Research Frontiers Incorporated

Good afternoon, and welcome to Research Frontier's investor conference call to discuss the fourth quarter and year-end 2025 results of operations and recent developments. 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 this call or will do so afterwards in order to answer more questions of general interest to shareholders on this call. Some statements today may contain forward-looking information identified by words such as expect, anticipate, and forecast. These reflect current beliefs, and actual results may differ materially from those expressed due to various risk factors, including those detailed in our SEC filings. Research Frontiers assumes no obligation to update or revise these statements. Today's call is in a listen-only mode with a Q&A session to follow. To ask a question, press star 1. The call is being recorded and will be available for replay on Research Frontier's website at smartglass.com for the next 90 days. During the question and answer portion of today's 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 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 thank you, everyone, for joining us for our year-end and fourth quarter 2025 conference call. 2025 was a year of not just incremental developments but structural adjustments in the supply chain, and meaningful expansion in our automotive pipeline, architectural retrofit execution, and new product development and capital positioning. This call is important because when you step back and look at 2024 and 2025 together, the trajectory of this becomes clearer. We have maintained production continuity in automotive through licensee transitions. expanded OEM engagement with high unit volume vehicle programs, allowing cost reductions by our licensees, and expanded engagement through other areas of the vehicle besides just the sunroof. We've seen Ferrari expand production of cars with SPD Smart Glass and Cadillac enter the market with SPD. We've seen Mercedes showcase SPD broadly in a concept vehicle and launched architectural retrofit initiatives. We've seen advancement in the black SPD development. We've strengthened our balance sheet. And our licensees, and I think this is important, are making new investments that are specific to SPD business, and they're moving forward and winning new business. We're going to talk about that later. I'll begin with financial results and our recent financing and then address GALSI directly and then transition to the significant positive developments that have occurred since our last conference call. For the full year 2025 and continuing in 2026, we remain debt-free. We've strengthened our working capital. Our royalties improve when adjusted for one-time licensee events early in the year. And let me now just address our February financing directly because we've gotten some questions about it. And keep in mind, I'm trying to save time by answering as many questions as possible, and I've basically taking questions that have been given to us and included many of them in my presentation. So hopefully that will allow us to efficiently cover a lot of ground because there's a lot of good things to talk about. As we disclosed in our February 18, 2026 Form 8K, we completed an oversubscribed $1.1 million private placement at $1 per share with five-year warrants that are at increasing exercise prices. This offering included accredited investors, several family members of one of our directors, and also importantly, the owner of one of our SPD licensees, and I think even more significant, the one responsible for the SPD architectural retrofit application. And we all believe that the retrofit represents a potentially very significant market. So when the licensee closest to execution of this invests its own capital alongside long-term shareholders, I think that speaks clearly about their confidence in that opportunity. And let me clarify something that I addressed in prior calls. I had stated that we would not need to raise capital if we were paid what we were owed and if we did not experience additional disruptions. There were several in 2025. And I also said we might raise capital for strategic reasons. In 2025, all of these elements were present. We experienced AGP-related developments, Gauzy's French subsidiary rehabilitation process, and slower collection of certain receivables, some of which are now being collected as we speak. At the same time, we saw expanding opportunities in automotive programs, architectural retrofit, and black SPD development, as well as new product opportunities. Given that combination, we believed that it was prudent to modestly reinforce the balance sheet. We deliberately kept the offering small and focused, and it was done at a market price. Participants were long-term holders who, other than our licensee, had participated in prior friends and family offerings, including our last one in September 2022. The shares were not registered for resale and are subject to at least a six-month holding period. We enter 2026 with strength and liquidity and no debt and resources to execute on our business. I know a lot of people have been frustrated by the silence that has been coming out of our licensee, Gauzy. So let me now address Gauzy directly. In mid-November, Gauzy's French subsidiaries entered into a court-supervised rehabilitation proceeding in France. This applies specifically to the French entities. It does not apply to Gauzy's German SPD film production facility. It does not apply to SPD emulsion production in Israel. However, as one would expect through most business organizations, this filing has had some ripple effects. Liquidity has been reallocated by Gauzy to satisfy the French rehabilitation monitors. That allocation appears to have temporarily reduced access to liquidity in other areas of the company. And Gauzy is actively working to address this. Senior management time and attention has understandably at Gauzy been focused on stabilizing and addressing these matters. In addition, Gauzy reduced headcount. And let me just say that sometimes workforce reductions are never easy, but by adjusting expenses and overhead, it can strengthen the long-term sustainability of a company. These actions by Gauzy appear aimed at lowering operating expenses, reducing capital requirements, and moving toward a more stable operating profile for Gauzy. And even in the midst of all of this, SPD emulsion production in Israel and SPD film production in Germany continues. In the midst of this, automotive and architectural development programs continue and expand. Gauzy is reconstituting its board to restore its NASDAQ compliance. They postponed their third quarter 2025 conference call due to the timing of the French filing, but I think it's important to understand that as a foreign issuer, they're required to file financials only semi-annually, and as a foreign issuer, their third quarter filing was purely voluntary, and their annual filing was is not due until the end of April. So they're on a bit of a different SEC reporting schedule than we are as a U.S. reporting company. From our standpoint, we remain in regular contact with them almost daily. Production inside and outside of France continues. Program execution continues. And progress on multiple fronts continues even during these restructuring efforts by Gauzy. And we'll talk about some of those things a little later on in the call. So now let me move from the discussion about stabilization to the acceleration of our business. While restructuring efforts were underway, development did not pause. Since our November call, expansion has accelerated. Ferrari continues to produce vehicles utilizing SPD Smart Glass. And even though licensed supplier AGP and their European affiliate, Solivare, both filed for bankruptcy protection in 2025. This had a six-figure impact on recorded royalties for us during 2025. But we successfully transitioned the Ferrari business to another licensee, Isu Clima. And even though this transition occurred mid-year, Isu Clima's sales levels exceeded their minimum annual royalty thresholds in the third and fourth quarter of 2025. Now, maintaining continuity through a supply chain shift requires execution, even when one has to zig and zag. And we had to do that. So initially, AGP asked that we transition the Ferrari business to their sister company, Solivaire, in Belgium. And when some of the key suppliers, not SPD, but just in general for automotive glass, pulled their support, they moved it back to their production in Peru, and then that didn't survive, so we had to shift it over to Isoclima. But I think that while that was certainly challenging for everybody, we successfully emerged, and I think it illustrates pretty clearly the strength and the robustness of our supply chain. Moving from Ferrari to Cadillac, they also entered the market with SPD Smart Glass and the Cadillac Celestique this year. The Celestique is General Motors' flagship ultra-luxury vehicle, and it has garnered great industry and press accolades with a strong and positive focus on the four-quadrant SPD smart roof. It represents adoption by a major USOEM, our first, and also validates SPD in a next-generation engineered platform for General Motors. We believe this will result in substantial additional business for us. And it's certainly significant that SPD Smart Glass was chosen and introduced in European ultra performance and American ultra luxury vehicles. Mercedes also recently unveiled a concept vehicle featuring SPD integrated across much of the car, not just the roof. I think it was 75% of the surface area of the glass. As those familiar with the automotive industry understand, concept vehicles often signal direction. They reflect where engineering resources are being allocated and based upon feedback where marketing resources are deployed and what makes it into ultimately new vehicles. Let's reflect. Since our November 2025 conference call, I was the keynote speaker at the Automotive Glazing Summit in Detroit. We now have high-volume quotations on four models in the automotive sector. Since our last conference call, we have also started work with a new European OEM. And in addition to those models, which can represent hundreds of thousands of units, we also have specialty programs with potential annual volumes in the tens of thousands of units that recently came on board since the last conference call. The automotive pipeline today is broader. than at any point in our history. We'll talk a little bit now about some of the new products and technical advances. SPD Black continues to advance, and OEMs have made clear their preference for glazing applications that require a neutral or black aesthetic. Black SPD addresses that requirement and broadens the market. We are also advancing new SPD film variants, optical refinements, IR and UV integration, improved manufacturing and yield, and broader access to key ancillary technologies to make a super smart window. These are adoption-enabling refinements driven by OEM feedback. And, of course, we listen carefully to the customer writing the checks. Moving now to the architectural market. Since our last conference call, we and our licensee AIT, also known as LTI Smart Glass, launched the retrofit architectural SPD product at Glass Build America in Orlando. We have identified four initial retrofit projects of different sizes. Each highlights a different advantage of the SPD retrofit system, which is why they were selected. In multiple cases, removing exterior glazing would be disruptive or costly. To give an example, in one case, The building is a historically designated building. That project initially specified Sage electrochromic glass. But because Sage and their electrochromics required exterior glass removal and replacement, and something that was actually restricted because of the historical designation, the project pivoted from electrochromic to SPD retrofit. Instead of replacing the facade, SPD upgrades performance from inside the existing frame. Why is this significant? The installed base of buildings globally is vastly larger than annual new construction, and the SPD retrofit system dramatically expands our addressable market and compresses manufacturing and installation time without requiring facade replacement or structural or occupant disruption. You could stay in the building while they do it. Other projects in the retrofit market also span residential and commercial buildings, as well as government installations. And since our product launched last quarter, we are focusing on developing some new and innovative ancillary systems and peripherals for the retrofit application. With that, I look forward to answering your questions, and we'll first include some of the questions previously sent in by our shareholders. So first, without pulling any punches, Here are the additional questions we received that were emailed to us. And in some cases, I'm combining several related questions into one. And also, we covered some of these topics earlier, but I thought it would be helpful to you to hear some of the questions and for me to go into more detail. Joe, how concerned are you about Gauzy's French rehabilitation proceeding? What happens if things deteriorate further? Well, that's a fair question, and by the way, all indications are that they're not going to deteriorate further. They're actually improving from where I sit. First, it's important to separate the French subsidiary proceedings from the broader organization. The rehabilitation process applies specifically and only to Gauzy's French subsidiaries. It does not apply to the German SPD film production outside of Stuttgart, or the SPD emulsion production operations in Israel. SPD film production in Germany continues, and SPD emulsion production in Israel continues. Automotive and architectural development programs continue. Market development and new business development for SPD continues. And yes, the French filing required liquidity allocation and management attention. And yes, Gazi reduced headcount as a part of the restructuring. But restructuring, when done properly, can be a very healthy change that strengthens a company. And, you know, we, of course, remain in regular contact with Gauzy. And from our standpoint, we see operational continuity in SPD production and program execution. I'm going to take another question that's related to that. Do I have a contingency plan if Gauzy does not perform? The answer, Michael, is yes, we do. We have a plan A, B, C, and D. My preference is not to have to use any of those. Another question from Mr. Erdman. What can you say about the war? Well, war is bad. And if I had to say what was the most disruptive thing to our business, we have some key technical developments that are on the verge of happening within Gauzy. And we have some key meetings with companies outside of Israel that are going to be scheduled for this month or early next month. And really the limiting factor on both was when are they going to open up the Israeli airspace. Right now it's closed. I heard today I think it was that they're reopening it on Sunday. In some cases people outside of Israel at Gauzy had to take planes to other countries, then trains and buses, including a six-hour bus ride to get home. They're very able to operate on, you know, in these environments where that happens. So, you know, kudos to them for the strength and determination to do that. I got another question. Can you provide a postmortem why we didn't get a business and there's a couple of car models mentioned. This is from Jared. I'm going to talk about three of them that are on his list. The only one I'm not talking about is Mercedes, and that's because of some active discussions going on. But one of them was VW. Why don't we get the VW business or the Rivian business, which is somewhat related since they kind of share a lot of the platforms together. VW initially –

with the Porsche Taycan went with a PDLC product. And I don't know why they did, so I can't answer the question, why didn't we get the business?