Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the third quarter of 2020 results and recent developments. [Operator Instructions] This conference is being recorded today. A replay of this conference call will be available starting later today in the Investors section of Research Frontiers' website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information. The words expect, anticipate, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were 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 shareholders on this call. [Operator Instructions]. I would now like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Paul, and good afternoon from Woodbury, New York, everyone, and thanks for being here. Joining me today is Seth Van Voorhees, our CFO. And in August, we also welcome to our Board of Directors, Graham Settle, who many of you may know because he has been a fellow shareholder of ours since the company first went public in 1986. I also thank Former Director, Greg Grimes, who has been a shareholder of our company for over 20 years. Graham, it's good to have you on this conference call, not only as a shareholder, but now also as a member of our Board of Directors. If you listen to the replays of our last 2 conference calls, we predicted much lower economic activity for the entire automotive industry generally and for us specifically. Although fee income was down for us, we have also have prepared for this by shoring up our balance sheet over the past several years. When the storm hit with COVID-19, we were prepared for it and in a strong position to weather that storm. In addition to increasing our cash reserves, we have also engaged on a sustained and focused cost management program. We also managed cash on hand well and even received a $202,000 PPP loan, which is being forgiven in its entirety, making it essentially a grant. When we back out nonrecurring charges and noncash accounting effects, 2019 represented the fifth consecutive year that expenses at Research Frontiers have decreased and the sixth consecutive year of lower operating losses for our company compared to the prior year. This trend of lower expenses and lower losses continued into 2020. Expenses during the first 9 months of 2020 were down over $716,000 or over 23% from last year. And even on lower revenues from COVID…

[Operator Instructions] And our first question comes from [ Jeremy Lau ].

Yes. Great call, and congratulations. I want to ask the question who or what is the company Global Glass Technology?

Okay. Global Glass -- the reason you're asking me this question is there was a docket filing in the Federal Court in Florida. We have not received a copy of any complaint or anything like that. So I'm only going from what I see from the caption. But Global Glass was a company that had -- it's a -- we believe to be a 1-person corporation that had loaned money to a former licensee of ours, SPD Control Systems. And when SPD Control Systems defaulted on the loan, they foreclosed on all of the assets of SPD Control Systems, including their intellectual property. I'm not sure what they got out of that foreclosure because SPD Control Systems, as part of their license agreement with Research Frontiers, just like every other license agreement we have, provides that when the license terminates or expires, which it did, all of the IP from the licensee gets licensed back to us on a royalty-free, nonexclusive perpetual basis with the right to grant sublicenses. So basically, the IP developed by a licensee after they become a licensee reverts back to Research Frontiers.

We have a question from [ Arthur Borofka ].

Can you comment on electronic signage with Panasonic? What's happening? Is -- are there any displays yet out in Japan or any other countries?

Sure. [ Art ] is referring to a product -- it's really a very cool product. And if you go on YouTube or see some of the reviews of the products on the Internet, they're getting some glowing reviews. Basically, OLED technology, which is organic light-emitting diode technologies, being used in TVs right now and other displays, they tried to come up with a transparent OLED display, which is one where you could just put it on your window, let's say, of your home and have it turn into a TV. The problem they were having with that is that the light from behind -- from outside was washing out the image, and they weren't getting vibrant blacks. So Panasonic got a brilliant idea, "Why don't we put a switchable film behind the OLED display so that when you want to turn your clear window into a high-definition TV, you simply flip a switch and the SPD film turns dark?" And they've gotten glowing reviews on how vibrant and dark the blacks are by being able to do that. And to answer your question, our licensee that is producing that for Panasonic, Nippon Sheet Glass, which is also the owner of Pilkington, had shipped a number of those to customers already this year, and we expect that, that will continue. Also, in other areas, a number of other companies have approached different licensees of ours for either that type of display application or others. So word is getting out that SPD becomes something that can turn an OLED display into a high-definition window/TV.

Our next question comes from [ Francis Putrevu ].

So how many different films does Gauzy make?

Right now, their focus is on the 90-micron film, which is the workhorse that is being used in most industrial applications. They can make other types of film as well. And there are certain films under development for some highly specialized and really interesting applications for SPD as well.

Do they make PDLC...

Oh, I'm sorry. Your question also asked, do they make a PDLC film? Yes, that's where they started their business was making first electronics for the smart glass industry, and then they realize that the quality of PDLC film wasn't where it should be in the industry. So that became their main business. And that's what attracted them to us and us to them is that they're a very high-quality PDLC manufacturer. And as you may know, if you dig down into the material science, a PDLC film and an SPD film has many commonalities. They're both coated on conductive PET. They have busbars applied to them, and it's a roll-to-roll coating process. And in the case of Gauzy, they were also doing UV-cured PDLC, which not everyone in the industry does. And SPD is also a UV-cured technology. So there's a lot of synergies between their PDLC business and their SPD business.

Can both of those films be combined to give a darker effect?

Yes. They can be combined to get a darker effect. And PDLC and SPD sometimes is combined to not only achieve complete privacy like on aircraft, but also when you want to regulate lighting conditions but not totally block the light. James Dyson, the vacuum cleaner magnate, has actually -- his yacht windows are a combination SPD and PDLC, and it allows him when he is down in his bedroom on his yacht to have privacy, but still let light come in if he wants it or when the glare gets too much or when he wants to block the heat to independently flip on the SPD or flip them both on depending on what he's trying to achieve. So you could do that as well.

And I've seen a transparent TV without an image. Kind of like a screensaver bouncing around the TV. Would that also be SPD use that -- used there as well?

I'm not sure. It depends. If there was nothing behind the display you saw, sometimes you'll see it in a piece of furniture or a display cabinet or on a window on a home or office, that's the use of SPD with an OLED display.

Our next question comes from [ Allan Yukimoff ].

Good conference call. Henrik Fisker has been getting a lot of attention lately, some publicity. He's got a SPAC that trades under FSR and he's been on Jim Cramer show on CNBC talking about the outlook for his car. I think Barron's also wrote him up a few weeks ago. And what is the current relationship with that company at this moment in time? Can you give us a little color if you haven't discussed it already?

Sure. So -- no, we haven't discussed it today, but we're actually on the Fisker EMotion, which is their sports car that's coming out, not their first car, but their next one.

The Ocean is the first, I think. Is that right?

Yes. And then this is the EMotion, which is a really beautiful car. And we've known Henrik Fisker for a long time. He's the guy -- a lot of people don't know this, that actually designed the Model S for Tesla, too. And Fisker had its ups and downs like any electric vehicle company, but then mostly up. And I think part of that happened when they had hired -- I'm spacing out here, but from GM -- Bob Lutz from GM to help get the company back on track. And then this transaction you referred to with the SPAC, and we know the people involved with that transaction as well from the financial end of it. It's very interesting. There's a lot of very beautiful cars that are going to be coming out and a lot of investments being made to allow these companies to do that.

So the Ocean is not -- you're not on the Ocean, though. I think that's the first cut. This is being priced very reasonably from what I read.

Yes. That was the issue. Originally, the plan at Fisker, they told us, was to come out with the EMotion, which was the high-end sports car. And it was more of a Model S kind of competitor but a lot sportier. And they are using SPD on the side windows as well as the roof. Then they came out with the Ocean to come out with a less expensive initial car. And -- but we're not on that.

Got you. Is there a release date on the EMotion? Is it like 20 -- sometime in 2022?

I don't know the latest on it. But one of the reasons all the electric car companies are very interested in SPD is that what we allow them to do is actually reduce the temperature inside the vehicle by at least 18 degrees Fahrenheit. So instead of getting in your car and it being 90 at 72 degrees without using the air conditioner, and then while you're in the car, you're using the air conditioner less. Now in an internal combustion engine car, that allows you to make the air conditioning compressor 40% smaller and use the air conditioning less, and that reduces CO2 emissions. In an electric vehicle, it allows you to use for the same reason, less power to cool the car. And because of that, Continental Automotive and others have calculated a 5.5% increase in driving range using our smart glass. So very significant.

We have a question from [ Bruce Denny ].

I guess one question with two branches here. In the conference call, you mentioned that the SPD is being specced in to new architectural projects as well as several mid-market automobiles.

Right, those are pretty significant, yes.

Can you give us an idea what the release time is on the automobiles and when we can expect to see some of these architectural projects happen? They can design a building 15 years before they start construction. So I wonder if you have a handle on timing for some of these things.

I would say that the architectural applications, you'll probably see in 2021, and you'll start to see, if not in 2021, in 2022, you'll see some of these other automotive projects that I've been talking about.

And vis-à-vis the mid-market with larger volume, you think?

Yes. And to be the most exciting thing, I can't underestimate the difference in the size of the premium market versus the mid-level market. And just like Elon Musk's dream is to bring electric vehicles to the masses and not just to the premium market, the same thing with SPD is that we -- you have to start in the premium market like any technology, especially for the automotive industry. But then your goal is to always get the cost down. And the competition among the filmmakers and the competition within the supply chain, and just really, I think, people making very smart investments among our licensees in automation and equipment has really helped get the cost down tremendously of SPD. So I think that's why we're able to finally talk now about the mid-market.

And just one other point. As far as automobile sun visors go, is anyone actually embedding the film in the windshield?

Yes. So McLaren is doing that now. And there are some projects in development that are also working on that. As a matter of fact, just today, I was having a conversation about that very application with one of our licensees.

That's helpful to me.

It's a name you recognize, believe me.

Our next question comes from [ August Berman ].

Good color. Just a question about Mercedes. It looks like the new Mercedes S-Class, the W223, had a function where you kind of wave your hand to open up the, I guess, what you would say, just the roof to allow for Magic Sky.

Yes, the pull-across shade, yes.

Just kind of deducing, would we think that -- is SPD getting to the point where we can have a manual wiping up the hand to darken, clear. I know Gauzy AGP has had some interesting videos that I've seen. Is it a ready-to-install kind of project at this point here? I'm just trying to think in terms of why Mercedes would want to not use Magic Sky right now. Maybe in the future. They're just getting everything kind of prepared for that. What is the reasoning on that?

Yes. So -- yes, the answer, August, is yes. Matter of fact, the same sensors that you use to wave your hand now in front of the sliding shade on the new S-Class can work with our technology. You could also speak to Amazon Alexa and control your smart glass. We have glass in our office that's been doing that for at least 5 years. So a lot of different very cool ways to control both SPD. And a lot of them can be off-the-shelf solutions like you saw. And if you go to our website, there's actually a pretty cool video of someone waving their hand in front of an aircraft window, it's a segmented aircraft window, and you could actually control all the segments by just waving your hand and gesturing in front of it. So that's pretty neat.

Yes. And then just one other question. Looking at a recent video on the Continent -- The Continental website, it did show a video of SPD and PDLC. Are we likely to see new models include those technologies? Is that going to be the golden standard?

Yes. Yes, absolutely.

We have a question from [ Justin Harrison ].

A20 (sic) [ A220 ] is very exciting as that would be our first commercial aircraft. Is that correct?

That's right. Technically, we're the longest flying commercial EDW because Airbus had us in the A380 for Qantas Airlines. It was a very specially designed aircraft interior by an Australian designer since -- trying to think if it was 2008, but that's just 1 laboratory window, [ Justin ]. This is -- the A220 is a beautiful aircraft, a lot of windows. And what they're doing with the interior -- because it's a VIP business aircraft, is so stunning. I mean you're going to want one. So let's get rich and get your stock up so you can buy one.

Wonderful. So I have another question for you in regards to Airbus. The -- this initial order, so it's a -- and maybe it was my phone and maybe it was a conference call, but something cut out, I think you said it was 15 aircraft initially?

Right. 15 aircrafts have been designated for this and are in the pipeline.

Okay. And one more question for you, if you have time.

Absolutely. For you, Justin, absolutely.

So I read the patents and I have seen names such as Tesla, Apple mentioning SPD technology. Is there anything that you could share with us? Because it would seem Tesla -- Elon Musk is the sexy guy of electronic vehicles. I would love to see this in a Tesla, and I would think that he would love, too, as well. Is there anything that you could elaborate with any of these patents that we're reading, or we're just on hold?

I can't really talk about anything that hasn't been publicly announced by the OEM. There's some real interesting stories behind Tesla and SPD. And I know a lot of people there that are still there, including Elon and Franz, the lead designer. And they've looked at this and they think it's the coolest thing ever. So I think it's just a matter of time before they figure out how to effectively get this into their Teslas. They have a lot on their plate besides this. But it's a natural, in my opinion.

[Operator Instructions] And we have a question from [ Thomas McCarthy ].

Two-part question, both quick, I think. The Fisker EMotion, can you share whether it's -- SPD use is going to be an option or standard?

I don't know if that's been determined yet, but I believe it's probably going to be standard.

Okay. And what's your guess as to when we'll know?

I don't want to guess.

All right.

Sorry. But there are other things. There are other cars, too, that I think will be much higher volume that will be very nice for everyone to see.

Okay. Good. The second question concerns, could you give us an update on the marine use, cruise ships, individual boats? And also there was talk at one point about Viking Cruises. I think that's their name. Anything happening there?

Yes. So in the cruise ship market, you need architectural-sized glass for the cabins. So that really is something that is going to almost certainly need to use the wider Gauzy film. And Vision Systems, our licensee there, has been the leader in the cruise ship marketing although other licensees have also approached that industry. In the yacht market itself, I just heard, again, today about a new project coming out in the yacht industry. So there's a lot of naval architects that really like this because you're replacing curtains and shades, which, in a static environment like a house, they collect dust and things like that, and they could be mechanical nightmares. In a moving vehicle, like a car or a yacht, they also rattle a hell of a lot. So I had one naval architect who had put our glass in a production yacht that he designed. And he didn't know who I was, and I said why did you put this cool glass in there? He said that because I wouldn't have been able to do these designs without it. And you see how sleek it looks and how there's no rattling and you get these smooth lines. And then I told them, I'm the CEO of the company that invented that, and he had a big laugh.

Our next question comes from [ Ronald Rosato ].

That was a nice piece of news on Airbus. Congratulations. Welcome.

Congratulations to all of us. Congratulations to all of us.

Yes. I have 2 questions. One, could we expect any -- to see any product designs out of Daimay?

Yes. I alluded it -- to it briefly in response to a question I got from [ Sam Scinta ]. They've already developed multiple iterations of this. So they're pretty far advanced in terms of the product development part, and they have a -- what I believe is going to be their launch customer in the OEM side. And of course, they also have the aftermarket. So -- and a lot of people don't know Daimay. They're the largest sun visor manufacturer in the world. And I was in the Detroit area at their headquarters, their North American headquarters, and their CEO was sitting in my S-Class. And he was playing with all the foldout mirrors and sun visors and they all were Daimay products, by the way. So they're a very well-established company with a great reputation. We're really pleased to be working with them.

Okay. Great. And just one other question, Joe. Any movement in the armored vehicle market?

Yes. Armored vehicles, some very high-profile ones, maybe the highest profile ones in the world are speccing us in. And a little bit of a disappointment was that Brazil got hit so hard with the coronavirus that SER really was shut down for quite a long time. I mean, fortunately, they're back up and running again. They've been pitching this not only to the [Foreign Language], which are the companies that will upgrade your car and make it armored in the aftermarket, but also the [Foreign Language], but the -- but also some of the OEMs that have major facilities in Brazil like to armor their cars at the factory. And some of their biggest customers were listed in the press release, one of them being Toyota Brazil. So there's a lot of interest there and something in between the aftermarket and the OEM market as well. We have 2 other licensees, just to complete the picture of that, who really do armor glass well. You have Isoclima and you have AGP. So there's definitely a strong expertise in our licensee chain on how to do armored vehicles with SPD.

Our next question comes from [ Leonard Lee Tsao ].

Lots of exciting things going on. Part of the question I had has already been answered. So I just want to ask a couple of quick things here. You mentioned the hospitals. And with corona, I know they've been working on that. Is there anything actually happening in that area at this time?

Yes. You have kind of 2 approaches, [ Len ], that we're going into the hospital market. One is the replacement of traditional stationary partitions, the windows, because that helps with bringing daylighting in, which is -- can be therapeutic, and privacy. But the other thing they're working on is kind of a cool product that Gauzy has developed, is a movable partition. So you can actually move it into the hospital room and take a private room and turn it into a semi-private and still have on-demand privacy and light control. So it's kind of cool as well. And other application outside of that, too. Yes.

Yes. And it's a long time in their site, you saw the display windows in the stores and all that sort of thing and then the coffee shop, how they used it with their hand, and that's all exciting stuff. So we should start -- are the new models here now? We're in the second half of the year, which is when they start manufacturing. So in the auto market then, we should start seeing something in the next few quarters, I would assume. Or is that too early?

Are we talking about -- are you talking about the hospital market or you're talking about the auto market?

No. I've switched to the auto market. I'm sorry, that was...

Yes. So the auto market -- the cars that are coming out, as I mentioned earlier, you're probably going to see some visibility on that in 2021 and 2022. Everything in that market got shifted out, though, as you know, from coronavirus. So cars that were supposed to come out this year are coming out next year. Cars that are supposed to come out next year or coming out the year after. They're just -- they're doing the best they can.

We have a question from [ John Nelson ].

Any new developments in the cell phone market as far as use of SPD on the camera port hole or the screen?

There's been interest in that, but it's not a top priority for us or our licensees. Obviously, the companies that are making these, Apple and Samsung primarily, and then there's some other ones, too, that -- where you have a built-in camera and a strong need for privacy, have all looked at SPD as a solution to create privacy that becomes unhackable. But it's not a -- to be quite honest, it's not a huge priority for us right now because of what we've been all -- us and our licensees have been kept busy with some pretty large architectural and automotive and aircraft and -- projects, as you heard a little bit about it today. But those kind of things are great because as people understand SPD-SmartGlass film as being a material that has this versatility to allow you to do these really cool things, they figure out what to do with it. And we like that. I mean we get approached with these new uses quite often, and I love them because they're product extensions that don't cost us anything really to do. It's just a matter of making the material available to the companies that want it, and we're all geared up for that.

We have a question from [ Eddie Flemming ].

Joe, just help me to understand a little bit better -- help me understand a little bit better about how you receive revenue? I know you license it out, so like in the automotive industry, is it based on the number of cars they sell? Or like the square footage glass that they put in the car?

Typically, we -- yes, we try to keep it as simple as we can in the automotive industry and very consistent. We get a 10% royalty-based on the revenues of the Tier 1 supplier that is supplying the SPD product to the car company. So for example, Asahi Glass sells a sunroof to Mercedes. We get 10% of that selling price that Mercedes pays for that. The only exception to that is, we have a separate direct license between SPD Control Systems, Research Frontiers and Daimler, that allows Daimler to use our electronics. So -- and there, we get paid by the car. So every car, we get certain fixed royalty based on that. And it's -- for us, it's allowing Mercedes to do what they want with the electronics and feel comfortable with it. And that license gives them the freedom to operate.

Okay. Do you see a greater potential from the architectural market than you do the car automotive? Or you think automotive will always be?

I think in the next 3 to 5 years, Eddie, it's going to be shifting towards architectural as our predominant product. Just to give you kind of the relative amount of glass, the architectural market uses twice as much glass as the automotive market does. So as we're now able to penetrate that market for the first time because of the wider film from Gauzy, that becomes a reality that we could do that, and we're beginning to see a warm acceptance from the customers about that. So eventually, this can become our biggest market. But for now, the predictable high-volume market is automotive for us.

Is the revenue from architecture based on the same thing, like, percentage of the...

Yes. In that market, it's a 15% royalty.

Okay. And one last one is -- question is, do you see the COVID-19 effect in the architectural less than the automotive? Or about the same?

It's hard to say because, on the one hand, you have structures being totally redesigned now because of COVID-19, and we've published some articles, and we've been interviewed by the media about it, where people are reconfiguring their homes to be more friendly for remote working. And I think that's a very positive sign for us. The only way we're negatively affected is if there's a general decrease in economic activity due to COVID-19. But more people are actually living at home, so they're paying more attention, I believe, to upgrading their homes and home improvement. And when you do that, that helps us a lot.

Look, we appreciate your being so knowledgeable and always up-to-date on what's going on in the market, even if it's not your company. I just appreciate that.

It's the economist in me. I like to look at megatrends and macro trends to determine how we should be deploying our own resources.

And our final question comes from [ Alan Ginsberg ].

Could you give us an update on the sale of Hitachi Chemical and how that affects Research Frontiers?

Sure. So the short answer is, it's completely business as usual. Maybe they're being even more aggressive in their business development efforts since the sale. But we haven't been negatively affected at all by the sale of Hitachi Chemicals' business to Denko. And like I said, I'm seeing a new spring in their step, and it's really pleasing to see. Okay. Well, if there's no further questions -- or are there?

We have no more questions in queue at this time.

Okay. So if anybody is -- feels that their question hasn't been fully answered, please feel free to e-mail us, and we'll do our best to supplement it. I'm going to make a few closing remarks now. As everyone knows, 2020 was a very interesting year, in many respects and it's still not over. COVID-19 hit many businesses very hard, but we can see that V-shaped recovery happening in some industries and maybe more of W than a V, depending on how long some of the shutdowns continue. It certainly delayed the introduction of vehicles slated to use our technology, but those delays seem to be behind us now. And analysts are very bullish on both the automotive and aircraft industries, especially in the areas that we're now entering. We never could have predicted COVID-19, but we were certainly prepared for it as a company. And I believe that this also gave us a competitive advantage over other companies that were not so well prepared in our industry and had to announce layoffs and shutdowns. Since our last conference call, a number of major automotive projects have specced in SBD for their coming models. Also highly significant, I believe, is the movement of our technology from the premium segment to the much larger middle market of the automotive industry. And since our last conference call, SPD has now been adopted for use on the high-end A220 transport category VIP jets, with production of at least 15 of these aircrafts with SPD electronically dimmable windows already announced by Airbus. And our fee income in new markets, such as architectural and display applications, was up for the first 9 months of this year compared to last year. The projects we spoke about today for our technology in all of these markets should…

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