Joseph Harary - President and CEO.

Alan Denzer - Stifel Nicolaus.

Good afternoon, ladies and gentlemen. Welcome to Research Frontiers’ Investor Conference Call to discuss the Second Quarter of 2016 Results and Recent Developments. During today’s presentation, all parties will be in a listen-only mode. [Operator Instructions].

This conference is being recorded today and 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 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 would 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, Allison. 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. I’d like to thank all of you who sent such nice notes to us about the unexpected passing of our dear founder Bob Saxe.

I’ve known Bob Saxe for over 30 years and I’ll miss his friendship and the mentorship. Bob devoted his professional career and his life to Research Frontiers and we’ll all work hard to make sure that his legacy as the founder of the smart window industry continues on.

Today’s call will be concise and focused mostly on our two largest markets, automotive and aerospace. There is increasing activity in our other markets such as architectural, marine and some activity as well in some new markets and we will touch on those as well.

If you are like me, the first thing that I focus on when reviewing each quarter’s financial results is revenues. And I am sure that you were all as disappointed as I was to see that fee income was lower in the second quarter. We got most of these numbers this week and last week, and I think it will be useful for us to analyze them together.

Over 80% of revenue difference between last year and this year was due to non-recurring items such as special projects like revenue from the World’s Fair, special projects from VariGuard and non-recurring license fees. Only about one-sixth of this revenue decline actually came from economic activities.

However, since our results from operations going forward are the most important bellwether of our future success. Even though this represents a small fraction of the reasons for the decline, I think that it is important to understand what happened here. So, we will discuss this today in some detail. Let’s start from revenue from our aircraft market.

In aircraft, we have four very active licensees. For three of these licensees, activity was up in the second quarter. Revenue from one licensee was temporarily down in the second quarter compared to the first quarter because of a design improvement that was requested by one OEM customer.

Their new window installations were down, while this could be redesigned and implemented. Revenues from this licensee should be back up as new windows resume installation in the second half of this year. In aircraft, SPD technology is mostly standard equipment.

So, revenue depends upon the number of new windows being installed, which in turn depends upon the number of aircrafts being produced each quarter. I’m going to turn to revenue from automotive. Unlike aircraft where our revenue generally follows overall production levels, in automotive, SPD technology is an option.

So, royalty income depends upon two factors, total number of cars being produced and the take rate, which is the percentage of cars that take the SPD Magic Sky Control option. We can influence take rate, which is unfortunately we do not have much influence over the other factor, which is the total number of cars produced for each model.

This is entirely up to Mercedes and depends upon things such as worldwide demand for a car, the timing of the introduction of cars by competitors, and where car model is in its product lifecycle. For example, there’re high volumes typically in the first two years of redesigned cars production.

Volume tapers off typically in year three, rises again typically in year four when the car design is refreshed, mid-model and then volume tapers off over the next few years until the next redesign of the car. We had a mix bag here in the second quarter. Take rates were up but the total number of cars produced by Mercedes were down.

One reason that take rates were up is the growing awareness of Magic Sky Control, as it has put on more car models with higher production volumes like the S-Class sedan. Another reason take rates are up is that the -- from the cooperative marketing initiatives that we have with Mercedes and its dealers.

This initiative which I discussed in detail in our last two conference calls together is underway, and judging from the higher take rates on all models of Mercedes here in the U.S. where we started this program, it has been very successful so far.

Roadster sales with Magic Sky Control have exceeded Daimler’s initial production projections for this year. And with the recent refresh of both the Mercedes SLC and the SL roadsters, total volumes were up.

And with high take rates, the number of cars for both models of roadsters produced with our technology for the first half of this year was up nicely from the same period of last year. The take rates are up which is great. Why was the overall car production lower in the second quarter? One reason is the states these cars are in and their product cycle.

With the refresh of the S-Class still a year away, we’re probably at the lowest volume period for this car’s lifecycle until it refreshes next year when volumes will historically increase. We saw this volume increase with the SLC and SL roadsters, both of which were refreshed earlier this year, breathing new life into sales of these cars.

There is another reason that total production of cars was down this past quarter. Normally, the second quarter of the year is the weakest for new vehicle production within Mercedes, this is because the new model year cars hit showrooms at early July of each year.

So, as you would expect, the quarter before that has lower production, since it is the last quarter of the old model year, and neither Mercedes nor their dealers want to have older car models sitting on the lot that must be deeply discounted in order to sell.

So, as you would expect, Mercedes cuts back on its production in the second quarter unless inventory of the older cars wind down.

If you read automotive news or other industry publications, it was no secret that earlier this year, auto manufacturers had delays in getting emission certifications for their cars because after the Volkswagen scandal, the ECA looked at all cars more carefully.

Since this slowed down the delivery to dealers of cars already shipped from Germany that were produced in the first quarter that were sitting on the dock waiting clearance, the OEMs further cut production in the second quarter more than usual, so that the cars produced in the and the first quarter that were sitting in the dock could be delivered to dealers.

All this is fairly well-known and was discussed in various automotive industry articles. So, I am not revealing any secretes here, but the bottom line remains the same, which was that total production of vehicles in the second quarter was most probably reduced more than usual for this period.

So, the bad news was that the total number of cars produced in the second quarter was down. Some of this was expected as part of the normal production cycle, but some of this was even a surprise to the auto manufacturers. Fortunately, this is behind us for the year.

Looking forward to the second half of the year, we have been told to expect higher production. Under the Mercedes model year production cycle, the new model year has just begun and the third quarter will be much stronger than the second quarter, and the fourth quarter production being the strongest historically for Mercedes.

So, total number of cars which is the first factor in determining our royalties is expected to be up in the second half of this year. What about the other factors, take rates? Earlier this year, we launched a successful coordinated marketing and dealer awareness campaign with the support of Mercedes.

As we noted in our last two conference calls, we expect to see the increase in revenues in the automotive market from this initiative to be begin in the second half of this year. This is when the next order cycle for cars by dealers kicks in, and we’re sticking to this guidance.

In a recent check of take rates, the percentage of cars with Magic Sky Control option shows meaningfully higher take rates for the 2017 model year that has already begun to be delivered to dealers. All models of Mercedes are showing this higher take rate as compared to the last model year.

So, it seems as if the coordinated marketing initiative that we have started with Mercedes has been very effective. We see this in the numbers and in the feedback that Mercedes and Research Frontiers have been getting from the key Mercedes dealers.

As such, with Mercedes’ cooperation and help, we’re expanding this program in the third and fourth quarters of this year. While we have focused today on our historical revenues from the aircraft and automotive markets, let’s talk about where these markets are going.

We have already spoken about expected growing revenues from increased take rates and more cars being produced during the second half of this year, but what about other OEMs? And this is a question I get quite often, as you can imagine.

As I’ve noted in the past, we and our licensees have been working in the world’s premium -- with the world’s premium auto manufacturers. Several of them that have already developed and tested their own SPD-SmartGlass products for their upcoming cars, have told us that they’re looking to see what the take rates are for the Mercedes S-Class sedan.

If these take rates are high and the option is popular, these other OEMs will pull the trigger and put SPD on their own vehicles. As I noted earlier, we’re indeed seeing these higher take rates. We told shareholders at our Annual Stockholders Meeting this past June to expect other OEMs to adopt SPD. Let me give you today some more details.

At least one of these OEMs besides Mercedes has indicated to us and our licensees that they’re on such an accelerated timeframe for product launch that they plan to use the same SmartGlass suppliers Mercedes and even accept Mercedes test results.

The follow-up question that we all ask is what do you mean by accelerated timeframe? And let me try to help you understand what this means. Normally, a typical OEM in the automotive market will take two to three years to develop and test the new glass component for a vehicle.

So, I think it’s reasonable to assume that if the OEM is willing to accept another manufacturer’s test and use the same suppliers who’ve already put the SPD-SmartGlass into serial production, then they plan to introduce the vehicle within two years or less.

So, that timeframe puts into 2018 or perhaps 2017, since I can’t tell you when the process started with this OEM, and there’re other OEMs as well. What about aircraft? Based upon contract signed between our licensees and the OEMs to-date, we’re standard equipment on seven different aircraft and an option on an eighth.

In addition, we have said that there’re many more, about 17 in advanced stages of discussion between our licensees and the OEMs. So, let’s review the aircraft market, which like the automotive market, we also expect to grow beginning in the second half of this year.

In aerospace, the adoption of SPD Electronically Dimmable Windows or EDWs, continues to grow across all market segments. SPD EDWs are standard equipment on Honda Aircraft Company’s HondaJet. These SPD windows are supplied by our licensee Vision Systems and produced that their Melbourne, Florida factory.

Dassault Aviation’s upcoming Falcon 5X will feature SPD Skylight as standard equipment. These SPD products will also be supplied by Vision Systems. Vision Systems has also said that their SPD EDWs are already installed or will be installed in Epic Aviation’s upcoming E1000 aircraft and in Airbus Helicopters H175.

Three weeks ago on July 12th, Airbus Helicopters announced delivery of the first VIP version of the H175 helicopter. And in the announcement Electronically Dimmable Windows were noted as “one of the distinctive elements”.

In addition to successes in OEM new production programs, Vision Systems is also active in both general aviation and commercial aviation aftermarket segments. For example, in partnership with RUAG Aviation, Vision Systems’ SPD EDWs have been certified and installed on the refurbished Falcon 900.

In the first quarter of this year, we also saw a partnership between New York Stock Exchange industry giant, AAR Corporation and our licensee Vision Systems for aftermarket aircraft upgrades using SPD-Smart Electronically Dimmable Windows.

The market for aftermarket installations come in many times the size of the OEM market and SPD technology has a unique advantage over EDW technologies such as electrochromics and that they can be -- we can be retrofitted to existing aircraft without having to change the outer structural window.

Moving onto InspecTech, SPD EDW supplied by our licensee InspecTech, were selected on for all models of the Textron, Beechcraft, King Air’s the C90GTx, the 250 and the 350i. The C90GTx and the 250 previously used polarized windows, and the 350i previously used electrochromic Electronically Dimmable Windows.

Now SPD EDWs are standard equipment on all three models. These SPD windows are produced at InspecTech’s Pittsfield, Massachusetts factory. Now, I have some exciting news. Today, I can tell you for the first time about the most recent contract won by InspecTech. It is for SPD anterior partitions for a major airline.

Deliveries have already begun and the customer’s happy with the product. With this commercial aviation aftermarket contract, InspecTech has achieved a significant milestone. The Company has now sold and installed SPD EDW products in all six of the aerospace market segments.

The commercial aviation OEM segment, we’re standard equipment on the Airbus A380 in selected areas that were delivered to Qantas. In the commercial aviation aftermarket segment, as I just noted with the anterior partitions that are being used by a major airline.

In the general aviation OEM segment, SPD EDWs from InspecTech are standard equipment on all three models of Textron Beechcraft King Airs. And in the general aviation aftermarket segment, InspecTech’s EDWs have been installed on 36 different aircraft models in the aftermarket.

In the helicopter OEM segment, InspecTech’s EDWs have been used onto Sikorsky S-92 VIP helicopter configurations. And in the helicopter aftermarket segment, their EDWs were installed on three different helicopter models in the aftermarket.

This is a very impressive accomplishment by InspecTech, and this is something that only SPD-Smart technology has achieved in the aircraft industry. In Europe, our licensee, Isoclima makes SPD-Smart aircraft widows for helicopters. Isoclima makes SPS-Smart windows for the Bell and AugustaWestland VIP helicopters as well as other aircraft models.

In April, Fokker Services, which is now part of our licensee GKN Aerospace, made public their SPD activities by showing SPD EDWs at the Hamburg Airshow, a premier commercial aviation tradeshow. Among the SPD products featured was an SPD EDW intended for use with Fokker’s SkyView panoramic window.

This 54.5 inch by 19.5 inch widow is one of the largest aerospace EDWs ever seen, yet with SPD technology, it still switches in just a few seconds. The SPD product showcase by Fokker was developed collaboration with GKN and with InspecTech.

And more innovations and product announcements were showcased at the Geneva EBACE Airshow in May, and at the large Farnborough Airshow in England, in June. We’ve also seen more activity in the marine market.

This year also saw yet another major yacht model come out which extensively uses SPD-SmartGlass produced by our licensee Vision Systems for the Silver Arrows Marine Granturismo.

Deliveries to customers start this year for this production yacht that Silver Arrows Marine produced in conjunction with Gorden Wagener and Mercedes-Benz Style, a design arm of Mercedes-Benz.

Mercedes also launched the highly visible marketing campaign surrounding it at the Monaco Grand Prix and the Cannes Film Festival and at other major exclusive events around the world. We’re also seeing the beginning of business and other new markets such as trains and other product applications.

Two of our licensees already have customers in this area. We also are seeing a pipeline of new projects in the architectural market as awareness of our technology grows after the World’s Fair. Our balance sheet remains strong and debt free. As of June 30, 2016, the Company had working capital of over $6 million.

And based on existing cash and levels of expenditures, even if our revenue stayed the same and did not increase as we’re expecting, our cash would be sufficient to fund our operations at least until early 2018.

I was asked by a shareholder by an email, if I thought our stock decline was due to a potential stock offering of our shares? No, I don’t think so. We’re not contemplating or discussing with anyone in issuance of stock at this time.

Another shareholder emailed to ask, what is the impact upon Research Frontiers of the collaboration of Mercedes and Gauzy? Is there any indication that Mercedes will drop Magic Sky Control due to technology being developed by Gauzy? Well, first, when I asked the senior people within Mercedes, they’ve not even heard of Gauzy.

And I think that the reason for this question is that Gauzy recently touted in their own press release that they were given space in the Mercedes technology incubator for startup. Gauzy has a dyed liquid crystal technology. Traditionally that technology is much like liquid crystal and that it does not block heat or light and simply scatters light.

And if you look at the videos on their website that are not computer generated simulations, you’ll see it is hazy as well. Finally, dyed liquid crystal technology is known to have real durability problems. So, I strongly doubt that it can withstand the rigorous testing that SPD had to go through with Mercedes.

We looked into this company over four years ago and not much of any substance has seem to happen with it since then other than it merely moving to an incubator. So, no, I don’t expect this to have any impact on us. Another question was regarding the marine market.

Has there been any efforts to introduce SPD to the cruise vessels market? I think this is the first time we’re saying this, but yes, actually large SPD smart windows are currently being tested on an ocean-going cruise ship.

Another question was what seems to be the barriers to use a SmartGlass in commercial and residential buildings with large glass surfaces; are there architectural firms that are aggressively pushing the SmartGlass idea in the U.S.

or abroad? First, yes, there’re some real champions of our technology out there throughout the world that are pushing the technology with some success now. In my opinion, the main barrier is total cost. A building uses a lot of glass, so outfitting the entire building skin would be very expensive today for any smart window technology including ours.

However, we’re seeing fairly large uses of our glass in the architectural market in projects under development right now. And our efforts to educate the market about the benefit of SPD-SmartGlass technology seems to be working.

We were also asked about the status of our patent litigation in which we’re suing E Ink, Amazon, Sony and Barnes & Noble for infringement of three of our patents. As many of you know, a Markman hearing was held in early November. And the purpose of the Markman hearing is to interpret what the words in our patents mean.

Judge Stark, the main Judge in the case appointed 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 have filed our objections to Judge Burke’s interpretation and believe that the law is clearly on our side.

We await the decision by Judge Stark about whether or not to adopt those recommendations. Now, I am going to ask the operator to open up the conference to any additional questions people participating today might have..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Ashfaq Farooq [ph] of WestPark Capital. [Ph] Please go ahead..

Quick question on the lower cost of the OEM. You cited that one of the reasons for the revenue shortfall was that the costs to OEMs -- the production costs of OEMs went down.

So, isn’t that like a good scenario for Research Frontiers as in it will lead to like a higher rates of adoption, I mean like, could explain that part?.

Absolutely. When we compare last year to this year, the price reductions were scheduled price reductions that came in at the beginning of this year. And yes, not only are they expected to lead to higher lines but they actually have, so it is a good thing.

But, when you compare last year to this year, you’ll get a little bit of an effect because that really just started to take hold with the lower pricing..

Do you expect, like these lower costs lead to like higher take rates in the back half of the year?.

I do. So, far what we’re seeing from an analysis that Mercedes did for us of take rates is that take rates across all models are actually up for the 2017 model year, which just to kind of clarify, it may have not been clear but the second quarter calendar quarter of the year is the last quarter of the production year for Mercedes.

So that’s why we see volumes down. But starting in beginning of July, sedans and other light vehicles start coming into dealer showrooms and starting -- a month later, you start seeing the SPDs come in. And those are the 2017 model years, and those are showing really nice increases in take rates across the board..

You guys have quite a few ongoing conversations with aircraft OEMs.

Do you have any updates on that like with any aircraft OEM making Research Frontiers a standard equipment or an option?.

Well, if you break down the market -- and it’s a good question because especially when you start thinking in terms of commercial versus general aviation, and when you think about OEM versus aftermarket, and as I mentioned earlier, the aftermarket is much bigger.

In general aviation, the aftermarket either kicks in when somebody is upgrading the interior or fixing the interior of a plane or when the plane changes ownership. With airlines, usually these are part of pretty massive fleet upgrades.

So, once you get into a fleet program, you’re talking about pretty much higher volumes even than OEM production in terms of use of the product. So, if you break down the two markets, in the commercial market, you have Boeing and Airbus as a top two large aircraft manufacturers and you’ve Embraer and Bombardier.

All of these companies have an involvement in way or another with SPD and our licensees. I can’t comment on specifics. Some of the discussions that have gone on very recently have been going on behind closed doors.

But, there seems to be I think a strong recognition that SPD offers some real performance and even cost advantages over other technologies that these airlines and these aircraft manufacturers have looked at..

Our next question will come from Bruce Balden, a private investor. Please go ahead..

Joe?.

Hi, Bruce..

Are you going -- guys going to be doing a co-ops on marketing with the new OEMs as they come onboard to….

That’s an excellent question, Bruce. The same program that we have with Mercedes has been designed to work with any OEM. And we’ve also been expressing that as something that we’d like to do with them when they launch their vehicles. So, yes, I mean, we’re having success in one area.

There’s no reason expect that that same investment won’t be similarly successful in the other areas with other OEMs too. So, yes, we’ve designed it with that in mind and we’ve already spoken to the OEMs about that..

Thank you very much.

Once quick last question, my usual one, are we still essentially failure free on the Mercedes cars?.

I am happy to say that with tens of thousands of cars on the road for years now, there hasn’t been one reported failure except for I think I mentioned once that tree fell on the glass and broke it. The SPD still works but the glass had to be replaced..

Thank you..

You’re welcome. And that’s a real tribute to Mercedes testing, which is I guess why the other OEM seem pretty willing to accept that as well..

And our next question will come from Gerald Albert [ph] a Private Investor. Please go ahead..

I wondered with the lower pricing, if you have much visibility within Mercedes with other models, I am thinking of the V class, which they’ve shown you a couple of times in concept form?.

Well, I can’t comment on specifics. Recently, we’ve had discussions about additional car models with them and additional uses for SPD..

Okay, thank you..

And our next question will come from Alan Denzer of Stifel Nicolaus. Please go ahead..

Hi, there. Joe, my condolence is to you and team there for a great loss. One of the things he stressed in any discussion I had with him when I asked him about it, was the other applications within the bottom of deal for SmartGlass other than the sunroof.

Could you please comment on any discussions or ideas that have taken place for other applications within either Mercedes or the automobile in general with any OEMs that you may be in touch with?.

Other applications besides the roof are certainly ones that we’re having specific discussions on and in some cases specific development programs with.

There is a lot of glass in a car, you got to glimpse of what’s possible with Continental’s Ford Mondeo that had all 12 pieces of glass in the car from the sun visor built into windshield to the roof to the side glass to the quarter panels to the rear windows to the rear side windows, all having SPD. You get an idea of what’s possible.

And certainly, the more glass that uses our technology have the greater revenues..

One just follow-up, Ford had displayed sunroof at the 2015 New York Auto Show, have you heard anything or is there anything you can comment on about the possible inclusion of SPD glass within the new Continental model that they’re coming out with?.

I don’t want to comment other than what I’ve said previously in the past, which is the main reason that we weren’t on the initial production was that two to three-year period that typically an OEM likes to have for glass products and they didn’t have that much runway between the time they decided to adopt SPD for the concept and when the car came out in production.

We’ve had discussions with them since.

And actually, the other thing that’s kind of interesting is there’s been a very interesting discussion going among many different automakers about how SPD will benefit electric vehicles certainly because more power’s going towards driving the car and less towards cooling it, but also the benefits of SPD and the autonomous driven vehicles and the benefits there.

And I might as well use this opportunity to say that later this year, I am also going to be the speaker at the Autonomous Driving Conference that’s being held in Detroit.

So, the industry is beginning to realize that when you’re in a car that’s potentially going to be driving itself, you start to pay attention to passenger experience just like they do in the aircraft market..

Do you want to just make a comment about the Frankfurt Auto Show coming up in September or shall we just read that….

We have to stick to the policy that we have which is the only auto show that I ever talk about going to is the New York Auto Show because I’ve been taking my kids to that since they were young and now they’re married with their own kids. So, I’ll take my grandkids to it.

But, we don’t comment about what’s going to happen at an auto show until it happens..

And our next question will come from Michael Kay [ph] of KNT Associates. [Ph] Please go ahead..

Joe, just a few short ones. What’s the status of Vision Systems development and marketing of the sun visors? It seems that really has great potential, when do you think it would….

It does. Just to maybe answer the question because I’ve got it from several people. They initially started testing this for the automotive market. They’ve gotten great success and customer response from that with the OEM that they’re working with on that.

They moved a lot of the more sophisticated development into the aircraft segment of their business because they also have a lot of strong interest there as SPD moves from the passenger cabinet to the cockpit, the benefits I think are pretty apparent.

And a lot of this development work for the automotive industry is being funded by the aircraft development. So, basically, they’re working in parallel but my guess is you’ll see a product come out in both markets, almost at the same time..

Any notion as to when that would be, like, take a year or six months or -- and did they give any indication when it would be available for people?.

When you’re dealing with very large companies and here we’re talking about OEM, we don’t give timeframes because they don’t move at the same pace as we’d like, but they certainly are moving with pretty firm steps, I think the speed of which some of these developments have happened even surprised Vision Systems..

Also with the unfortunate passing of Mr. Saxe, I guess maybe some people are wondering what impact would that have on improvement and further development of SPD because I understand that he still was very active as Chief Technology Officer working on different projects.

And in addition since I don’t think anyone knows the history of underdevelopment and evolution of SPD better than him since he started it all, do you think all that material is certified [ph] so that if it’s needed during litigation, it would be available?.

So, answer to your question, Bob took extensive notes and lab notebooks of things he was thinking about. Also he was not only a brilliant scientist but a brilliant businessman as well with a Harvard MBA.

And one of the things they do teach you in business school is session planning and like any good company, we focused on that year’s ago and made sure that the thoughts and ideas from all of us in the directions we were going could carry on if something happened to us.

So, while I personally will miss Bob very much, he was a dear friend for over 30 years, as a Company his work and his vision and the directions that he saw us going in have been preserved and are being pursued..

And is there any news concerning a new -- another film, SPD film licensee?.

There is development, but nothing that I would talk about on an open conference call. And as you know, with any licensee or any company that we’re working with, it’s up to them to make the announcements first about what they’re doing, not us..

But that could possibly result in a further lowering of SPD film if Hitachi has some competition, is that possible?.

Competition is always good. You just don’t want it to become a commodity..

And our next question will come from Stephen Almaguer [ph] a private investor. Please go ahead..

I am just wondering here, I’ve been retired for going on ten years now. And unfortunately it gives me a lot of time to watch television. And as I go through the channels, I see a lot of these aftermarket automobile shows, custom builders, motor homes, things of this nature. And I’m curious, I just a few weeks ago saw that Mercedes-Benz sprint....

The Sprinter....

Yes, it was getting retrofitted for some music industry mogul or something like that. Anyway, this guy put probably $100,000 into this car. And when they got done, they put window shades in it. And I was extremely disappointed with it being a Mercedes to begin with. The guy had custom made seats that were trimmed all-in Ferrari leather in.

The music system would probably dwarf what the cost of the windows had been, if they were SPD. So, I guess my question is after seeing all these motor homes that in some cases go over $2 million, they have four slide outs items with big windows, nobody has yet that I am seeing is using it.

Do the licensees that research dealing with, have they reached out to these people and even offered to let them try this on an extra mile basis?.

First of all, Mercedes doesn’t do those upgrades, typically it’s the aftermarket auto tuners that do this. And you’re right, they spend a lot of money upgrading a vehicle. A lot of it is awareness, a lot of it also is whether they have access to the technology. We’re trying to change that so that they have more awareness and more access to it.

But remember, the aftermarket is somewhat unique. Unless the car has laminated glass already in it, you would have to fabricate glass molds to bend the glass to the right size and shape to go into the car and then make laminated glass panels with SPD. Now, they do this.

Isoclima and AGP, two of our licensees that do a lot of work in the bullet-resisting glass market, already have the molding and the tooling for most cars.

So, if you wanted upgrade, I don’t know, Toyota Land Cruiser or something like that, you can most probably find that both of those companies have the glass tooling to make a laminated side widow with SPD.

With the Sprinter, it would require new tooling because that’s not something that’s usually made bulletproof or -- but once you have the tooling, it becomes feasible. So, there’s been some interest in that. And it’s certainly a market that is not price sensitive, as we gathered from the show you saw. So, it’s something that certainly is being pursued.

Same thing with RVs, RVs can be very expensive. And if you’ve ever driven in an RV with rattling shades on the road, you could really appreciate the benefit of SPD..

Correct. Okay, that’s good. I guess, if I start seeing these popup on these shows where these people are starting to use this stuff, I would probably buy some more in a way of stack….

That’s a market that to me a good market, but -- the logistics are much different. I mean, right now in the early stages, you have some specialty companies like AGP and Isoclima that can service that market because they already have the glass tooling.

But when you think about the large glass companies, they like to design something once and make 100,000 pieces of it..

And our next question will come from George Wohanka, [ph] a private investor. Please go ahead..

I fully understood that there’s no cash needed at the present time, but in the past you said you would not rule out a strategic investment by someone you mentioned specifically Kevin Douglas in the past, and is the arrangement that you made with him, because to your comments, now rule out strategic investment by say a OEM?.

No, nothing rules it out but if -- the reason to make a strategic investment is not the money, it’s the strategic relationship, and it’s something that interests us -- if presented, we would certainly consider it.

But I was answering the question about whether someone thought our stock weakness which kind of implies that it was a hedge fund or market participant that wanted to get involved. And there, we’re not having any discussions at all..

Okay, thanks Joe..

I think that’s the last question that we have in the queue. So, I’d like to make a closing remark if I could. The past five weeks, since Bob Saxe passed away have been difficult for all of us. He was a great man and we miss him as a founder and a guiding light and as a friend.

He started Research Frontiers 50 years ago when smart window was science fiction. And through hard work and determination he and his team made them a reality. I’m proud to have worked with Bob and to be part of the team.

Along the way, many of the companies other than Research Frontiers, have tried to do the same thing, have spent enormous amounts of money and most have failed, and the jury is still out on the one or two competitors that are left.

Bob got to see his idea become a prototype and his prototype become a product and his product become an even better product. In the last year of his life, he got to see his technology debut at the World’s Fair and be experienced there by over 6 million visitors.

He got to see the world’s leading premium automaker put it in five different car models including the best-selling luxury sedan in the world. He got to see SPD technology go from being an option on Mercedes models representing 29,000 cars two years ago to 42,000 cars last year to now being an option on over 120,000 cars with more coming.

He got to see other automotive OEMs select SPD for serial production. He got to see his technology become the first and longest flying switchable window technology in aircraft and become standard equipment on seven different aircraft models. He got to see it being used on both commercial and private aircrafts.

He got to see it being used on yachts and even began to be used on cruise ships. He got to see it protecting some of the most precious artwork and historic documents in museums around the world. He got to see his technology being used in tens of thousands of homes, offices, yachts, cars and other products.

He got to see his technology become the best selling and best performing smart window technology in the world. He got to see improve people’s lives by saving energy, reducing pollution and making people safer and more comfortable, in essence making the world the better place.

But, I am sorry to say he did not get to see his Company become profitable, but he did see the things that would make us profitable and he knew it was coming. And along the way, he got to know many of you personally. Many times he expressed that he appreciated the support that you gave us and the trust that you placed in him and in all of us.

Bob Saxe had no children. Research Frontiers was his baby. It was his legacy for the world. All of us still have work to do here at Research Frontiers but it is with inspiration from the brilliant determination of our fonder Bob Saxe and renewed vigor from his example that we move his Company successfully forward and build on what he has achieved.

If Bob were here today sitting next to me as he has done on all of our other quarterly investor conference calls, he would thank you all for being a part of his world and achieving his vision for that world. And he’d thank you for your trust, support and friendship along the way.

So, on behalf of Bob Saxe, I do want to express that thanks to all of you for that. Thank you all for participating today..

Ladies and gentlemen, the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your lines..