With the progress that was announced on March 6, 2003, not one investor need be concerned about financing. Add to that the interest from the display market and the ones who need to be concerned are those who have to cover over 2,000,000 shares.
When Thomas Edison invented the light bulb, he still had to get power to people’s homes and offices to power it. SPD products had a similar need for a supporting infrastructure. While we and our licensees have developed various SPD-Smart products, we also had to develop efficient ways to get SPD film to them for use in such products. We have now licensed seven companies to make and sell SPD film. And in order to get SPD film produced, we had to develop efficient ways to get high-quality SPD emulsions used to make such films to these SPD film manufacturers. The leaders in this effort are our licensees Dainippon Ink and Chemicals and Hitachi Chemical Company, and their SPD emulsion work is proceeding nicely and on the production schedule that they had previously indicated to Research Frontiers.
The initial job in building this infrastructure is done but we are also constantly striving to improve and expand the core of the infrastructure as well, including SPD film and emulsion supply. We expect that further improvements in the supply chain will be achieved. The addition of multiple sources of supply, especially by large companies with international operations, should further enhance product quality, pricing, and delivery times. I look forward to sharing these developments with you as they occur.
Another current task, collectively taken on by Research Frontiers and our licensees, is to develop widespread trade and consumer awareness of the benefits of SPD-Smart products. History tells us that introducing any new technology to the public is an extensive project. But I can tell you this – it is developing substantial momentum which is accelerating. The past two years have been breakthrough years for Research Frontiers as we moved from being a company with a technology under development to a company with products using our technology being sold by our licensees. Awareness of SPD technology is at an all-time high. The technology has also recently received some prestigious awards from Popular Science and the Society of Automotive Engineers, and this has also been helping sales and marketing efforts by us and our licensees.
Yesterday, we issued a press release indicating that sales of various SPD-Smart products during the fourth quarter of 2002 were reported by company licensees InspecTech Aero Service, Inc., Razor's Edge Technologies, Inc., SPD Inc., SPD Systems, Inc., and ThermoView Industries. Sales have begun and while modest at first, sales are growing. As you may know, under our license agreements Research Frontiers receives a 5-10% royalty on sales of SPD-Smart products.
It has become easier for our licensees to sell more products now because the delivery time has been shortened and the landed cost of SPD materials is lower. This is due to the fact that our licensee SPD Inc. has now been selling SPD film to our licensees, and we have even licensed Laminated Technologies to provide lamination services to our licensees. LamTech has very good experience with laminating SPD films and has worked with many of our licensees already. Now, quicker delivery times are possible because LamTech can inventory different types of SPD film and then, when an end-product licensee of ours requests it, can cut the film to custom sizes, laminate it to whatever of the many types of glass or plastic that the architect or customer specifies, and ship it out to the customer for installation. Thus, the selling cycle between when an order is placed, and when it is paid for, is much quicker than the original system where SPD glass was cut and laminated in Incheon, Korea, and then shipped to the licensee in the US or Europe. Not only has this speeded up delivery, but the landed cost of SPD components used by our end-product licensees is also lower. These cost savings were achieved in two main ways: (1) because the cost of shipping the SPD film from Korea to the licensee is much lower than the cost of shipping glass (because it is lighter and less likely to break in transit), and (2) because the customs duties paid on the SPD film sale is lower than the customs duties that would have been paid on the shipment of glass with SPD film already laminated within it. These developments have enabled our licensees here to offer better pricing and more precise delivery times to their customers, and this has improved the sales situation considerably.
One parting thought about the markets we are in. According to the Freedonia Group’s market research, demand for flat glass in the U.S. is forecast to increase 2.5% per year (faster than the general economy) to 6.3 billion square feet ($8.2 billion) in 2003. Within the flat glass industry, advanced flat glass (low-emissivity, reflective, smart glass, security glass, heads-up displays, ultraclear and self-cleaning glass) is forecast to grow faster (9.6% per year to $2.6 billion in 2006, representing 22 percent of the total fabricated flat glass market in the US at that time). Within this advanced glass category, smart glass is expected to grow the fastest (20% per year to $445 million of smart glass alone in 2006). This translates into substantially higher smart window sales. In the architectural glass segment, the trends are positive. There has been a continuing trend toward larger houses with greater window area, as well as increased popularity of double-or triple-paned energy-efficient insulating glass units (for both the new and replacement markets). Whenever you laminate film (whether it’s SPD film or other types of film) to glass, you will generally get a stronger window. Demand for security glass (bullet-and burglary-resistant glazings) is growing too, especially in government buildings, research facilities and laboratories, correctional facilities, and retail stores. In automotive, the trends are also favorable, as vehicles use more and more glass. A number of our licensees currently have projects going on in all of these areas and the expansion of these markets can only help them and us.
Should have done your homework instead of going off on wild goose chases with all the nonsense about escort services and "who is N. Dixon." I've told you all along, I'm an investor in SPD light control technology that is now commercialized and has several companies working on projects for current and future products. I understand the glass business as my relative was CEO and Chairman of the board of LOF. I know how many companies have tried and failed to get the durability and flexibility that SPD has. It will compete with EC and LC in some markets and not at all in other. Competition is still in the lab for most transportation and window applications. These are several multibillion dollar markets and REFR only burns 4 million a year. Read the above again. Sales HAVE BEGUN AND ARE GROWING!
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