Research Frontiers Incorporated

Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the second quarter of 2023, 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 opened for questions by pressing star 1. This conference has been recorded today. A replay of the conference call will be available starting later today in the Investors section of Research Frontiers' 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, plans, 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 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 uncertainties. The company will be answering many of the questions that were emailed to it prior to the conference call, either in the 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 this 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 pound one. Also, we ask that you keep your questions 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, Jen, and welcome aboard. Hello, everyone, and welcome to our second quarter of 2023 Investor Conference Call. First, I want to welcome Eyal Peso, the chairman, CEO, and co-founder of our licensee and strategic investor, Gauzy Limited, to our board of directors. Eyal and I have worked together closely now for about six and a half years, since December 2016, and we share the vision of how smart glass can be done right. Gauzy has invested significant dollars not only in research frontiers, but in factories and business development teams around the world, and cutting-edge R&D relating to SPD technology. They continue to break ever-increasing performance records set for themselves, and it is an honor and a pleasure to have Eyal Peso officially on our board of directors. Turning to the numbers, we had good revenue growth in the first quarter of 2023, and this growth continued in the second quarter of 2023. As noted in our 10Q filed earlier this afternoon, total fee income for the second quarter of 2023 was up over 116% compared to the second quarter of 2022. Most of this was from even higher percentage growth in the automotive market as well as growth in the aircraft market. For the first half of 2023, revenue was also up compared to the first half of last year, once again driven by triple-digit percentage growth growth in the automotive and aircraft markets. We continue to drive down expenses. Compared to the same period last year, expenses were down $131,000 for the first six months ending June 30, 2023, and 118,000, or 14.3%, for the second quarter of 2023. Between higher revenues, lower expenses, and higher investment income, our net loss for the second quarter of 2023 was one penny per share, which is about $250,000 or 33.5% lower than the second quarter of 2022. And for the first half of this year was 3 cents per share, which was about 414,000 or 30.2% lower than the same period of last year. Let's talk now a bit about some of the other developments since the last conference call. In automotive, Ferrari's Piro Sangue are being delivered to customers with our SPD Smart Glass Roof, and we expect that deliveries of the SPD Smart Glass Roof for the Cadillac Celestique will start in the second half of this year. Looking towards our expectations for the future, more models are either specifying SPD or switching to us from other technologies. Also, since our last conference call, we made substantial progress on landing two new OEMs and one of which has three models targeted for SPD. And while we can't always give specifics until the customer has spoken, I could give you some guidance as to places to look to give you a better idea of what's coming. Simply put, even if we can't say something directly, you can look to see what other people are saying and doing. For example, if you look at the patent literature, a number of companies have filed patents for new and interesting innovations using our SPD materials for various applications, mostly in automotive. Looking elsewhere, sometimes you could find proud statements about their SPD projects on social media by people who work at these companies. And sometimes you could understand where a company is going and where they see their market and business opportunities by looking at how and where they are hiring. For example, Gauzy has about 70 job postings for new positions in key industries that we currently service. This is about double the positions they were hiring for just a short while ago. Let me also help you try to put some of the events that you might see in the near future in context so you can understand their significance. Research frontiers and our licensees exhibit and speak at many industry conferences about the benefits of smart glass. Sometimes this has a very direct impact. For example, the Cadillac Celestique came directly out of an automotive glass conference that I spoke at in Detroit several years ago. Based upon our discussions with GM, we expect multiple cars from General Motors to use our SPD smart glass. These conferences also serve to educate the industry as to the benefits of smart glass and help them cut through the marketing clutter, claims, and other noise. made by other technologies. This is beginning to bear fruit for us. Some automakers that have selected other switchable technologies and even put them into production have now come to us and our licensees because of dissatisfaction with the performance and durability of these other technologies. We became the gold standard through hard work and helping to educate the industry as to the differences in smart glass technologies. As we have noted many times on these conference calls, not all smart window technologies are created equal. These automakers are coming to us and their glass suppliers from a position of knowledge and with better context. Don't be surprised if the placeholders they have set with other switchable technologies ultimately get satisfied with SPD's smart glass. And in addition to the two new automakers I referred to above and their four different new car models targeted for SPD, in this latter category, another two to three automakers currently using other smart glass technologies are seriously considering switching to SPD. And why not? We have better performance and proven durability. Sales also continue to grow and expand. to various models of aircraft. Many of you saw announcements by our licensee vision systems that they are now supplying SPD electronically dimmable windows on two very large aircraft from Airbus, the ACJ A319neo with AMAC Aerospace and the ACJ 220 with Comlux. My closing remarks today will have some very exciting further developments in aerospace. Deployment of SPD on trains and boats continues. and for architectural applications as well. Now, I took some of the questions previously sent in by our shareholders and incorporated them into my presentation. Let's take some additional questions. First question came from Jared Albert. This was in New York One. Extreme heat can reduce EV battery range by 31% a study shows. Jared mentions a 2019 study from the American Automobile Association found that EV range dropped 4% at 95 degrees, that's kind of timely with the heat wave going on here, without using air conditioning, and 17% when AC was running. So think about that. Your range dropped 4% when it gets hotter and 17% when you have to turn on the air conditioning. And our Secretary of Energy actually was in an interview and started fanning herself because her staff had turned off the air conditioning to increase the driving range and speed up the charging of the car when they stopped for charging. To help combat range loss, this is the AAA study, recommends pre-cooling a car while it's plugged in as well as using sun shades or parking in the shade to help reduce heat. The initial cool down of a car takes more energy than maintaining it at a comfortable temperature, the study said. This is something we've been talking about for years. Most air conditioning systems are four to six times bigger than they need to be because of the need to make people comfortable. And if you have an internal combustion engine vehicle, that's not such a big deal. You just run the air conditioning. But when you get into an electric vehicle where you want more of the car's battery going towards driving it and less towards cooling it, we can reduce temperatures by about 18 degrees Fahrenheit. So instead of getting in the car and it being 90 degrees, it's 72 before you even turn on the air conditioning. So that initial cool down is actually done by our smart glass.

Another question came from Mr. Claire Houghton.