Good afternoon, ladies and gentlemen. Welcome to Research Frontiers Investor Conference Call to discuss the First Quarter of 2022 Results of Operations and Recent Developments. During today's presentation, all parties will be in listen-only mode. 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 future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC.

Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were e-mailed to it prior to this conference call, either in their presentation or as part of the Q&A Session at the end.

In some cases, the company has responded directly to e-mail questions prior to this call or will do so afterwards in order to answer more questions of general interest to the shareholders on this call. 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 hello everyone. And welcome to our first quarter of 2022 investor conference call. We had our last investor call together just eight weeks ago. So this call will be shorter on the presentation side, leaving more time for everyone in the Q&A portion later.

I also thank all of you who have emailed in your questions that allows me to answer many of your questions in my prepared remarks to make these calls more efficient for everyone and to cover more ground. 2021 was the seventh consecutive year that expenses were lower than the year before at Research Frontiers.

And this trend continued into the first quarter of this year with total expenses lower by about 3%, which is something often difficult to achieve, especially in the new 8.5% inflationary environment that we're currently in. We are also in a strong financial condition. We continue to have no debt.

And as of March 31, 2022, the company had cash and cash equivalence of about $2.5 million working capital of $3 million and total shareholders’ equity of $3.2 million. We took a little bit of a market hit when we moved from investment securities into all cash and cash equivalent during the first quarter.

But with world events and the new inflationary environment and market gyrations we wanted to play things safe. So that's why we did it. The company expects to have sufficient working capital for at least the next 23 months of operations, which should take us into early 2024.

This is based upon our lower quarterly burn rate of $300,000 to $325,000, that's per quarter, with higher projected revenues during that period, mostly from new car models. In our last investor call in March, we reviewed the past year together and look forward to some exciting developments that we expect to happen this year.

Despite everything else happening in the world, I'm happy to report that everything is still on that positive track.

The company’s fee income from licensing activities decreased slightly as a result of two factors, lower to flat economic activity and various things that use the company’s SPD-SmartGlass technology; and timing differences due to how revenues are recorded from an accounting standpoint.

We expect revenue in all market segments to increase beginning later this year as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market. In our last conference call, we spoke about new car models coming into production in Q3 and Q4 of this year with our SPD-SmartGlass technology in it.

This is still on track despite the supply chain and other disruptions around the world. In aircraft last year, there were significant new projects in the aircraft industry, including the ACJ220 program by Airbus, Comlux and Vision Systems.

And our last call, we also highlighted the SPD electronically dimmable windows by Vision Systems in the new epic aircraft. There is yet another aircraft that is now adopting our EDWs. For those that follow the industry or follow us on social media, you may already be aware of this.

Let me congratulate Vision Systems once again, on the debut in early April at the Florida Air Show of the electronically dimmable windows that have been put in serial production in the Daher TBM 960 very fast turboprop aircraft.

This joins a growing list of fixed wing and helicopters at Vision Systems that is now supplying SPD smart electronically dimmable windows too. There has also been further integration and expansion after the merger announced in February between two of our licensees, Gauzy and Vision System.

As I mentioned in our last call, this was a transaction that had our full support and one that I personally work with Gauzy and Vision System on for the past two years. It created the largest, internationally diversified, smart glass technologies manufacturing company in the world.

As of last year, the combined entity had over 70 certified industrial partners, five dedicated manufacturing sites, 14 global offices, international subsidiaries on six continents and customers in over 50 countries. They have over 60 patents and 20 unique product categories and 480 employees globally.

And had last year, approximately $15 million in combined revenues. After having visited both companies multiple times since the merger was announced in the first quarter, I saw first-hand the synergies and expansion of their businesses that had resulted.

Both Vision System and Gauzy have shown me their expansion plans for their production facilities, both here in the U.S., and in Europe, and in other areas of the world.

Gauzy also took significant steps and made a significant investment to increase the capacity and capabilities of their emulsion production facility in Israel and their SPD film production facility in Germany.

Another licensee of ours in automotive, AGP, recently also received $250 million in expansion capital, and they certainly have become a quite a bit more active with our technology. I think you'll be seeing their efforts more publicly this year.

We took some of the questions previously sent in by shareholders, and here are some additional questions that were emailed to us. From Jared Albert. Hi Joe, can you provide a per unit royalty range for upcoming car models? Well, thanks Jared. We estimate between a $100 and $150 per car in royalty income, depending on the content.

Jared also asks is $40 to $60 per square foot, a reasonable range for View’s electrochromic installed and something similar for the electronics.

Jared I've heard higher costs as well, especially for the wiring and the electronics, but it's hard to tell because their installations are clearly highly subsidized with View paying in some cases up to 82% of the costs. So it's really hard to get an accurate sense as to what things really cost in that world.

Another question of the vehicles that evaluated SPD and then used PDLC in production, do you have any insight into why the decision was made and any feedback since production began? Well, a lot of the customers have reported that it's just not blocking enough light and heat.

And there may be a variety of reasons from using suppliers that the OEM had a separate equity investment in to maybe not understanding fully the limited amount of solar protection compared to SPD, that PDLC is able to achieve. But I would just be speculating.

But I know that a lot of these customers of these cars are not very happy with the limited level of solar protection that the PDLC is providing. And it's only in small volume. So it's hard to tell really if that's a wildly held belief or not, but what's been publicly posted has been somewhat dissatisfaction with the PDLC.

Jared also asked, what do you think of the recently published academic SPD study from Saudi Arabia? Do you like the conclusions and was the evaluation process fair? And will this be useful in marketing SPD? Well, Jared to answer your question, yes, I like the conclusions and it's a very useful business development tool for us and our licensees.

I also like the fact that the demographics and climate, where it was done, Saudi Arabia, are great for early adoption customers. And here's a sample of some of the conclusions from that study. First, is scope.

In this study, the overall energy consumption and visual comfort of suspended particle device or SPD smart window were investigated as part of the glazing integration of an adaptive building designed to consume less energy in a hot desert climate. So they are building an energy efficient building and designing it especially for hotter climates.

A typical floor of a commercial office building in Riyadh, Saudi Arabia was chosen for the energy and visual comfort simulation. And here are some of the conclusions from the study.

The simulation results indicated that switchable SPD smart windows in the off and automated states achieved the promising reduction of net energy by up to 58% against double glazed Low-E windows, well, double glazed Low-E windows as people in the industry know, are pretty much the high end of energy efficiency. So it's 58% better.

Another conclusion, the energy required to operate an SPD smart window in the fully powered transparent state is very low at 3.96 kilowatt hours per year per square meter. Think about that. Four kilowatt hours per year per square meter divide by 10.79 and you get square footage. When compared to the total energy consumption, it's very low.

Another conclusion, the net energy savings associated with integrating an SPD smart window with all states would reduce the overall energy consumption, making this type of glazing and energy-efficient product.

The SPD smart window offered a significant reduction in daylight glare probability and solutions using automated, controlled SPD smart windows would offer an excellent balance of energy performance, the elimination of discomfort due to glare issues and the provision of sufficient daylight for office buildings.

And then the final conclusion thus controlled switchable SPD glazing can be a good alternative to standard glazing in a hot desert climate in terms of reducing energy use and providing visual comfort. So to answer your question in a nutshell, yes, I'm very happy with the results of that study.

And as I mentioned, this would be a great resource for architects, and a very good business development tool. We discussed a lot of exciting to topics so far, and today I'd like to ask our operator Paul to open up the conference to any additional questions people participating today might have that we haven't already covered.

So Paul, if you wouldn't mind opening up the Q&A queue?.

And we have a question from Chuck Michaels. Your line is open..

Yes. Hi, Joe. I just had a question I wasn't aware of this. But I saw in your press release that you indicated there is a new aircraft model that debuted in early April.

Can you give us more information on that?.

Yes, I'm still somewhat unlimited to what I could say, but this was debuting at the Florida Air Show. And earlier on in the call, I congratulated Vision Systems on this another win that they had. It's a really interesting, it's a high speed turbo prop, the Daher TBM 960. So just like the King Air turbo prop, this is a very nice looking plane.

I don't know if you've seen pictures of it. And I think it's going to be a very popular product in that..

Okay. Thank you..

Thanks a lot..

Thank you. And we have a question from Clare Harden. Your line is open..

Hi Joe..

Hey Clare ..

See, I was wondering at one time you said that Research Frontiers was being covered by more brokers and that type of thing. Yet the volume on our stock on REFR, Research Frontiers is around 29,000 shares a day. And you compare that with View, which is I feel is an inferior product is getting over 800,000 shares a day.

Do you think there is any explanation for that?.

Yes. View started out as a $4 billion market value company. And it has a very, very large number of shares, outstanding. Having said all that and having started with a very high valuation, they have lost year-to-date 61% of their value and that's year-to-date.

So they went from $4 billion before they went public to about $345 million right now in market value. So it's just the number of shares that they have. And unfortunately for them, the volume has been down volume..

Okay. All right. Thank you..

Thanks a lot..

Thank you. And we have no further questions in queue at this time..

Yes we got one emailed question. One of our shareholders, David, asked and a couple of other shareholders had emailed in a question about the other public smart window companies View and Crown.

So basically the question is to kind of combine them were, what can I say about their businesses? How do they compare to Research Frontiers? And what about their recent performance? And I'm going to go into some detail, I guess, because first of all, it was a broadly asked question. But it's also one that I receive quite often, especially this year.

And I'm also going to combine this with another question I get and spend some time with this too, because as you'll see, these companies have actually helped Research Frontiers and our licenses in multiple ways beyond just bringing awareness of smart windows to customers. I'm going to start though by kind of putting this in context.

Last year, we showed our lowest loss in 27 years. And we even had one profitable quarter, which is something that no other smart window company to my knowledge has ever achieved. And this quarter we reported even lower expenses than last year.

So I've been asked why have we mentioned not only revenue, but also lower cost and financial stability in our calls together. And I think when we talk about View and Crown, you're going to maybe get a little bit more appreciation for why that's important. Of course, higher revenues and lower costs makes profitability closer.

And it's also just a great indication that your company is managing its affairs as efficiently as possible. But there's another reason that this directly relates to operational success and that's confidence by smart glass customers and the stability of their suppliers. So now let me answer the question we got about View and Crown.

Crown has not reported their first quarter numbers yet. But based on all public indications, they continue to have no sales. They have once again, pushed back the anticipated date of their product launch from last quarter to now being this summer.

And today they announced that their Co-President and Chief Marketing Officer resigned and left the company. Their stocks trading a little over a $1 as of the close today. Also, in their last conference call, while they were somewhat optimistic that they would be able to make their inserts wider than six inches, they have not achieved this yet.

And their immediate goal is to do six inches and then achieve 12-inch wide inserts and eventually go up to widths that are comparable to what the industry needs to cover a typical commercial window.

And we know from our experience over 20 years ago, that it is a great distance from a commercialization standpoint, going from six inches to 1.8 meter widths. And that's the width that our licensee Gauzy can achieve in their factory in Germany, that's dedicated to the production of SPD-Smart light-control film.

So Crown would have to be times wider than they can achieve now to reach that goal. And I hope they do achieve this because side by side comparisons of SPD-SmartGlass to their inserts would be quite favorable to Research Frontiers and our licenses. That's Crown. Another public smart window company is View.

And View does have sales, but View has not filed their financials in quite a while. And this has certainly been a terrible year for them and their investors. View originally indicated nearly January that they expected to file their restated financials for 2019 and 2020. So going back away, as well as to 2021 financials by this past March.

And they reaffirmed this in late February. Then about two days later, two of their directors resigned including the one that is their Board Chairman that was appointed to fix their accounting issues.

And they stated in their resignation that they resigned because apparently they did not think that View did what they were supposed to do to adequately fix the accounting mess. In March, their head of R&D who also developed their View’s manufacturing process, abruptly resigned. He had been with View almost since the beginning.

And in early March, View withdrew the registration statement with the SEC that they had. And when the end of March rolled around and View missed their stated March target date for filing their corrected and new financials, they said they would now file them sometime in May.

And if they do in fact, file them later this month, it'll be interesting to see if their cost of revenue is still, $3.75 to about $4 for every dollar of revenue they generate. So, they're basically for every dollar are paying almost $4 in costs of goods sold. So not a very good economic model.

But just going a little further, and I think this will make a lot of sense as to why this is positive for us. It's not just bad luck by a competitor because I do wish them well.

But given the nature of the accounting issue that they claim they had regarding warranty reserves from defective products and their more recent claim that there were no other accounting issues that they had uncovered, it seems to me that they should have been in a position to file their restated financials a while ago.

But for some reason they didn't. And what I believe is really behind this other than the accounting problem and a defective product from the warranty claims is that View as quickly running out of cash and filing their financials in March, would have resulted in them having a dreaded, going concern opinion about their ability to remain in business.

So my educated opinion for whatever it's worth that View is currently trying to quickly raise money so that when they eventually do file their financials, it will not have a going concern opinion in them.

But apart from kind of the direct reason for this question about our public smart window competitors there has been a more direct impact on our business. And it's positive for us. We recently learned from industry sources that View’s customers are concerned about the continuing viability of View moving forward.

And given their lack of financials and their very large losses that, I think, last year were about $260 million a year, I guess, they were also able to piece together the situation that I outlined above and were concerned about it as well.

And because of this, our licensees have been approached by View’s existing and prospective customers who are looking for a more financially stable and reliable supplier of smart windows.

And these customers will find not only that our licensees are well capitalized, and have a very stable businesses and supply some of the largest and most demanding customers in the world, but they will also see firsthand the superior performance and reliability of SPD-SmartGlass.

And it seems now that the additional factor is not just the cost of the product, but whether the company supplying it will be in business and customers are beginning to take that into effect.

And don't get me wrong, I really wish View and Crown well, I actually wanted them to do well because View and Crown actually act as a great reference point for customers of our SPD smart technology, which has superb performance and has proven durability in tens of thousands of cars, boats, aircraft, and architectural applications.

So it was always good to have that reference point, a window that switches in 40 minutes versus ours, that switches in two seconds. Or if you see pictures of competitive technologies you very rarely see videos because they take so long to switch. But if you see pictures, you'll see that they don't get very dark also. And that's a problem.

So, I do wish them well. I'm not sure if we have any other questions in the queue. I think I see one actually..

Yes, we have a question from Leonard. Your line….

Hey, good afternoon, Joe..

Hey Len , how are you?.

I'm fine, thank you. I wasn't aware of that Saudi report, which I think is absolutely wonderful as I live down here in Florida where there is a lot of heat and we're looking forward to getting windows for residential use.

And I just wondered if you've had any continued success with PGT or some supplier of windows down here in Florida, where that might be a likely event anytime soon..

We have. And, and Len , thanks for mentioning PGT. PGT is one of the premier impact resistant, hurricane resistant windows suppliers in Florida. They make a great product. A lot of the buildings down here that – they have to comply with the Dade county hurricane standards, and PGT is often the preferred supplier of that here in Florida where you are.

And we do have a good relationship with PGT. We also have other very well respected, high impact resistant window manufacturers. Some have considerable experience with our technology and also with just impact resistant windows in general and even retrofit applications.

So that in large cities like New York, where when you want to replace the windows, you have to put up scaffolding and you have to get either co-op or condo board approval and the building department approvals and things like that. With a retrofit done from the inside, you don't have to do that.

So it really changes the game in terms of how smart windows can be introduced into those buildings. And as you know, I believe you're on the west coast of Florida, there is a lot of economic activity and construction going on in Fort Myers and Naples. I mean, just a lot of beautiful buildings going up.

On the east coast of Florida, Aventura, Sunny Isles, have magnificent buildings. And our licensee Gauzy actually has an office in Aventura. So that puts them very strategically located. And they have been working on some projects for SPD that I think are going to be highly visible when they come out..

That sounds exciting..

It is. You will be able to drive to some of these projects and see them..

Yes, well, there's – I don't know anybody that's building more than they are in Sarasota right now at the Bayfront and everything. There is lots of projects going on here as well. .

Yes..

So, I think it would be a very welcome addition if we can get it operating here with some of the local manufacturers..

Right..

So I just wondered that that was something we could look forward to in the next year or so, or is it going to be longer than that?.

Yes. In the last month or two, I've been in your area at least three or four times. And I apologize for not stopping in, but they were in and out for project discussions..

Okay. No problem. When you get a chance, let me know..

I will, I will..

Thank you. And we have a question from August Berman. Your line is open..

Hey Joe, how are you?.

Hey, Dr.

Berman , how are you?.

I'm well, thank you. Just a couple of questions for me. First is and I'm not sure if this has been asked in the past.

With the Hyundai investment in Gauzy, does Hyundai have any say in terms of Gauzy, we don't want you to make any kind of big time deal with any other OEMs until Hyundai goes first, or is there not a restriction? Just my thinking is that maybe Hyundai has to go first before the doors open to other OEM customers of similar pattern..

That's an excellent question. And well, I'll answer it first by saying, I don't believe there is any restrictions because I know that there is multiple projects going on in the automotive industry. And some may actually come out ahead of Hyundai. So I don't think there is any restrictions.

But one of the things to understand about Hyundai, and we had this experience with Mercedes. I felt like I was asking them if I could date other women in the beginning because they were a launch customer. And I had a number of car companies that wanted to adopt this. And I approached them and I first delicately asked the question.

They said, Joe, of course, we want you to work with other companies because the higher the volume, the lower the cost, the lower the cost, the more cars we can put this in, and the more cars we could put this in, the more our customers are going to like it, very simple approach.

And I even learned that car companies will also license key innovations to their competitors. So for that very reason, they want to get the volumes up. They want to strengthen the supply base. They want to get the cost down. So I don't believe there is any restrictions in there.

Of course you want to be as nice as possible to your best customers, but I don't think that means turning down others..

Okay. That's perfect. And so I know – my second question is I internally have my set of pipeline in terms of what, I think, is going to happen with SPD in the future and other OEM. Does 2023 look better than 2022 in terms of more adoption? We're talking about two in 2022.

And do we see an inflection point at that point where we say, okay, now we've got two more, we're going to get you four more the following year or any guidance in that area..

Yes, well, I think, it's always going to get better. And one of the reasons is that in terms of our revenues, if you think about a typical car project, a car program lasts about eight years. So for eight years, you are in a car. And so when you are one you are in, let's say, there is two cars that are introduced this year.

So there is two new cars that come out this year with our technology. Next year, those two cars are still there. Plus, you have the Cadillac coming out in 2023, you have other, car companies coming out. So it becomes accretive you are adding layers of revenue on top of existing programs.

And then superimpose on that, the grand scheme, which we'll talk about, which is almost every car company in the world has accelerated their electric vehicle program. And remember we can increase the driving range of electric vehicles by 5.5%. So strategically important is the quicker the adoption of electric vehicles the better we're going to do.

So all of those are very positive trends..

Okay. And then my last question is….

One other point, just to, as long as, just to give you a more complete answer. Typically, in the first year the car programs are starting up and things like that, by year two, they start to market it more and people get more comfortable with the new car models and things like that.

So you could also expect kind of a natural increase in volumes for the first several years of a car because of that..

Okay, perfect.

And then lastly, maybe that most, our question is – any talks with Mercedes, are they still going, are they still ongoing?.

Yes..

It feels like they haven't adopted – they haven't adopted PDLC. So SPD still has to be out there.

It's just like, why?.

Yes..

Yes..

Well, if you remember Mercedes first used PDLC before they used SPD, they had it in mind box. And it was not very good of a product. It actually created a greenhouse effect inside the car where heat would be trapped and not be able to get out. So instead of blocking heat, it was actually trapping into making it worse.

As smart as Mercedes was back then, but remember also when they did do that, we were in existence in commercial production yet. So it's not like they had a choice. But once they did have a choice, they went with SPD. And we have very good relations with everyone at Mercedes all the way up to the Chairman level.

I remember Ola Källenius when he was an up and comer, but wasn't in the top four executives. And our consultants who said, keep an eye on this guy, he is going somewhere. And they were right. But yes, we have a good relationship with everyone at Mercedes.

And I expect that when they are ready to introduce the car, they have targeted, you will see SPD in it..

Very good. Thank you Joe..

Thanks..

Thank you. And we have a question from William Brazel. Your line is open..

Yes. Good afternoon..

Hi..

Yes, I've been on several of your conference calls. I've been an investor for three years. I've noticed your stock prices range from a $1.36 to $5 over those three years that I've been an investor in. And right now that’s nearly low end of a $1.70. Can you comment on why we have that stock price besides a lack of revenue? you keeping about.

We need some significant revenues, otherwise, if we ended today, an investment environment, if they don't show a profit, I don't think the stock is going to go anywhere..

Right. Well of course our goal is to have higher revenue. And every good company should have that as its goal. If we look at – two factors, I think, that are really what go into our stock price. One is supply and demand. Our demand hasn't changed – I mean, our supply hasn't changed.

We've had just under 32 million shares outstanding for the last couple of years. So we are very careful about not diluting shareholders with stock offerings, which tend to weaken a stock. But we're also in a market cap that wasn't one that was attracting a lot of money. Most of them flowing into the FANG stocks and that's the supply and demand.

Small caps were really not participating in most of the market. If you look at our current price today year-to-date, we're about flat, year-to-date the Russell 2000, which is I guess the most comparable index is down almost 18%. The NASDAQ is down almost 23%. I don't have to tell you..

I understand that, but your stock is not going do anything if you don't have the increased revenues and there is not any confidence on the street. There's no confidence in the street on this company because you don't have the ability to bring it home plate and increase these revenues significantly..

Well, I disagree. I think if you've been listening to the calls, you see that there is a lot of things that are in the works and because the nature of our business is not to – our primary business and revenues right now are not selling buildings. Okay. It's automotive.

These cars come online and the day before we started production, there is no revenues the day of start production, the revenues start, and that's the way it works, you know. And if you….

Well I understand that but as of your last quarter, you still don't have the revenues to report. I keep hearing quarter after quarter, the things are going to get better, but I'm still waiting for the day when you are profitable..

Okay. So, you know what's happened to unit volumes in the automotive industry in the last year. And things like that. I mean, if you are dependent on the automotive industry, which is where our primary market is, that's also, you're going to rise and fall somewhat with that tide.

If you follow those industries, that it's been a very disrupted year between….

Yes, I understand that. But that's just one segment. I thought the big industry that you could really hit a home run in is in the architectural side of the window..

Sure. Right, exactly. And that's the one that we said is just coming out now. But if you look at our bread and butter, where the revenues have been coming from, they are mostly coming from automotive..

Yes..

And that's been true for the last 10 years. But look, we always want to do better. I'm a shareholder, like you, I've been a shareholder that paid in some cases in 20s for the stock. So there is probably nobody on this call as motivated as I, to show positive revenues and things like that.

And what I'm trying to do right now is at least show you where those revenues are likely to come from and what we have in the works and what the path to that profitability is. And I start to see it, but we we'll talk about that in a little while. But I thank you. Look, I share your frustration..

One point that I have is for this company to get into that $100 million, $50 million, $100 million or more in revenues, I would think it would have to be mainly come on the architectural side, wouldn't it?.

No, not necessarily, if you look at the – yes, if you look at the – if you look at the market for just premium automobiles, so cars are both, let's say $60,000 in MSRP, below. Nowadays, it's probably higher because of the inflationary aspects that are going on in all car segments.

But if you just look at that and you look at that being about 3% of the unit volumes, you're talking about a 100% of that market would be about $200 million in revenue to Research Frontiers.

And of course, we're not going to get a 100% of the market, but you could see a big chunk of that can come and a big, significant increase in our revenues could come from just being in automotive sunroofs. If you've been following some of the developments in our industry, car makers are not only looking at us for sunroofs, but other things as well.

So, I expect this to be a good market. But the good news about being our company is we can be in five different markets. We could be diversified without having to spend money building factories. Our licensees do that and they have been. And I should tell you something also..

Well, that's one reason why I invested in the company, because I know you have such a low overhead and since you run the royalty business and you just take a fee from your….

Right..

Vendors that's one reason I invested in the stock that I thought, man, you could really become a cash cow and then you would actually even be paying a dividend. .

All right. And that's our goal to be a royalty collecting dividend paying machine. And the….

Can that happen with just most of your revenue though, coming from the car industry?.

Absolutely, absolutely..

Really?.

One car could do that for us. But we're not stopping at one car..

Because I like the….

I guess the idea. Yes I guess, what I like to do and look, everybody has their own things that they look at in making decisions, especially investment decisions. I like to look where the smart money is going. And the smart money in our industry is by our licensees making substantial investments in SPD technology.

You have to ask yourself, why are they doing that? And I think the answer is they see with a better crystal ball than we do even what their business is going to need. .

I just think the market will take the path. I think the market will take a double check on your stock if you could just start getting one or two quarters, what you're profitable. And then I think that that would really open up the….

Yes. And I'm going to talk a little bit about that in my closing remarks..

Okay..

But I agree with you a 100%..

Okay. .

No I agree with you a 100% though. Thank you..

Thank you. Okay..

And we have a question from John Strobel. Your line is open..

Hi Joe..

Hi, John..

I asked this question in the last conference call and I'm kind of looking for an update on your thoughts because the world has changed dramatically in these last two months. It looks like Russia is unlikely to be a customer of any SBD products for years. They are essentially out of the business of trade.

And in China which has created catastrophic backups to supply chains worldwide with their shutting down various cities with COVID.

Do we have enough materials to reach our goals?.

Yes. And it's an excellent question. And let me also take the other part of that question. The two big markets for automotive is China, the largest one in the world and Russia used to be a big market for premium cars, especially. So, it certainly, is not good that two of the major markets for automotive have basically dried up. They will come back.

These things happen in cycles and maybe China before Russia, but whatever, I don't have a crystal ball in world politics. I focus a little more on the economics. But the other part of your question is actually an excellent one too. And I'm happy to say that we don't really have a very high dependency on components from China or anywhere else really.

So its most of the items are manufactured in Europe or the United States and the key components of this and or in Israel. So, all very stable places for these things. And I don't foresee a supplying chain issue with any of this stuff. But it's an excellent question.

I focus a little bit more on what can we do to maybe focus more on North America, Europe and the Middle East in terms of their car markets first until maybe China comes back online, because that was a very big market for every premium car company in the world, especially Audi, Mercedes and BMW..

Okay. Thank you..

Thank you..

And we have a question from Francis Cordoba. Your line is open..

Hey Joe, how you doing?.

Hey Francis., how is it going?.

Pretty good.

With one film laminator, Gauzy in Germany, is that the only plant that will be producing the laminate?.

No. So there's two film producers. There's two film producers, Hitachi Chemical, which was bought by Showa Denko and there's Gauzy. Gauzy is the only one that can coat film 1.8 meters wide. The production line at Hitachi was one meter wide, which was perfectly fine for a lot of the applications like car, sunroofs and trains and things like that.

But what we found, and this was a condition to doing business with Gauzy, we said, we won't license you unless you build a facility that can coat film at least 1.5 meters wide. But like they exceed expectations, they did 1.8 and actually can go a little bit wider than that. But yes, so they are the only ones doing, let's say architectural widths..

Is there a large difference between the two films if you were to actually look at them between Gauzy and….

No. I mean, I've done side by side evaluations of both films. They are both excellent films. If I had to give you my qualitative assessment and I hope I don't get in trouble with Hitachi by doing this, Hitachi's film has been the workhorse of the industry for over a decade. And it's a great product and they did a beautiful job with that.

And has a nice range of light transmission, it blocks 99.5% of the light in the dark state, it lasts about 55% of the light in the clear state which gives you 110:1 contrast ratio, which looks really dramatic and really does a great job of blocking heat, light and glare. So it's a great product.

As great as it is when you put the Gauzy film next to it, it looks blacker for the same coating thickness and it looks clearer. Maybe it's just my eyes. Maybe it's the area of the spectrum that it's operating in with is a slightly different one. It might be just something as simple as a better dispersion of the nanoparticles inside the film.

But they are comparable in terms of, they both are using the same materials. One just looks a little bit different in my eyes, maybe a little bit darker and a little bit wider range of light transmission..

Now you also – you didn't mention anything about TVs, how is that progressing?.

I'm going to mention that in my closing remarks. But that's going well. And if you will hold your question until, I could say, something about that, I'm happy to talk about it..

Right. Now as far as architecture goes, the film being installed in sun roofs, it's only for vehicles like 60,000 and above. .

Right now..

Right now..

Right now. But if you look at who some of the entrants might be, some may be premium car makers and some may be higher volume car makers like Hyundai. So, let's see where everything goes together..

Will the price point come down to where it could actually be feasible to use in architecture?.

Well, absolutely. Absolutely. I mean right now without subsidizing, I would say, we're cost comparable to what we think of View window really costs..

Actually….

We're closer to what their subsidized price is than what their actual costs are. But I don't want to go into detail because I don't set pricing.

But yes, it's definitely feasible for architectural and certainly feasible to get – the costs have already come down a lot with Gauzy entering the scene and just having some competition to the Showa Denko, Hitachi film that the costs have come down and can make mid-market cars even quite feasible..

So now you mentioned subsidies.

Do you expect that to happen with possibly the government with green buildings?.

Well, there is a bill in Congress right now, the Dynamic Glass Act, which would give substantial tax breaks for putting switchable glass like ours in buildings. So, that's clearly a tax expenditure that is subsidizing the market if it passes. But also, I never rely on subsidies.

What we've been focusing on from day one is making this technology more affordable and do it through picking the right people in the supply chain, designing the technology properly and really just minding – crossing your T’s and doting your I’s and doing things like that.

And if you look at the history of things, the costs have come down, but then they went down a lot recently. So, we may not – I'll quote, one of my licensees who years ago, saw Saint-Gobain had supplied Ferrari with the electrical chromo groove for the Super America. And it was a disaster.

I mean, it didn't work well, cars were came with the glass broken, so they couldn't deliver the cars. The customers wasn't a very positive experience when they were doing this. But on top of all that they were losing between $2500 $5000 per car.

And one of our licensees who ended up doing high volume business with Mercedes using our technology, said, Joe, we're not in it for a marketing gimmick. There is a total of 600 of those Ferraris that were produced throughout the life of the program. It's a marketing expense for the supplier of that.

We're in this to make money and all of our licenses are in this to make money. So we're not interested in subsidizing, although we certainly welcome that. And like I said, the Dynamic Glass Act would certainly put a lot of wind in our sales there. But I think you're also seeing if you will, an indirect subsidy.

I mean, this is now the economist in me coming out. But if you look at higher energy costs and we are conservation of energy becomes a lot more valuable to people to so something that wasn't affordable when gas was a $1.98, a gallon, maybe a lot more valuable, and viable, when gas is $4.50.

And Europe has been living with high energy prices for quite a long time. And if you notice, they tend to be on the forefront of energy, efficient buildings, and installations, and incentives and things like that. So, you have that going on too. Of course, I wish that energy prices will come down.

I think that our role is not to sit there and ride the wave up with higher energy prices, making our technology relatively more affordable. Our real job at Research Frontiers is to bring the cost down so that no matter what energy prices are, this is a good thing to put into your buildings, or into your cars, or into your boats..

Now you also mentioned it going into a lot of electrical vehicles.

Are there any internal combustion engines that are going be using it?.

Yes. And one of the drivers there is the fact that we actually reduce CO2 emissions in, ICE vehicles by four grams per kilometer, which is very significant..

Are any of those vehicles going to be announced soon?.

I think you'll see that. Yes. Look, the industry is waking up to the fact that we could extend the range of electric vehicles and reduce CO2 emissions in cars. It's a good thing. And we've been working hard with that messaging for the last three or four years to just constantly get that out to the industry. And it works, they realize it..

How close are the sun visors?.

I think they are very close. I think they are very close. And I think you'll see sun visors implemented in a lot of different ways in a car. Let me just leave it at that for now..

Okay. Thanks Joe..

Thanks a lot. Good talking to you..

Thank you. And our final question comes from Alan Denzer. Your line is open..

Yes. Hello Joe..

Hey Alan. Alan , how are you,.

Joe, it's been tough. It's been tough..

I know it's been tough. I think we've been relatively better than other tough investments, but I'm not satisfied with that. I would like as a shareholder for our shareholders to show a very nice return on their investment. So we're working hard for that..

Right. One thing I just wanted to follow-up on that no one seems to have asked in the last number of conference calls, and if you could just tell us whatever happened to the Brazilian armored car contract..

So the SER in Brazil has run into a lot of difficulties. Brazil was severely, severely, severely hit with, COVID shutdowns and perhaps they didn't approach things the right way as a country. I don't want to judge anybody on that. But they were very, very severely hit. They also had some successes.

SPD was demonstrated on cars by major manufacturers and they were armored. But I think you'll also see our glass come out elsewhere. So I don't think it's a vacuum. I mean, I don't think it's – I think it's – I'm sorry. Say that again..

It's a dead that contract..

No, they are still a licensee, but the company is still climbing up from some very difficult times as you would expect..

So you expect it to eventually happen or not..

I think so. And I think that some of their competitors are licensees of ours too. So if they are not the one supplying armor glass in Brazil, we already have licensees with even more experience with our technology, doing that..

Well, feel free to criticize any government you want, including ours. You are still living in a free country, presumably. Thanks a lot, Joe. Good luck to you..

Thanks a lot, Alan ..

Thank you. Thank you. And we have no further questions in queue..

Okay. In that case, I'd like to – first of all, if we haven't fully answered anyone's questions either that were emailed to us or during the live Q&A today feel free to email us, we'll do our best to answer what we can. And I just want to make a few closing remarks.

So I mentioned last year, we showed our lowest loss in 27 years and I explained why that's important. And we even showed a small profit one of the quarters last year. And I think that's significant because it's something, first of all, that no other smart window company has ever done to my knowledge.

And I think even more significant as we expect to do it again.

And as I mentioned in the past as a company approaches profitability, and you've seen this with companies even like Tesla, where they had a profitable quarter and then a couple quarters of losses, and then they became sustainably profitable, revenues are often choppy, but then they usually smooth out.

And we expect consistent profitability once the SPD-SmartGlass industry hits its stride. And today you heard more about what that path to sustain profitability looks like. And the progress that we, and our licensees and our customers have made along that path. 2021 began a, a year of great accomplishments for our company in that area.

And these continued into 2022. These accomplishments included new cars announced by Cadillac, more cars by McLaren and even a new government contract in the area of specialty vehicles. Also innovative projects by other automaker showed new uses for SPD, such as BMW showed at the Munich Auto Show.

Prestigious publications with millions of readers each have highlighted the range extending benefits of SPD-SmartGlass in internal combustion engine and electric vehicles. And that highly coveted 5.5% increase in driving range. They also noted the significance of the four grams per kilometer reduction in CO2 emissions when SPD-SmartGlass is used.

And the industry has also recognized other benefits. SPD technology makes people more comfortable and safer, and it protects the interiors of homes and cars. It reduces noise. It strengthens glass and makes it safer.

We noted that a fixed non moveable panoramic roof in cars can also reduce the weight by using SPD-SmartGlass by up to 13 pounds and eliminate the need for about 54 components. So this reduces costs and further increases driving range and reliability, while contributing to the stability of the car on the road.

Hyundai, Sekisui and others invested that are heavily involved in the automotive industry have made substantial investments in our industry through equity investments, in our licensee Gauzy recently raised even more expansion capital.

And when I was at CES this year, the chairman of Hyundai Motor himself, along with his CTO and believe it or not, the Korean economic ministry visited us at Gauzy booth where the SPD sun roofs were on display.

In aircraft planes manufactured by Airbus, Epic and last month Daher, with their TBM960, joined the other aircraft, such as the King Air and the Honda Jet and a host of helicopters that from our SPD technology.

And also now that Gauzy is shipping wider SPD film we saw the beginning of shipments of SPD-SmartGlass for the architectural industry and more train projects. And I mentioned there's activity going on that could even make those windows retrofittable in the architectural market.

You also saw industry giants like LG Display of South Korea combine their transparent OED display technology with SPD film to make vibrant, high-definition displays and televisions that turn into a clear window at the touch of a button. And these were exhibited at the Munich Auto Show and at the January CES in Las Vegas.

And one recent report indicates that LG has moved forward with their plans for this new TV, with a 55-inch transparent OLED SPD screen intended for their home entertainment markets slated for release in 2023. You mentioned two new car models in Q3 and Q4 and additional aircraft such as the Epic and the Daher.

During the year, more and more car companies increased their investment in electric vehicles and accelerated their timetables. All these are very positive. Every major car company has announced an electric strategy. Energy efficiency, and reduction of CO2 and other emissions is an important topic in this world.

And this year, we also demonstrated a new concept in solar protection for a major automotive OEM on one of their new electric vehicles. And I'm pleased to announce today to now a second vehicle also is being targeted by them.

As noted, we expect revenues from these new automotive programs to start coming into the startup production of these vehicles beginning in Q3 and Q4 of this year. And with the Cadillac Celestiq in 2023. Plans by key licensees of ours to further expand production here in the U.S. and in Europe are in the works.

And the merger between our licensees Gauzy and Vision Systems created a powerhouse in the smart glass industry, focusing on our SPDs technology.

And unlike competitors, View, Sage and Crown in the architectural space, we not only have a proven technology and one with demonstrably better performance, but we also have wide coverage and much better economics and logistics. We’re a film-based technology. We're excited about all areas of growth for our technology.

And today we spoke about more cars, more yachts, more trains, architectural projects, and new applications such as consumer electronics and adaptive headlights, such as the one that BMW has shown.

We and our licensees continue to work hard to continue and build upon these successes and have made substantial investments to expand their resources and their production capacity. I hope to see some of you in person at our upcoming annual meeting of stockholders on June 9, that's being held at our company headquarters in Woodbury.

That meeting will mostly be administrative reelecting directors and approving our accountants, but it's always good to meet in person, our shareholders who have put their trust, and their money and their faith behind their efforts.

So I want to thank you all for being part of that excitement and for your continued support and trust as together we move our company and our industry forward. Thank you very much. And those celebrating have a great Mother's Day this weekend..

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