Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the first quarter 2021 results of operations and recent developments. [Operator Instructions].

This conference is being recorded today. A replay of this conference 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 the 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 our 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 the call or will do so afterwards, in order to answer more questions of general interest to shareholders on this call. [Operator Instructions].

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

Thank you, Paul, and good afternoon, everyone, and thanks for being here. .

It was the first quarter of last year that the COVID-19 pandemic shut down the world economy. Now we are coming out of those shutdowns, but key industries, such as the automotive industry, are still affected with other supply chain disruptions. .

one, the industrywide production halt due to COVID-19, which also affected our revenues in the aircraft market; and two, the end of the 9 years that we were on the Magic Sky Control SmartGlass roof option on certain models of cars within Daimler. .

Revenues from the display and consumer electronics market were up quarter-over-quarter, and our royalty income from the architectural market was stable compared to the same quarter last year.

We expect architectural revenues to grow based on recent activity on new projects in this area, and for activity in the automotive and aircraft markets to also rebound and grow due to new projects using our technology in these areas, as well as the restarting of the world economy. .

Major disruptions outside of the pandemic such as the computer chip shortage that has caused many factories to slow down production considerably or even shutdown has not had a direct effect on Research Frontiers other than a small reduction in the number of McLaren models coming off the production line of our technology.

For the most part, the supply chain disruptions in the automotive industry occurred after the end of the current Mercedes model that offered our technology as part of the Magic Sky Control [ center ] glass in Daimler, and prior to the introduction of new models coming up by Mercedes and other car manufacturers using our SPD-SmartGlass technology.

So we are largely unaffected by these current chip shortages in the automotive industry. .

In the meantime, neither we or our hard-working licensees have slowed down a bit. Several of our licensees have also recently made major investments since the beginning of this year to increase production capacity of SPD emulsions, films and end products for all industries. So everyone is preparing for success. .

In March and April and even already in May, new projects for SPD-SmartGlass has sprung up in various places around the world. If these projects use the amount of glass currently specified for SmartGlass, the surface area that suggests the architectural projects alone could exceed the usage of Mercedes and the McLaren in their peak years. .

Part of this increased level of activities is attributable to the world waking backdrop, partly attributable to cost reductions in our technology, making our SmartGlass more affordable to a wider group of projects.

And part can be attributed to the high level of activities, not only by our licensees, but also by our competitors, which has stimulated interest and activity. .

One of our active competitors in the architectural space is View. I will spend some time discussing it today because we received a number of questions since our last conference call from existing and even new investors in Research Frontiers, asking how we compare it to them. And since our last call, they went public with a destaffing process. .

View is scheduled to release their first quarter financial results about 8 -- or 6 days after ours, and I, for one, look forward to studying these numbers. Here's what I found so far since View started publishing their financial results for the first time.

I think that you will find it enlightening and put our own results of operations in quite a favorable context and give you a better insight into one of the industries that we're both in. .

View lost $441.5 million in 2018. They lost $290 million in 2019 on revenues of $24.3 million, and they lost $257 million in 2020 on revenues of $32.3 million. Their 2020 loss was higher than the upper end of the range that I had predicted on our last conference call in early March. .

To put this in context, View's net loss was over 100x larger than Research Frontiers' and they're projected to lose at least another $250 million this year and next year. .

One number that I focus on is View's own reported data regarding their cost of revenue. This is their cost to generate each dollar of sales revenue even before R&D and selling, general and administrative expenses are tapped on.

I found this number interesting because View's reported costs for each dollar of revenue in the fourth quarter of 2019 was $3.70. Their reported cost for each dollar of revenue increase to $3.81 for all of 2020. And it went even higher to an estimated $4.03 in the fourth quarter of 2020. .

one, production problems; or two, the cost of their raw materials went up substantially; or three, they were heavily subsidizing each project and charging customers less than 1/4 of what it costs them to make and deliver their glass.

Perhaps it's a combination of these factors, and we should get more insight on Wednesday when they release their numbers. .

So in the fourth quarter and in order for View to generate $7.7 million in revenue, that revenue had a direct cost to View of $31.3 million and their total loss for the fourth quarter to generate that $7.7 million in revenue was $55.3 million. That's roughly half the money that we have spent since inception. .

All in for the year, each dollar of revenue in 2020 cost View $8.36, making their loss of each dollar of revenue in 2020 over 7x the amount of their revenue. .

Now in comparison, let's talk about our financial results. Our loss this quarter was up once again, 1/100 of View's most recently reported quarterly loss. Our loss this quarter was $557,000 or 11% lower than the first quarter of 2020. And this lower loss this quarter is coming off of the lowest loss that Research Frontiers had in over 26 years.

So there has been a constant move towards achieving breakeven, positive cash flow and profitability. .

I have emphasized on our past conference calls together that it is important for us to make sure that we're operating as efficiently as possible to make being cash flow positive easier to attain. And our expenses are continuously coming down. 2020 was the 6th consecutive year that expenses were lower than the year before in the company.

In 2020, expenses decreased by over $1.3 million, and this trend continues in 2021. Our expenses this quarter were also down 23% from the same quarter last year. .

And because of our continuous reduction in our burn rate, which is now down to $400,000 to $450,000 per quarter, we actually have an estimated 32 months of cash available to fund our operations. So our existing capital should take us into late 2023 before we would need to have more capital.

And we may never need to raise additional capital because, as you will hear today, we expect many reasons for revenue increases this year and next year. .

Over the past year, there were some very major positive developments. Our SPD-Smart sale licensee, Gauzy, announced last April a Series C investment from Hyundai Motor Company and Avery Dennison. Since then, things have been moving even more quickly than originally expected within Hyundai.

As noted on our past conference call, in automotive, we make cars more energy efficient, reduce CO2 emissions by 4 grams per kilometer and increase the driving range of electric vehicles by up to 5.5%. We also make people more comfortable and safer and protect the interiors of cars.

And as Bentley has noted in their public presentations about the future of sunroof within Bentley, there is a greater need for SmartGlass too because of the movement towards fixed nonmovable panoramic roofs in cars. Bentley noted that SPD-SmartGlass can reduce weight in the roof by up to 13 pounds and eliminate the need for 54 components.

This reduces costs and further increases driving range and reliability while contributing to the stability of the car on the road. .

The first quarter of 2021 brought us a major new announcement in automotive.

Cadillac announced in January that their new ultra-luxury all-electric flagship vehicle, the Celestiq, will be coming out and offering an SPD-SmartGlass roof that gives passengers the ability to control the amount of light coming in into 4 segments of the large panoramic roof on the Celestiq.

They launched this flagship Celestiq at CES, and we're pleased to see that almost the entire video about this magnificent vehicle featured our SPD glass proof and subsequent articles have focused on our roofs as well. .

GM's all-electric strategy makes this development even more important to us. And I expect that there will be other car models within GM that use our technology using the Celestiq program as a platform for the development on many other cars within GM. .

And as was the case with Hyundai, the press has been speculating that this Celestiq will also come out sooner than originally expected. Because of this newsworthy event, since then, Research Frontiers has been interviewed by major automotive publications such as Automotive News, Autoline and Wards Automotive.

These major automotive publications featured us and the benefits that we bring to car, especially electric vehicles. .

Also, I just learned that we're appearing in Chapter 15 of the book [ Jetliner 7 ], which is the Bible on commercial aircraft interiors.

These major publications featured us and the benefits that we bring into these vehicles, and they -- some of these have helped us carry the message about all the benefits of SPD-SmartGlass broadly to key decision-makers in the automotive industry and the aircraft industry.

And the media is helping us bring this message out just when all the major car companies in the world are going all electric. .

We're also moving into many new areas. One important new area that we moved into is the higher volume segment of the automotive market. With the lowering of the cost of our technology, new markets in automotive, such as the higher volume, mid-level market, are now working with us.

And of course, the new fast-growing market of electric vehicles around the world, especially as pretty much every major automaker continues to announce their plans to become all electric. .

And also new aircraft, such as the Airbus A220 VIP Jet. Airbus has already announced orders for 15 of these transportation category sized jets, and each of these A220 aircraft will have SPD electronically dimmable windows, covering 50 structural windows. .

In addition to the Airbus A220, there are a number of other new aircraft models that have not yet been announced by our licensees in the aircraft industry. These licensees are Vision Systems, InspecTech and Isoclima. The companies are really cool, by the way. I've seen some amazing designs that really need SmartGlass. .

Other new areas are more yachts, consumer electronics and architectural applications. And as I've mentioned in the past, the architectural market uses twice as much of the world's glass as the automotive market.

Smart homes and buildings are potentially our largest market, as evidenced by the high valuations of some of our competitors are aspiring for just on this market alone. .

And as many of you know from prior conference calls, with the opening of Gauzy's Stuttgart factory in the fourth quarter of 2019 and its current ability to make SPD film of 1.8 meters wide, this will allow us for the first time to practically address the large potential architectural market. .

That market has become very active and in connection with competitive bidding on some large architectural projects for SPD, we learned that we actually have gone from having a size disadvantage, I'm referring to the limitation on the Asahi film where they're only quoting 1 meter wide, to now having size advantage over electrochromic since making these similar widths to the Gauzy film, 1.8 meters, but have limitations on the height of the window.

And of course, the bigger and electrochromically it gets overall, the slower it gets, with 10 switching needing tens of minutes with electrochromic compared to 2 sectors or less with SPD, regardless of the size of our windows. .

I'm also pleased to announce to you today that even in the 8 short weeks since our last conference call, Gauzy has made further improvements in the efficiency of their emulsion line in Israel and their firm coating line in Germany and even has made large investments to expand further their production capacity.

Some of our other licensees on the end product side have also made production and capacity enhancing investments. .

Now let me take some of the questions that our shareholders have sent me. We received by e-mail before this call questions from investors, and we're going to address many of them today, and here are some of the additional questions that were emailed to us. .

Okay.

Is the plant in Stuttgart, Germany closed or operational? And what is their maximum production?.

It's operational. There is a brief period of time in late December, early January scheduled to coincide with holiday shutdowns anyway, where they were -- where Germany was closed for COVID reasons but it opened up. The maximum production on that facility is 1 million square meters of SPD film.

Our new products using it, Gauzy film instead of Hitachi film. Yes, a lot of the automotive developments that we talked about are working with Gauzy on those projects. .

Also, I just wanted to note and congratulate Gauzy for appearing in Glass China(sic) [ China Glass ] in Shanghai, [ Today's News ] Hyundai. So a major glass event in China as well. .

Another question. Would it be easy to make chemistry to achieve 90% light blockage in the off state? Would this be more neutral since -- while still being about twice as dark as most architectural fixed tint. .

Jared, this is -- that's a great question. So basically, the idea is -- can we link the film where it's not as dark? So that less blue may be transmitted in a clear state. And the answer is yes. And also, if you gel very dark, you don't see any blue at all.

So because the reason that the windows appear blue is that the blue light and daylight is being transmitted. So if you -- if you make it really, really dark, then no light is being transmitted, and we can do that by making the film coating thicker. Then you're going to have less bluishness. And if you make it lighter also, the same thing will happen. .

So -- and the answer to your question is, yes. Matter of fact, the Audi production line has the tolerance to plus or minus 1 micron. And the normal SPD film that's kind of the workhorse of the industry right now is the 90 micron film being produced by Hitachi and Gauzy. But Gauzy can address that and still train Hitachi for certain applications. .

Okay. Moving to another question. Also from Jared Albert.

Would it be good for RFI if the Dynamic Glass Act became part of the internal revenue code? Would it actually provide a 30% tax credit for SPD Glass that doesn't currently exist in other forms in the United States? Are there currently tax credits for SPD leads in the U.S., for example, or other subsidies elsewhere the world? And is it likely that if it passes nationally, states will also adopt tax credits for SPD? Do you think it will pass in its current form? Thank you, and here's hoping the government subsidy is finally gets us going.

ESG is hot and virtue signaling is a critical market. .

Okay. Great, great question. And let me start by saying that it's almost impossible to predict any kind of political event in today's world, or especially in today's world. But this seems to be kind of a provision that makes sense.

And the way that dynamic glass is defined, is glass that uses electricity to change its light-transmitting properties in order to heat or cool a structure. That's from the Senate Bill that's pending right now. .

And it does have bipartisan sponsorship, so that makes it also something that makes it more likely that it is going to pass. And that definition that I just read will, in fact, cover SPD's technology. .

So is it a good thing? Absolutely. Because what it does is it encourages people through the form of tax credits to install energy efficient improvements in their buildings, and now they're specifically calling out SPD. So from an economic standpoint, it is definitely good for us.

Also, just from a general standpoint, the fact that dynamic glass is now being recognized as an energy-efficient improvement to buildings, I think, is a major change. And there are just similar types of credit rules. And even -- there are demand management incentives that come from local utilities.

So you have kind of a mix of private and public partnership to encourage you. .

Okay. I got questions from several shareholders about a company called Nodis and their TruTint technology. I always say that Nodis is a company that is based in Singapore. They recently moved to Ohio as part of a tech incubator. They've raised a very modest amount of capital.

If you go on their website to the last part before About, as a competitor, to us and to Gauzy and the answer is every dynamic tint a potential competitor, but there's so many small startups that are trying to do things that have always succeeded in the lab. And I don't see on their website computer simulations. .

The other thing that I found very hot is I have met with them in 2018. And they sent me a presentation. And oddly enough, the presentation included many of our SPD projects that they were passing off as their own, so we told them to stop that. .

So if you judge from the fact that they have no working samples with this on their website, and their presentations even as recently as this past October were using SPD instead of their own technology to demonstrate their own technology. So take it for what it's worth. .

Next question. Is there any schedule for Daimay to introduce its sun visor project -- product? And then also, there's a follow-up about the new infrastructure bill, which we've talked about. .

And the answer is there's two time tables to the Daimay sun visor product. One is, the one that's really funding the development, the product development within Daimay, and that's a specific vehicle with an auto manufacturer that this is for that will -- which is why they're able to do the corporate development they need to.

And then there is the aftermarket, where that could come out a lot sooner. So they have two time tables, really, to watch there. .

I did get a question from another shareholder. If they wanted SmartGlass for their homes, how do they get in touch with a licensee or an installer? And we set up the system that automatically allows you to fill out a form with details about who you are, where your project is and what it is.

And then it automatically goes how to all the licensees that can satisfy that. And for the most part, our licensees are focusing on commercial projects, but we don't have to focus on the ultra-large commercial projects and also residential is certainly within their wheelhouse as well, although it may not be their initial focus. .

Another shareholder asked about our stock price. I don't know obviously comment on our stock price, but I do want to point out that the Russell 2000, which we were included on last year and resulted in about 3.1 million shares being bought by Hyundai funds that invest in the Russell 2000 companies as part of their target.

That's why there's a lot of buying last April, May and a little bit in June. What happened? The last probably came rebalanced and we were reduced on it. Back then, in order to get on the Russell, you needed a market value of, I believe, $96 million. And I think our market value at the time was about $116 million.

So we were well within the cushion for inclusion last year. .

Due to a lot of activity in the market, companies that are going publicly stacked and relies in market value, some of the blockchain companies and other types of companies. The last analysis I saw was that in order to be included on the Russell 2000 this year, you need a market value of about $248 million.

So it's about 2.5x the market value of last year because of some of this corporate activity that's been going on. .

So I imagine that part of our stock has now -- the reason it went down in the last month or 2 is these reports that got published by various research firms and some of the hedge fund will trade based on that. If they know a company is going on, they'll buy the stock which is what happened last year before we went on.

And if they know a company is coming off and a large number of companies were having loss this year, they'll publish that. .

So I think that's one reason. The other may be sometimes related. Because around this time now, people's personal [ assets ] are good. .

We got another question. Long-time shareholders, there's a question for the Q1 '21 call.

If public companies such as [indiscernible] or PPG or ADC, or possibly even Tesla or Apple offered to purchase Research Frontiers in its entirety including the rights to all intellectual property, can you provide a range of what you would consider a fair price for the company? Many thanks. .

I love the question. The answer is that if we were presented with an offer for the company, we have an obligation to create an auction market. We can't just sell to whoever we want because of fiduciary obligation under Delaware law to try to get the best possible price for shareholders.

And that usually involves hiring investment bankers and valuation opinions and things like that. .

I will say this. If you look at what's going on in the smart glass market, the only other reference point is a company that has lost almost $260 million this year and has a market value of about $1.8 billion. So the market is obviously dialing smart glass companies and smart glass potential, very, very high.

And I think that, that would be something that would be factored into any kind of this decision whether to accept a buyout offer. .

Okay. Let me just ask our operator of our call to open up the conference to any live questions that we haven't answered already.

And remember, if I have not fully answered any questions that were either e-mailed to us or in the live Q&A in our presentation, feel free to call or email me, and in some cases, I have cut questions a little bit short to leave time for more live questions today. .

[Operator Instructions] And we have a question from [ Michael Clouser ]. .

Joe, I'm wondering, given the advantages of SPD in comparison to other light control technologies, why are -- it seems to me, whenever I look at a paper or news release, more -- most of the companies that the architectural glass are doing it through Sage or through View.

Would that be -- and also given the fact that Research Frontiers has lowered the price of film. I'm somewhat disappointed that there aren't more... .

You cut off there, but I think we heard the question. And the short answer to your question is, you hear about projects from View and Sage that are very large projects that they've worked on landing for years, most recent with Walmart. And they don't really give a lot of details other than the purchase price is $26 million for that. .

I do think that if the economics I alluded to earlier is that they're basically -- they're basically spending a lot more of each dollar revenue, that project may end up costing them over $100 million. So if they want to lose $75 million or $80 million on a project, that's their decision, it's not the way we would like to do business. .

And the same thing with Sage.

And some of our licensees that compete with them on these projects are winning these bids is because the performance is much better for SPD in terms of [indiscernible] speed, in terms of light transmission, the variety in terms of which glass laminators you can use and the control systems are much easier to implement as well. .

So there's a lot of advantages to going with SPD. And the cost premium for use -- for having the best, well, it's not much greater than the highly subsidized prices that some of these companies are doing. And also, they need to find projects that have very large lead times, in some cases, a year or 2 out, if you look at their announcement pattern. .

So we're in much better shape in terms of that. And just because the projects haven't been announced, we just don't announce them until they're a little bit more ripe. We saw View announce a project about 14 or 16 months ago and then reannounce it again in March.

So they tend to announce things as early as they can and obviously urging the public markets trying to raise money that can help them. .

We have a question from Gary Carroll. .

I'm in South Florida, our [indiscernible] market is on fire. And we hear a lot about smart homes and the builders here are becoming more and more acutely aware of the farm home technology. So I'm wondering what our market penetration is like in the U.S.

on the new smart home?.

Well, funny you mentioned Florida. I was recently there, initially to discuss one project. It turned out to be 3 projects. And then a fourth one was added as I was leaving. So some of these could have a fairly major uses of glass. And if you go down to the Miami, Aventura, [indiscernible] area, you can see all the construction going on there.

And our -- our licensees like down here actually handle some of those projects from a while ago with their PDLC projects, so they know all of the developers and the architects in that area as well. .

And they even opened up a special sales office in Aventura, which I have the opportunity to visit while I was down there. So there's a lot of activity, and you'll see a lot more of it. .

So do you feel like we have a good exposure and presence in the new in all of this -- all these new big buildings and the smart glass going in?.

Yes. And I think what was happening, and I kind of alluded to this earlier, Gary, is that part of the, really, increase in activity is coming from the fact that we have 2 very active competitors that are creating more -- creating excitement in the market. And competition can be good. .

As a matter of fact, when Gauzy became a film licensee, Hitachi called and thanked me. They said this is really creating a lot of interest out there. And that's benefited Hitachi as well. So you have some benefits to having an active market with competitors spending tremendous amounts of to market.

But if you're an architect or a developer who wants result, you're going to do your homework. And our licensees have been called in on the same projects that Sage and View have been pitching, and they're doing well. .

So if you're faced with a demonstration where a window takes 40 minutes to switch and other one were to take a 2 seconds to switch and if you're using a glass laminator you want for that.

As long as there's not too much of a cost premium, that becomes a really compelling sales tool and our licensees are really good at presenting the benefits of that technology. .

So hopefully, one of them may have a connection with the related companies that Steve brought down here in South Florida where he just mentioned all these ginormous projects that they're involved with. It will be a fantastic customer for us. .

Yes. And we know the related companies from New York and from Florida. So a lot of good stuff happening. .

[Operator Instructions] And our next question comes from [ August Bernone ]. .

A couple of questions. I know Gauzy, when they announced, it was first made up of Hyundai, back to 2020. They had indicated in an article that their first product would be a visor for their sun roof.

Is there anything you could say on that? Would that kind of guidance still be holding true today?.

I think with most automotive applications, probably the low-hanging fruit is definitely the sunroof because that's where a lot of -- so heat comes into the vehicle -- and especially as you move now towards fixed panoramic roof where you want to avoid the complexity and the cost and the maintenance issues with having a sliding roof, but you still want that open air feeling.

This goes back to Bentley's presentation about the sunroof of the future of Bentley. That becomes even more compelling. .

So it's a safe bet that the sunroofs are always going to be very popular for [ density ] smart glass. We start to see now though automakers putting it in other places, too, like in the windshield above the AS1 line where it becomes embedded sun visor.

And with SUVs, you can do what you want behind the [indiscernible] the United States and Europe, that also includes passenger cars. You can see them inside in rear glass as well. .

But I think the sunroofs are always going to be a safe bet and a very demonstrable benefit because of all the sun that comes in and how difficult it is to shade, especially if you get them to be a very large sunroof that can't use a mechanical shade, because of the need for a very rigid shade if you're going to have the big purpose area to cover, why don't you have the glass do the work?.

Just one other question. I know we're still -- we're seeing a bunch more vehicles coming out, specifically electric that are filling roofs that are all curved glass. Is curved glass -- let's be more specific. I think you want -- let's do a curved glass versus a flat roof.

Is curved glass technologically, as well as costs, is it a lot more versus a flat glass process? I feel like I've read some articles where people are saying -- oh yes, they're saying that just the ability to implement in a curved glass is not feasible even though I know SPD can go into curved glass. .

Yes. The S-Class Coupe has a 3-dimensional curved roof. And as you correctly pointed out, a lot of the designs that are coming out now in the electric vehicles also have very sleek, elegant curved lines including curved glass. That's one area where we're really good at compared to our competitors. .

Electrochromic is a really flat glass only. And that's why you see it in reall -- in only 2 areas. One is architectural where glass is basically flat. And in aircraft, also where the nonstructural window is also flat. .

So they are where they can be. And we can be in a lot more places, including curved glass. .

We have a question from [ Alan Denver ]. .

I'm wondering -- all right. Question about Gauzy.

Do you know any plans it may or may not have for going public? And what would you think the chances are that they would even if they haven't expressed one way or another to you?.

Well, if I knew about specific plans, I wouldn't be able to talk about it. I think that it's a natural evolution in their company at some point to become a publicly traded smart glass company, especially when you consider that companies like View have a $1.8 billion market value right now.

And I think that if you did a head-to-head comparison with either our business versus View or Gauzy's business versus View, you would see that we're better companies. .

I have the greatest respect for Rao Mulpuri at View. But it is a tough job. They have very high cost. They have, really, some limitations in what they're doing.

And they're good at raising money, although that market seems to have dried up because if you look at one of the more recent public comments to the media, they asked him, "Why do you build -- why do you do this type of transaction?" And he said, "Well, we could go public." The traditional -- and so they needed the money. .

That, to me, is a statement. And also, if you look at kind of what's happened to the stack market, many of the stacks, including View, are trading well below their par value of $10 or something. .

Yes. Well, maybe if they made a deal with you first, that would make the company a little more attractive to the public market. .

We welcome everyone. And companies that are competitors of ours in the past have become part of us. .

I'm glad to hear you're more open to the possibility. .

Yes, always. .

And our final question comes from [ Leonard Lisa ]. .

I was just listening to your earlier comment about the amount of cash that the company has with probably carrying through to the third quarter... .

Towards the end of 2023. .

Yes. And, I think, judging from the way you said that you think we would positive cash flow by the way things are going now. However, as I was looking, there are options outstanding currently from previous activities.

And if those were exercised, which should be, they will be, if the stock moves higher, that would raise an additional $7 million almost anyhow. So you wouldn't need any outside financing.

Or you don't factor that?.

That's exactly correct. We don't factor that into calendar months, because you can't predict your own stock price and whatever, some warrants and the options would be in money. But I think it's a safe bet. And you've seen recently options have been exercised also beginning this year. .

Yes. So I don't think cash for the company is needed with all those activities that's going on now. We're going to be looking at... .

Yes, if we did something, Len, then it would be first strategically, not for the need for capital. .

Yes. Okay. Well, that's -- I was just looking at... .

Yes, one of the things I love is the fact that Hyundai made an excellent investment in Gauzy because that's a strategic investor that now has an invested interest in the success of SPD-SmartGlass. And they need to do something about it. They're car makers. So I want those kind of investments, those are really good ones. .

Is the activity over in Asia? Is it different from here? I mean, they're very busy. I know they may manufacture lots of cars for exporting, but I think their market alone is very good over there. So I wouldn't think the delay in chips are bothering their market at all. So we should see things going forward here pretty quickly like you said. .

Right. And in other sense, I mean, Volkswagen, just today announced huge profits, 4-point something billion and it's basically because of the strength of the premium car market. So they're making money in car companies now. .

And we have some additional questions. This is from [ Seth Nickerson ]. .

I know you don't like to talk about [indiscernible] because it's public. But I read on a public board about a military contract. I don't know if you want to talk about it. But there was a lot of details given out on this public forum. .

I'm not familiar with the post. So I can't really comment on it. And if you want to share a little bit more, I'd be happy to listen... .

Microsoft patent has mentioned SPD, 118 [indiscernible] with the military. .

As I said in the past, you can get a good idea of where the activity is, even if it hasn't been announced, by following who's mentioning us in their patents. You see it in Hyundai, you see it in Apple. You see it pretty much in a lot of major companies out there have all mentioned us on their patents and give you an idea what they're looking at. .

The contracts said I think 40,000 units initially and then 120,000. Sounds a little significant. I mean, it's not big, but it's not small. .

Yes. Look, the nice thing about our business also, Seth, is we don't have to do capital expenditure in order to address those markets. We have licensees that have capacity to do that and we can make enough film for this. And yes, it's nice business, the way we set it up.

Because -- and as you could see compared to vertically integrated manufacturing companies like View, there's a lot of things that can happen along the way, and we don't have those kind of risks. .

And we have a question from Gary Carroll. .

Joe, I'm back again. .

You want to go after the property that they're building in Florida that [indiscernible] did? Okay. .

No, I'm not. I'm not looking at exactly that, no. .

To drive by. Okay. .

I want to just drive by it.

Actually, as a fairly recent investor in the company, I would like a clarification as part of my ignorance, but what exactly is the relationship between Research and Gauzy?.

So apart from having the same business for the smart glass industry, which is there's the right way to do things and a wrong way to do it. We hit it off right away because we both believe that providing a technology that is the best-performing is the way to go in this market.

And you don't make compromises in terms of performance and quality to do that. .

But the formal relationship is Gauzy is a licensee of ours that's licensed to make SPD film for the entire industry. So they can sell this to Asahi, for example, if they wanted to put it in cars. Or they can sell it to Vision Systems if they want to put it in train. Or they're going to sell it to InspecTech if they want to put it in planes. .

I mean -- so they're a key supplier that's licensed by us to supply the industry, plus they have an implied license for architecture as well. So they can make parts of [ plexiglass ]. But the main focus is as a film maker and a material science company. So that's really their strategic importance. .

And they are great enough to do work with, I must say. I mean they... .

And when you say licensee, Joe, as a licensee, so Research Frontiers is just receiving payment, residuals, how does that... .

We get royalty payments. We get royalty payments based on product sales. And just to give you kind of a quick summary of the landscape, Gary. For architectural, aircraft, marine, pretty much everything but automotive, we get a 15% royalty on product sales by the licensee to their customer. And in automotive, it's 10%, and that's public.

So I'm not sharing anything that I shouldn't. .

And they're a great company to work with. Back then, they had 50 employees. They have maybe 130 right now, and most of that has been hired in the investments they've been making based on SPD.

So we couldn't ask for a stronger commitment from licensees and the amount of people and money they've put into property, plant and equipment in Germany, in Israel and the United States and other areas of the world. .

[Operator Instructions] We have no further questions in queue. .

All right. Thank you, Paul. So I'd like to make just some closing remarks. .

Over the past 6 months, we've had the opportunity to get a more detailed look at what some of our competitors are up to. View had large losses, increasing costs associated with their revenue and their market value is down since they went public in March. .

Even so, with a valuation of $1.8 billion, their market value is still considerably higher than Research Frontiers', and that tells me that investors put a great value of smart glass. .

View focuses on the architectural market. We just started in that market, and we are already seeing success. We're also in additional major markets that they're not in, such as automotive, aircraft, marine, museum and consumer electronics and information displays. These are additional markets that add further value and market and revenue potential. .

In their main market, architectural, View's electrochromic glass take 20 to 40 minutes to switch to the most commercial price smartglass panels. Our SPD-SmartGlass can switch in 2 seconds, regardless of the size. Does that mean that View has a bad business model or bad technology? Not necessarily, time will tell.

But for now, we can say that our business model is different and we're quite proud of our leadership position and accomplishments in the smart glass industry. .

At the end of our last conference call, I took some time to list some of the areas where we were either first and some where we're the only company to achieve things in our industry. There were dozens of items on that list, and it took over 5 typewritten pages just to list them. .

We can say that we're not only seeing traction in View's main market, architectural glass, but also markets that they are not in, such as automotive, with new cars coming out with our technology, aircraft -- also with some exciting new aircraft coming out with our SPD smart windows.

And of course, marine glass and the use of our technology in display systems, consumer electronics and museums. .

We discussed our operations in our markets and what we can expect for the coming year on today's call. Now let's talk about research comparisons and investments, and I hope you can listen to this. But now there is a reference point. .

Automotive, aircraft, green buildings, boats and consumer electronics. They like the fact that we're an ESG company in the purest sense of that term, making us even more desirable in today's investment climate. And we, through our licensees, are the only smart window company in the world with a major footprint in all of these markets and industries. .

Investors also like that we're now a firmly established cutting-edge technology that has proven its performance and reliability by being used in tens of thousands of cars, boats, planes and now, buildings. .

Over 6 million people have experienced our SPD-SmartGlass, and that is a world record that continues to grow for us. And our business model does not require huge capital expenditures, high levels of sustained losses from operations over time or large payrolls. .

And how do you value this? For the first time, our industry has a public valuation reference point in the smart window industry. As last checked, View has a market value of $1.8 billion, and this company is in only 1 of the 5 markets that we operate in. .

We're pleased that investors in the smart glass industry finally have a basis of comparing shareholder value and operational efficiency. In these areas as well as the top performance of our SPD technology, you will see that our company delivered quite a bit more value, stability and operational efficiency to our shareholders.

And because of the 5 markets that we're in, our prospects are getting better in delivering vastly more value to our shareholders, especially when one considers the rapid expansion of the market for electric vehicles and energy-efficient buildings. .

Once again, in automotive, aircraft, beyond consumer electronics and now even in the architectural market, where we're being specked in, when the customer wants the best-performing and best quality windows, they're selecting SPD-SmartGlass. In the last year, we doubled the number of automakers who are putting SPD-SmartGlass on their cars.

Two new auto makers made public move towards adoption of SPD-SmartGlass, and one of the world's largest aircraft manufacturers did the same, and additional ones remain to be announced by customers and our licensees. .

For the past several years, we've been publicizing the benefits of SPD-SmartGlass to multiple industries. The world is going green. We make buildings and their internal ACAC and illumination systems more energy efficient. We make people safer, healthier and more comfortable. .

And remember, these are projects in the architectural building space have unique designs that are enhanced and perhaps only possible using SmartGlass.

The world is going electric and our SPD-SmartGlass technology will make those cars travel further on a charge, enhance safety, increase comfort and give drivers and passengers an unforgettable driving experience. .

Let me leave you with some statistics. The future of transportation is coming pretty quickly. This year, Research Frontiers' President said that we'll see 30 electric vehicles from 21 brands. That's up from 17 EV models in 2020. And the Boston Consulting Group predicts that EVs will account for more than half of the light vehicle sales by 2026. .

And as our investors, I'm pleased that you will be part of that green building future and that electric vehicle future. I want to thank you again for your support and I look forward to talking to you on the next conference call. .

This concludes today's conference call. Thank you for attending..