Wednesday, June 13, 2018

HAUP Hides in the Darkness

There are various shades in the land of dark companies.  The brightest have de-registered from the SEC to save money and care enough about their shareholders to continue communication through their own website or  Some companies lie in grayish middle ground where they will release info to shareholders only when asked.  The darkest of the dark don't  care about the stock price or wellbeing of any shareholder.  They hide in the shadows and communicate nothing.

Hauppauge Digital, Inc (HAUP) is one of the bad ones.  Their CFO, Jerry, told me they have de-registered and do not have to communicate.  I reminded him he is breaking state law by refusing to give financial information to a shareholder.  He uses the SEC as a scapegoat, claiming it will violate fair disclosure rules to send information to only one shareholder.  This is a gross misinterpretation and makes clear he does not care about us.

Still I hold shares and think the stock is likely cheap.  They recently put out the first press release in years.  They have redone their website.  As you can imagine the stock has dropped into the toilet and Jerry could care less.  I think the market cap is about a half million and I'd wager revenue is way higher than that.  This one is a gamble.

Before we get into the exciting world of state law and HAUP's shirking of fiduciary responsibility let me tell you what I see in the stock.  I think most likely it's very cheap but I have no numbers to back that up.

HAUP makes many different electronic products to do with digital video and TV.  They have products to stream live TV to your electronic devices.  They have cables and boxes to send video back and forth between TV and a computer.  They have products to record, crop, and create videos.  They have DVR type products.  They have TV tuners.  They are all over Amazon.  When they last filed a 10k almost five years ago they were spending $3M annually on R&D.  This is a real company with real revenue and real potential.

Let's start with a chart.  My favorite!  See below for all time, 10 year, and 5 year.  The company de-listed from the SEC in Mar 2014 and haven't communicated since.  The stock sits at $0.05.  This is what I would call "left for dead".

What value destruction.  You can see the stock price drop in 2013 as revenue fell.  In early 2014 NASDAQ delisted the company then five months later HAUP gave up and de-registered from the SEC.   

From a chart point of view what I see is a stock at an all time low.  It has been building a base for the past 4 years and sits at support.  This would be a buy.  

Below are some numbers.  The most recent quarterly filed in May 2014:
  • negative book value without enough money to pay the bills
  • BV -$3.0M
  • rev $5.8M vs $10.4 in the prior year Q
  • net loss $0.6M
  •  10.9M shares common
    • no preferred or warrants
And the most recent annual filed in Dec 2013:
  • negative book value without enough money to pay the bills
  • BV -$2.1M
  • rev $34M vs $44.6 in the prior year
  • net loss $4.0M
  •  10.9M shares common
    • no preferred or warrants
Here's a long term chart of HAUP revenue:

Let's talk value at the point when they stopped communication.  Revenue was $34M and dropping but only a few years prior it was $100M.  The company was losing money with negative book value, mostly due to $12.5M in accrued expenses.  The company is in a good field and they are developing new products to prepare for the future.  I'd put company value at $20M at least = $1.83 per share.  Maybe you could say a fair value would be the $1.00 - $1.50 range of 2012.

Since de-registering they have not communicated but are alive so somehow they found a way around the debt.  The stock price sits at $0.05 which would be a $0.55M market cap if the share count hasn't changed.

They redid their website sometime between Jan 29 and Feb 24 of 2018.  The old site looked fine and the new one looks great.  It's a modern showcase of all their products and looks impressive.  Definitely looks better than a half million dollar company to me.

The most interesting thing is HAUP filed a press release in Apr 2018 for the first time in years.  Of course they left out the stock ticker but they announced what they must feel is an exciting new product, Cordcutter TV.  In Jan 2018 Pixelworks announced their chip will be inside of HAUP's new Cordcutter TV.

I don't know.  I think $0.05 is cheap but we have no idea the share structure or debt.  How much dilution has come?  This is where the gamble comes in and you have to think about upside vs downside.  I think upside is huge with a potential share value of $2 or more.  Not long before going dark the stock was at $1.  Downside is 5 cents.

The catalyst would be a company sale or communication.  Many companies come back from the dark and I hope HAUP will follow suit.  All it would take is a posting of some good numbers and the stock will move big time.  HEMA did it as did MRCR, EKCS, CNGA, and so many others.  I'm not holding my breath.

State Law and the SEC:
The reason HAUP thinks it's OK to stop communicating is the horrid SEC rule 12g that allows companies to de-register from the SEC if they have fewer than 300 of shareholders "of record".  Once a company de-registers they are no longer required by the SEC to file reports in the public domain and that is exactly what HAUP has done.  For more information on this criminal SEC rule I encourage you to read my blog post here.

The reason I hate this SEC rule is their shareholder "of record" definition.  All shares held through a single brokerage in street name are counted as a single shareholder.  Personally I hold HAUP shares through Schwab and what this definition means is all shares held through Schwab are counted as one shareholder.  There could be a thousand shareholders through Schwab and it would be counted as a single share!  What a scam.  Jason Zweig wrote a great article (with me as a source :)) about this in the Wall Street Journal.  To illustrate in the context of HAUP let me just draw your attention to this quote from their first 10k back in 1995:
The approximate number of holders of record of the Common Stock as of November 7, 1995 was 77. The Company believes there are in excess of 750 beneficial holders of the Common Stock.
Outside of the SEC all companies are still subject to the state laws which govern them.  HAUP is incorporated in DE and headquartered in NY.  I'm no lawyer but somehow one or both of those state laws apply to them.  Both DE and NY have state laws which REQUIRE the following, regardless of SEC status:

  • company must hold an annual meeting
  • company must show financial statements to any shareholder who asks for them

So HAUP is required by state law to give me financial statements and hold an annual meeting.  They are doing neither.   Below is my communication with their CFO.  He is hiding behind the SEC fair disclosure rule while ignoring fiduciary duty and state law.

Could you please send me the latest annual financials. A report would be great but if only the financials are available I'll take that.
Jerry Tucciarone (CFO):
SEC rules allow companies that have under 300 shareholders to go dark. Once the SEC allows a company to go dark the company is no longer obligated to file public reports. Since Hauppauge Digital Inc. has under 300 shareholders, on July 28, 2014 the SEC accepted our application to go dark. In accordance with this rule, we have not filed any financials since the quarter ended March 31, 2014.
HAUP is incorporated in Delaware. The Delaware state Corporation Law Title 8, Chapter 1, § 220 Inspection of books and records states that shareholders must be allowed to inspect the company books. This applies regardless of SEC status. State law also requires annual meetings.

HAUP is headquartered in New York. New York state Business Corporation Law §624 Books and records similarly states shareholders must be allowed to inspect the books. It also states the company must provide shareholders with annual financial statements including the income statement and balance sheet. State law also requires annual meetings.

Please send me the annual financial statements for the most recent fiscal year.
Jerry Tucciarone (CFO):
We have been advised by our attorneys that we would be in violation of SEC fair disclosure regulations if we issue non public financial information to one shareholder.
And you are in violation of state law by not releasing financial information to a shareholder. State law gives 5 days to comply
Jerry Tucciarone (CFO):
Our outside counsel advised us that during this dark period we cannot issue financial information to only one shareholder.
You are misinterpreting SEC guidelines and breaking the law. I have quoted you the state laws. You are able to look them up yourself and you, as the CFO, have a responsibility to do so. You are hiding information from an owner of the company. I don't know how anyone can come to an interpretation that this is the right thing to do.

When and where is the next annual meeting? State law also requires annual shareholder meetings.
Jerry Tucciarone (CFO): response...
So Jerry refused to send me the financials that state law dictates he must share.  I followed up with a paper letter requesting the financials along with copies of the law and proof of my share ownership.  I mailed one letter to the CFO Jerry Tucciarone and one to the CEO Kenneth Plotkin.  That was a couple weeks ago and so far I have no response.  I sent a followup email to Jerry yesterday but I'm not expecting much.  At the bottom of this post is my letter and the state laws I sent them.

I filed a complaint with the Delaware attorney general, explaining HAUP is breaking the law.  I filed a complaint with the SEC, informing them their rule is being misinterpreted and used as an excuse to break state law.  I don't expect a response but a man can dream, right?

The funniest part of Jerry's responses is his title on the website, "investor relations."  Why would they bother having anyone in investor relations if they won't tell investors anything?

Breach of Ethics:
Let me tell you the story of a company.  They sold shares to the public when money was needed then pushed the stock into the ground when they no longer cared.  This company's directors have a fiduciary duty to act in a manner that will benefit their shareholders.  This company's officers have a duty to abide by the laws that govern them.  This company has a moral obligation to do right by their fellow man.  Trust was placed in this company and trust has been broken.

HAUP was founded by two couples: Kenneth R. Aupperle, wife Laura Aupperle, Kenneth Plotkin, and wife Dorothy Plotkin.  In 1995 the company decided they needed help from the public to fund operations. They could not do it on their own. They asked for money from you and I in exchange for company ownership.  HAUP sold 1,333,333 units to the public at $3.15 per unit.  Each unit consisted of one share of $.01 par value common stock and one Class A redeemable stockpurchase warrant.  Money from the IPO was used to pay off debt and fund operations.  Jerry Tucciarone was CFO.  Company operations were run in a building owned by the founders, with rent paid by the company of course.

The company's very first proxy, in 1996, shows each of the founders with 287k shares = 10.4% of 2,756,183 outstanding common shares.  Of course the founders gave themselves stock options and over the years stayed around 10% owners as share count rose up to the latest reported 2014 count of 10.9M.

I don't know if the Plotkin's have ever sold shares.  Latest count has Kenneth with 911k = 9% and his wife with 550k = 5.5%.  Kenneth Aupperle died and his wife Laura sold their shares between 2005 - 2012.  I haven't looked at the filings but the chart shows prices from $1 - $7.50 in that timeframe...1900% to 14900% above the current stock price.

The stock price was $0.27 when HAUP delisted in July 2014.  It now sits at $0.05, down 81%.

What have the founders received over the years?  Salary, stock options, rent payments from the company.  And what has the public received?  Dilution gives the public 25% of the stock they once owned.  The stock sits 98% below it's IPO price.  HAUP delisted and ran into the corner to hide.  They know they have more than 300 beneficial shareholders.  HAUP doesn't even think enough of its shareholders to tell them what's going on.  This company that asked for money now could care less.  I'd like to know how HAUP's board of directors think they are fulfilling their fiduciary duty as the stock price sits at nothing and they hide information from their own shareholders.

My Request:
It wouldn't take much for HAUP to make it better.  I imagine they de-registered to save money.  They must still keep books so all they have to do is publish the information.  They could post reports on their own website like DEWY and HEMA.  They could send out only an annual like SIMA, COMX, or ADDC.  They could forgo the audit to save money and only send out reports on request like MRCR and EKCS have done.  IOMT hasn't been audited for years and only posts an annual to their own website.

It is so easy to make this right.  Do the right thing, HAUP.  Show us what's behind the curtain.

disclosure: long HAUP

Appendix: my letter to HAUP including the applicable state laws in Delaware and New York

New York Code

BSC - Business Corporation

Article 6 - (601 - 630) SHAREHOLDERS

624 - Books and records; right of inspection, prima facie evidence.

§ 624. Books and records; right of inspection, prima facie evidence.
   (a) Each corporation shall keep correct and complete books and records
 of   account   and shall  keep minutes  of the proceedings  of its
 shareholders, board and executive committee, if any, and shall  keep at
 the  office  of the corporation  in this state or at the office of its
 transfer agent or registrar in this state, a record containing the names
 and addresses of all shareholders, the number and class of  shares held
 by each and the dates when they respectively became the owners of record
 thereof.    Any of the  foregoing books, minutes or records may be in
 written form or in any  other form capable of  being converted into
 written form within a reasonable time.
   (b) Any  person who  shall have been  a shareholder of record of a
 corporation upon at least five days' written demand shall have the right
 to examine in person or by agent  or attorney, during usual business
 hours,  its minutes of the proceedings of its shareholders and record of
 shareholders and to make extracts therefrom for any  purpose reasonably
 related  to such person's interest as a shareholder.  Holders of voting
 trust certificates representing  shares of the corporation shall  be
 regarded  as shareholders  for the purpose of this section.   Any such
 agent or attorney shall be authorized in a writing  that satisfies the
 requirements  of a writing under paragraph (b) of section 609 (Proxies).
 A corporation  requested to provide  information pursuant to   this
 paragraph  shall make available such information in written form and in
 any other  format in which  such information is  maintained by the
 corporation and shall not be required to provide such information in any
 other  format.  If a request made pursuant to this paragraph includes a
 request  to furnish  information regarding  beneficial owners, the
 corporation  shall make available  such information in its possession
 regarding beneficial owners as is  provided to the corporation by a
 registered  broker or dealer or a bank, association or other entity that
 exercises  fiduciary powers  in connection with  the forwarding of
 information  to such owners.  The corporation shall not be required to
 obtain information about beneficial owners not in its possession.
   (c) An inspection authorized by paragraph (b) may be  denied to such
 shareholder  or other person  upon his refusal to  furnish to the
 corporation, its transfer agent or  registrar an affidavit that such
 inspection  is not desired for a purpose which is in the interest of a
 business or object other than the business of the corporation  and that
 he  has not  within five  years sold or offered for sale any list of
 shareholders of any corporation of any type  or kind, whether or not
 formed  under the laws of this state, or aided or abetted any person in
 procuring any such record of shareholders for any such purpose.
   (d) Upon refusal by the corporation or by an officer or agent  of the
 corporation to permit an inspection of the minutes of the proceedings of
 its  shareholders  or of the record of shareholders as herein provided,
 the person making the demand for inspection may  apply to the supreme
 court  in the  judicial district where the office of the corporation is
 located, upon such  notice as the court  may direct, for an order
 directing  the corporation,  its officer or agent to show cause why an
 order should not be granted permitting such inspection by the applicant.
 Upon the return day of the order to show cause, the court shall hear the
 parties summarily, by affidavit or otherwise, and if it appears that the
 applicant is qualified and entitled to such inspection, the court  shall
 grant  an order  compelling such  inspection and awarding such further
 relief as to the court may seem just and proper.
   (e) Upon the written request of any shareholder, the corporation shall
 give or mail to such shareholder an annual balance sheet and profit  and
 loss  statement  for the preceding  fiscal year, and, if any interim

balance sheet or profit and loss statement has been distributed  to its
 shareholders  or otherwise made available to the public, the most recent
 such interim balance sheet or profit and loss statement. The corporation
 shall  be allowed a reasonable time to prepare such annual balance sheet
 and profit and loss statement.
   (f) Nothing herein contained shall  impair the power of courts to
 compel  the production  for examination of the books and records of a
   (g) The books and records specified in paragraph (a)  shall be prima
 facie  evidence of the facts therein stated in favor of the plaintiff in
 any action or special proceeding against such corporation or any of  its
 officers, directors or shareholders.

New York Code

BSC - Business Corporation

Article 6 - (601 - 630) SHAREHOLDERS

602 - Meetings of shareholders.

§ 602. Meetings of shareholders.
   (a) Meetings  of shareholders  may be held at such place, within or
 without this state, as may be fixed by or under the by-laws, or  if not
 so fixed, at the office of the corporation in this state.
   (b) A  meeting of shareholders shall be held annually for the election
 of directors and the transaction of other business on a date fixed by or
 under the by-laws. A failure to hold the annual meeting on the  date so
 fixed  or to elect  a sufficient number  of directors to conduct the
 business of the corporation shall not work a forfeiture  or give cause
 for  dissolution of the corporation, except as provided in paragraph (c)
 of section 1104  (Petition in case  of deadlock among directors  or
   (c) Special  meetings of the shareholders may be called by the board
 and by such person or persons as may be so authorized by the certificate
 of incorporation or the by-laws. At any such special meeting  only such
 business  may be transacted which is related to the purpose or purposes
 set forth in the notice required by section 605 (Notice of  meetings of
   (d) Except  as otherwise  required by this chapter, the by-laws may
 designate reasonable procedures for the calling and conduct of a meeting
 of shareholders, including but not limited to specifying:  (i) who may
 call  and who may conduct the meeting, (ii) the means by which the order
 of business to be conducted shall be established, (iii)  the procedures
 and  requirements  for the nomination of directors, (iv) the procedures
 with respect to  the making of shareholder  proposals, and (v) the
 procedures  to be established  for the adjournment of any meeting of
 shareholders. No amendment of the by-laws pertaining to the election  of
 directors  or the procedures for the calling and conduct of a meeting of
 shareholders shall affect the election of directors  or the procedures
 for  the calling  or conduct in respect of any meeting of shareholders
 unless adequate notice thereof is given to the shareholders in a  manner
 reasonably  calculated to  provide shareholders with sufficient time to
 respond thereto prior to such meeting.

State of Delaware




Subchapter VII. Meetings, Elections, Voting and Notice

§ 211 Meetings of stockholders.
(a)(1) Meetings of stockholders may be held at such place, either within or without this State as may be designated by or in the manner provided in the certificate of incorporation or bylaws, or if not so designated, as determined by the board of directors. If, pursuant to this paragraph or the certificate of incorporation or the bylaws of the corporation, the board of directors is authorized to determine the place of a meeting of stockholders, the board of directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by paragraph (a)(2) of this section.
(2) If authorized by the board of directors in its sole discretion, and subject to such guidelines and procedures as the board of directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:
a. Participate in a meeting of stockholders; and
b. Be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.
(b) Unless directors are elected by written consent in lieu of an annual meeting as permitted by this subsection, an annual meeting of stockholders shall be held for the election of directors on a date and at a time designated by or in the manner provided in the bylaws. Stockholders may, unless the certificate of incorporation otherwise provides, act by written consent to elect directors; provided, however, that, if such consent is less than unanimous, such action by written consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Any other proper business may be transacted at the annual meeting.
(c) A failure to hold the annual meeting at the designated time or to elect a sufficient number of directors to conduct the business of the corporation shall not affect otherwise valid corporate acts or work a forfeiture or dissolution of the corporation except as may be otherwise specifically provided in this chapter. If the annual meeting for election of directors is not held on the date designated therefor or action by written consent to elect directors in lieu of an annual meeting has not been taken, the directors shall cause the meeting to be held as soon as is convenient. If there be a failure to hold the annual meeting or to take action by written consent to elect directors in lieu of an annual meeting for a period of 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after the latest to occur of the organization of the corporation, its last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director. The shares of stock represented at such meeting, either in person or by proxy, and entitled to vote thereat, shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the certificate of incorporation or bylaws to the contrary. The Court of Chancery may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date or dates for determination of stockholders entitled to notice of the meeting and to vote thereat, and the form of notice of such meeting.
(d) Special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
(e) All elections of directors shall be by written ballot unless otherwise provided in the certificate of incorporation; if authorized by the board of directors, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.

§ 220 Inspection of books and records.
(a) As used in this section:
(1) "Stockholder" means a holder of record of stock in a stock corporation, or a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person.
(2) "Subsidiary" means any entity directly or indirectly owned, in whole or in part, by the corporation of which the stockholder is a stockholder and over the affairs of which the corporation directly or indirectly exercises control, and includes, without limitation, corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, statutory trusts and/or joint ventures.
(3) "Under oath" includes statements the declarant affirms to be true under penalty of perjury under the laws of the United States or any state.
(b) Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose, and to make copies and extracts from:
(1) The corporation's stock ledger, a list of its stockholders, and its other books and records; and
(2) A subsidiary's books and records, to the extent that:
a. The corporation has actual possession and control of such records of such subsidiary; or
b. The corporation could obtain such records through the exercise of control over such subsidiary, provided that as of the date of the making of the demand:
1. The stockholder inspection of such books and records of the subsidiary would not constitute a breach of an agreement between the corporation or the subsidiary and a person or persons not affiliated with the corporation; and
2. The subsidiary would not have the right under the law applicable to it to deny the corporation access to such books and records upon demand by the corporation.
In every instance where the stockholder is other than a record holder of stock in a stock corporation, or a member of a nonstock corporation, the demand under oath shall state the person's status as a stockholder, be accompanied by documentary evidence of beneficial ownership of the stock, and state that such documentary evidence is a true and correct copy of what it purports to be. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in this State or at its principal place of business.
(c) If the corporation, or an officer or agent thereof, refuses to permit an inspection sought by a stockholder or attorney or other agent acting for the stockholder pursuant to subsection (b) of this section or does not reply to the demand within 5 business days after the demand has been made, the stockholder may apply to the Court of Chancery for an order to compel such inspection. The Court of Chancery is hereby vested with exclusive jurisdiction to determine whether or not the person seeking inspection is entitled to the inspection sought. The Court may summarily order the corporation to permit the stockholder to inspect the corporation's stock ledger, an existing list of stockholders, and its other books and records, and to make copies or extracts therefrom; or the Court may order the corporation to furnish to the stockholder a list of its stockholders as of a specific date on condition that the stockholder first pay to the corporation the reasonable cost of obtaining and furnishing such list and on such other conditions as the Court deems appropriate. Where the stockholder seeks to inspect the corporation's books and records, other than its stock ledger or list of stockholders, such stockholder shall first establish that:
(1) Such stockholder is a stockholder;
(2) Such stockholder has complied with this section respecting the form and manner of making demand for inspection of such documents; and
(3) The inspection such stockholder seeks is for a proper purpose.
Where the stockholder seeks to inspect the corporation's stock ledger or list of stockholders and establishes that such stockholder is a stockholder and has complied with this section respecting the form and manner of making demand for inspection of such documents, the burden of proof shall be upon the corporation to establish that the inspection such stockholder seeks is for an improper purpose. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other or further relief as the Court may deem just and proper. The Court may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within this State and kept in this State upon such terms and conditions as the order may prescribe.
(d) Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to the director's position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger and the list of stockholders and to make copies or extracts therefrom. The burden of proof shall be upon the corporation to establish that the inspection such director seeks is for an improper purpose. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.


  1. One thing I forgot to mention is age. Kenneth Plotkin the CEO, Chairman, COO, and President is 67 now. If he ever wants to sell his stock and move on he's going to have to make it worth a lot more than it is now

  2. Ken Plotkin has cooked the books and used the company as an ATM for multi years. If he cared about his stock the company wouldnt trade at .03. He DOES NOT want this in the light ever again.

  3. here's an article quoting the CEO Plotkin on why he went dark and how he could possibly file again some day:

  4. That Libn article is very insightful. Plotkin hardly hides his rationale for screwing over the average shareholder in his business (in terms of negative psychological signalling etc)

  5. Hey Dan,

    1) Your returns have trumped mine by a large margin so obviously I have no place in saying this but surely buying HAUP is speculation and not (Value) investing. If you do not have financial information how the heck can you value the business and buy stock like you are?
    I get you have a good hunch on this, that business can't be that bad and it could be a 10x + but the lottery ticket is what it is without hard facts...
    What do you think?

    2) I actually agree with Jerry here, disclosing not public information to you and no one else doesn't seem fair. What you should have done is requested on behalf of all shareholders that info goes on the website. I get that they are violating state laws but this I never knew that state laws could contradict SEC laws either. Giving you information advantage is like insider trading in my view, you would have material non public information.
    Someone higher up needs to look into this legislation and update all this stuff.

    3) You wrote "The company's very first proxy, in 1996, shows each of the founders with 287k shares = 10.4% of 2,756,183 outstanding common shares. Of course the founders gave themselves stock options and over the years stayed around 10% owners as share count rose up to the latest reported 2014 count of 10.9M. "

    How have they stayed at 10% owners if shares outstnading went from 2.7M to 10.9M and it was all via stock option grants? That looks like moving from 10% to 80% share ownership, which would make sense given the crappy governance here.

    1. 1. this is very much speculation. this is a gamble. I have others, see my old QDLC posts and VLXC. I suppose it's sort of like value investing but the value is a guess.

      2. You are wrong and so is Jerry. I am a shareholder and I have the right to see the numbers for my company. Simple as that

      3. I think options and maybe stock splits or something. I'm not certain

    2. As far as postin reports to their website I would love that. I don’t know if I discussed that with HAUP but it’s mentioned in this blog post and I regularly encourage dark companies to do that.

    3. "disclosing not public information to you and no one else doesn't seem fair."

      Aren't insiders also shareholders? Don't they also have access to the books & records? If so, then they ARE disclosing MNPI to certain people (insiders) and nobody else - how is this acceptable???

  6. You didn't approve my comment?

    1. sorry. I stopped getting emails about new comments and was too dense to check manually...

  7. Here’s an article about a partnership between HAUP and Microsoft from Apr 2015:

    1. Thanks for that article. Factiva has quite a few Hauppauge or Plotkin stuff going back a while so they're active. And they clearly sell products.

      For instance, some of their amazon listings have hundreds of reviews. If 2% of people leave reviews and the average retail price is $100, 1,000 reviews would apparently indicate a level of sales ($5M) well above the current market cap.

    2. and I think this is the product. A $60 TV tuner for the Xbox. OK I'll stop commenting on my own blog post now...

    3. Then I jump in! Their products on Amazon have a lot of reviews and not too bad ones either.

    4. I have the product. It works as advertised. I bought it because some of the newer Vizio TVs do not come equipped with TV tuners (they're effectively giant computer monitors). You can save hundreds of dollars vs. a comparably Sony if you buy the Vizio without the tuner.

    5. LOL German Reader! thanks for telling me my comments weren't working

    6. Always a pleasure!
      See how popular you are with your dark stocks, lol.

  8. Dan, there is a simpler path forward here than making complaints to the AG. You need to file a lawsuit in the Delaware Court of Chancery seeking a court order to compel the company to respond to your books and records demand. It will cost at least several thousand in legal fees, but you may be able to recover that. Otherwise interesting scenario and fascinating post!

  9. As a former user of Hauppauge products (PVR capture cards) at the beginning of the century I can perfectly understand how the company moves between good and bad times. Occasionally, they'll have a 'hit' product.

    Regarding company structure, I'd suggest you have a look at their (European) subsidiaries, which generally have obligation to file some company information:
    Hauppauge Computer-Works GmbH (DE): EUR >1M equity (no cash) @ 31-12-2016 (;jsessionid=9345AF3A06A3286903541F8F3E813A12.web03-1?submitaction=showDocument&id=21323130 )
    HAUPPAUGE DIGITAL EUROPE S.à r.l. (LU): end of domicilation agreement @ 2016? ( )
    HAUPPAUGE COMPUTER WORKS, LIMITED (UK): Dissolved on 16 January 2018 ( ). Note that share(s) were held by Hauppauge Digital Europe SARL.

    This leaves me a bit puzzled on the European holding company, i.e. does it still exist and where is it domiciled. Google further resulted in this?

    HAUPPAUGE DIGITAL EUROPE SARL / Société : 837531474 (???)
    "Date création entreprise 17-01-2018" ( )

    One of the older filings of an European subsidiary points to the parent company for consolidated financial information ;-)
    Isn't there any filing of information in the US? #outstanding shares?

    Company definitely has meat on the bone according to LinkedIn (>70 employees, but no job vacancies). Note the interesting statement of a disgrunted employee on Glassdoor: "The company is dying fast, they have had to dissolve the old Hauppauge to create a new business so they don't have to pay their old debts..I would not recommend this company in the least."

    1. this is great. thanks. I'll have to check these links

      I don't think there's any US info. I'd like to know the share count right now

  10. Forgot to include one:
    HAUPPAUGE DIGITAL EUROPE SARL (Ireland): headquarters according to EU webstore, no recent filings, points to Luxembourg as country of domicile which is in conflict with above ( )

  11. > OK I'll stop commenting on my own blog post now...

    No don't! :)
    I scored me some HAUP after reading your article, and I appreciated the comments for some additional background. I guess it may feel like an echo chamber but it's very helpful, thanks Dan!

  12. Dan, keep it coming. Let us know if you hear anything.

    Another thought, this may be a little aggressive (although deserving based on their actions), but I'm sure there are enough readers on this blog to put a serious dent in their Amazon's miraculous how willing an individual can become if a situation starts having a direct impact on them

  13. Thank you for publishing this. I'm curious when I see such activity and am always curious as to what the follow up is. As like you said, it is pretty much set in stone what they need to do for minority shareholders, but when management acts badly, it doesn't seem like there is a lot you can do unless you get attorneys involved. I've heard of some people contacting the AG's office, but that may result in at best, a follow up to the company, to at worst, just ignoring it. Otherwise, I'm not sure what sort of response you would get if you hired an attorney to sent them a letter, or if it went to court, which court it would go to and if there are penalties by statue (or if you would just be granted the right to inspect and potentially get your legal costs reimbursed). Because, if it was a slam dunk sort of thing, I figure there would be a few attorneys out there looking for such opportunities to take such companies to court.

    1. going to court can work. If you check my recent FRTN post there's a link to an article and filings from shareholders who took them to court. Shareholders won and FRTN even had to pay the bill

  14. How to make Haup worth the 30-40mm it really is worth(or more?

    1. communication with the public would be a good first step

  15. Nice writeup. Like your tenacity. Your letter to Plotkin noted symbol QDLC, though suppose you already knew that. How does company justify hiding behind the SEC when HAUP de-registered from the SEC? Absurd.

    1. Thanks. I saw that QDLC after posting this. ooops

      completely absurd

  16. Today I visited the HQ of Hauppauge Digital (HAUP). The CFO refused to give me their financial statements. This is illegal under both NY & DE law. I have filed a complaint with both the NY & DE Secretary of State.

    1. That is great! Maybe if people keep putting pressure on them something will happen.

  17. Thank you for doing this. As I'm always interested in seeing such stories and their outcomes. In addition, it sounds like you have some support over at CoFB and that someone else may be interested in activism on this company as well.

  18. Thanks, Dan. Appreciate the post and the updates in the comments as well. Checked out their website - they sure do sell a lot of products.

    I went to newegg and even read the reviews on some of their products. General perception seems to be : innovative and useful products, but dated software and poor customer support.

    If you happen to hear back on any of the financials, please share it here. Thanks!

    1. I'll do an update if anything ever comes of this. I mean I think something will come of it, but the risk is that could be a decade or two out... Sometimes these things sit forever until the majority owner retires or dies


    1. thanks. I saw that. He found some good web info.

    2. "In a post from March 2018, a former employee of more than 10 years disclaims that the company has been dissolved and the assets moved to a new business."

      This could basically mean that HAUP is an empty shell company with no value at all.

  20. Im all in on going for special shareholder meeting re Haup. Anything else is a direct waste of time. The finances will be fine to ok at worst. The key is to making the company run much much better. Ken Plotkin is way way to old to run this anymore


  22. financial statements coming out this week or will HAUP figure out another way to delay?