In February, 2003, Asensio removed the following letter to him from his website.  Asensio Exposed was able to locate the text on a message board.   Regrettably, the company letterhead and officer's signature is not reproduced in this format.


December 10, 2001

Mr. Manuel P. Asensio
Chairman, President and Chief Executive Officer
Asensio & Company, Inc.
767 Third Avenue
New York, NY 10017

Dear Mr. Asensio:

We received your fax dated November 15, 2001 as well as today’s fax. We have responded both publicly and also directly to you regarding your various statements about Research Frontiers, a fact which, like others that do not suit your purposes, you have conveniently chosen to ignore. Our most recent public response is dated November 29, 2001. Much of what you describe as “questionable” transactions in your November 15th letter apparently appears “questionable” only to you since these transactions were not only fully disclosed in our public filings and statements, but involve matters that are common and well-understood by anyone who has successfully financed a public company with minimal dilution to its shareholders. We note in this regard your admission of your own failed attempts to take Asensio & Company public (although the real reasons for your withdrawal of your public offering has not been publicized). I also note that you raised some of these same issues with the reporter from Forbes Magazine who when attempting to ascertain the accuracy of the facts you presented to him, discovered with easy verification that various statements by you were either exaggerated or untrue. He interviewed us and repeated the many things that he said you had told him about Research Frontiers which, in the final analysis were not relevant enough to include in his article about you. You will also note that this reporter stated in his article that Forbes did not recommend to their readers that they short the stock of Research Frontiers or any company having a market capitalization of less than $300 million.

We also note that you seem to use a scattershot approach to your “research” where you will raise an issue and when proven wrong, just keep raising other issues. This is clearly reflected in your November 15, 2001 letter where, after previously insinuating erroneously that our technology might never be used in a product, attempting to malign our licensees and others involved with Research Frontiers and our SPD technology with information you know to be false, reaching conclusions about our patent position which is contrary to the public record available to anyone with a computer and access to the Internet, you then chose to take well-documented and properly authorized transactions which were fully disclosed to the market, and ascribe some sort of unspecified and improper motive to them. We also note your similar attempts to malign and defame Ailouros Ltd., including what must have been for you an embarrassing correction on your web site of your November 28th press release in response to our public response to you in this matter dated November 29, 2001.

Your letter accuses us of being engaged in a “pump and dump” scheme. Yet you have intentionally ignored some of the facts which are clearly inconsistent with your opinion, such as the fact that insiders have recently been buying Research Frontiers stock, and the fact that the last sale by any member of management occurred almost 16 months ago with a small sale of 7,800 shares by Robert Saxe. The foregoing makes it quite clear that it is you and your clients that are engaged in a “short and distort” scheme. We have been developing information about you and your clients and intend to focus the light of truth on your collective activities. Based on our information, we believe that it would be appropriate and in the public interest for the identities and activities of your clients and you with regard to our Company to be revealed to the public as part of a full disclosure of these activities.

On March 15, 2001, you approached Research Frontiers and asked if we would sell stock directly to your “friend” who had a short position in our stock and who might want to cover that position without having to repurchase these shares in the open market. Although you have publicly denied that this meeting took place in your two separate “press releases” dated August 24th, our evidence, including your own correspondence after the meeting confirms that you in fact did meet with us on this date. As you may recall, we appropriately turned down your request.

On June 15, 2001 you issued your first public “press release” about Research Frontiers entitled “REFR makes unsubstantiated future profit forecast.” While our targets are based upon data supplied to us by our various licensees, your conclusory statement that you believe our forecasts to be unsubstantiated is your own opinion which itself is not supported by any facts. In addition to the unsubstantiated opinions you express in your June 15th press release, we have publicly noted and stated in earlier correspondence which both we and our law firm have sent to you which you have chosen to ignore, that statements contained in your various press releases are false and misleading.

At approximately 10:00 p.m. on June 14, 2001 (about 10 hours before you initiated your public campaign against Research Frontiers but presumably well after you and your clients had already established a short position in our stock), you sent us a fax listing selected language from various press releases and media articles. While we stand behind our own public statements, like every other company in America, we cannot control what the press chooses to say about us. Despite this obvious fact, you issued a false and misleading “press release” on June 18, 2001 that somehow attributed a statement made by a reporter in Automotive News two months earlier which, by all accounts of the executive interviewed, misquotes one of our licensees, as some sort of conspiracy by Research Frontiers and the media to indicate that the various automotive applications for our patented suspended particle device (SPD) technology was something newly discovered. This is obviously inconsistent with Research Frontiers’ numerous public statements which have consistently over time noted that automotive applications are one of the many excellent uses for SPD technology, a fact that anyone reviewing our history should have known. Although you admit these facts later on, you still repeated this theme in the press release that you issued on September 11th. Since the markets were closed on September 11th and for the balance of that week because of the terrorist attacks on our country that occurred the day you issued your “press release”, we can only assume that you reissued your September 11th “press release” again on September 18th with a different title but with the same themes and absurd conclusion that Research Frontiers and the media have somehow conspired with each other. Your continued repetition of statements you know to be false is fraudulent, defamatory, and a violation of applicable laws and regulations which apply to you and your firm.
Since we have already publicly responded to your September 6, 2001 “press release” about our extensive patent portfolio in our September 7th press release, which also outlines some of your other abusive and unlawful tactics, I now turn to the remaining “press release” which, like your other press releases with which you have barraged the public about Research Frontiers in the course of a three month period, is false and misleading. In addition to the erroneous statements you have repeatedly made about SPD aircraft applications, we have discovered that your private activities (only some of which I address in this letter), are even more egregious and legally actionable. First, we find it interesting to note that in various press releases and other statements that you issued prior to August 22, 2001, you stated that SPD aircraft window products would never be produced. When you were proven wrong on August 15th with the first sale of a commercial SPD product, you then had to scramble around for other ways to hurt Research Frontiers and its licensees and their customers so as to protect you and your clients from losses stemming from your short position in Research Frontiers. One of your most egregious tactics was to contact and harass (and even threaten) each and every customer for SPD products whose names were publicly announced by our licensee, InspecTech Aero Service, Inc. While others who represented themselves to work for Asensio and Company started this practice almost immediately after customer names were announced, you then became personally involved. We understand that each customer who has installed SPD aircraft windows purchased from InspecTech have not only confirmed their purchase to you, but also reported back to you that they and the owners and passengers on these various aircraft were very pleased with these windows. I understand that even the legal department of one of these customers has been in contact with you. This information and the evidence of your improper activities has been, and will be, turned over to the proper authorities for further action.

We also note from publicly available sources that Asensio & Company currently states that it only has four clients. Our information about your clients indicates that you may have indeed lost a number of clients recently. Could this be due to the poor performance of your stock picks and/or because they no longer wish to be associated with you for other reasons? We note your public statements of your track record, but also note that in the past you have been fined and censured for misrepresenting your record and selectively disclosing information. Conveniently for you, you have not publicly disclosed when you initiate your short position and those of your clients, and when you cover such positions. However, the apparent loss of your clients over time and your refusal to disclose publicly the details of your track record seems to be strong indication that your results are not what you would like the public to believe, and that there may be other problems that you and your company have failed to disclose.

We also note that at least one of your clients has sued you and obtained a judgment in excess of three times the amount you and your firm were fined last year by the NASD for various offenses, including selectively disclosing information including your misrepresentation of your performance record, repeated rule violations of applicable rules regarding determining whether stocks you and your clients had sold short were indeed borrowable, failure to report as required by applicable laws sales made as being short sales, omitting material facts and/or making misleading statements or claims, violating rules regarding Internet message board posting and advertising. In this regard, we also find it suspicious that certain of your activities seem to correspond to postings on public Internet boards critical of Research Frontiers by individuals purporting not to be affiliated with Asensio and Company. We invite your public sworn statement that no postings made on the Internet about Research Frontiers have been or will be made directly or indirectly by you or your clients, or by any of your agents, employees, or individuals or firms directly or indirectly compensated by you or your clients, agents and employees. We also have reason to believe that you are in violation of the settlement agreement that you entered into with NASD Regulation, Inc.

In your various "press releases" you have repeatedly stated that you have sold shares of Research Frontiers common stock short. Research Frontiers has lawfully obtained and turned over to the proper authorities documentation indicating that Asensio & Company has maintained a long position in Research Frontiers common stock during the relevant periods when Asensio & Company had indicated in its press releases that it had a short position in Research Frontiers common stock. We invited you on several occasions to publicly explain in detail why this is so, and why you have not publicly disclosed this fact in view of the legal requirement that you make full disclosure. Unlike our transactions, which you complain of in your recent letter to us, which the investing public has received full disclosure of and which are so ordinary as to not raise any legitimate concern by anyone with even a superficial knowledge of corporate finance (for example, you raise as highly unusual that Research Frontiers has granted management stock options under stock option plans approved by our shareholders), you have yet to respond to our evidence that you have maintained a long position in Research Frontiers common stock despite your public comments that you and your clients are short. In letters sent privately by you to us, you insist falsely that you have never had a long position in Research Frontiers common stock, but you curiously also ask us to show you how we do know that you have a long position. As noted in our earlier letter to you in this regard, we have turned over our evidence to the proper authorities, and invited you to obtain this evidence from the NASD or SEC directly since we do not want to compromise any ongoing investigations by these authorities regarding you and your firm. Based upon the information we have obtained, we believe that your long position could very well be part of a scheme in conjunction with your clients and/or others to manipulate trading in Research Frontiers common stock, and engage in a repeating pattern of circumventing various short selling rules. We have obtained and are turning over to the appropriate regulatory authorities additional evidence of these improper activities.

We also find it incredulous that someone who claims to be a savvy market professional and whose firm claims to have acted as a co-manager on certain public offerings (something we can find no public evidence of in recent times and which is inconsistent with documents which we have obtained), can question Research Frontiers’ stock repurchase programs (details of which are all publicly disclosed) and characterize it as improper. Like many companies, we repurchase our common stock in the open market whenever we believe that it is an attractive use of our capital. If anything, this shows not only the strength of our balance sheet and cash position, but also our confidence in the prospects for Research Frontiers and our licensees. We recognize that as a short seller attempting to drive down the price of our stock, you would prefer us not to repurchase shares, but as usual, your comments on this subject are self-serving.

You also challenge loans made to insiders (the last such loan was made almost five years ago). These loans are made at prevailing market interest rates and similar to margin loans made by brokers. Details were also fully disclosed in our publicly filed documents. You also challenge management compensation. As you may know from our public disclosures, a large part of recent management and non-management compensation has come in the form of bonuses. In 2000 and 2001, bonuses were paid to management as a result of the creation of added shareholder value. Research Frontiers stock outperformed all of the major market indices during the relevant periods. For example, during 2000, Research Frontiers’ stock price increased by over 18% as compared to the Nasdaq which fell by 39% and the Dow Jones Industrial Average which also fell by over 6% during this same period. Through the first half of 2001 when bonuses for this year were calculated, over $114 million in shareholder value was created as Research Frontiers stock increased by over 54% (as compared to a 12.5% decline in the Nasdaq and a 2.6% decline in the Dow Jones Industrial Average during this same period). Our record was achieved by us despite heavy artificial sales pressure on our stock by short sellers whose short sales aggregated nearly 1.7 million shares as of mid-November, 2001. As a short seller whose actions and economic self-interest are to reduce or destroy shareholder value, we understand why you would not like to see management’s compensation aligned with the building of shareholder value.

We also challenge you to explain your statement that Research Frontiers has sold approximately 4.5 million shares in unregistered offerings. Any innuendo by you that we have had any illegal or improper securities offerings is, again, false and defamatory. As far as your comments about Ailouros Ltd., I provided you with their contact information when you and I had met in March 2001. The terms of our relationship with them are fully disclosed in our periodic filings with the SEC including the registration statement filed in connection with their investment. We note that while you have corrected some of your statements about Ailouros, Ltd, on your web site, you have repeated in both your November 28 and November 29 “press releases” information which you know (or which any competent professional in the securities industry should have known) to be false.

As the author of your letters, you are of course free to publish them and accept whatever legal consequences result from such publication. We also invite you to publish this letter in its entirety (and reserve the right to do so ourselves) if you are so confident of what you like to categorize as your “exhaustive research and in-depth analysis” as evidenced by the so called “press releases” you have issued to date about Research Frontiers. Consistent with your checkered history of selective disclosure (for which you have already been sanctioned and fined by NASD Regulation), we do not think that you will stand behind your so-called “research” and publish the complete correspondence between our two companies.

In order to help complete their files, we are providing copies of your latest letter and your letter dated November 15, 2001 and this response to the SEC and NASD.


Joseph M. Harary