DISCLAIMER:
Much of the "REFR Fraud" has been attributed to my predictions. I will confess:
1) I am a REFR fanatic (family is old Toledo Glass family and I know how big this is!)
2) I was premature. I, ME, N. DIXON NOT REFR was premature in predictions (wrongly attributed to REFR by Mr. Wexler)
3) It doesn't matter any more. SPD products are here. Read the lastest news items. If you're in NYC go to the Nasdaq MarketSite and play with the SPD products that are in the making now.
FACT OR FICTION!
(Third Edition)
July 7, 2001
by Dr. Albert P. Malvino
Ph.D.EE from Stanford University
email address = al@malvino.com
web site = www.malvino.com
Research Frontiers (RFI) has developed its suspended particle device (SPD) technology for the control of light. Research Frontiers has more than 365 patents and patent applications pending throughout the world covering its proprietary technology and licenses this technology to major corporations throughout the world. Research Frontiers' common stock is traded on NASDAQ National Market System under the symbol REFR.
Fair Disclosure:
1. I have a large position in Research Frontiers Incorporated, accumulated over the past three years based on my research on SPD technology.
2. I am a college textbook author with enough time between books that I research and invest in stocks for my IRA pension funds.
3. I do not work for Research Frontiers and have no connection with the company, aside from being one of its larger shareholders.
1. FICTION: SPD windows will cost $100 per square foot. This cost estimate and SPD's specifications help explain its 35-year uninterrupted history of commercial failure.
FACT 1-1: The only parties qualified to know the cost of SPD windows are the licensed manufacturers of SPD glass. Hankuk Glass, the leading manufacturer at this time, estimates their SPD glass will initially cost $37 per square foot.
FACT 1-2: With the economies of large-scale production in emulsion and film production, estimates as low as $20 per square foot have been indicated.
FACT 1-3: The $100 cost estimate has nothing to do with the 35-year history of R&D. The $100 cost estimate is erroneous, probably a reporting error or an incorrect guess from a third party not related to Hankuk Glass.
2. FICTION: If aircraft manufacturers want smart windows, they have many other technologies to choose from.
FACT 2-1: There are only three viable technologies to choose from: liquid-crystal, electrochromic, and SPD. Liquid-crystal technology is not tunable since it has only two possible states: clear or dark. Most importantly, this technology does not actually block light, it diffuses light. This type of window appears "frosted" and does not significantly diminish the lumens passing through the window. The liquid-crystal film also breaks down rapidly under UV and high heat. It is, therefore, totally unsuitable and no aircraft manufacturer would give it any serious consideration.
FACT 2-2: The second technology, electrochromic, produces color changes through chemical reaction. Electrochromic technology responds very slowly, must be fabricated on glass which is not allowed by the FAA, will typically wear out after being cycled 20,000 times, suffers from an Iris effect where changes in color move slowly from the outer edges to the middle, is easily damaged by overvoltages, and has a very limited useful temperature range. The annoying slow changes, dangers from shattering glass, lack of cycling durability, annoying Iris effect, and failure to work over a wide temperature range prohibit electrochromic technology from being a choice among aircraft manufacturers.
FACT 2-3: SPD technology has instant response, can use plastic, has cycling durability, has no Iris effect, can withstand large overvoltages, and operates over a very large temperature range. SPD is the method of choice because it offers so many advantages over mechanical shades. The price of an SPD window is also significantly lower than any competing technology.
3. FICTION: RFI did not provide any information on the amount of profits it expects nor the exact source of its expected revenues.
FACT 3-1: If licensees of Research Frontiers collectively achieve a mere 1% penetration of the worldwide market for newly produced glass, this will comprise 370 million square feet of windows made SPD-smart each year. The Company presently estimates that it will receive from its licensees an earned royalty of at least $1.00 to $1.50 per square foot from architectural and automotive glass products, with a much larger earned royalty of between $40 and $150 per square foot for certain other product applications such as aircraft windows.
FACT 3-2: A recent market survey of 50 leading U.S. window manufacturers by The Townsend Research Group reports U.S. window manufacturers expect 6.2% of commercial buildings and 3.6% of residential homes to have some type of smart windows by 2005.
FACT 3-3: The new SPD Inc. factory will be able to produce about 35
tons per year of the basic SPD materials used to make SPD light-control
film or about 15 million square feet of film at a royalty of $1 to $150
per square foot, depending on the end product (flat glass, rear-view mirrors, sunglasses, aircraft windows, etc.). Further, Hankuk is already planning for expansion. Seong Man Kim, President of Hankuk Glass Industries’ Flat Glass Division and a Director of SPD Inc. indicated: "While we can out-source additional capacity once demand for this factory’s production exceeds the capacity of our coaters, we will probably build similar factories in various locations throughout the world to add further capacity to meet the growing demand we see worldwide for SPD film and end products."
FACT 3-4: RFI spends about a million dollars a quarter or four million dollars a year on operating expenses. These costs are not expected to rise in proportion to earnings because other companies put up all the capital and workers. RFI has clearly stated that they will be profitable in at least one quarter of 2002 (if not earlier) so that is a projection of over a million dollars of revenues in one quarter. Similarly, they are predicting over 4 million in the year after that. These are not estimates but minimums and the company has said the numbers could come earlier and be much larger.
FACT 3-5: ThermoView Industries, Inc., one of the largest publicly traded companies dedicated to the home improvement and renovation industry, is developing a new line of smart windows. ThermoView intends to display SPD smart windows at public exhibitions as early as July 2001, and feature these windows at trade shows and in conjunction with other marketing opportunities throughout the year. The company has begun work on specific product applications, and it expects to start selling smart windows to residential consumers in 2002.
4. FICTION: SPD is less durable and less usable than other smart windows technologies that use inorganic solid materials that are more durable.
FACT 4-1: There are only three technologies at this time that can even be considered to be in competition with each other: liquid crystal, electrochromic, and SPD.
FACT 4-2: Liquid crystals break down rapidly under UV and high heat, so their durability is low. Electrochromic devices have an inherently short lifetime. Typically, they self-destruct after 20,000 cycles because their internal chemical reactions destroy their ability to change color.
FACT 4-3: SPD is more durable than electrochromic technology. SPD has already been tested and stressed by more than 1,000,000 cycles without failure. Furthermore, being organic does not make things more or less durable and most of SPD does not use organic components. SPD is neither solid nor liquid. It is a solid medium containing trapped microscopic droplets that cannot move. SPD has no moving parts except on the microscopic level and has been tested to work reliably in ways that outperform any of the competition.
5. FICTION: SPD technology requires the continuous use of 115 volts ac.
FACT 5-1: There are different kinds of SPD film with varying voltage requirements. Some operate with as little as 20 volts ac. It depends on the thickness of the SPD film and the nature of the particles used.
FACT 5-2: SPD technology does not require continuous power. In the clear state, it requires 0.6 watt per square foot. In the dark state, it consumes no power. For instance, an aircraft with 80 windows all in the clear state consumes approximately 48 watts of power. Compared to the estimated 200 individual passenger reading lamps needing 3 watts each for a total of 600 watts, SPD power is a fraction (6.6%) of that power required. This fraction gets smaller with any of the windows adjusted towards the dark state.
FACT 5-3: One type of SPD film requires up to 100 volts ac for the clear state, but the window voltage does not come directly from a wall plug. It comes from a control box with electronic circuits that produce a variable output voltage from 0 to a maximum of 100 volts ac to allow tuning the window tint from dark to clear.
6. FICTION: RFI is a 35-year-old company with an uninterrupted history of losses and commercial failure.
FACT 6-1: From 1965 to 1986, RFI was a private company doing R&D on suspended-particle devices, a totally new approach to light control that was abandoned by Edwin Land (Polaroid) in the 1930s because the technology was too far ahead of its time.
FACT 6-2: To describe this R&D activity as a commercial failure is equivalent to describing Edison’s 10,000 R&D experiments in developing a durable light bulb as a commercial failure. R&D is not commerce. It is a step in the evolution toward commerce.
FACT 6-3: RFI went public in 1986. During the past 15 years, it has spent $22 million to develop SPD technology. In 1998, RFI invented a fast-cure SPD film, the key invention that sets SPD apart from electrochromic technology, the main competitor. As of Mar 31, 2001, the company has $12.5 million in cash, has a tax-loss carry forward of $37.6 million, and is debt-free.
FACT 6-4. Robert L. Saxe, President of Research Frontiers, officially opened the trading day of the Nasdaq stock market on June 29, 2001 in a Market Open Ceremony at the Nasdaq MarketSite in Times Square, New York City. Mr. Saxe was joined by employees of Research Frontiers, representatives of several of Research Frontiers' licensees, and invited guests. Research Frontiers was given a welcome message on the Nasdaq "Tower" overlooking Times Square, the event was broadcast live. This was another outside validation that SPD technology is being commercialized.
7. FICTION: RFI is supposedly commercializing a 1930s smart glass technology called suspended particle device, SPD.
FACT 7-1: Although he discovered SPD in the 1934, Edwin Land soon abandoned it because the technical obstacles were so great at the time that it could not be commercialized. The technology had to await new discoveries in polymer chemistry and other areas that would come later in the century.
FACT 7-2: When Robert Saxe began his R&D in 1965, the state of the art in SPD technology was primitive. Mr. Saxe and his staff overcame numerous obstacles such as gravity effects, particle clustering, particle stacking on conductors, etc. The technical obstacles were so numerous and difficult that only a man with an Edison-like perseverence could overcome them.
FACT 7-3: Although Edwin Land discovered a few properties of light-controlling crystals in the 1930s, most of SPD technology has been produced by RFI and is brand new. Some patents were just filed last week. Is HDTV (digital TV) brand new or just an improvement over analog color TV . . . which is an improved black and white TV . . . which is an improved radio . . . which is an improved telephone . . . which is an improved telegraph . . . which is an improved pony express? The SPD film contains particles suspended in tiny liquid droplets suspended in one large polymer molecule that contains these holes like a sponge or piece of swiss cheese. This material took lots of research to make so that the particles stay in place but can rotate in an applied electric field. How much of this, and much more, is 65 years old? Realistically, none.
FACT 7-4: Describing SPD technology as a 1930s smart glass technology is like saying that aircraft technology is a 1790s technology because Cayley of England invented the first airplane in 1799, or that computer technology is an 1820s technology because Babbage invented a computer in 1822. Like Land, Babbage found that the state of the art was too primitive at the time to commercialize his computer.
Fact 7-5: RFI and its licensees showcase SPD technology at the Nasdaq MarketSite Experience in Times Square, New York City from July 1 to Oct 31. RFI’s exhibit features SPD products supplied by its licensees, including smart windows, aircraft, and automotive products. The Nasdaq MarketSite Experience, a ticketed visitor attraction located at 4 Times Square is open to the public daily. Thousands of visitors are expected to visit Research Frontiers' exhibit at Nasdaq MarketSite Experience and will be able to operate SPD smart windows and other products for homes, aircraft, and automobiles.
Fact 7-6: Donald Bosic, Senior Vice President for The Nasdaq Stock Market noted that: "The Nasdaq MarketSite is one of the most technologically advanced buildings in the world. The MarketSite not only serves as a facility where the public can learn more about The Nasdaq Stock Market and the future of investing, but also has become a premier studio for media broadcasts of breaking market news. We are pleased to have Research Frontiers as one of the first companies showcased in this leading-edge environment."
8. FICTION: SPD smart glass is unsafe because it uses ac line voltage instead of low dc voltage such as used in electrochromic devices.
FACT 8-1: SPD windows will be at least as safe as the common electrical appliances found around homes and offices. The first level of protection for SPD windows will be the insulating materials found in all electrical appliances such as glass, plastic, and other materials that do not conduct electricity.
FACT 8-2: SPD windows in homes and offices may be safer than electrical appliances for the following reasons. The ac line voltage does not go directly to the SPD windows. Instead, it will go to a control box with electronic circuits. This control box will produce a variable output voltage determined manually with a knob or automatically with a photocell.
FACT 8-3: The control box may also include a current-limiting shutdown circuit for an additional level of protection not found in ordinary appliances. Both the control and current-limiting circuits are common and inexpensive designs found in electronic instruments.
9. FICTION: SPD glass uses a lot of power continuously.
FACT 9-1: SPD windows do not have a high power consumption. Currently, the maximum power is 0.6 watt per square foot. For comparison, the latest high-efficiency, diode-based aircraft passenger reading lamps consume about 3 watts each. An airplane with 80 SPD windows will use approximately 48 watts if all windows are in the clear state. SPD windows do not require any power in the dark state.
FACT 9-2: SPD windows in homes will not use power continuously because they can be turned off at night or at any other time that is desired. This can be done manually or automatically. However, this is unnecessary since the power consumed is negligible compared to the total energy used in a home or office.
FACT 9-3: The SPD windows in a parked car will require no power and the windows will go to the dark state.
10. FICTION: Using SPD windows will escalate your monthly energy costs.
FACT 10-1: A home with a couple hundred square feet of SPD windows will use at most 120 W when the windows are in the clear state. But the windows will not be continuously in the clear state. They will average a tint level between dark and clear. The average power consumption will be probably be closer to 40 W since power can be removed from windows at night if desired. In this case, the monthly consumption is approximately 30 kilowatt hours, which is less than a few dollars per month. But even this nominal cost is negated by the energy savings of SPD windows.
FACT 10-2: SPD smart windows can save energy in addition to controlling the level of transmitted light. SPD windows with special coatings provide significant energy savings compared to ordinary glass windows. The Solar Industry Association estimates that office buildings consume $150 billion of energy each year. Buildings lose at least 25% of their energy through windows. If SPD windows are used, this will result in a savings of many billions of dollars per year.
FACT 10-3: In the homes, smart windows can eliminate venetian blinds, curtains, and other window coverings. This could save thousands of dollars in the equipping of a new home. In addition, a home with SPD windows could cut its energy bill by a significant amount.
11. FICTION: Only small licensees are active in SPD technology.
FACT 11-1: Hitachi Chemical and Dainippon Industries (7.7 billion in annual revenues) have trained at RFI and are now producing larger quantities of emulsion.
FACT 11-2: Outside of Japan, Hankuk Glass is the largest glass manufacturer in Asia. They have formed a separate subsidiary SPD Inc. to start mass producing SPD film and end products in the final quarter of 2001.
FACT 11-3: GE, a film-maker licensee, has become active recently and has retrained at RFI in the period immediately preceding the annual meeting of 2001.
FACT 11-4. Other large companies in the supply chain infrastructure like Material Sciences Corporation, Lang-Mekra, Asahi subsidiaries AP Technoglass and Glaverbel, etc. are waiting for film to be produced in large quantity.
12. FICTION: The profit projections made by Research Frontiers at its 2001 annual meeting were not based on some new material or substantive developments in their business.
FACT 12-1: SPD Inc., a recently created and separate subsidiary of Hankuk Glass Industries, is devoted exclusively to the mass production and sale of SPD light control film and a wide variety of end products using SPD film. RFI has an equity interest in SPD Inc. which could be a major source of long-term value.
FACT 12-2: Seong Man Kim, President of Hankuk Glass and a Director of SPD Inc. noted: "Hanglas’ Glass Technology Research Institute successfully achieved our goals relating to quality control, durability, production scale-up, product development, and SPD performance characteristics. The formation of a subsidiary of Hanglas dedicated exclusively to the mass production, marketing and distribution of SPD film and a variety of end-products will permit us to more rapidly deploy dedicated facilities, equipment, personnel, and capital to take advantage of our successful development effort."
FACT 12-3: SPD Inc. expects to produce SPD film in the Fall of this year, and to commence mass production of both SPD film and SPD end-products later on this year. This summer, SPD Inc. will also conduct some pre-production runs on the new equipment it will be using and will use the SPD film produced by these runs to supply new product samples to certain important customers. In addition to supplying SPD film to Research Frontiers’ other "end-product" licensees, Hankuk and its subsidiary, SPD Inc., can produce a wide variety of SPD end-products as well. SPD Inc.’s business plan outlines production of a variety of these products using SPD light-control technology, including SPD smart windows for automobiles, trains, aircraft, and boats, as well as for residential and commercial architectural window applications, appliances, optical filters, and flat panel information displays including large area displays such as scoreboards, road and traffic signs, digital clocks, and logographs.
FACT 12-4: InspecTech Aero Service, Inc. has received a purchase order from an executive jet charter fleet operator for replacement of existing cabin inner windows with SPD windows. The order is for the first aircraft in the world to have these new smart windows installed. "We have been meeting with vendors and other Research Frontiers licensees over the past weeks to assemble the supply chain," stated Jim Lang, President of InspecTech, "and now we can confidently and swiftly respond to the many inquiries we've received from major airlines, aircraft manufacturers, and fleet operators for this cutting-edge technology."
FACT 12-5: Airplane windows will provide "hands on" exposure of SPD technology to all the business executives and others who fly. This will have incalculable marketing value --- especially as there are sure to be numerous additional applications for the technology that are not now apparent but that will be developed once the wide variety of consumers and businessmen who fly are exposed to it.
13. FICTION: InspecTech is an immaterial Ft. Lauderdale distributor of aftermarket aircraft parts.
Fact 13-1: InspecTech is an FAA authorized MANUFACTURER of new aircraft parts, both for the aftermarket and as an OEM. Pricing may be obtained upon RFQ. Call 954-359-6766 and ask for sales, fax your request to 953-359-6765, or see their website, inspectech.net.
FACT 13-2: A LearJet Model 35 flying with SPD aircraft windows is expected within the next 25-40 days, with other aircraft to follow quickly. Purchase orders are imminent from existing and potential customers, including the world’s largest jet manufacturers and airlines.
FACT 13-3: InspecTech has received their first purchase order from an executive jet charter fleet operator for replacement of existing cabin inner windows with fast-responding Suspended Particle Device (SPD) windows.
FACT 13-4. At the annual meeting InspecTech talked about their capabilities and that the only expansion they felt they needed to do was perhaps to hire more quality control inspectors since they really would be managing the SPD supply chain (making sure film for a particular customer was ordered on time, shipped on time, and installed by completion centers or subcontractors, on time).
14. FICTION: It is absurd to claim that virtually non-existent InspecTech with such a hyperbolized unrealistic scheme will be capable of installing SPD windows in aircraft.
FACT 14-1: The Aircraft Interiors Conference & Exhibition 2001 at Long Beach, California on June 1, 2001 was a complete success and surpassed expectations both in terms of the quantity and quality of visitors at the InspecTech booth. The event was the perfect venue for introducing smart aircraft windows and partitions to the aviation industry-at-large. Orders are imminent from visitors who expressed an immediate need for this technology. Engineering review is underway for these customers.
FACT 14-2: Several visitors at the InspecTech booth were ones who had previously seen the SPD product in private, and the event cemented the next milestone achievement to be their purchase decision point. There is huge interest by major players in the OEM and aftermarket areas. A spearhead meeting took place with a major OEM as a result of the show, and formal negotiations will commence immediately.
FACT 14-3: In addition, key meetings were held with exhibiting vendors to construct a solid framework for the future scale-up of high volume production of aircraft windows and partitions. Overall, the caliber of attendees was truly astounding, with key decision-makers visiting on a constant basis. Both days of the exhibition were a whirlwind of meetings and introductions.
15. FICTION: The idea of converting aircraft window shades from something mechanical, simple and unquestionably effective to something that uses electricity and controls, is unproven, highly questionable, and complex to install and maintain and cannot change from totally clear to totally dark.
FACT 15-1: Mechanical window shades are time-consuming and costly to maintain, subtract 4 inches of width from the cabin interior in certain aircraft, increase fuel costs by as much as $1000 each per year, and decrease the range of the aircraft because of their weight. Certain mechanical shades weigh in excess of 9 pounds, in comparison to less than 2 pounds for the SPD window. Also, mechanical shades cannot go completely dark, because they are able to block only 95 percent of the light when pulled all the way down.
FACT 15-2: SPD windows can prevent UV and heat damage to the interior, are easy to install and maintain, and save as much as $1000 each per year in fuel costs because of their light weight They also can block 98.5 percent of the light, which is better than a mechanical shade.
FACT 15-3: The Airbus A380 specifications call for smart windows. Other major aircraft manufacturers are interested in smart windows, and a market also exists for regional and executive jets.
FACT 15-4. Continuing to use mechanical shades when SPD windows offer so many advantages is equivalent to using an old Smith-Corona typewriter instead of a desktop computer with word processing.
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(Note: See also the following:
1. COMPANY WEB SITE: A variety of information on the company and its SPD technology. refr-spd.com
2. SLIDE SHOW: An excellent visual presentation of the company and its technology. refr-spd.com
3. FALKNER REPORT: A good analysis of RFI’s history, current situation, and prospects can be found through the link to R. J. Falkner & Company on RFI’s web site. refr-spd.com
4. FACT LIST: A good place to start your due diligence on RFI. ragingbull.lycos.com
5. UPDATED SPD MARKETS: Estimates for the emulsion, film, and end product markets. ragingbull.lycos.com
6. SPD AND THE COMPETITION: A look at competing technologies in light control.
ragingbull.lycos.com
7. FILM: THE DOMINANT PHYSICAL ADVANTAGE: The major manufacturing advantage of SPD.
ragingbull.lycos.com
8. SPD: A PARADIGM SHIFT IN GLASS APPLICATIONS: A whole new world is opening up.
ragingbull.lycos.com
Now you have the facts. The information disseminated by Mr. Wexler is not just misleading it is false.
Short if you must but please send your cards and letters to Mr. Wexler and kindly tell him that we are getting bored trying to educate him. Hasn't he learned his lesson by now?
Warmest regards,
N. Dixon
Private Citizen |
