For a Little Company, Sabratek Sure Raises Lots of Questions

Also, more on Seagate, and this column's current fave in the Amazon vs. barnesandnoble.com battle.
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Here's the deal on

Sabratek

(SBTK)

, a suburban Chicago company whose main biz is medical infusion pumps: It's borderline for this column to even write about. It has a market cap of less than $300 mil and a mere $65 mil in sales.

But at every turn it seems it's just

begging

for ink. And according to

SEC

filings, plenty of investors may have Sabratek in their portfolios via such mutual fund companies as

Putnam Investments

,

Pilgrim Baxter & Associates

and the

Kaufmann Fund

, which as of April held 15.4%, 8% and 7.5% of the stock, respectively.

Go back and look at some of the items: High

receivable days outstanding, skyrocketing inventories, a

class-action lawsuit that alleges accounting improprieties and, the most recent, an

acquisition announced on the last day of the quarter that could boost its earnings by a few pennies per share.

Now the latest: Last Friday, in the bowels of an S-3 related to something else -- way down in the exhibits, which

nobody

reads -- Sabratek disclosed a research and development agreement with

Systle

. There was no press release on this deal, which was done on June 30 -- the last day of the quarter -- and called for Systle to hand over $1 million to Sabratek.)

The only information given on Systle is that it's a Delaware corporation. (A check with Delaware shows it was incorporated on June 28.) And it's apparently run by, or at least connected with, Charles K. Stewart. (I say "apparently" because he's the only Systle person named in the document, his title isn't given and he personally answers the number listed in the agreement with a blunt "hello.")

Stewart, a former options trader, also happens to be one of Sabratek's largest investors, with a stake of more than 5%. He's also a large investor in and until recently was chairman of

Aware

(AWRE) - Get Report

.

The agreement says Sabratek plans to do research and development for Systle "in connection with the Systle Programs." Systle

Programs

? According to the agreement, Systle Programs refer to "the product development programs listed in Exhibit A ... " (Only there's no Exhibit A.)

What's going on here? What's Systle's history? Why a deal with what seems like a closely related party at the end of the quarter? Did Sabratek actually receive the $1 million?

Stewart declined to comment, other than to say that he has seen the "negative" pieces I have written on Sabratek. He said that a conversation with me would not be "fair" and that he's "not talking to people who have an ax to grind."

Sabratek officials, meanwhile, were out of town and unable to be reached. You can bet, however, that short-sellers will be paying close attention to Sabratek's next 10-Q to see how and if the $1 million, if it was ever paid, shows up.

Seagate update:

Yesterday's item on

Seagate

(SEG)

said Seagate had 34 million shares in

Veritas

(VRTS) - Get Report

. Oops, I didn't account for a recent 2-for-1 split; make that 69 million shares. And Seagate owns 35% of

Dragon Systems

, not the 18% mentioned here. But it's irrelevant, from a valuation standpoint, because it's private and it's unknown what the value is.

That said: The mystery money manager quoted in

that article isn't the only analyst looking at the untapped value in Seagate. It's been a favorite topic of Andrew Neff of

Bear Stearns

for quite a while. Neff's analysis puts the value of Seagate's non-disk drive businesses at or near the current price of 26 7/16. He figures the drive biz is worth another $12 per share to $25 per share, for a total value of $33 to $50 per share.

Pathetic:

Did a flashback to my weekend while reading Lashinksy's

piece on

barnesandnoble.com

(BNBN)

. Went to the

Barnes & Noble

(BKS) - Get Report

store near my home in lovely suburban New Jersey on Saturday. This isn't just any Barnes & Noble: It's the second-largest store in the chain. It's so large it even sells used books. But did they have the book my daughter needed for required summer reading

before

the next school year starts? No. Did they have the

Amityville Horror Conspiracy

, which my son had hoped to buy with his Barnes & Noble gift certificate, which had been bought in a Barnes & Noble store? No. Were they friendly? No.

So I said to my wife, "Let's just get out of here and do it online." So, we did. We would've gone to barnesandnoble.com if they took a gift certificate that was bought in the store. But did they? No. So, we went to

Amazon.com

(AMZN) - Get Report

, which we know works. (And which doesn't charge us taxes on our purchase like barnesandnoble.com does, at least in New Jersey.) Even bought the latest

Sugar Ray

CD while we were there.

Would've bought it while we were at the Barnes & Noble record store on Floor 2 of the big New Jersey superstore. But did they have it? No.

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

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