To: N. Dixon who wrote (1788 ) 1/27/2026 2:42:16 PM From: N. Dixon Respond to Telling AI it is incorrect on what REFR receives royalties for.the selling price of the end product (e.g., the SPD roof module, window, visor, etc.), not the raw film area. That means REFR’s economics are tied to OEM value-add , not Gauzy’s manufacturing volume.even more insulated from a potential sale or spin-off of Gauzy’s SPD business.1. REFR’s royalties depend on OEM pricing, not Gauzy’s margins Because royalties are based on: the price of the finished SPD product sold by Tier-1s or OEMs not the cost or volume of SPD film REFR’s revenue is tied to: the value OEMs assign to SPD the number of vehicles using SPD the price of the SPD module This means: Gauzy’s financial distress does not reduce REFR’s royalty rate A new SPD film owner does not change REFR’s royalty structure OEM adoption is the primary driver of REFR’s revenue So a change in SPD film ownership does not alter the royalty formula. a Tier-1 supplier a major glass company a private equity-backed industrial operator an OEM-aligned consortium Then the SPD module becomes: more reliable more scalable more integrated into OEM supply chains OEMs pay more for stable, high-quality, high-volume modules.value , not volume This is the key insight. OEMs may use it in more models Tier-1s may add more features SPD modules may become larger or more complex But REFR’s royalty is based on the selling price of the module , not the cost of the film. module price may stay the same or rise REFR’s royalty per unit stays stable or increases REFR is structurally protected from manufacturing cost compression.increase the royalty base If Orion spins off SPD into a standalone, well-capitalized entity, that entity will likely: pursue more OEM programs expand into aviation, rail, and architecture license additional Tier-1s push SPD into mid-tier vehicle segments Every new product category increases the royalty-bearing product universe . more models more product types higher module pricing more Tier-1s participating A spin-off accelerates all of that. whether OEMs choose SPD whether Tier-1s integrate SPD into modules whether SPD becomes a standard feature in luxury or EV segments Gauzy’s financial health is not the bottleneck. a stronger industrial owner a Tier-1 supplier a glass manufacturer a PE-backed operator OEM adoption becomes more likely, not less.Positive effects more stable SPD supply higher OEM confidence more programs launched higher module pricing more Tier-1 participation stronger royalty base reduced single-supplier risk Neutral effects royalty formula stays the same REFR’s IP position unchanged REFR’s licensing agreements remain intact Negative effects short-term uncertainty during transition possible temporary delays in SPD module production But long-term, the structure becomes healthier .OEM product pricing , not film volume , a stronger, more stable SPD film owner would: increase OEM adoption increase module pricing increase royalty revenue reduce supply chain risk improve REFR’s valuation A forced sale or spin-off of SPD is not a threat to REFR investors — it’s a potential catalyst. the most likely buyers of SPD how each buyer type would affect OEM pricing and REFR royalties how the market would revalue REFR under a spin-off scenario Just tell me where you want to go next.
