Research Frontiers -REFR - The good, the bad and the ugly!

Research Frontiers - REFR has been in business for over 50 years.  In that time they have racked up loses of over 100 million dollars developing Electronically Dimmable Glass  based on their patented SmartGlass SPD technology. Fifty years later they  are generating less than 2 million dollars annually with corporate overhead running between 5 - 6 million per year.  So why buy the stock here???

Reasons not to buy REFR

  • Management has little credibility with the investment community. They have consistently over promised and under delivered. Despite their best intentions they have had a very hard time predicting adoption of their SPD technology with OEM's. 
  • REFR needs cash. With revenues of less than 2mm and expenses of 5mm and just 2.5mm in the bank, according to their most recent 10q they have enough cash to last only 12-15 months based on forward looking projections. So by buying the stock here you are likely walking into a dilution event. 
  • REFR took a write off in 2016 of roughly 500k which their auditors deemed to be a material weakness in their accounting process. Although management believes they will ultimately recover these funds it was another blow to credibility. 

Why I'm buying REFR (under 1.20) anyway

  • After 50 years adoption of SPD technology seems to be starting - especially in the automotive space (their largest short term market) and in aerospace
  • REFR technology has been tested and deployed by some of the most sophisticated and cutting edge companies on the planet including Mercedes Benz, PPG, Textron, Honda Jet etc...
  • Simple "licensee" business model - they manufacture nothing and simply collect a royalty of roughly 10% which currently translates into $150/sunroof and $100/aircraft window. 
  • Although a dilution event is likely, the company has less than 25 million shares outstanding with no debt, so the corporate structure is fairly clean (up until now). 
  • Although developed decades ago, no current technology can beat their SmartGlass (SPD) technology.  SPD goes from clear to dark faster than any other technology, blocks light (i.e. gets darker) than other technologies, and blocks heat and UV better than other EDG.

Potential Catalysts in the next 12 months

  • Signing of a new major automotive OEM in addition to Mercedes
  • Mercedes decides to "make" more S Class sedans with SPD. There are currently 100k S Class cars made annually. At a 30% "make rate" REFR can break even
  • Adoption of SPD technology in the commercial aviation market.  They currently dominate the EDW private jet business
  • A favorable outcome in a patent litigation case REFR initiated against Amazon, E-Ink and others
  • Completing a round of financing on favorable terms perhaps with a strategic partner

Electrically tinted windows and windshield for the car With Continental´s Intelligent Glass Control you can tint your car windows with the touch of a button. Special films, inserted into the glass of the car, change their transparency through electric control signals. The degree of shading for individual windows can be determined, to “dim” your windows. This means increased comfort and safety for passengers and reduces the energy consumption of your climate control system.

Continental Automotive recently showcased several SPD products including side windows with Smart Glass

Vision Systems - Electronically Dimmable Windows

Vision Systems’ genuine expertise in solar protection places it today among the world leaders in this area for the aeronautic, land transport and marine markets. The range comprises solutions both for passengers and drivers, including roller and pleated shades, driver blinds and cockpit sun visors, and Electronically Dimmable Windows : Nuance and Noctis (privacy mode). For more information :

Panasonic Transparent Screen

Transform an ordinary window into a visual showcase with the Transparent Screen. The screen utilizes our industry leading digital projection in a specially developed system that puts beautiful video images onto glass windows and doors on demand. It allows you to choose between transparency and showcasing stunning digital content. Learn more:

Panasonic recently started selling glass store windows that can also project images onto the glass using SPD
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