Research Frontiers Incorporated

Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the third quarter of 2024 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 call will be available starting later today in the Investor 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, plans, forecast, 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 applicable safe harbor provisions. These statements reflect the company's current beliefs and a number of important factors that 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 the 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 this 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 star 2. Also, we ask that you keep your questions brief in the interest of time. I'll now turn the call over to Joe Harari, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Erica, and hello, everyone, and welcome to our third quarter of 2024 Investor Conference Call. As we anticipated in previous calls, based upon the leading indicators that we typically look at, we saw strong momentum this quarter. Compared to Q3 last year, royalty income grew over 115%, fueled by triple-digit growth in our two largest markets, the automotive and aircraft markets. For the first nine months of this year, royalty income rose by over 93% compared to the same period last year. This was driven by double-digit percentage growth in the aircraft and architectural markets and triple-digit percentage growth in our largest market, the automotive market. In fact, we're on track to almost double the number of roofs sold to Ferrari and triple the number of roofs sold to McLaren compared to last year. This marks our seventh consecutive quarter of revenue growth, and looking ahead, we expect to finish the year with double-digit revenue growth over last year. In fact, as of the end of the third quarter of this year, we have already surpassed revenues for all of last year. Our expenses were down by $92,000 this quarter alone and by over $150,000 over the nine months. With higher revenues and lower expenses, our quarterly net loss is one-third of last year, and for the full nine months is about half, translating to zero cents or almost break-even per share for the quarter and two cents per share for the full nine months. Barring strategic reasons, we do not anticipate needing additional capital in the near term. we remain debt-free with over $1.65 million in cash and stable working capital sufficient for more than five years of operations. Now let's break down these results by market so we can all better understand where we are and what we could all expect. There's been a steady march forward in the automotive and aircraft industries towards the adoption of our SPD smart glass technology, starting with Mercedes, then McLaren, then Ferrari, and now this quarter, Cadillac. In aircraft, our bread and butter were SPD smart EDW windows and turboprops like the King Air and jets like the Honda Jet, and now much larger aircraft from Daher to Seoul, and especially Boeing and Airbus aircraft, all with far more windows per plane. And more vehicle introductions using SPD technology are expected as early as this coming year. Sales of cars using our SPD Smart Glass technology at Ferrari and McLaren remain quite strong, and Cadillac is just starting now. An extremely high percentage of Ferrari customers and McLaren customers are all opting for the SPD Smart Glass roof, and the SPD Smart Glass roof is standard on the Cadillac Celestic. We are on track to almost double the number of roofs sold to Ferrari and triple the number of roofs sold to McLaren compared to last year. So there are excellent results with existing models as SPD Smart Glass roof options become more and more popular on the cars that offer it. Now regarding new customers and new models. After good meetings in Asia in August and in Europe starting in September and October and more recently this week, I am quite optimistic that we will see multiple new car models with SPD Smart Glass come out as early as 2025 from car makers in these different regions of the world. What's particularly exciting is that the manufacturing cost of products using our technology has decreased significantly, making it feasible for use for the first time in moderately priced vehicles. This creates opportunities for higher volumes of SPD smart glass technology in middle market cars worldwide. Our launch project in Asia for this is still on track. All of this and the expansion both among new OEMs and the extension to new car models within each OEM, reinforces the strong validation of the value of our SPD smart glass technology that we offer to the automotive market. Following LTI's retrofit product debut in AIA in June, we're seeing increased interest in SPD projects worldwide. While details aren't yet public, we expect further growth as architects adopt SPD for its energy-saving technology. and instant glare control capabilities. As recently as this week, we discussed more new projects and opportunities for SPD in the architectural market and their specifications. I spent some time discussing our largest market automotive and new models coming out there shortly, as well as architectural markets. I now want to move to our second largest royalty generating market aircraft. We also once again had higher revenues with double digit growth in the second quarter and triple-digit growth in the third quarter. There have been fundamental improvement in that market for us as well. This stems from the way that decisions are made. For general aviation aircraft, we're on the HondaJet and the King Air, among other aircraft. In those and other areas, the OEM made the decision about putting our high-performing SPD technology on the aircraft. The significant shift is that in the larger aircraft made by Boeing and Airbus, Now the customer decides. This has been tremendously enabling for our licensees selling SPD EDWs because the performance in terms of switching speed is instantaneous and the wide change in tint, also being uniform, has made it an easier choice by the customer to pick SPD. And airlines and owners are picking SPD when given the choice. Apart from the obvious benefits of improving the passenger experience by giving them more control over their environment, and reducing noise in the aircraft cabin, there are temperature benefits as well. In automotive, we see a side-by-side reduction of 18 degrees Fahrenheit in a car. In aircraft, we have seen as much as a 26-degree Fahrenheit reduction in cabin temperatures simply by using SPD. Once again, and our growth in revenue from the aircraft market reinforces the value we add to the aircraft and airlines around the world. In the interest of time and to cover as much ground as possible today, I have taken a number of questions that we have received by email and have incorporated them into my presentation today. I'm now going to open up the conference call to additional questions, and first I'll read and answer some of the questions we received by email, and I encourage people to email in their questions before the conference call so we can tailor our presentation to cover the most ground for the benefit of all shareholders. So here are some of the additional questions that were emailed to us. And in some cases, I'm combining several related questions into one. They basically cover three areas. One, the effect of the war in the Middle East. Two, use of competitive technologies. And three, the architectural market. First, on behalf of our friends at GALSI, we appreciate the questions about the situation in the Middle East and their safety. Everyone is, in fact, safe. The war in Israel has not affected Gauzy's operations. They planned and then built redundancy into the Stuttgart facility for both emulsion and film production. They also have redundancies in other areas and a worldwide footprint in factories in the U.S., Germany, France, and of course, Israel. Our next question. Joe, on prior conference calls, you mentioned that you were going to see other technologies tried on cars. We see some cars coming out with PDLC in the roof.

Can you comment on this?