Research Frontiers Incorporated

Welcome to Research Frontier's investor conference call to discuss the first quarter 2021 results of operations and recent developments. During today's presentation, all parties will be in a listen-only mode, and following the presentation, the conference will be open for questions by pressing star 1. This conference is being recorded today. A replay of this conference will be available starting later today in the Investors section of Research Frontier's website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information, the words expect, anticipate, plan, forecasts and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for the future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainty. The company will be answering many of the questions that were emailed to it prior to this conference call, either in their presentation or as part of the Q&A session at the end. In some cases, the company has responded directly to email questions prior to the call or will do so afterwards in order to answer more questions of general interest to shareholders on this call. If you find that your question has been substantially answered as a courtesy, And to allow time for other shareholders to ask their questions, please remove yourself from the queue by pressing star 2. Also, we ask that you keep your question brief in the interest of time. I would now like to turn the conference over to Joe Harari, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Paul, and good afternoon, everyone, and thanks for being here. It was the first quarter of last year that the COVID-19 pandemic shut down the world economy. Now we are coming out of those shutdowns, but key industries, such as the automotive industry, are still plagued with other supply chain disruptions. As outlined in prior conference calls, our revenues in automotive were affected by two factors. One, the industry-wide production halt due to COVID-19, which also affected our revenues in the aircraft market. and two, the end of the nine years that we were on the magic side control smart glass roof option on certain models of cars within Daimler. Revenues from the display and consumer electronics market were up quarter over quarter, and our royalty income from the architectural market was stable compared to the same quarter last year. We expect architectural revenues to grow based on recent activity on new projects in this area. and for activity in the automotive and aircraft markets to also rebound and grow due to new projects using our technology in these areas, as well as the restarting of the world economy. Major disruptions outside of the pandemic, such as the computer chip shortage that has caused many factories to slow down production considerably or even shut down, has not had a direct effect on research frontiers other than a small reduction in the number of McLaren models coming off the production line with our technology. For the most part, these supply chain disruptions in the automotive industry occurred after the end of the current Mercedes model that offered our technology as part of the Magic SkyControl Sunroof option at Daimler, and prior to the introduction of new models coming out by Mercedes and other car manufacturers using our SPD smart glass technology. So we are largely unaffected by these current chip shortages in the automotive industry. In the meantime, neither we nor our hardworking licensees have slowed down a bit. Several of our licensees have also recently made major investments since the beginning of this year to increase production capacity of SPD emulsion, film, and end products for all industries. So everyone is preparing for success. In March and April, and even already in May, new projects for SPD smart glass have sprung up in various places around the world. If these projects used the amount of glass currently specified for smart glass, the surface areas for just the architectural projects alone could exceed the usage of Mercedes and McLaren in their peak years. Part of this increased level of activity is attributable to the world-wicking backup. Part is attributable to cost reductions in our technology, making our smart glass more affordable to a wider group of projects. and part can be attributed to the high level of activities not only by our licensees, but also by our competitors, which have stimulated interest and activity. One of our active competitors in the architectural space is you. I will spend some time discussing them today because we received a number of questions since our last conference call from existing and even new investors in research centers asking how we compare to them. and since that last call, they went public through a despacking process. VUE is scheduled to release their first quarter financial results about six days after ours, and I, for one, look forward to studying these numbers. Here's what I've found so far since VUE started publishing their financial results for the first time. I think that you'll find it enlightening and put our own results of operations in quite a favorable context and give you a better insight into one of the industries that we're both in. Vue lost $441.5 million in 2018. They lost $290 million in 2019 on revenues of $24.3 million, and they lost $257 million in 2020 on revenues of $32.3 million. Their 2020 loss was higher than the upper end of the range that I had predicted, on our last conference call in early March. To put this in context, VIEW's net loss was over 100 times larger than research frontiers, and they're projected to lose at least another $250 million this year and next year. One number that I focus on is VIEW's own reported data regarding their cost of revenue. This is their cost to generate each dollar of sales revenue even before R&D and selling general and administrative expenses are tacked on. I found this number interesting because these reported costs for each dollar of revenue in the fourth quarter of 2019 was $3.70. Their reported costs for each dollar of revenue increased to $3.81 for all of 2020 and went up even higher to an estimated $4.03 in the fourth quarter of 2020. So I was scratching my head because the reported cost per dollar of revenue is going up and not down as one would expect in a normal business operation with economies of scale kicking in. Unless they had either, one, production problems, or two, the cost of their raw materials went up substantially, or three, they were heavily subsidizing each project and charging customers less than one quarter of what it cost them to make and deliver their glass. Perhaps it's a combination of these factors, and we should get more insight on Wednesday when they release their numbers. So in the fourth quarter, in order for VUE to generate $7.7 million in revenue, that revenue had a direct cost to VUE of $31.3 million, and their total loss for the fourth quarter to generate that $7.7 million in revenue was $55.3 million. That's roughly half the money that we have spent since inception. All in for the year, each dollar of revenue in 2020 cost View $8.36, making their loss on each dollar of revenue in 2020 over seven times the amount of their revenue. Now in comparison, let's talk about our financial results. Our loss this quarter was once again one hundredth of View's most recently reported quarterly loss, Our losses quarter was $557,000, or 11% lower than the first quarter of 2020. And this lower losses quarter is coming off of the lowest loss that research funders had in over 26 years. So there has been a constant move towards achieving break-even, positive cash flow, and profitability. I have emphasized on our past conference calls together that it is important for us to make sure that we're operating as efficiently as possible to make being cash flow positive easier to attain. And our expenses have continuously come down. 2020 was the sixth consecutive year that expenses were lower than the year before at your company. In 2020, expenses decreased by over $1.3 million, and this trend continued in 2021. Our expenses this quarter are also down 23% from the same quarter last year. And because of our continuous reduction in our burn rate, which is now down to $400,000 to $450,000 per quarter, we actually have an estimated 32 months of cash available to fund our operations. So our existing capital should take us into late 2023 before we would need to have more capital. And we may never need to raise additional capital because, as you will hear today, we expect many reasons for revenue increases this year and next year. Over the past year, there were some very major positive developments. Our SPD Smart film licensee, Gauzy, announced last April a Series C investment from Hyundai Motor Company and Avery Dennison. Since then, things have been moving even more quickly than originally expected within Hyundai. As noted on our past conference calls, in automotive, we make cars more energy efficient, reduce CO2 emissions by 4 grams per kilometer, and increase the driving range of electric vehicles by up to 5.5%. We also make people more comfortable and safer and protect the interiors of cars. And as Bentley has noted in their public presentations about the future of sunroofs within Bentley, there is a greater need for smart glass roofs because of the movement towards fixed, non-movable panoramic roofs in cars. Bentley noted that SPD smart glass can reduce weight in the roof by up to 13 pounds and eliminates the need for 54 components. This reduces costs and further increases driving range and reliability while contributing to the stability of the car on the road. The first quarter of 2021 brought us a major new announcement in automotive. Cadillac announced in January that their new ultra-luxury all-electric tractor vehicle, the Celestique, will be coming out and offering an SPD smart glass roof It gives passengers the ability to control the amount of light coming into four segments of the large panoramic roof on the Celestique. They launched this flagship Celestique at CES, and we were pleased to see that almost the entire video about this magnificent vehicle featured our SPD's glass roof, and subsequent articles have focused on our roofs as well. GM's all-electric strategy makes this development even more important to us. and I expect that there will be other car models within GM that use our technology, using the Celestique program as a platform for development on many other cars within GM. And as was the case with Hyundai, the press has been speculating that this Celestique will also come out sooner than originally expected. Because of this newsworthy event, since then Research Centers has been interviewed by major automotive publications, such as Automotive News, Autoline, and Worth Automotive. These major automotive publications featured us in the benefits that we bring to cars, especially electric vehicles. Also, I just learned that we're appearing in Chapter 15 of the book Jetliner Sabins, which is the Bible on commercial aircraft interiors. These major publications featured us in the benefits that we bring to these vehicles, and they Certainly it helps us carry the message about all the benefits of SPD's smart glass broadly to key decision makers in the automotive industry and the aircraft industry. And the media is helping us bring this message out just when all the major car companies in the world are going all electric. We're also moving into many new areas. One important new area that we moved into is the higher volume segment of the automotive market. With the lowering of the cost of our technology, new markets in automotive, such as the high-volume mid-level market, are now working with us. And, of course, the new fast-growing market for electric vehicles around the world, especially as pretty much every major automaker continues to announce their plans to become all-electric. And also new aircraft, such as the Airbus A220 VIP jet. Airbus has already announced orders for 15 of these transportation category-sized jets And each of these A220 aircrafts will have SPD electronically dimmable windows covering 50 structural windows. In addition to the Airbus A220, there are a number of other new aircraft models that have not yet been announced by our licensees in the aircraft industry. These licensees are Vision Systems and Spectac and E-Cuclema. Some of these are really cool, by the way. I've seen some amazing designs that really need smart glass. Other new areas are more yachts, consumer electronics, and architectural applications. And as I've mentioned in the past, the architectural market uses twice as much of the world's glass as the automotive market. Smart homes and buildings are potentially our largest market, as evidenced by the high valuations that some of our competitors are aspiring for just on this market alone. And as many of you know from prior conference calls, with the opening of Gauzy's stick art factory in the fourth quarter of 2019 and its current ability to make SPD film 1.8 meters wide, this allowed us for the first time to practically address the large potential architectural market. That market has become very active and in connection with competitive bidding on some large architectural projects for SPD, we learned that we actually have gone from having a size disadvantage, referring to the limitation on the Hitachi film where they were only coating one meter wide, to now having a size advantage over electrochromics since they can do similar rifts to the Gauzy film, 1.8 meters, but have limitations on the height of the window. And, of course, the bigger an electrochromic window gets overall, the slower it gets, with tin-switching taking tens of minutes with electrochromics compared to two seconds or less with SPD, regardless of the size of our windows. I'm also pleased to announce to you today that even in the eight short weeks since our last conference call, Gauzy has made further improvements in the efficiency of their emulsion line in Israel and their foam coating line in Germany, and even has made large investments to expand further their production capacity. Some of our other licensees on the end product side have also made production and capacity enhancing investments. Now let me take some other questions that our shareholders have sent me. We received by email before this call questions from investors, and we're going to address many of them today.

And here are some of the additional questions that were emailed to us. Okay.

Is the plant in Stuttgart, Germany closed or operational? What's their maximum production? It's operational. There was a brief period of time in late December, early January scheduled to coincide with holiday shutdowns anyway where Germany was closed for COVID reasons but it's opened up. The maximum production on that facility is 1 million square meters of SPD film. Are any products using Gauzy film instead of Hitachi film? Yes, a lot of the automotive developments that we talked about are working with Gauzy on those projects. Also, I just wanted to note and congratulate Gauzy. They're appearing in glass china in Shanghai from today through Sunday, so a major glass event in China as well. Another question, would it be easy to make chemistry to achieve 90% light blockage in the off state? Would this be more neutral while still being about twice as dark as most architectural fixants? Jared, that's a great question. So basically the idea is can we make the film where it's not as dark so that less blue may be transmitted in the clear space? And the answer is yes. And also, if you go very dark, you don't see any blue at all. So, you know, because the reason that the windows appear blue is that the blue light and daylighting is being transmitted. So if you make it really, really dark so no light is being transmitted, and we can do that by making the film coating thicker, then you're going to have less bluishness. And if you make it lighter, also the same thing would happen. So, and the answer to your question is yes. Matter of fact, the Gauzy production line has the tolerance to coat plus or minus one micron. And the normal SPD film that's kind of the workhorse of the industry right now is the 90 micron film being produced by Hitachi and Gauzy. But Gauzy can adjust that, and so can Hitachi, and they have for certain applications.

Okay. Moving to another question. I'm sorry.

Also from Jared Albert, would it be good for RFI if the Dynamic Glass Act became part of the Internal Revenue Code? Would it actually provide a 30% tax credit for SPD labs that doesn't currently exist in other forms in the United States? Are there currently tax credits for SPD leads in the U.S., for example, or other subsidies elsewhere in the world? And is it likely that if it passes nationally, states will also adopt tax credits for SPD? Do you think it will pass in its current form? Thank you, and here's hoping government subsidies finally get this going. ESG is hot and virtue signaling is a critical market. Okay. Great, great question. And let me first say that it's almost impossible to predict any kind of political event in today's world, or especially in today's world. But this seems to be kind of a provision that makes sense. And the way that... Dynamic glass is defined as glass which uses electricity to change its light transmittance properties in order to heat or cool a structure. That's from the Senate bill that's pending right now. And it does have bipartisan sponsorship, so that makes it also something that, you know, makes it more likely that it is going to pass. And that definition that I just read will, in fact, cover STD technologies. So is it a good thing? Absolutely, because what it does is it encourages people through the form of tax credits to install energy-efficient improvements in their buildings, and now they're specifically calling out SPD. So from an economic standpoint, it's definitely good for us. Also, just from a general standpoint, the fact that Dynamic Glass is now being recognized as an energy-efficient improvement to buildings you know, I think is a major change. And there are similar types of credits on the world, and even, you know, there are demand management incentives that come from local utilities. So you have kind of a mix of private and public partnership to encourage this.

Okay. Okay.

I got questions from several shareholders about a company called Notice and their True10 technology. I will just say that Notice is a company that was based in Singapore. They recently moved to Ohio as part of a tech incubator. They raised a very modest amount of capital. if you go on their website, because I was asked a little bit more about, you know, is it a competitor to us or to Galaxy? And the answer is every dynamic tint is a potential competitor, but there's so many, you know, small startups that are trying to do things that have only succeeded in the lab. And I've only seen on their website computer simulations. The other thing that I found very odd is I had met with them in 2018, and they sent me a presentation, and oddly enough, the presentation included many of our SPD projects that they were passing off as their own, so we told them to stop that. So I'll let you judge from the fact that they have no working samples of this on their website, and You know, their presentations, even as recently as this past October, were using SPD instead of their own technology to demonstrate their own technology. So take it for what it's worth. Next question comes, is there any schedule for Dynaid to introduce its SunVisor product? And then also there's a follow-up about the new infrastructure bill, which we talked about. And the answer is there are two timetables for the Dyne Sunvisor product. One is the one that's really funding the development, the product development within Dyne. And that's a specific vehicle with an auto manufacturer that this is for that will, you know, which is why they're able to do the corporate development they need to. And then there's the aftermarket where that could come out a lot sooner. So you have a few timetables really to watch there. I did get a question from another shareholder. If they wanted smart glass for their homes, you know, how do they get in touch with a licensee or an installer? And we set up a system that automatically allows you to fill out a form with details about who you are, where your project is, and what it is, and then it automatically goes out to all the licensees that can satisfy that. And for the most part, our licensees are focusing on commercial projects, but we don't have to focus on the ultra-large commercial projects. And also, you know, residential is certainly within their wheelhouse as well, although it may not be their initial focus. Another shareholder asked about Our stock price, I don't usually comment on our stock price, but I do want to point out that the Russell 2000, which we were included on last year and resulted in about 3.1 million shares being bought by index funds that invest in the Russell 2000 companies as part of their charter, that brought in a lot of buying last April, May, and a little bit in June. as the Russell became rebalanced and we were introduced on it. Back then, in order to get on the Russell, you needed a market value of, I believe, $96 million, and I think our market value at the time was about $116 million. So we were well within the cushion for inclusion last year. Due to a lot of... activity in the market, companies that are going public through SPACs and the rise in market value of, you know, some of the, you know, blockchain companies and other types of companies. The last analysis I saw was that in order to be included on the Russell 2000 this year, you need a market value of about $248 million. So it's about two and a half times the market value of last year because of some of this corporate activity that's been going on. So I imagine that part of our stock has, you know, the reason it went down in the last month or two is, you know, these reports get published by, you know, various research firms, and some of the hedge funds will trade based on that. So if they know a company is going on, they'll buy the stock, which is what happened last year before we went on. And if they know a company is coming off, and a large number of companies are coming off this year, you know, they'll sell the stock. So I think that's one reason. And the other may be, you know, some tax-related, you know, because, you know, around this time now, people's personal taxes are due. Got another question. Long time, Cheryl. There's a question for the 2-1-21 call. Suppose a company such as Sangoban or PPG or AGC or possibly even Tesla or Apple offered to purchase Research Frontiers in its entirety, including the rights to all intellectual property. Can you provide a range of what you would consider a fair price for the company? Many thanks. Well, I love the question. The answer is that if we were presented with an offer for the company, we have an obligation to to create an auction market. We can't just sell to whoever we want. There's a fiduciary obligation under Delaware law to try to get the best possible price for shareholders. And that usually involves hiring investment bankers and valuation opinions and things like that. I will say this. If you look at what's going on in the smart glass market, the only other reference point is a company that, you know, has lost almost $260 million this year and has a market value of about $1.8 billion. So the market is obviously valuing smart glass companies and the smart glass potential very, very highly. And I think that that would be something that would be factored into any kind of decision whether to accept a buyout offer.

Okay.

Let me ask our operator now, Paul, to open up the conference to any live questions that we haven't answered already. And remember, if I have not fully answered any questions that were either emailed to us or in the live Q&A in my presentation, Feel free to call or email me. In some cases, I had to cut the questions a little bit short to leave time for more live questions today.

If you would like to ask a question, please press star 1 on your telephone keypad now. You will be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, to ask a question, please press star 1

on your phone now and we have a question from michael closner your line hello hi michael how are you hello joe um i'm wondering given the advantages of spd in comparison to other light control uh technologies why are it seems to me whenever i you know look at a paper a news release most of the companies that being architectural glass or doing it through sage or through view would that be and also given the fact that research frontiers has lowered the price of film I'm somewhat disappointed that there aren't more you cut off there but I think we heard the question and

The short answer to your question is you hear about projects from View and Sage that are very large projects that they've worked on landing for years. Most recently with Walmart. And they don't really give a lot of details other than the purchase price is $26 million for that. I do think that If the economics I alluded to earlier is that they're basically spending a lot more of each dollar of revenue, that project may end up costing them over $100 million. If they want to lose $75 million or $80 million on a project, that's their decision. It's not the way we or our licensees do business. The same thing with Sage. Some of our licensees that compete with them on these projects or winning these bids because the performance is much better for SPD in terms of switching speed, range of light transmission, the variety in terms of which glass laminators you can use, and the control systems are much easier to implement as well. So there's a lot of advantages to going with SPD, and the cost premium for having the best really isn't not much greater than uh the highly subsidized prices that some of these companies are doing and um and also you know they need to find projects that have uh very large lead times you know in some cases a year or two out if you look at kind of their announcement pattern so um we're in much better shape in terms of that and just because the projects haven't been announced we just don't announce them until you know they're a little bit more ripe um You know, we saw Vue announce a project about 14 or 16 months ago and then re-announce it again in March. You know, so they tend to announce things as early as they, you know, as they can. And, you know, obviously when you're in the public markets trying to raise money, that helps you.

Thank you. We have a question from Gary Carroll.

Yeah, hi, good afternoon, Joe. How are you?

Hi, Gary. How are you?

Good. I'm in South Florida. Of course, our real estate market's on fire, and, you know, we hear a lot about smart homes and the builders here are becoming more and more acutely aware of the smart home technology, but wondering what our market penetration is like in the U.S. in the new smart home.

Well, it's funny you mention Florida. I was recently there initially to discuss one project. It turned out to be three projects, and then a fourth one was added as I was leaving. So some of these can have fairly major uses of glass, and if you go down to the Miami, Aventura, Sunny Isles area, you can see all of the construction going on there. And our licensees, like, yeah, and our licensees, like, down here, actually end some of those projects from a while ago with their PDLC projects, so they know all of the developers and the architects in that area as well. And they even opened up a special sales office in Aventura, which I had the opportunity to visit when I was down there. So there's a lot of activity there, and, you know, you'll see a lot more of it.

So do you feel like we have a good exposure and presence in the new, in all these new big buildings and with smart glass going in?

Yeah, I think that what's happening, and I kind of alluded to this earlier, Gary, is that part of the really increase in activity is coming from the fact that we have two very active competitors that are creating excitement in the market. And, you know, competition can be good. Matter of fact, when Jowsey became a film licensee, Hitachi called and thanked me. They said, this is really creating a lot of interest out there. You know, and that's benefited Hitachi as well. So, you have some benefits to having an active market with competitors that are spending tremendous amounts of money to market. But, you know, if you're an architect or a developer worth your salt, you know, you're going to do your homework and our licensees have been called in on the same projects that Steve and Bill have been pitching and, you know, they're doing well. So, you know, if you're faced with a demonstration where a window takes 40 minutes to switch and another one where it takes two seconds to switch And you could use any glass laminator you want for that. As long as there's not too much of a cost premium, that becomes a really compelling sales tool. And, you know, our licensees are really good at presenting the benefits of SPD technology.

Absolutely. Hopefully one of them may have a connection with a related company, Steve Ross down here in South Florida, where he just mentioned all these ginormous projects that they're involved with. It would be a fantastic customer for us.

Yeah, and we know the related companies from New York and from Florida, so a lot of good stuff happening.

Excellent. Thank you very much. Thanks a lot.

As a reminder, if you do have a question, please press star 1 on your touchstone keypad now. And our next question comes from August Berman. Your line is open.

Hey, Drew, how are you? Hey, August, how are you? Hey, good, good. I have a couple of questions. I know Gauzy, when the announcement was first made about Hyundai in 2020, they had indicated in an article that their first project would be a visor versus sunroof. Is there anything you could say on that? Would that kind of guidance still be holding true today?

I think with most automotive applications, probably the low-hanging fruit is definitely the sunroof because that's where a lot of solar heat comes into the vehicle, and especially as you move now towards fixed panoramic roofs where you want to avoid the complexity and the cost and the maintenance issues of having a sliding roof, but you still want that open-air feeling. you know, this goes back to Bettany's presentation about the sunroof of the future at Bettany. You know, that becomes even more compelling. So it's a safe bet that sunroofs are always going to be very popular for testity smart glass. You start to see now, though, automakers putting it in other places, too, like in the windshield above the AS1 line where it becomes an embedded sun visor. And as, you know, SUVs You can do what you want behind the B pillar in the United States and in Europe. That also includes passenger cars. You know, you can see them inside in rear glass as well. But I think sunroofs are always going to be, you know, a safe bet and a very demonstrable benefit because of all the sun that comes in and how difficult it is to shade, especially when you get them to be very large sunroofs that can't use a mechanical shade. or a very rigid shade if you're going to have a big surface area to cover. We'll just have a glass do the work.

Just one other question. I know we're seeing a bunch more vehicles coming out, specifically electric, that are showing rooms that are all curved glass. Is curved glass, let's say we were going to implement an STD glass into a curved glass versus a flat, just flat glass in the room, Is curved glass technologically as well as cost even a lot more versus a flat glass process? I feel like I've read some articles where people are saying or OEMs are saying that just the ability to implement it in a curved glass is just not feasible, even though I know SPD can go into curved glass.

Yeah, the S-Class Coupe has a three-dimensional curved roof. And, you know, as you correctly pointed out, a lot of the designs that are coming out now with the electric vehicles, also have, you know, very sleek, elegant, um, curved lines including curved glass. That's one area where we're really good at compared to our competitors. Um, electroclonics are really flat glass only and that's why you see them really in only two areas. One is, um, architectural where glass is basically flat and, um, an aircraft also where the, you know, the, uh, the non-structural window is also flat. So, you know, they are where they can be, and we can be in a lot more places, including curved glass.

Great. Thank you, Joe. Thanks. We have a question from Alan Denzer. Your line is open. Hey, Joe. Hi, Alan. What do you think I'm good. How are you? Good. All right. Question about Gauzy. Do you know any plans that they may or may not have for going public? And what would you think the chances are that they would, even if they haven't expressed one way or another to you?

Well, if I knew about specific plans, I wouldn't be able to talk about it. I think that it's a natural evolution in their company at some point to become a publicly traded smart glass company, especially when you consider that companies like you have a $1.8 billion market value right now. And I think that if you did a head-to-head comparison with either our business versus you or Gauzy's business versus Vue, you know, you would see that, you know, we're better companies. You know, I have the greatest respect for Raoul Malpuri at Vue, but he has a tough shop. You know, they have very high costs. They have, you know, really some limitations in what they're doing. And, you know, they're good at raising money, although that market seems to have dried up because if you look at one of his more recent public comments to the media, they asked them, why do you go, you know, why do you do a SPAC transaction? They said, well, we couldn't go public. You know, we did a traditional S1 and we needed the money. That, to me, is a statement. You know, and also, if you look at kind of what's happened to the SPAC market, many of the SPACs, including you, are traded well below their, you know, their par value, their $10, you know, all the assets.

Well, maybe if they made a deal with you first, that would make the company a little more attractive.

We welcome everyone and companies that were competitors of ours, you know, in the past.

I hear you're open to the possibility.

Yes, always.

Good luck. Thank you. Thanks, Alan.

And our final question comes from Leonard Liesow. Your line is open.

Thank you. Hi, Joe. Hey, Len. I was just listening to your earlier comment about the amount of cash that the company has would probably carry them through to the

third quarter.

Yeah, and I think, judging from the way you said that, you'd think we would be positive cash flow, but then it wouldn't be anyhow. However, as I was looking, there are options outstanding currently from previous activities, and if those were exercised, which indeed they will be as the stock moves higher, that would raise an additional $7 million almost anyhow. So you wouldn't need any outside financing.

Is that correct? That's exactly correct. We don't factor that into, you know, counting the months because you can't predict your own stock price and whether the, you know, the warrants and the options would be in the money. But I think it's a safe bet. And you've seen recently options have been exercised all the time, even this year.

Yeah. Yeah, so I don't think, you know, cash for the company is needed with all this activity that's going on now.

Yeah, if we did something then it would be for strategic reasons, not for the capital. Yeah, okay. I was just looking at it. One of the things I love is the fact that Hyundai made an equity investment in Gauzy because That's a strategic investor that now has a vested interest in the success of SPD's smart film. You know? And they're in a position to do something about it. You know, they're a carmaker. So I love those kind of investments. Those are the really good ones.

Is any of the activity over in Asia different from here? I mean, they're very busy. I know they manufacture cars. lots of cars for exporting, but I think their market alone is very good over there, so I wouldn't think, you know, the delay in ships are bothering their market at all, so we should see things going forward here pretty quickly, I would say.

Right, right, and another trend, I mean, Volkswagen just today announced, you know, huge profits, you know, $4. something billion, and it's basically because of the strength of the premium car market, so... You know, they're making money in the car companies now.

For sure. Okay. Thank you. Thanks a lot. And we have some additional questions.

The first is from Seth Nickerson. Your line is open.

Hi, Joe. Hey, Seth. How are you? I'm well. I know you don't like to talk about things before they're public. But I read on a public board about a military contract.

I don't know if you want to talk about it, but there was a lot of detail given out on this public forum.

I'm not familiar with the post, so I can't really comment on it. I mean, if you want to share... A little bit more, I'd be happy to... A Microsoft patent that mentioned SPD 118 times, I think, with the military... As I said in the past, you can get a good idea of where the activity is, even if it hasn't been announced, by following who's mentioning us in their patents. You see it in Hyundai, you see it in Apple, you see it pretty much... A lot of major companies out there, Tesla, have all, you know, mentioned us in their patents.

What are they looking at? The contract said, I think, 40,000 units initially and then 120,000. Sounds a little significant. I mean, it's not big, but it's not small.

Yeah. Look, the nice thing about our business also, Seth, is you don't have to do capital expenditure in order to... address those markets. We have licensees that have the capacity to do that and, you know, they can make enough film for this and, you know, it's, you know, it's a nice business the way we set it up because, you know, as you can see compared to, you know, you know, vertically integrated manufacturing companies like you, there's a lot of things that can happen along the way and we don't have those same risks.

All right. Thank you. I didn't want to take too long. Thanks. Sure. And we have a question from Gary Carroll.

Hey, Joe. Joe, I'm sorry. I'm back again.

You want the address of the property that they're building in Florida?

Is it okay? I'm going to go down and check it out. Just drive by. Okay. I'm going to drive by. Actually, as a fairly recent investor in a company, I would like some clarification as part of my ignorance, but what exactly is the relationship between research and gouging?

So, apart from having the same vision for the smart glass industry, which is there's a right way to do things and a wrong way to do it, and we hit it off right away because we both believe that providing a technology that is the best performing is the way to go in this market. And you don't make compromises in terms of performance and quality to do that. But the formal relationship is Galaxy is a licensee of ours that's licensed to make SPD film for the entire industry. So they can sell it to Asahi, for example, if they wanted to put it in cars. Or they can sell it to Vision Systems if they want to put it in trains. Or they could sell it to Inspect Tech if you want to put it in planes. So they're a key supplier that's licensed by us to supply the industry. Plus they have an end product license for architecture as well. So they can make architectural glass. But their main focus is as a filmmaker and a material science company. So that's really their strategic importance. And they're a great company to work with, I must say.

And when you say licensee, Joe, as a licensee, so Research Frontiers is receiving... payment, residuals?

We get royalty payments. We get royalty payments based on product sales. And just to give you kind of a quick summary of the landscape, Gary, for architectural, aircraft, marine, pretty much everything but automotive, we get a 15% royalty on product sales by the licensee to their customer. And in automotive, it's 10%. And that's public, so I'm not sharing. I should have. And, you know, they're a great company to work with. You know, when I met them, they had 50 employees. They have maybe 130 right now, and most of that has been hired and the investments they've been making based on SPD. So, you know, we couldn't ask for a stronger commitment from licensees and the amount of people and money they've put into property planning equipment in Germany and Israel and in the United States and other areas of the world.

Very well. Thanks for clarification. Thanks. Once again, if you do have a question, please press star 1 on your touchstone keypad now. And we have no further questions in queue.

All right. Thank you. Thank you, Paul. I'd like to make just some closing remarks. Over the past six months, we've had the opportunity to get a more detailed look at what some of our competitors are up to. View at large losses, increasing costs associated with their revenue, and their market value is down since they went public in March. Even so, with a valuation at $1.8 billion, Their market value is still considerably higher than research frontiers, and that tells me that investors see the great value of smart glasses. VIEW focuses on the architectural market. We just started in that market, and we're already seeing success. We're also in additional major markets that they're not in, such as automotive, aircraft, marine, museum, and consumer electronics and information displays. These additional markets add further value and market and revenue potential. In their main market, Architectural, View's electrochromic glass takes 20 to 40 minutes to switch from those commercial-sized smart glass panels. RSPD smart glass can switch in two seconds, regardless of the size. Does that mean that View has a bad business model or a bad technology? Not necessarily. Time will tell. But for now, we can say that our business model is different, and we're quite proud of our leadership position and accomplishments in the smart glass industry. At the end of our last conference call, I took some time to list some of the areas where we were either first and some where we're the only company to achieve things in our industry. There were dozens of items on that list, and it took over five typewritten pages just to list them. We can say that we're not only seeing traction in these main market architecture glass, but also markets that they are not in, such as automotive, with new cars coming out with our technology, aircraft, also with some exciting new aircraft coming out with our SPD smart windows, and, of course, marine glass and the use of our technology in display systems, consumer electronics, and museums. We discussed our operations and our markets and what we can expect for the coming year on today's call. Now let's talk about research comparisons and investment, and I don't usually do this, but now there is a reference point. This is what I've heard from institutional investors. First of all, they liked the diversity of the markets they were in, automotive, aircraft, green buildings, boats, and consumer electronics. They liked the fact they were an ESG company in the purest sense of that term, making us even more desirable in today's investment climate. And we, through our licensees, are the only smart window company in the world with a major footprint in all of these markets and industries. Investors also like that we're now a firmly established cutting-edge technology that has proven its performance and reliability by being used in tens of thousands of cars, boats, planes, and now buildings. Over 6 million people have experienced our SPD smart glass, and that is a world record that continues to grow for us. And our business model does not require huge capital expenditures, high levels of sustained losses from operations over time, or large payrolls. I asked, how do you value this? For the first time, our industry has a public valuation reference point in the smart window industry. I've last checked, you had a market value of 1.8 billion dollars. and this company is in only one of the five markets that we operate in. We're pleased that investors in the smart glass industry finally have a basis of comparing shareholder value and operational efficiency. In these areas, as well as the top performance of our SPD technology, you will see that our company delivers quite a bit more value, stability, and operational efficiency to our shareholders. And because of the five markets that we're in, Our prospects are quite good for delivering vastly more value to our shareholders, especially when one considers the rapid expansion of the market for electric vehicles and energy-efficient buildings. Once again, in automotive, aircraft, yachts, consumer electronics, and now even in the architectural market where we're being specced in, when the customer wants the best-performing and best-quality windows, they're selecting STD Smart Class. Last year, we doubled the number of automakers who are putting SPD Smart Glass on their cars. Two new automakers made public moves towards adoption of SPD Smart Glass, and one of the world's largest aircraft manufacturers did the same, and additional ones remain to be announced by customers and our licensees. For the past several years, we've been publicizing the benefits of SPD Smart Glass to multiple industries. The world is going green. We make buildings and their internal HVAC and illumination systems more energy efficient. We make people safer, healthier, and more comfortable. A number of recent projects in the architectural building space have unique designs that are enhanced and perhaps only possible using smart glass. The world is going electric, and our STD smart glass technology will make those cars travel further on a charge, enhance safety, increase comfort, and give drivers and passengers alike an unforgettable driving experience. Let me leave you with some statistics. The future of transportation is coming pretty quickly. This year, Research Frontiers Edmunds says that we'll see 30 electric vehicles from 21 brands. That's up from 17 EV models in 2020. And the Boston Consulting Group predicts that EVs will account for more than half of the light vehicle sales by 2026. And as our investors, I'm pleased that you'll be part of that green building future and that electric vehicle future.

I want to thank you again for your support, and I look forward to talking to you at my next conference call. This concludes today's conference call. Thank you for attending.