Joseph Harary - President and Chief Executive Officer Seth Van Voorhees - Chief Financial Officer.

Alan Denzer - Stifel George Wohanka - Retail.

Good afternoon, ladies and gentlemen. Welcome to Research Frontiers’ Investor Conference Call to discuss First Quarter of 2016 Results and Recent Developments. [Operator Instructions] This conference is being recorded today.

A replay of this 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 e-mailed 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 e-mail questions prior to this call or will do so afterwards in order to answer more questions of general interest to shareholders on this call. [Operator Instructions] Also we ask that you keep your question brief in the interest of time.

I would now like to turn the conference over to Joseph Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir..

Thank you, Arenson and good afternoon everyone and thanks for being here today. Joining me today is Seth Van Voorhees, who is our CFO and also heads up our VariGuard division. Today’s call will be concise and focused mostly on our two largest markets, automotive and aerospace.

There is activity in our other markets architectural, marine and museum and we may touch on these as well. Less than two months have passed since our last conference call when we discussed 2015 results of operations. On that call, we announced the marketing initiative that we had started in conjunction with Mercedes and its dealers.

This initiative is underway and I will give more details on the success of this later on in the call. As we noted in our last conference call, we expect to see the increase in revenues in the automotive market from this initiative begin in the second half of this year. This is when the next order cycle for cars by dealers, kicks in.

2016 has started out to be a very active year for us our licensees and their customers. Let’s review some of these developments so far in the first third of the year.

First, in January, the giant German automotive supplier, Continental Automotive, started the year off at the Consumer Electronics Show with a highly successful exhibition at the Consumer Electronics Show. There they outfitted a Ford Mondeo with all 12 pieces of SPD-SmartGlass in it being controlled by Continental’s Intelligent Glass Control system.

Specially invited members of the press, the automotive industry and even their senior executives and Board of Directors were present for this important event.

Since then, Continental has presented their Intelligent Glass Control system and the fully equipped SPD-SmartGlass Ford Mondeo station wagon at additional technology fairs and exhibitions with impressively favorable reactions from all.

Also at the Consumer Electronics Show this time on the architectural glass side, the press saw the latest in connected home design with Zuli’s Smartplug product operating SPD-SmartGlass. Later that month, Mercedes premiered their new SLC Roadster at the Detroit Auto Show.

This car replaced the SLK in name and also features the popular MAGIC SKY CONTROL panoramic roof option. February saw partnership between the New York Stock Exchange industry giant, AAR Corporation and our licensee, Vision Systems for aftermarket aircraft upgrades using SPD-Smart Electronically Dimmable Windows.

And in March, the newly refreshed models of the Mercedes SLC and SL Roadsters made their European debut at the Geneva Auto Show. These vehicles and three additional S-Class models all offer MAGIC SKY CONTROL making now a total of 5 car models using our SPD-Smart technology. These cars were also featured at the New York Auto Show.

In fact cars with our SPD-SmartGlass have appeared at every major auto show around the world this past year. March also saw our licensee Hitachi Chemical exhibit their SPD-Smart products at the Vancouver Globe 2015 Innovation Conference, an exhibition focused on Green Innovation.

It was nice to see this type of marketing activity by our licensee, Hitachi Chemical. And in April, innovative new products for the aircraft industry using SPD-Smart technology were debuted at the Hamburg Air Show by Vision Systems and GKN’s new Fokker Services subsidiary.

And later this month in May, more innovations and product announcements will be showcased at theGeneva EBACE Air Show. SPD Electronically Dimmable Windows had a strong presence at all the major aircraft industry shows in 2015 and 2016. SPD technology was also featured at all the major international yacht shows.

As you know, we are on the Cheoy Lee Alpha 76 and 76 Flybridge yachts and the Hatteras 100 mega yacht. This year also saw yet another major yacht model come out which extensively used SPD-SmartGlass produced by our licensee, Vision Systems for the Silver Arrows Marine, ARROW460 Granturismo.

Deliveries to customers start this year for this production yacht that Silver Arrows Marine produced in conjunction with Mercedes-Benz Style, a design arm of Mercedes-Benz. Moving now to our balance sheet and revenues, as of March 31, the company had working capital of approximately $7.1 million. Our balance sheet remains strong and debt free.

Based upon existing cash and levels of expenditures even if our revenues stayed the same and did not increase as we are expecting, our cash would be sufficient to fund our operations for about the next 2 years. Our board reviews our capital resources at every board meeting and in answer to a question we received in advance of this call.

We currently are not discussing any transactions to raise additional capital. We don’t need capital right now, but as sometimes is the case, if a strategic investment comes up, we would certainly consider it.

For example, in the past, our largest shareholder, Kevin Douglass asked us if we would allow him to increase his ownership position in the company and we issued some stock to him directly and the rest he bought in the open market. Revenues were up in both of our largest markets automotive and aerospace.

For the first quarter of 2016, revenues were up about 8% compared to the fourth quarter of 2015 and also compared to the first quarter of 2015. And if we back out non-recurring revenues in the first quarter of 2015, then revenues in the first quarter of 2016 would have been about 21% higher than the first quarter of 2015.

Our revenues for the first quarter of 2016 were actually even higher than we reported, because one of our licensees did not submit their royalty report on time also. So, that covers historical results of operations. Now, let’s talk about what to expect in the current quarter and beyond.

The ramp up in number of models and numbers of cars, aircraft and boats continues. Architectural projects that want the best performing Smart windows in the world have already begun to spec in SPD-SmartGlass. Our licensees in Europe are particularly strong in this area.

On Christmas Day 2015, the first HondaJet was delivered to a customer in North America. Now, HondaJet has begun delivering to customers in Europe and elsewhere. Our licensee, Vision Systems makes these windows in their Melbourne, Florida facility.

And InspecTech makes the Electronically Dimmable Windows for the King Air and that aircraft is selling quite well. We are standard equipment on the King Air 250, 350I and C90GTx. All of these aircrafts are made in the United States and all of the windows are.

In Europe, our licensee, Isoclima makes SPD-Smart aircraft windows for helicopters and these too were part of the economic activity in aircraft in the first quarter of 2016. Isoclima makes SPD-Smart widows for the Bell and AugustaWestland VIP helicopters as well as for other aircraft models. Now, let’s talk about our largest market, automotive.

As expected and as predicted on our last investor conference call the refresh of the SLC and SL roadsters by Mercedes has resulted in a pick-up in the volume production of these cars that are in the mid-cycle of their program.

The S-Class Coupe is also selling well for Mercedes and the take rates for the MAGIC SKY CONTROL panoramic roof feature continues to exceed Mercedes expectations. We also expect higher take rates from the Maybach, Mercedes top-of-the-line sedan.

And we are happy to confirm that as we said in our last conference call, as of April the high volume V222 S-Class sedans have begun to hit dealer showrooms here in the U.S. and elsewhere. This is the best-selling luxury sedan in the world.

So in 2014, just to summarize according to IHS data, we were an option on Mercedes models representing 29,000 cars. In 2015, we were an option on 42,000 cars and starting now in the second quarter of 2016 we are an option on over 120,000 cars. That’s just starting folks.

Our biggest challenge, and our biggest opportunity, is creating an educated customer. We do this in all five of our markets. When people realize the benefits of using our SPD-Smart technology they want it. One of the challenges we faced is that the initial cars that offered MAGIC SKY CONTROL were our Roadsters.

If you went to an auto show or to a dealer showroom these cars 99% of the time had their top open hiding the MAGIC SKY CONTROL roof in the trunk. For this reason awareness had to spread through us, through favorable press, and through word of mouth.

Now the situation is different, Mercedes has moved MAGIC SKY CONTROL to sedans, their higher volume vehicles. So we now for the first time have the opportunity to take more direct actions in the showroom and at auto shows to promote awareness of this really cool product.

On our last conference call eight weeks ago, we outlined our strategy to increase even further the sales of the MAGIC SKY CONTROL panoramic roof option on Mercedes vehicles. This is the program that has the support of the highest levels within Mercedes in Germany, China and the U.S. We have now visited a number of key Mercedes-Benz dealers.

Last week alone, I personally met with ten different dealers and we were very warmly received. The number of meeting is one reason my voice is kind of raspy today, so please forgive me if the call is short and I am a little harder to understand.

We have met their sales force and have provided them with information, videos, demonstration units and other tools to help them and their customers understand the many benefits of SPD-SmartGlass. We all read almost daily about three important trends in the automotive industry electric vehicles, autonomous driving and CO2 emissions.

As discussed in more detail on our last conference call SPD-SmartGlass’ important benefits in all three of these areas. And of course it makes cars safer, more energy efficient and more comfortable.

Independent data shows an 18 degree reduction in cabin temperature inside the vehicle without having to use the air-conditionings and an estimated increase of 5.5% in the driving range and reduction by 4 grams per kilometer of CO2 emissions.

Dealers are also beginning to look at the UV protection afforded by the MAGIC SKY CONTROL roof as a safety feature to protect car occupants. And we also show Mercedes dealers in our presentations and our meetings how this option can help them sell more cars and make more money per car.

The MAGIC SKY CONTROL option on vehicles that are out there is very popular with customers who know about it and Mercedes and their key dealers love it. By building awareness of what this remarkable option does we are finding that when customers know about it, they want it plain and simple.

We have answered quite a large number of the questions that were e-mailed to us as part of the presentation today. But before we open the floor up to live questions for those participants on the line we thought we would answer some of the other questions we received via e-mail.

We were asked by about the recent Markman recommendation by Judge Burke in our patent litigation against E-Ink, Amazon, Sony and Barnes & Noble. As many of you know we are suing them for infringement of three of our patents.

A Markman hearing was held in early November and the purpose of a Markman hearing is to interpret what the words in our patents mean. Judge Stark, the main judge in the case assigned Judge Burke to be a magistrate and make recommendations. Judge Burke made his recommendations, some of which went our way and some of which went E Ink’s way.

We filed our objections to Judge Burke’s interpretation and we believe that the law is clearly on our side. We await the decision by Judge Stark about whether or not to adopt those recommendations by Judge Burke. Taking a couple of more of the questions that we received we were asked about profitability with all of the developments.

And one thing I just want to stress and one reason we are focusing on automotive and aircraft is those are the markets that are the most predictable for us. And also they can generate high volume and early volumes. And if we just look at automotive one car alone the S-Class depending on the take rates can make us profitable.

So it’s something that we spent quite a bit of our time and attention on as well. I was also asked in terms of revenue whether a good chunk of our revenues from product sales or for minimum annual royalties under our license agreements.

While in past years most of the revenues were coming from minimum annual royalties under our license agreements, I am happy to say that this year and last year the bulk of our revenues are coming from product sales and that’s made us the best-selling smart window technology in the world. Looking at some of the other question we got.

One question we got is in prior calls we mentioned that our SPD-SmartGlass costs between one-half and one-third of the cost of electrochromic windows in the aircraft industry, and the shareholder had asked to try to understand why this price advantage apparently did not transfer to the building industry.

To answer the question George, we are at an early stage and so our competitors in the architectural market. And we believe that a lot of the installations that our competitor Sage and View are putting into the market are highly subsidized, and we are not.

So we may have the cost advantage, we just don’t know yet until we all get to market pricing like we have in our other markets. But in the other markets we are cost competitive in the higher performing product.

I think that basically takes care of most of the questions that we haven’t already answered in our presentation or by e-mail either before the call or on the call. So, I would like to open up the floor to live questions. And if anyone has as questions that haven’t been answered please, now is a good time..

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Alan Denzer of Stifel. Please go ahead..

Yes. It’s Alan Denzer.

Joe, how are you?.

Hi, Alan.

How are you?.

Okay.

I just needed to mention to you that I have went to the largest auto dealership yesterday in Westchester County as you know are very wealthy county up here in White Plains of Happy Motors and I was a little dismayed your marketing program evidently hasn’t reached them yet?.

Yes. We started in the south. We started in the south where the bulk of the S-Classes are sold..

Yes. Okay. Well, they didn’t even have one car there that had the MAGIC SKY CONTROL option in their inventory and they didn’t have any mention of it in their marketing materials in the interactive displays that they have. And the salesman that I spoke to said in effect gee, why did they ever put this on a convertible car, you don’t really need this.

And of course I had to tell him that’s it’s now in the sedans and he looked in his computer and said oh, yes, well that will be due in June or July, okay. So, evidently we are very much at the beginning of the learning process here at least in the Northeast..

Yes. Well, it’s hard to judge from a visit to one dealership. I visited 10 Mercedes dealerships last week. Every one of the dealers had cars with MAGIC SKY CONTROL. When I approached them, usually I started with the either the general manager or the sales manager, because they are the most familiar with their inventory and their cars.

And without a doubt, every one of those sales managers knew about MAGIC SKY CONTROL and were very enthusiastic about it. Remember this is the sunbelt, where the 95% reduction in heat and the 18 degree reduction in temperature is particularly important to customers.

And also what I have been told from even dealers in the Northeast salesmen is that typically a third of the salesmen are good and knowledgeable, a third are average, and a third are something else..

Right. But you know Westchester County is where the money is so I mean you could – you can argue….

Yes. Alan, I have been in dealers where the demographics are similar and you do see a wide variety among salespeople about their knowledge. Like I said, it’s something where we are trying to address that.

And up until now, there hasn’t been a great deal of general awareness among consumers and even some of the salespeople just because the cars that were on the showroom were roadsters with their top open and it’s very hard to demonstrate it.

We have actually changed that now with our initiatives, where each dealer gets a demonstration of SmartGlass that the customer can operate and we are finding that they are very warmly welcoming that tool..

The one positive factor out of my discussion with salesmen was that it was available on the S-Class, it’s possible and likely even that if it’s successful it will migrate into the E-Class cars which will happen?.

Right. Yes, typically there is a migration of technology form the S to the E..

Thanks..

Anyway, thanks. I appreciate that. I will make sure when I visit Westchester to spend a little more time with them..

In White Plains. Thank you..

White Plains..

The next question comes from George Wohanka from Retail..

On the call, it was mentioned that quarterly earnings were actually or quarterly income was actually higher, because one of the licensees got its reporting in a little late where would that show up, would that show up in accounts receivable or if that would show up?.

It will show up probably in the next quarter’s report so for the second quarter..

And how much was it?.

No, just to be clear, what happened is that the reports were not issued in a timely fashion. So, they were not included in our financials and will be reflected in our second quarter results. So, what Joe was indicating is that our revenues would have been higher had those that royalty report been submitted on time..

Right. And that was one of the major licensees like Pilkington and Asahi where we would make sure that that was included..

Okay, good enough. Thanks a lot..

Thank you..

At this time, we have no further questions..

Okay. In that case, I would like to maybe make some closing remarks. If you look at our strategy, we have been building off strong platforms that we have particularly in automotive with Mercedez, an aircraft with HondaJet, Textron and the major helicopter manufacturers and the world’s fair in architectural.

In Marine, we are building off the Cheoy Lee, Hatteras, and most recently, the production motor yacht by Silver Arrows, Marine and Mercedes-Benz Style. And the growing awareness of the SPD-Smart panels by VariGuard has also been helpful, especially the use by the Smithsonian and other museums. So, this has been a very solid strategy.

We are blessed with household names that are out there using our technology and with customers want the very best.

Now, that the V222 sedans with MAGIC SKY CONTROL are finally in production and in dealer showrooms, we are optimistic that customers will love MAGIC SKY CONTROL in the S-Class sedan as they do in the other cars that offer the MAGIC SKY CONTROL option. This one car loan can make us profitable depending upon the take rates.

And we have met with great enthusiasm by the key Mercedes-Benz dealers for the MAGIC SKY CONTROL panoramic roof option. Remember, in 2014, we are an option on less than 30,000 cars. Last year, we were an option on the 42,000 cars. And starting just with the second quarter of 2016, we are now an option on over 120,000 cars.

That’s four times as many vehicles as in 2014 and three times as many vehicles as last year.

Add to that a fleet of planes produced by HondaJet and Textron with our SPD-Smart aircraft windows, another aircraft around the world and high visibility production yachts like the Mercedes-Benz design, Silver Arrow’s Marine and you could see the ways that our business is growing that our technology is being widely adopted.

In the past 12 months alone, over 6 million people have had the opportunity to operate in SPD-Smart window and experience the magic of SPD-SmartGlass in the architectural context.

And with strong showings at all the major automotive aircraft and yacht shows around the world and in the world’s fair and being the keynote speakers at major industry conferences, we are constantly out there showing every industry how Smart their glass can be.

This effort continues and next month I am presenting the keynote address in Detroit at the Automotive Glass Conference there. I was also quite honored to have also been selected to be the Chairman of that entire conference.

So, we hope that you will join us in celebrating our successes so far with recognition that we have worked hard and have achieved meaningful footholds in all the five industries in which our technology is used.

And we will continue with hard work to work hard and this will result for Research Frontiers, for our licensees and some of the world’s best launch customers with future successes. In other words, the best is yet to come. And of course, none of this would have been possible without your support and trust as our investors.

So, I thank you all very much for your participation in today’s conference call. And if I haven’t answered a question that you had e-mailed, feel free to follow up after the call and I will try to answer those as well. Thank you very much everyone..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..