Good afternoon, ladies and gentlemen. Welcome to Research Frontiers Investor Conference Call to discuss the First quarter 2017 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. A replay of this conference call will be available starting tomorrow 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 could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The Company will be answering many of the questions that were emailed to it prior to this conference call, either in their presentation or as part of the Q&A session at the end. In some cases, the Company has responded directly to email questions prior to this call or will do so afterwards, in order to answer more questions of general interest to shareholders on this call. [Operator Instructions] 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, Anita, and good afternoon, everyone. And joining me today on this conference call is Seth Van Voorhees who is our CFO and Vice President of Business Development and also heads up our VariGuard division. Many of you speak to Seth throughout the year, and Seth and I will both be available to take questions after my presentation. In our last conference call for investors in March, we outlined our clear strategy for growing revenues, continue to develop new licensees, continue to grow each of the five markets that our technology is used in and develop new uses for our SPD-SmartGlass technology. As we also noted, a key element to growing revenues was reducing the cost of our technology to the final customer. In the seven weeks that have elapsed since our last call, we have made progress in all of these areas; we will talk about it. The automotive market is currently our largest market and to recap what we said on our last conference call, until our other four markets come online with more firmness, we will be dependent upon the ups and downs of the automotive industry. On balance, the automotive industry is a great industry to be in. The automotive industry is the first high-volume user of smart glass, and SPD offers the best performance of any switchable tint technology ever developed. The automotive industry has tried other technologies, but we are the only that has gained the foothold and has putting serial production. The automotive industry is also one where our technology has shown itself time and time again to be highly reliable over the years across tens of thousands of cars, not one reported problem ever. The automotive industry is also the one main industry with relatively steady and predictable volumes compared to…

[Operator Instructions] First question today comes from Ishfaque Faruk with WestPark Capital. Please go ahead.

Hi. Good afternoon, Joe.

Hey Ishfaque, how are you?

Good, good. Could you give...

I must say by the way, you have very sharp eyes in finding that Asahi press release so quickly.

Thank you. All right. Could you give us a sense of your partnership with this new licensee who’s going to be focused primarily on the South Korean aftermarket?

Sure. And maybe I could also give you kind of the longer game plan. So, they have a license from us to supply the automotive aftermarket in South Korea. It’s a market that they’re very, very familiar with. They’ve supplied automotive based products, architectural based products, aircraft, aerospace products. The idea is to go after the lowest hanging fruit that they see right now, which is avoid that exist in the market. And you question gives me an opportunity maybe to elaborate a little bit more on some of the challenges that have faced the aftermarket. So, let’s say you had a car that you wanted to upgrade with SPD-SmartGlass in the past. If it didn’t come as a factory installed option, the next thing that you would look at is whether it was existing laminated glass or not. There’s about 40 different car models that have laminated glass on the side glass and they typically do it for either solar control or acoustic reduction -- sound reduction. A primary example is the Mercedes S-Class has laminated glass on the side because it’s quieter and cooler. So, if you had that then what you would do if you wanted to upgrade your car, see if the auto glass manufacturer, either the OEM manufacturer or the aftermarket glass manufacturer will be willing to sell the glass in an unlaminated form so that you can laminate our film in between it; and if they would, you would laminate the film inside it, and then you would install it in the existing door panel. However, most cars don’t have laminated glass and also most suppliers wouldn’t supply glass that’s not fully laminated. So, what then you ought to do is either work with some that already that already had the glass molds and…

Will the SPD-SmartGlass get much -- be like a hit in the aftermarket hours, considering the fact that it’s a pretty pricy option for installing in aftermarket?

Yes. Well, there are things such as aluminum wheels that are lot more expensive than you could imagine, they get upgraded everyday in the aftermarket. So, people are spending money on customizing their car. And this is probably one of the most dramatic things you can do to upgrade your car, unless you want to flashing blue LED lights on the undercarriage or something like that. But in terms of kind of a desirable and functional upgrade option, the market seems to really rally around this. And the fact that we now have a path to get this into the market is quite useful. I mentioned, I’ve talked about the longer term plans for this product. The South Korean market is something that Hanamac is very, very familiar with. Their head of product development and their president or both are originally from Korea educated in United States. They do plan to expand this into other markets once they’ve kind of established the business and the distribution channels in South Korea. I don’t think South Korea will be the end of where they go with this.

Joe, sticking to the -- moving on to the train side of things. The Asahi Glass WONDERLITE, is that using your SPD or is it like some computing frames? Because it’s not very clearly...

Yes. That’s using our SPD technology; it’s just that their trademark -- their trade name for SPD-SmartGlass is WONDERLITE.

And will the company get like similar contracts from train SPD folks in other parts and like how big would these contracts be, like comparable to like airplane manufacturers, car manufacturers? I’m just trying to get a sense for like the size of this market.

Thank you for the question. The train market can be quite large. First of all, one of the challenges the trains face is that they use a lot of glass and it’s not only in the side window but also in the roof now. And it’s to create a more of an open air atmosphere and a panoramic view of your surroundings. Anytime you have a captive customer, whether it’s in a aircraft or a train or in the future an autonomously driven vehicle, people want to look out more. And in trains, there is a lot of glass because of that. But the problem is most train air conditioning systems can’t keep up with the solar heat gain requirements of using a lot of glass. So, part of the benefit that Asahi was mentioning with this is the fact that it allows the air conditioning systems to actually make the passenger properly comfortable. How big is the market? Well, this is a ten-car train, it’s ultra luxury train. When you see the pictures on Google, you will be reminded of a luxury cruise ship. And this is catering to the silver market in Japan. It doesn’t go very fast. I think it’s 115 kilometers an hour, so about 70 miles an hour. So, it’s not a bullet train; it’s very much a leisurely ride through some of the most scenic areas of Northern Japan. But, other markets have bigger trains. And when you start deploying this on all of the first class cars and then all of the cars on the train, you’re talking about a substantial amount of glass. And as I mentioned in my presentation, Asahi is not the only one working on this. And by the way, JR East is the first one to adopt this but JR West is working on their own luxury train in different part of Japan. And then you have in other areas and in other continents luxury trains that are doing quite well in Europe and in North America. So, you are going to see luxury train travel I think become a more important way of getting around. And we are very important part of that because panoramic views are key to that. And in the train market, likely the automotive market, we get a 10% royalty.

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

Hello, Joe. Just a few follow-up questions regarding the Hanamac deal. When do you think that they will be able to offer the retrofit SPD glass to their market, how long would it take?

Their product development people are in South Korea right now and they have been interfacing with Hitachi to purchase the film. It could be as soon as the end of this year or early next year that this product is available. So, very quick development times.

And then, who actually will be on letting the people in South Korea know that such a thing is possible, will it be the auto companies or other shops?

They have a marketing plan that is meant to get the word out in a very efficient manner. The press release has been widely picked up in the market also. But, when you think about the fact that people come to these auto glass shops and the dealers for upgrade now, just the standard existing traffic is going to be very interested in this. And of course, this is going to be such a novel item that finally available on a much easier basis than prior -- and before that, word is going to spread pretty quickly. The aftermarket is a great market because of that.

What about the United States because that technology be used -- have that market in the U.S.?

Absolutely. Like I said, they are starting in South Korea but they are going to expanse other markets once they establish their footholds and their distribution channel in the South Korea. But this kind of approach can be done anywhere.

And what’s the status of the Vision -- the sunvisors, the Vision Systems has been on working on, sunvisor?

They are continuing to market this to the automotive market, to the aircraft market. They are getting some very positive feedback from launch customers on this. And maybe this will also inspire them to take a quicker step into the aftermarket as well.

And a last thing. You didn’t mention it but could we assume that there will be a major announcement regarding a major OEM, auto OEM sometime this year, like you said in previous calls?

I’ve never said when it was not going to happen, so I don’t want to say this year or not but things are moving forward.

The next question comes from Jeffery Harvey, [ph] a private investor. Please go ahead.

Just a couple of thoughts here. I think one of the reasons why the stock is so low is that you can’t ever talk about really anything that you are doing. And I just wonder in the future, is there any way you can structure licenses with companies or maybe you get a little more freedom about talking about what’s going on?

It’s not a factor of our license agreements. Our license agreements do not restrict us from saying anything with some very limited exceptions that are very specific. What the constrain is, is the industries we’re in. For example, we’ve been talking to Asahi about this train project for quite a long time, since the beginning of development. But even they couldn’t announce it until this week. And they lamented the fact that even they didn’t have the flexibility to say as much as they would have liked to say in their press release, which is now available both in Japanese and English on their website. But, they are working to get JR East to allow them to say more and us to say more. Same things holds true in the aircraft market; it’s the customer that speaks for us. They control the marketing message about their planes. It’s the same thing in the car market. Daimler controls the marketing message about their cars. And it’s just the nature of the industries that we are in. I wouldn’t chose to be in other industries because these are very good industries with very good business opportunities. Now, in architectural, we typically have more freedom, unless it’s a private residence or something like that. Typically commercial installations like to talk about the energy savings, things that they are doing. So, maybe you can get a little bit more visibility on that. But, one thing I think that is important to understand is, we can talk about what we are doing but really it’s the revenues that those activities generate that is the things that we all most care about, us at Research Frontiers, our investors, our licensees. So, talking about something is not as improvements as actually achieving it. And that’s why we have this very, very focused effort on growing the markets we are in, reducing the cost of the end product, establishing new markets because all of those things will generate additional revenue for us, and that’s the thing that matters most.

I agree with that. Looking at the auto industry and I don’t know the track record of Gentex and how they ramped up. But, you have been on the Mercedes for a long time now, you have had no failures. What do you see? Why aren’t the other the companies jumping on board? And when do you see a meaningful revenue ramp in that industry? At some point in time I would think would be like a hockey stick and maybe it’s the cost. Do you think you need stronger licensees in that industry…

Let me -- it’s a great question. So, first of all, we don’t need stronger licensees. We have pretty much the [indiscernible] of the world’s automotive glass production licensees our technology and these are the active companies. So. God bless them; they really are great partners to have and have tremendous capabilities in resources to bring to bear on this. Purely a matter of cost. If you’re a car maker and they assume 20% of the car’s MSRP goes to options, you want to make sure that that 20% pool of money that is option money is going to the most profitable options on the car because that’s where your automakers make their profit. The dealers make the same profit on everything, pretty much. So, it’s not really a dealership driven thing. They just want to sell cars that achieve high customer satisfaction, so they make their hold back from the automakers. But at the OEM level, it’s truly a matter of which options are relatively more profitable than others. So, if we can get into the sweet spot, which I referred to earlier, same thing is aluminum wheels and some other options that are commonly put on cars whether you wanted or not, then we expect the same thing to happen with our technology that we become not only a highly made option -- forget about what the customer requests but what the guy in single thing [ph] and that’s making S-Classes, checks off on the box there or the guy in Munich at BMW or in Wolfsburg at VW or Ingolstadt at Audi or Coventry with Jaguar Land Rover, once you get into those sweet spots, then it becomes a very compelling economic case for the automakers to have to put this on the car. And when you consider that it’s a functional feature as well as a cool feature that even enhances the value to the OEM. So, it’s purely a matter of cost and that’s why our focus is so much on cost reduction.

So, does that mean you are talking you think another two or three years before that’s going to come to fruition?

Well, we’ve already seen for example cost reductions over the last couple of months even. This is a sustained effort by us and by our licensees…

Do you know what the sweet spots are for these auto companies?

Well, I know what they are for Mercedes and I’m assuming that those same sweet spots exist for the other car makers too. So, we know what our target is.

They airplane industry always seems to me to be actually probably even bigger market maybe than the auto industry. And the way you have it where you can retrofit the existing airplanes and you make a lot of sense, it’s not that expensive; it could be done when airplane goes in for retrofit for electronics. Again, do you have the right licensees for that or do you need stronger licensees in that market?

Well, we have the right licensees in the aircraft market. Fokker Services is a subsidiary of the largest manufacturer of aircraft windows in the world, and Vision Systems is also a substantial company that incidentally has the largest team devoted to SPD technology out of any licensee out there. So, we have strong licensees. It also seems to be a compelling market because it’s not…

[Multiple Speakers] cost again?

No, I don’t think so. I don’t think it’s a factor of cost. In some markets, Jeff, we’re cheaper than motorized shades and things like that that are placed on aircraft now. What it is I believe -- what I think it is, is that these are very highly engineered products with very long development cycles. And you have to start that process early. And some of the certification issues and things like that that any component faces, it’s fairly lengthy and expensive. Our licensees fortunately have started that process a while ago, so they are not just starting out now but they have been working in these markets for a while. And we have what I consider the most reliable technology in aircraft, we’ve been flying the longest; we’ve switched the fastest; we are the most uniform in switching. So, I think there is a lot of strong suites here. And the one thing that we can do that our competition and electrochromics can’t do is we could retrofit in existing plain. Right now, the only plains that have electrochromic technology from Gentex on it are once that have especially designed exterior windows that are meant to protect it. So, if you put it on a plain that doesn’t have those windows, you might have to change all the structural windows in your plain as well as the inside windows, whereas we can be placed on the dust cover, the interior panel between the structural window and the dust cover, pretty much anywhere you want on the plain. So, it becomes much easier to upgrade us in the aftermarket. And that’s something that Fokker has developed their element product, which is basically a cassette that when a plain comes in for C check or D check, you could upgrade it, you don’t have to change your structural windows, and nobody wants to do that anyway. It’s just a matter of pressing forward, Jeff.

You did indicate that you expect some sort of commercial announcements sometime soon.

Yes.

You mentioned -- okay. I mean, are we talking -- looking out your business plan and your future revenue growth, when do you see a substantial ramp in revenue?

There is lot of factors that will contribute to it. I’m going to have to be very brief though, because we have a couple of other questions in the queue and we got a leave time for them. But, one thing we’ve said is that we expect that with cost reductions, substantially higher revenue from the automotive market. So, the quicker we achieve that the quicker we’re going to get those ramp ups there. One model can do that for us. Second thing is going from the aircraft -- the general aviation market, business to commercial aviation, that’s eight times larger. So, basically, it’s just focusing on that and then you have the other markets, the new products like the Panasonic products or the Hanamac or the Corning products and things like that that come out that use our technology that further enhance them. And that’s how you win ball games, but I think singles, doubles and triples as well as homerun.

The next question comes from Jarrett Albert, [ph] a private investor. Please go ahead.

I don’t know if you got my email about the Panasonic IPS LCD coupled with light-modulating cells, if you are just able to answer that?

That’s another Panasonic product, not the smart, the transparent screen product, that’s more of a TV. And they are achieving the black modulation probably through something like a better TFT or something you could do when you don’t have ambient light sources, like do in the other markets. I don’t think that does [ph] but quite frankly, the more experience Panasonic has with the benefits of SPD, when it deals with ambient lighting, the more products we’re going to be in. So, it’s a positive first product that we’re in.

The next comes from Charles Michaels, [ph] a private investor.

I think my questions are covered.

Thanks Charles.

[Operator Instructions] Our next question comes from Michael Forrester, [ph] a private investor. Please go ahead.

I have listened to a lot of these conferences. And it’s always great to hear the news about what may happen in the future. But, what are your worries? What are the things coming up that can retard improvement of revenues or cause a decrease in revenues?

For lack of a better way of expressing this, stupid decisions by people. I have seen big companies and small companies make dumb decisions, I am not expecting any but it’s something we’re going to come to come of out [indiscernible], it would be in that category. I am not so worried about competition, maybe just to kind of expand your question little bit. What I have seen in terms of the performance of other technologies really is not up to par with what I consider what the market expects which is if you are going to spend money on a premium product like a smart window, you are going to want the best performance, you’re not going to want to wait 40 minutes for your window to switch. And then, the other thing I would say is at some point, and we have protections in place, someone they want to buy Research Frontiers at a low value, and that’s probably the thing that keeps me awake more than anything else is that with our stock where it is, we become a very attractive target. Now, we have things in place to prevent that or to maybe get shareholders better value and prevent some of the abusive techniques that have been tried in the past and hostile takeovers. But quite frankly, the best thing I could do for the Company and all of us can do, and this is what when we wake up we think about and when we go to sleep we think about, how do we grow revenues and how do we reduce cost. And that’s really very simple approach that we have. We are expanding our view on how to achieve those things and our licensees are too. So, we are going to be in a good shape.

How safe are the licenses and patents? It seems like we have gone -- and I won’t miss stock for 20 years, it seems to me one of these days somebody may be able to take advantage of the technology as a competitor.

Remember, if you are working with 20-year old technology and really when things come off of patent, you are talking about taking a snapshot in history that as it existed 20 years ago, you are going to really have a tough time competing with the current state of the art technology that’s out there. For example, someone wanted to work with some of our initial film technology, they wouldn’t be able to put it in production. So, I am not so worried about that. And we have a very talented staff of scientists here that are inventing and patenting new things every day. So, it’s a very big investment for us and it’s part of what we do.

Last question. In light of the picture you’re giving us about the future for the Company, can you explain why since I think at the last conference call, Seth mentioned that the stock price was a joke. And here we are 15 to 20% lower in price, less than two months later.

I think you have a number of people out there that are looking for sustained revenue growth before they pull the trigger on buying more stock. So, until the happens and that’s where we are focusing our efforts on is getting that sustained revenue growth, you’re going to have the markets fluctuate around. Seth, do you have any thoughts on...

Yes, sure, and I still stand behind my comment. Although at the end of the day we don’t control our stock price; it’s the market that does. I’m sharing my view, my personal view on our valuation and compared to other companies that are in the same space that we’re participating in that have much higher valuations with much less developed products in the marketplace. So, from that prospective, I still feel exactly the way I felt in our last call, even more so since the valuation has gone down as you correctly point out. But to Joe’s point, the best thing that we can do is not focus on what the stock market is doing but focus on how do get our revenue growth going. And it is absolutely clear to us that we could have a very meaningful revenue increase, if we were able to deliver some of the cost reductions we’re trying to do in the automotive market. That is mission one for us as a company.

Okay, with no idea of when mission one will be achieved, right?

We achieve it every day; this is a continuous effort to reduce cost and pass those cost savings on to the customer. At the same time, we have a very sustained business development team that’s out there developing new markets and new products and developing the existing markets. And agree with Seth. Revenue growth is a thing that will do the most good for us and the way you achieve that is develop your markets and cut your cost, so that it becomes more cost effective for more and more customers. And it’s not rocket science, it’s just hard work. And when you consider the lack of success that others in our industry have had in really doing that, we’re in good shape relative to everyone else but we want to be the best company for our investors. So, we want to change that.

The next question comes from Bruce Toni, [ph] a private investor. Please go ahead.

First, one is, I apologize in advance if you’ve already answered this one, but I didn’t hear you say with any clarity when we can expect a wider film for architectural installations.

I didn’t say. What I said so far in the call is that our licensees are pretty creative in how they design around that limitation, but it’s not a technological limitation. So, one of few things would have to happen for us to have wider film. Either Hitachi would have to widen their coating head, which is certainly an investment they can make or somebody else would have to make the film and I just have to leave it at that.

Okay. And the second question was in reference to the question you just spoke about, looking at the curve, if you will, how much you’ve been able to reduce cost so far? Can you make even a general prediction, if the curve is continuous, where we might reach that point where costs have come down to encourage wider adaptation of the film?

Right, okay. So, let’s start with kind of the rule of thumb that everyone is in a manufacturing business works by. They’ve looked at every technology based products from fine chemicals to computers, to cell phones, to cars. And typically as you double your production experience, your value-added costs come down by 20%. So, if it costs you $100 to make the first 100 wedges, it should cost you $80 to make the next 100 and then have 200 wedges, it should cost you $64 to make the next 200 and so on and so forth, this is why prices come down. Until we can really go up that experience curve in terms of doubling production experience, the other ways you can do this are achieving some cost reductions through economies of scale, and some cost reductions by just kind of reexamining some of the things that you do in figuring out if there is ways to do it cheaper. Are there processes that you can take out for example that you can safely take out because those technology doesn’t really need them or they built some suspenders that you can eliminate. And maybe to give a kind of a color to things. In the automotive industry, you don’t expect huge, huge decreases in costs overnight; it’s kind of a sustained effort in the partnership between the automaker and the suppliers and also kind of an expectation about doing business. And I’ve seen scheduled cost reductions for our technology for example by our licensees and things like that. And I must say that since we started our initiative to reduce cost, the cost reduction percentage has been bigger than anything I’ve even seen in the -- with these scheduled cost reductions that you typically see in automotive. So, we’re doing okay; we’re doing better than probably people have expected we would, but we haven’t hit our targets yet. And quite frankly, when we hit our targets, we are going to keep going. If we can make this more affordable, it’s good for everybody.

Yes. And do you get any feedback from the manufacturers about when do they wake up and realize that having this product available is going to sell their car, say Mercedes versus BMW? Maybe people are going to look for this product and want to see it on the cars that they buy. I don’t know whether they factor that in, but it seems like a no brainer to me. I don’t know why they keep dragging their feet. It’s just not understandable.

It has to be as profitable as the aluminum wheels. Probably that’s something matters. I think I’m going to make a few closing remarks because I think that was our last question in the queue.

Thank you.

Thanks a lot Bruce. Even though we have competition in all of the markets other than automotive and some of our competitors are spending as much as 25 times what we are spending, we actually have more to sow for it. We remain the best selling and best performing smart window technology in the world. Our revenue growth will come from continued development of the main markets that we are in, and our revenue growth will also come from new products to new applications for our smart SPD technology, and will also come from making our technology more affordable. We’ve made progress in all of these areas but this is certainly a focused and continuous effort, and we’re all working hard to achieve this. No one in the smart glass industry has come as far as we have in automotive; no one has been on as many cars as we have or in as many different car models; and no one has achieved the performance and reliability that we’ve demonstrated to the automotive industry. No one has been in as many different aircraft models as we have or as flown as long, and we’re building upon this. Everyday people in tens of thousands of cars on the road have our glass over their head on the road, protecting them from sun, heat, UV and glare, making their driving experience more comfortable and enjoyable. It’s also in their home, their offices, boats and aircrafts, protecting life-sensitive documents in museums. And it is now also entering more of the consumer electronics and multimedia markets and new uses for virtual SPD light-control technology or constantly being developed. Take for example what Vision Systems is doing with it to convey information from within the glass of an aircraft or train window or what Panasonic is doing with their transparent screen to project images on to a piece of glass or Hanamac’s development of a more cost-effective way to serve the automotive aftermarket or Asahi and its customer JR East catering to the premium train traveler with ultra luxurious train travel and innovative new designs. And with the further electrification of vehicles, more connected cars and self-driving cars, SPD-SmartGlass technology will be there to make these products and the passenger experience with them even better. It has been said that the best way to predict the future is to invent it. Thank you all for being part of this effort as together we shape the way that people live, work and travel. Good afternoon, everyone.

This conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.