Research Frontiers (REFR) investor relations material

Executive summary

• Q1 2026 revenue declined sharply year-over-year due to timing of license revenue recognition and the absence of prior year's upfront license payment, with fee income at $136,319 versus $559,776 in Q1 2025.

• Operational and liquidity challenges at key licensee Gauzy, due to French rehabilitation proceedings, temporarily affected payments and financial strength.

• Despite disruptions, SPD production, development, and customer engagement continued across automotive, aerospace, and architectural markets, with new SPD-Smart product developments ongoing.

• Management remains optimistic about Gauzy's recovery and the long-term prospects for SPD technology.

• Net loss widened to $525,365 ($0.02 per share) from $177,687 ($0.01 per share) in Q1 2025.

Financial highlights

• Q1 2026 revenues were lower year-over-year due to non-recurrence of upfront license revenue and GAAP revenue recognition timing.

• Cash and cash equivalents increased to $1.3 million as of March 31, 2026, up from $664,000 at year-end 2025, supported by $1.375 million raised from a private placement.

• Operating and R&D expenses declined compared to the same period last year, with operating expenses at $521,382 and R&D down by $17,527.

• Sequential increase in royalties from automotive and aircraft markets from Q4 2025 to Q1 2026.

• The company remains debt-free.

Outlook and guidance

• Management expects normalization of payments and operations as Gauzy's situation improves.

• Revenue in all market segments is expected to increase as new car models and other products using SPD-SmartGlass technology are introduced.

• The company expects sufficient working capital for at least 12 months based on current operations.

• Long-term opportunities for SPD technology are seen as significant across multiple industries, with a broader, more diversified, and mature platform.

• Eventual success and positive cash flow depend on commercialization by licensees and royalty payments.