Good afternoon, ladies and gentlemen. Welcome to Research Frontiers’ Investor Conference Call to discuss the Second Quarter of 2016 Results and Recent Developments. During today’s presentation, all parties will be in a listen-only mode. [Operator Instructions]. This conference is being recorded today and a replay of this conference call will be available starting later today in the Investors section of Research Frontiers’ website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information. The words expect, anticipate, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the Company’s current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The Company will be answering many of the questions that were emailed to it prior to this conference call either in the presentation or as part of the Q&A session at the end. In some cases, the Company has responded directly to email questions prior to this call or would do so afterwards in order to answer more questions of general interest to shareholders on this call. [Operator Instructions] Also we ask that you keep your question brief in the interest of time. I would now like to turn the conference over to Joseph Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Allison. And good afternoon everyone and thanks for being here today. Joining me today is Seth Van Voorhees, who is our CFO and also heads up our VariGuard division. I’d like to thank all of you who sent such nice notes to us about the unexpected passing of our dear founder Bob Saxe. I’ve known Bob Saxe for over 30 years and I’ll miss his friendship and the mentorship. Bob devoted his professional career and his life to Research Frontiers and we’ll all work hard to make sure that his legacy as the founder of the smart window industry continues on. Today’s call will be concise and focused mostly on our two largest markets, automotive and aerospace. There is increasing activity in our other markets such as architectural, marine and some activity as well in some new markets and we will touch on those as well. If you are like me, the first thing that I focus on when reviewing each quarter’s financial results is revenues. And I am sure that you were all as disappointed as I was to see that fee income was lower in the second quarter. We got most of these numbers this week and last week, and I think it will be useful for us to analyze them together. Over 80% of revenue difference between last year and this year was due to non-recurring items such as special projects like revenue from the World’s Fair, special projects from VariGuard and non-recurring license fees. Only about one-sixth of this revenue decline actually came from economic activities. However, since our results from operations going forward are the most important bellwether of our future success. Even though this represents a small fraction of the reasons for the decline, I think that it is important to understand…

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

Quick question on the lower cost of the OEM. You cited that one of the reasons for the revenue shortfall was that the costs to OEMs -- the production costs of OEMs went down. So, isn’t that like a good scenario for Research Frontiers as in it will lead to like a higher rates of adoption, I mean like, could explain that part?

Absolutely. When we compare last year to this year, the price reductions were scheduled price reductions that came in at the beginning of this year. And yes, not only are they expected to lead to higher lines but they actually have, so it is a good thing. But, when you compare last year to this year, you’ll get a little bit of an effect because that really just started to take hold with the lower pricing.

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

I do. So, far what we’re seeing from an analysis that Mercedes did for us of take rates is that take rates across all models are actually up for the 2017 model year, which just to kind of clarify, it may have not been clear but the second quarter calendar quarter of the year is the last quarter of the production year for Mercedes. So that’s why we see volumes down. But starting in beginning of July, sedans and other light vehicles start coming into dealer showrooms and starting -- a month later, you start seeing the SPDs come in. And those are the 2017 model years, and those are showing really nice increases in take rates across the board.

You guys have quite a few ongoing conversations with aircraft OEMs. Do you have any updates on that like with any aircraft OEM making Research Frontiers a standard equipment or an option?

Well, if you break down the market -- and it’s a good question because especially when you start thinking in terms of commercial versus general aviation, and when you think about OEM versus aftermarket, and as I mentioned earlier, the aftermarket is much bigger. In general aviation, the aftermarket either kicks in when somebody is upgrading the interior or fixing the interior of a plane or when the plane changes ownership. With airlines, usually these are part of pretty massive fleet upgrades. So, once you get into a fleet program, you’re talking about pretty much higher volumes even than OEM production in terms of use of the product. So, if you break down the two markets, in the commercial market, you have Boeing and Airbus as a top two large aircraft manufacturers and you’ve Embraer and Bombardier. All of these companies have an involvement in way or another with SPD and our licensees. I can’t comment on specifics. Some of the discussions that have gone on very recently have been going on behind closed doors. But, there seems to be I think a strong recognition that SPD offers some real performance and even cost advantages over other technologies that these airlines and these aircraft manufacturers have looked at.

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

Joe?

Hi, Bruce.

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

That’s an excellent question, Bruce. The same program that we have with Mercedes has been designed to work with any OEM. And we’ve also been expressing that as something that we’d like to do with them when they launch their vehicles. So, yes, I mean, we’re having success in one area. There’s no reason expect that that same investment won’t be similarly successful in the other areas with other OEMs too. So, yes, we’ve designed it with that in mind and we’ve already spoken to the OEMs about that.

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

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

Thank you.

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

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

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

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

Okay, thank you.

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

Hi, there. Joe, my condolence is to you and team there for a great loss. One of the things he stressed in any discussion I had with him when I asked him about it, was the other applications within the bottom of deal for SmartGlass other than the sunroof. Could you please comment on any discussions or ideas that have taken place for other applications within either Mercedes or the automobile in general with any OEMs that you may be in touch with?

Other applications besides the roof are certainly ones that we’re having specific discussions on and in some cases specific development programs with. There is a lot of glass in a car, you got to glimpse of what’s possible with Continental’s Ford Mondeo that had all 12 pieces of glass in the car from the sun visor built into windshield to the roof to the side glass to the quarter panels to the rear windows to the rear side windows, all having SPD. You get an idea of what’s possible. And certainly, the more glass that uses our technology have the greater revenues.

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

I don’t want to comment other than what I’ve said previously in the past, which is the main reason that we weren’t on the initial production was that two to three-year period that typically an OEM likes to have for glass products and they didn’t have that much runway between the time they decided to adopt SPD for the concept and when the car came out in production. We’ve had discussions with them since. And actually, the other thing that’s kind of interesting is there’s been a very interesting discussion going among many different automakers about how SPD will benefit electric vehicles certainly because more power’s going towards driving the car and less towards cooling it, but also the benefits of SPD and the autonomous driven vehicles and the benefits there. And I might as well use this opportunity to say that later this year, I am also going to be the speaker at the Autonomous Driving Conference that’s being held in Detroit. So, the industry is beginning to realize that when you’re in a car that’s potentially going to be driving itself, you start to pay attention to passenger experience just like they do in the aircraft market.

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

We have to stick to the policy that we have which is the only auto show that I ever talk about going to is the New York Auto Show because I’ve been taking my kids to that since they were young and now they’re married with their own kids. So, I’ll take my grandkids to it. But, we don’t comment about what’s going to happen at an auto show until it happens.

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

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

It does. Just to maybe answer the question because I’ve got it from several people. They initially started testing this for the automotive market. They’ve gotten great success and customer response from that with the OEM that they’re working with on that. They moved a lot of the more sophisticated development into the aircraft segment of their business because they also have a lot of strong interest there as SPD moves from the passenger cabinet to the cockpit, the benefits I think are pretty apparent. And a lot of this development work for the automotive industry is being funded by the aircraft development. So, basically, they’re working in parallel but my guess is you’ll see a product come out in both markets, almost at the same time.

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

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

Also with the unfortunate passing of Mr. Saxe, I guess maybe some people are wondering what impact would that have on improvement and further development of SPD because I understand that he still was very active as Chief Technology Officer working on different projects. And in addition since I don’t think anyone knows the history of underdevelopment and evolution of SPD better than him since he started it all, do you think all that material is certified [ph] so that if it’s needed during litigation, it would be available?

So, answer to your question, Bob took extensive notes and lab notebooks of things he was thinking about. Also he was not only a brilliant scientist but a brilliant businessman as well with a Harvard MBA. And one of the things they do teach you in business school is session planning and like any good company, we focused on that year’s ago and made sure that the thoughts and ideas from all of us in the directions we were going could carry on if something happened to us. So, while I personally will miss Bob very much, he was a dear friend for over 30 years, as a Company his work and his vision and the directions that he saw us going in have been preserved and are being pursued.

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

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

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

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

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

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

The Sprinter...

Yes, it was getting retrofitted for some music industry mogul or something like that. Anyway, this guy put probably $100,000 into this car. And when they got done, they put window shades in it. And I was extremely disappointed with it being a Mercedes to begin with. The guy had custom made seats that were trimmed all-in Ferrari leather in. The music system would probably dwarf what the cost of the windows had been, if they were SPD. So, I guess my question is after seeing all these motor homes that in some cases go over $2 million, they have four slide outs items with big windows, nobody has yet that I am seeing is using it. Do the licensees that research dealing with, have they reached out to these people and even offered to let them try this on an extra mile basis?

First of all, Mercedes doesn’t do those upgrades, typically it’s the aftermarket auto tuners that do this. And you’re right, they spend a lot of money upgrading a vehicle. A lot of it is awareness, a lot of it also is whether they have access to the technology. We’re trying to change that so that they have more awareness and more access to it. But remember, the aftermarket is somewhat unique. Unless the car has laminated glass already in it, you would have to fabricate glass molds to bend the glass to the right size and shape to go into the car and then make laminated glass panels with SPD. Now, they do this. Isoclima and AGP, two of our licensees that do a lot of work in the bullet-resisting glass market, already have the molding and the tooling for most cars. So, if you wanted upgrade, I don’t know, Toyota Land Cruiser or something like that, you can most probably find that both of those companies have the glass tooling to make a laminated side widow with SPD. With the Sprinter, it would require new tooling because that’s not something that’s usually made bulletproof or -- but once you have the tooling, it becomes feasible. So, there’s been some interest in that. And it’s certainly a market that is not price sensitive, as we gathered from the show you saw. So, it’s something that certainly is being pursued. Same thing with RVs, RVs can be very expensive. And if you’ve ever driven in an RV with rattling shades on the road, you could really appreciate the benefit of SPD.

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

That’s a market that to me a good market, but -- the logistics are much different. I mean, right now in the early stages, you have some specialty companies like AGP and Isoclima that can service that market because they already have the glass tooling. But when you think about the large glass companies, they like to design something once and make 100,000 pieces of it.

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

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

No, nothing rules it out but if -- the reason to make a strategic investment is not the money, it’s the strategic relationship, and it’s something that interests us -- if presented, we would certainly consider it. But I was answering the question about whether someone thought our stock weakness which kind of implies that it was a hedge fund or market participant that wanted to get involved. And there, we’re not having any discussions at all.

Okay, thanks Joe.

I think that’s the last question that we have in the queue. So, I’d like to make a closing remark if I could. The past five weeks, since Bob Saxe passed away have been difficult for all of us. He was a great man and we miss him as a founder and a guiding light and as a friend. He started Research Frontiers 50 years ago when smart window was science fiction. And through hard work and determination he and his team made them a reality. I’m proud to have worked with Bob and to be part of the team. Along the way, many of the companies other than Research Frontiers, have tried to do the same thing, have spent enormous amounts of money and most have failed, and the jury is still out on the one or two competitors that are left. Bob got to see his idea become a prototype and his prototype become a product and his product become an even better product. In the last year of his life, he got to see his technology debut at the World’s Fair and be experienced there by over 6 million visitors. He got to see the world’s leading premium automaker put it in five different car models including the best-selling luxury sedan in the world. He got to see SPD technology go from being an option on Mercedes models representing 29,000 cars two years ago to 42,000 cars last year to now being an option on over 120,000 cars with more coming. He got to see other automotive OEMs select SPD for serial production. He got to see his technology become the first and longest flying switchable window technology in aircraft and become standard equipment on seven different aircraft models. He got to see it being used on…

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