Research Frontiers Announces Its First Profit Targets as Part of New 'Road Map' for the Future
WOODBURY, N.Y.--(BUSINESS WIRE)--June 14, 2001--At its Annual Meeting of Shareholders, Research Frontiers Incorporated (Nasdaq: REFR - news), the developer and licensor of fast-responding SPD light-control technology, today reviewed progress by its licensees and presented its next key goals, including profit targets.
Robert L. Saxe, President of Research Frontiers, noted that ``We have now substantially completed the goals set forth in the 'road map' we outlined for our shareholders in mid-1999, which focused on building the SPD supply infrastructure. With the achievement of those goals, and based on commercial sales projections for SPD light-control products by our licensees, for the first time we can reasonably predict the timing of future revenues and profits. Based upon projected timetables and sales goals of Research Frontiers' licensees for SPD film and end-products, the Company expects to earn royalties from sales of licensed products (payable under license agreements within 45 days after the end of the quarter in which sales of licensed products occur) early next year, achieve its first quarterly profit next year, and achieve its first full-year of profit in 2003, but possibly in 2002. Thereafter profits are expected to escalate rapidly.''
Market data indicates a healthy profit potential for Research Frontiers. According to market research performed by The Freedonia Group, worldwide annual flat glass production in 1999 aggregated 37 billion square feet (of which 15.1 billion square feet was in Asia, 8.1 billion square feet in North America, and 7.6 billion square feet in Western Europe). Based upon this data, 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 vast majority of this glass production goes towards architectural building window products, which represent over 55% of flat glass sales in the U.S., and automotive glass products, which represent over 25% of U.S. flat glass sales. 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. Based upon a recent market survey of 50 leading U.S. window manufacturers done for Research Frontiers by The Townsend Research Group, 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. Therefore, in the intermediate or long term, the Company believes that its present and future architectural window licensees will achieve a penetration of architectural markets that will far exceed 1%. In addition to newly-produced SPD windows, architectural windows already in place could be retrofitted with SPD film or SPD window covering products. Research Frontiers estimates that such windows in place aggregate to an enormous market of perhaps 150-300 billion square feet.
Two years ago, at Research Frontiers' June 1999 Annual Meeting of Shareholders, the Company outlined a road map indicating its goal of completing the supply infrastructure to support mass-production of products using the Company's technology. In order to commercialize end-products using SPD technology, there first needed to be sources of high quality SPD emulsion - the basic chemicals that can then be processed into a thin SPD film. Shortly after outlining the road map, Research Frontiers signed license agreements with two emulsion makers, Dainippon Ink and Chemicals Inc. and Hitachi Chemical Co., Ltd. During the first half of 2000, Research Frontiers added a third emulsion-maker, Polaroid, to its list of emulsion supplier licensees. The first critical ``link'' in the SPD supply chain - SPD emulsion - has now been established.
SPD emulsion manufacturers are licensed to make SPD emulsion, and, under their license with Research Frontiers, sell to licensees of Research Frontiers who process the emulsions into a thin SPD film. In turn, SPD film-making licensees are licensed to sell film to a growing list of companies already licensed to make SPD end-products. Currently there are six companies licensed by Research Frontiers to make these SPD films: Hankuk Glass Industries, General Electric, Material Sciences Corp., Hitachi Chemical, Polaroid, and Film Technologies International, with the last two film-making licensees being added last year and earlier this year, respectively. This step in the supply chain - sources for SPD film - has now been completed and strengthened.
With the supply infrastructure in place, the Company was able to achieve another important goal: the addition of new end-product licensees. The world's largest truck mirror maker, Lang-Mekra, became a licensee in December of 1999, and leading window manufacturer ThermoView Industries was licensed for SPD smart windows during 2000. During the first quarter of 2001, Research Frontiers added two more end-product licensees: AP Technoglass Co., North America's leading automotive glass and sunroof glass supplier and a subsidiary of Asahi Glass Co., Ltd., the world's largest automotive glass supplier, and InspecTech Aero Service, Inc. for the production of SPD aircraft windows and cabin dividers.
Research Frontiers' licensees report significant progress this year. Hitachi Chemical Company and Dainippon Ink and Chemicals have made larger quantities of improved SPD emulsions and have been working with SPD film licensees to supply them. In early January 2001, Hankuk Glass Industries, Korea's largest glass company, formed their SPD Inc. subsidiary devoted exclusively to the production of SPD film and end-products. This was followed up in early April with SPD Inc.'s public announcement that they acquired a new factory devoted to SPD production in Inchon, Korea, and their public announcement of their product introduction timetable with SPD film availability this Fall, and mass production of end products expected in the fourth quarter of this year. At the Annual Meeting a video of a car with Hankuk's SPD sunroof and side windows was shown. Research Frontiers and some of Korea's largest venture capital firms and institutions have made minority investments in SPD Inc.
Research Frontiers' licensee for SPD ``smart'' aircraft windows, InspecTech Aero Service, recently exhibited an SPD aircraft cabin window at the Aircraft Interiors Show in Long Beach, California. InspecTech's website at inspectech.net  includes information and a video about their SPD aircraft window, their growing list of strategic partners, and the many cost-effective benefits that SPD aircraft windows offer, including: substantial fuel and weight savings, increasing an aircraft's flying range, protection against glare, heat and UV radiation, increased passenger comfort, lower maintenance costs, reliable operation over the life of the aircraft, increased interior cabin width, and centralized control as well as individual passenger control. InspecTech has indicated:
Key meetings were held with vendors including other licensees of Research Frontiers to construct a solid framework for the scale-up of high volume production of aircraft windows and cabin partitions.
A LearJet Model 35 flying with SPD aircraft windows is expected within the next 30-45 days, with other aircraft to quickly follow.
Orders are imminent from potential customers, including the world's largest jet manufacturers and airlines, and engineering reviews are underway.
InspecTech has designed their SPD aircraft windows for quick and easy installation and expects only a negligible labor increase to install these windows during an aircraft's scheduled maintenance event, and that installation can also be done in an aircraft outside of regularly scheduled maintenance events if the customer wants SPD windows in their aircraft right away.
All of these accomplishments have been reported by InspecTech during the short two-month time period since they took their license. Research Frontiers also noted the fine work of its other licensees who have been working with InspecTech to supply them with SPD film and other components. James Lang, President of InspecTech, and Alex Martinez, who heads up their product development team, made a presentation and demonstrated their SPD aircraft windows at the conclusion of Research Frontiers' Annual Meeting.
In December 2000, Lang-Mekra North America, LLC, the world's largest producer of commercial vehicle mirror systems and Research Frontiers' licensee for SPD rear-view mirrors, exhibited an SPD mirror product for the truck industry at the Society of Automotive Engineers International Truck and Bus Meeting and Exposition. Their SPD mirror automatically and instantly adjusts to changing driving conditions to control glare. Reports indicate that the SPD mirror was well-received by Lang-Mekra's customers, including the world's largest truck manufacturers.
Our licensee, ThermoView Industries, Inc., has restructured itself during the past year, strengthened its finances, and under new top management, is now aggressively moving forward with incorporating SPD smart window technology into their product line. ThermoView is expected to release details in the coming weeks.
About SPD Technology and Research Frontiers Incorporated
SPD technology allows you to instantly and precisely control how clear or dark glass or plastic is, and adjust its light transmission by either turning a knob or having the device automatically adjust itself. This is made possible by a thin film which uses SPD light-control technology invented by Research Frontiers. SPD technology is licensed to a growing number of companies in various industries, and is covered by approximately 365 patents and patent applications held by Research Frontiers worldwide. The first products using SPD technology are scheduled to be mass produced and available later this year.
SPD technology has many applications, including ``smart'' windows for homes and buildings, skylights and interior partitions. A smart window using SPD film provides relief from glare or heat without blocking view, while also enabling privacy whenever desired, protection from UV damage, promotion of energy conservation, and other benefits. In automotive vehicles, SPD-smart products can include windows, sunroofs, sunvisors, rear-view mirrors, instrument panels and navigation systems. In aircraft, replacing existing window shades with SPD film can improve passenger satisfaction and comfort, while also reducing fuel consumption, maintenance, downtime and cost of operation. SPD eyewear products - sunglasses, sport goggles such as ski goggles, and visors - will continuously and instantly control glare to the degree needed. In the flat panel display industry, SPDs may be used in products such as laptop computers, cell phones, and handheld devices such as PDAs - Personal Digital Assistants, with significant performance and cost advantages over current technologies. In advertising, promotion, and retail sales environments, SPDs offer display advertising advantages, bringing large, thin, flexible yet changeable displays to stores, store windows, point-of-purchase displays, billboards, truck sidings, road signs, and other signage applications.
Research Frontiers has licensed the following companies to use its patented suspended particle device (SPD) light-control technology in emulsions, film, or end-products:
AP Technoglass - North America's leading automotive glass and sunroof glass supplier and a subsidiary of Asahi Glass Co., Ltd., the world's largest automotive glass supplier;
Dainippon Ink and Chemicals Incorporated-the world's largest manufacturer of organic pigments;
Film Technologies International, Inc.-a leading worldwide manufacturer of solar control, safety and security window films for use on motor vehicles, homes and commercial buildings.
General Electric Company (NYSE: GE - news);
Glaverbel, SA of Belgium - majority-owned by Asahi Glass, one of the world's leading automotive glass manufacturing companies;
Global Mirror GmbH & Co. KG - the world's largest manufacturer of commercial vehicle mirror systems;
Hankuk Glass Industries Inc. - Asia's largest flat glass producer (outside of Japan);
Hitachi Chemical Co., Ltd.- majority-owned and part of Hitachi Ltd.;
InspecTech Aero Service, Inc.- provides aerospace component design, production, marketing, and distribution to both the OEM and aftermarket industry segments including the Fortune 10 Aerospace Corporations in the U.S.;
Material Sciences Corporation - the world's second-largest producer of specialty window films (NYSE: MSC - news);
Polaroid Corporation-the worldwide leader in instant imaging and a supplier of instant photographic cameras and films; digital imaging hardware, software and media; secure identification systems; and sunglasses to markets worldwide (NYSE: PRD - news);
ThermoView Industries, Inc. - a leading integrator of businesses and technologies within the replacement window industry (AMEX: THV - news);
Vision Ease Lens - the world's largest producer of polycarbonate lenses which is owned by BMC Industries, Inc. (NYSE: BMM - news)
Research Frontiers is a technological leader in the development and licensing of suspended particle devices (SPDs)-electrically operated light-control devices using proprietary particle suspensions and films. SPD technology permits light transmission to be electrically controlled instantly, either automatically (by means of a photocell or other sensing or control device) or adjusted manually by the user. Research Frontiers' proprietary SPD technology enables users to control the amount of light passing through windows, skylights, eyewear (including prescription and non-prescription sunglasses and sports goggles), automotive sunroofs, sunvisors and rear-view mirrors, as well as enabling brighter easier to read flat panel information displays for use in computers, television, telephones and other electronic instruments and products. Research Frontiers currently has agreements in effect covering smart windows, automotive mirrors and sunvisors, eyewear, displays and other products with major international corporations and holds or has rights in over 365 patents and patent applications on SPD technology throughout the world. Licensees of Research Frontiers who incorporate SPD technology into end products will pay Research Frontiers a royalty of 5-10% of net sales of licensed products under license agreements currently in effect. Research Frontiers' common stock trades on the Nasdaq National Market under the symbol ``REFR.'' Additional information about Research Frontiers can be found on the Internet at refr-spd.com.
Note: From time to time the Company may issue forward looking statements which involve risks and uncertainties. This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results could differ and are not guaranteed. Any forward looking statements should be considered accordingly. |
