REFR madness!

Research Frontiers (REFR) is, if not a fraudulent company, certainly a failed company. Forty years since it was founded it has no product, 14 employees, revenues below $300k per year, and yet it has a market cap of $200 million. Of the company’s 14 employees, 4 are technical/research employees. Only one of those employees has a PhD (in chemistry). (See the company’s 10k for details; this information is around page 10, after the list of licensees). This is not what you want to see in a technology start-up.

Research Frontiers owns the technology to tint glass and plastic by running an electric current through the material. One problem with the technology: the electricity is required to keep the glass clear. This minimizes the possible uses for Research Frontier’s tinting solution for safety reasons: it would be unfortunate for a car’s engine and battery to die, causing the windows to all go dark. Also, this makes it harder to use the technology in highly portable applications such as glasses (0.6 watts per square foot are required to keep the glass clear). The glass has also been derided as not becoming clear enough when the tinting is off. Research Frontier’s R&D spending is minuscule and it competes with companies much larger than itself that already have products on the market (such as the tinting solution in Transitions(TM) glasses, which is a passive system that darkens in response to UV light).

I recommend pursuing the archives at, detailing Manuel Asensio’s battle against REFR (he was/is a well-known short-seller, although I should note that he has his own detractors). To see the bull argument, see Gene Marcial’s short column at BusinessWeek. For a more nuanced view, take a look at this Forbes column from 2003.

If you value your money, stay away from Research Frontiers. Also, note that while I often profile bad investments, I do not recommend engaging in short selling; it is very risky.

Disclosure: I am not short REFR. I have never smoked REFR either. My disclosure policy once smoked a chocolate cigar but it did not inhale.

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