Joseph Harary - President and CEO.

Ishfaque Faruk - WestPark Capital Michael Kay - Kay Associates.

Good afternoon, ladies and gentlemen. Welcome to Research Frontiers Investor Conference Call to discuss the Fourth Quarter of 2017 Results 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 [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 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. [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..

What are the key factors that have resulted in almost no use of SmartGlass in office buildings and luxury apartments in the Mideast, Indonesia, USA, etc.? As I said in my presentation, there actually have been SPD-SmartGlass use in homes, offices and these projects have been focused in the U.S.

Middle East and Europe, so I guess I'll disagree with the statement that there has almost been no use of SmartGlass. We basically have about the same number of projects as our competitors in the architectural market, View and Sage. However at least one of them is losing about a $100 million a year to do that.

But also, we could do better if we had a wider and cheaper SPD film. Hitachi's coating line is over 10 years old and was commissioned when other SmartGlass films like PDLC were coated at 1-meter width or about 39 inches. The architectural industry ideally needs 60 inches wide film, and we are working on this.

At this point I'd like to ask our operator Rachel to open up the floor for any live questions that anybody on the call might have right now..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Ishfaque Faruk with WestPark Capital. Please go ahead..

A couple of quick questions for me.

So Joe you mentioned that architectural market was better and you also mentioned Gauzy, do you have a sense for if there's like any sizeable order or consumer adoption for the architectural market for some of your major licenses, not just Gauzy or Asahi?.

I think that Gauzy is going to start to be generating revenues for their SPD business, later on this year. I think that we are going to start to see some revenue starts pretty quickly, especially when you consider that they were only licensed in October, and trained in October, November, December and part of January.

So, they've been working very hard. As I mentioned earlier they have a lot of resources. They refer themselves as a startup but they really have 60 people that work as a company and hired people especially for the SPD business. So, we are very excited about that and I think that people will see the benefit of that..

In terms of any similar uptick from Asahi or Saint Gobain?.

Well, I mentioned that in Asahi's case the take rates, they hit some records this past year in 2017 and regarding the take rates, we've noticed an uptick.

We get reports from the licensees but we also get reports from Daimler on how many cars are coming off the production line each day with our technology on it and we've notice that market has firmed-up. And if we continue with our cost reduction, Mercedes said that the revenues could be multiples of what they are right now.

So it's a very big effort on our part and something where we are making good progress, and Mercedes is seeing that progress.

And I think the most important thing is Mercedes is seeing that progress in terms of cost reductions across the supply chain and maybe that's why they are turning up the volume a bit because they can see that this is going to be an ever increasing and more profitable item for them..

Okay, so sticking to the cost cutting side of things while you mentioned that you are cutting cost and your burn rate is down to around like $400,000 per quarter. Is that really helpful in terms of driving your top line growth and for….

We've been able to and I do want to distinguish something here, and I think your question is a good one to help me to do that. I want to distinguish between internal cost and cost to the customers.

When I refer to increased revenues from companies like Mercedes, that's from reducing the cost of the technology itself, coming up with lower cost to Mercedes to adopt and incorporate this into more and more vehicles. When I talk about internal cost reduction, that's just operational efficiencies.

We're trying to achieve cash flow positive and profitability and the two ways you do that are increasing revenues and decreasing expenses. Our revenue this year increased by over 22% and our expenses decreased by over 29% so the combination of the two resulted in a 1.6 million swing in a positive direction.

And it's always good to have a highly efficient company. We all work pretty hard but we also try to keep focused and smart in how we work and I think the revenue growth this year is an example of that..

Joe, any updates on the automotive market in terms of adding OEMs etcetera like making public announcements regarding that?.

I'm going to actually touch on that in my closing remarks, but I do want to talk about it. I think you will be pleased. In a few minutes you will have the answer..

The next question will come from Thomas McCarthy with Raymond James Financial. Please go ahead..

But let me focus on the internal expense reduction. Congratulations on that first of all. What more do you expect to do in that area? It must be getting pretty darn low..

the better we have in terms of revenue growth and cost reduction, the quicker we will become a profitable company and that’s something that we been working very hard towards..

Sure, I know you have, can you speak to the delay for the second auto OEM which..

I’m going to talk about the second and other automakers in a few minutes in my closing remarks. Operator The next question will come from Alan Ginsberg, a private Investor. Please go ahead..

Just have one question, when Gauzy starts production, will they be using Hitachi film or their own film?.

They have a pretty broad license and I think we have to wait to answer your question on that. Operator The next question comes from John Nelson a Private Investor. Please go ahead..

One of the things that was missing from the press release with fourth-quarter detail. Can you supply us....

Basically, revenue was up in all of our markets except as I mentioned, there was a slight decrease in aircraft, you will see the quarterly results, when we file our 10-K which is coming up..

Okay great, we’ve recommend in the future that you supply the Q4 details in your press release, it's kind of standard operating procedure..

Usually John we do. We usually file the 10-K right before the conference call so people have that data, and this year we wanted to share the results around the same time that we normally do, so we scheduled the call for today..

Okay and then on the $1.25 million loan in February.

Could you supply us with stock conversion price alone and conversion price on the warrants?.

I can say that it's around the current market price, and for the conversion and the warrants are at a premium..

The next question will come from Michael Kay with Kay Associates. Please go ahead..

You emphasize the importance of reaching that sweet spot in terms of the cost of SPD film.

How much longer did you think you'd have to go until you reach that sweet spot, so that Mercedes and the other OEMs would be very happy?.

In my last in-person meeting with Mercedes, they smiled and looked at me and said that they've heard the confirmation from the supply chain that we have hit that sweet spot. Now they're just working to validate it and work that through in their supply contracts..

Do you think that would result into good increases in the integration of SPD and their different models?.

Sure, you make it as profitable as other items and you hit that sweet spot and it becomes something that even if you don’t check the box and order the option, you find it on your car anyway, just like aluminum allow wheels..

In the news every day you read about smart this, Alexa and smart that -- smart shopping, any news to report with your partnership with that what the Zuli company in California?.

Zuli had changed direction and they're working a lot more closely now with Google but all of the things that Google does with their smart home automation and Zuli, and Amazon's Alexa, all works very well with our stuff. In the beginning we thought that that was the way to get into those markets faster.

Now what we are finding is that all of the major smart home systems have vastly simplified their interface with devices. So, they all work with our stuff, quite well.

So, we're not dependent on any one of them.We can work with all of them, and if you come out to Woodberry I'll show you an Alexa operating some of our smart windows, and some other smart devices operating others. It is kind of fun to talk to our windows abd have them react..

The next question comes from Allan Denser with Stifel. Please go ahead..

A question on the financing of 1.25 million in non-interest bonds or is something...?.

Not bonds -- yes, it's basically a non-interest loan that converts into equity automatically..

Are you at liberty to say who they are -- the investors, the long-term investors...?.

I could give you the -- yes Allan I can give you a general sense. These are long term investors, some I've known since the early 1990s that have been supportive of our company. It was meant to be a very small focused offering and we are very pleased with their participation. These are very long-term supporters of our company..

And I think we would have been pleased if we had heard about it at the time of the offering, I mean a lot of investors are quite concerned about the financial condition of the company, which is what I suppose has driven the stock down to $1.00 and it seems reluctant to want to go higher than that….

Now that the news that we have financing that will carry us even without anticipated revenue increases and further cost reductions and receivable collection. Even without all that we are talking about something that takes us into the fourth quarter of 2019 so..

So why didn’t you make the announcement in February why do you wait until now?.

Basically there are couple of things that need to be done including we wanted our the total picture including our balance sheet results and everything to be able to be included in that so that would give people a meaningful information of how long the capital would last.

And it was meant to be a very private small select group of people that would participate because general offerings tend to have a life of its own and that's a different type of financing..

The next question comes from Randy [Lambarto] with South Construction. Please go ahead..

You had mentioned earlier you talked a little bit about the possibility as becoming current with NASDAQ and did you say that they could in order to become compliant that one of the options was to do a reverse split is that an option?.

I want to be clear about what I said. I said that we have not received any kind of notification from NASDAQ about our stock price. What I also said is usually when a company has a stock price below a $1 and they get a notice they usually have six months to bring themselves into compliance.

As I said earlier, a lot can happen with our company in six months that I think is very positive that would make that a non-issue.

And then what I said is that what a lot of other companies have done is they've done reverse stock splits, and if we did a reverse stock split just to reverse if you will the stock dividends that we've given to shareholders, we would be in compliance.

But we haven't received any kind of notice so it’s not something that we are having any current discussions about..

This concludes our question-and-answer session. I would like to….

Yes, I would like to make a couple of closing remarks now if I could. It's been a year of hard work. 20-hour days, but it's been a labor of love for all of us. Our focus has been on developing markets and businesses and our revenues grew over 22% from last year.

Our focus has also been on operational efficiency and our expenses this year went down by 29% or $1.6 million after significant cost reductions in the year before. Because of revenue growth and cost reductions in each of the past five years our net loss has been lower than the year before.

In the early years, our hard work was focused on getting our SPD-Smart light control technology to work. Then our hard work was focused on moving it from the lab to commercial scale.

And as many of you know who have experience investing in technology-based companies like Research Frontiers, for every company that makes it into the real world, there are thousands of others that never graduate from the lab to the marketplace. This hard work continued with growing the markets and opening up new markets for our technology.

And now the work continues in expanding these markets, establishing new product areas and reducing the cost of our technology to end-user. Make no mistake, the hard work continues. I typically travel 100,000 to 150,000 miles per year for your company.

Our other department heads, Michael LaPointe, Seth Van Voorhees and Steve Slovak have also been traveling more and working hard. This call I’m actually conducting immediately after just getting off of a plane from Europe.

We try to make ourselves as accessible as possible and appreciate your patience during this time of opportunity, and I appreciate also the fact that I’m doing this from a cell phone and hopefully the connection at least is fairly clear. Our technology is used by world-class Global 100 companies. Our job now is clear.

Expand the market make it good accessible for more and more people in industry to grow revenues. And we’re not doing that alone, our licensees and their customers are also working hard. The SPD industry has expanded in 2017 with new customers, new uses, larger teams of people devoted to our technology and increased economic activity.

Very large electronics companies like Continental Automotive, Panasonic and Texas Instruments and others, have even developed product lines and business units based on our technology. It's not just the glass but the entire system that makes us the smartest glass on the planet.

I was asked about the second OEM for automotive and happy to say that it's not just one. There are now multiple OEMs that have developed vehicles that are coming out using SPD-SmartGlass technology.

And with respect to additional business beyond those that I just mentioned, the number of RFQs that we and our licensees are working on, especially in automotive, is quite large. We will continue to work hard to do this and we look forward to sharing the result of this hard work with you, our investors.

Thank you very much for your support and participating in today's conference call. Thank you..

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