Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the first quarter 2021 results of operations and recent developments. [Operator Instructions] This conference is being recorded today. A replay of this conference will be available starting later today in the Investors section of Research Frontiers' website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information. The words expect, anticipate, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for the future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were e-mailed to it prior to this conference call, either in our presentation or as part of the Q&A session at the end. In some cases, the company has responded directly to e-mail questions prior to the call or will do so afterwards, in order to answer more questions of general interest to shareholders on this call. [Operator Instructions] I would now like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Paul, and good afternoon, everyone, and thanks for being here. It was the first quarter of last year that the COVID-19 pandemic shut down the world economy. Now we are coming out of those shutdowns, but key industries, such as the automotive industry, are still affected with other supply chain disruptions. As outlined in the prior conference calls, our revenues in automotive were affected by 2 factors: one, the industrywide production halt due to COVID-19, which also affected our revenues in the aircraft market; and two, the end of the 9 years that we were on the Magic Sky Control SmartGlass roof option on certain models of cars within Daimler. Revenues from the display and consumer electronics market were up quarter-over-quarter, and our royalty income from the architectural market was stable compared to the same quarter last year. We expect architectural revenues to grow based on recent activity on new projects in this area, and for activity in the automotive and aircraft markets to also rebound and grow due to new projects using our technology in these areas, as well as the restarting of the world economy. Major disruptions outside of the pandemic such as the computer chip shortage that has caused many factories to slow down production considerably or even shutdown has not had a direct effect on Research Frontiers other than a small reduction in the number of McLaren models coming off the production line of our technology. For the most part, the supply chain disruptions in the automotive industry occurred after the end of the current Mercedes model that offered our technology as part of the Magic Sky Control [ center ] glass in Daimler, and prior to the introduction of new models coming up by Mercedes and other car manufacturers using our SPD-SmartGlass technology.…

Now let me take some of the questions that our shareholders have sent me. We received by e-mail before this call questions from investors, and we're going to address many of them today, and here are some of the additional questions that were emailed to us. Okay. Is the plant in Stuttgart, Germany closed or operational? And what is their maximum production? It's operational. There is a brief period of time in late December, early January scheduled to coincide with holiday shutdowns anyway, where they were -- where Germany was closed for COVID reasons but it opened up. The maximum production on that facility is 1 million square meters of SPD film. Our new products using it, Gauzy film instead of Hitachi film. Yes, a lot of the automotive developments that we talked about are working with Gauzy on those projects. Also, I just wanted to note and congratulate Gauzy for appearing in Glass China(sic) [ China Glass ] in Shanghai, [ Today's News ] Hyundai. So a major glass event in China as well. Another question. Would it be easy to make chemistry to achieve 90% light blockage in the off state? Would this be more neutral since -- while still being about twice as dark as most architectural fixed tint. Jared, this is -- that's a great question. So basically, the idea is -- can we link the film where it's not as dark? So that less blue may be transmitted in a clear state. And the answer is yes. And also, if you gel very dark, you don't see any blue at all. So because the reason that the windows appear blue is that the blue light and daylight is being transmitted. So if you -- if you make it really, really dark, then no light is…

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

Joe, I'm wondering, given the advantages of SPD in comparison to other light control technologies, why are -- it seems to me, whenever I look at a paper or news release, more -- most of the companies that the architectural glass are doing it through Sage or through View. Would that be -- and also given the fact that Research Frontiers has lowered the price of film. I'm somewhat disappointed that there aren't more...

You cut off there, but I think we heard the question. And the short answer to your question is, you hear about projects from View and Sage that are very large projects that they've worked on landing for years, most recent with Walmart. And they don't really give a lot of details other than the purchase price is $26 million for that. I do think that if the economics I alluded to earlier is that they're basically -- they're basically spending a lot more of each dollar revenue, that project may end up costing them over $100 million. So if they want to lose $75 million or $80 million on a project, that's their decision, it's not the way we would like to do business. And the same thing with Sage. And some of our licensees that compete with them on these projects are winning these bids is because the performance is much better for SPD in terms of [indiscernible] speed, in terms of light transmission, the variety in terms of which glass laminators you can use and the control systems are much easier to implement as well. So there's a lot of advantages to going with SPD. And the cost premium for use -- for having the best, well, it's not much greater than the highly subsidized prices that some of these companies are doing. And also, they need to find projects that have very large lead times, in some cases, a year or 2 out, if you look at their announcement pattern. So we're in much better shape in terms of that. And just because the projects haven't been announced, we just don't announce them until they're a little bit more ripe. We saw View announce a project about 14 or 16 months ago and then reannounce it again in March. So they tend to announce things as early as they can and obviously urging the public markets trying to raise money that can help them.

We have a question from Gary Carroll.

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

Well, funny you mentioned Florida. I was recently there, initially to discuss one project. It turned out to be 3 projects. And then a fourth one was added as I was leaving. So some of these could have a fairly major uses of glass. And if you go down to the Miami, Aventura, [indiscernible] area, you can see all the construction going on there. And our -- our licensees like down here actually handle some of those projects from a while ago with their PDLC projects, so they know all of the developers and the architects in that area as well. And they even opened up a special sales office in Aventura, which I have the opportunity to visit while I was down there. So there's a lot of activity, and you'll see a lot more of it.

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

Yes. And I think what was happening, and I kind of alluded to this earlier, Gary, is that part of the, really, increase in activity is coming from the fact that we have 2 very active competitors that are creating more -- creating excitement in the market. And competition can be good. As a matter of fact, when Gauzy became a film licensee, Hitachi called and thanked me. They said this is really creating a lot of interest out there. And that's benefited Hitachi as well. So you have some benefits to having an active market with competitors spending tremendous amounts of to market. But if you're an architect or a developer who wants result, you're going to do your homework. And our licensees have been called in on the same projects that Sage and View have been pitching, and they're doing well. So if you're faced with a demonstration where a window takes 40 minutes to switch and other one were to take a 2 seconds to switch and if you're using a glass laminator you want for that. As long as there's not too much of a cost premium, that becomes a really compelling sales tool and our licensees are really good at presenting the benefits of that technology.

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

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

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

A couple of questions. I know Gauzy, when they announced, it was first made up of Hyundai, back to 2020. They had indicated in an article that their first product would be a visor for their sun roof. Is there anything you could say on that? Would that kind of guidance still be holding true today?

I think with most automotive applications, probably the low-hanging fruit is definitely the sunroof because that's where a lot of -- so heat comes into the vehicle -- and especially as you move now towards fixed panoramic roof where you want to avoid the complexity and the cost and the maintenance issues with having a sliding roof, but you still want that open air feeling. This goes back to Bentley's presentation about the sunroof of the future of Bentley. That becomes even more compelling. So it's a safe bet that the sunroofs are always going to be very popular for [ density ] smart glass. We start to see now though automakers putting it in other places, too, like in the windshield above the AS1 line where it becomes embedded sun visor. And with SUVs, you can do what you want behind the [indiscernible] the United States and Europe, that also includes passenger cars. You can see them inside in rear glass as well. But I think the sunroofs are always going to be a safe bet and a very demonstrable benefit because of all the sun that comes in and how difficult it is to shade, especially if you get them to be a very large sunroof that can't use a mechanical shade, because of the need for a very rigid shade if you're going to have the big purpose area to cover, why don't you have the glass do the work?

Just one other question. I know we're still -- we're seeing a bunch more vehicles coming out, specifically electric that are filling roofs that are all curved glass. Is curved glass -- let's be more specific. I think you want -- let's do a curved glass versus a flat roof. Is curved glass technologically, as well as costs, is it a lot more versus a flat glass process? I feel like I've read some articles where people are saying -- oh yes, they're saying that just the ability to implement in a curved glass is not feasible even though I know SPD can go into curved glass.

Yes. The S-Class Coupe has a 3-dimensional curved roof. And as you correctly pointed out, a lot of the designs that are coming out now in the electric vehicles also have very sleek, elegant curved lines including curved glass. That's one area where we're really good at compared to our competitors. Electrochromic is a really flat glass only. And that's why you see it in reall -- in only 2 areas. One is architectural where glass is basically flat. And in aircraft, also where the nonstructural window is also flat. So they are where they can be. And we can be in a lot more places, including curved glass.

We have a question from [ Alan Denver ].

I'm wondering -- all right. Question about Gauzy. Do you know any plans it may or may not have for going public? And what would you think the chances are that they would even if they haven't expressed one way or another to you?

Well, if I knew about specific plans, I wouldn't be able to talk about it. I think that it's a natural evolution in their company at some point to become a publicly traded smart glass company, especially when you consider that companies like View have a $1.8 billion market value right now. And I think that if you did a head-to-head comparison with either our business versus View or Gauzy's business versus View, you would see that we're better companies. I have the greatest respect for Rao Mulpuri at View. But it is a tough job. They have very high cost. They have, really, some limitations in what they're doing. And they're good at raising money, although that market seems to have dried up because if you look at one of the more recent public comments to the media, they asked him, "Why do you build -- why do you do this type of transaction?" And he said, "Well, we could go public." The traditional -- and so they needed the money. That, to me, is a statement. And also, if you look at kind of what's happened to the stack market, many of the stacks, including View, are trading well below their par value of $10 or something.

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

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

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

Yes, always.

And our final question comes from [ Leonard Lisa ].

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

Towards the end of 2023.

Yes. And, I think, judging from the way you said that you think we would positive cash flow by the way things are going now. However, as I was looking, there are options outstanding currently from previous activities. And if those were exercised, which should be, they will be, if the stock moves higher, that would raise an additional $7 million almost anyhow. So you wouldn't need any outside financing. Or you don't factor that?

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

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

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

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

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

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

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

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

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

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

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

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

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

Yes. Look, the nice thing about our business also, Seth, is we don't have to do capital expenditure in order to address those markets. We have licensees that have capacity to do that and we can make enough film for this. And yes, it's nice business, the way we set it up. Because -- and as you could see compared to vertically integrated manufacturing companies like View, there's a lot of things that can happen along the way, and we don't have those kind of risks.

And we have a question from Gary Carroll.

Joe, I'm back again.

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

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

To drive by. Okay.

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

So apart from having the same business for the smart glass industry, which is there's the right way to do things and a wrong way to do it. We hit it off right away because we both believe that providing a technology that is the best-performing is the way to go in this market. And you don't make compromises in terms of performance and quality to do that. But the formal relationship is Gauzy is a licensee of ours that's licensed to make SPD film for the entire industry. So they can sell this to Asahi, for example, if they wanted to put it in cars. Or they can sell it to Vision Systems if they want to put it in train. Or they're going to sell it to InspecTech if they want to put it in planes. I mean -- so they're a key supplier that's licensed by us to supply the industry, plus they have an implied license for architecture as well. So they can make parts of [ plexiglass ]. But the main focus is as a film maker and a material science company. So that's really their strategic importance. And they are great enough to do work with, I must say. I mean they...

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

We get royalty payments. We get royalty payments based on product sales. And just to give you kind of a quick summary of the landscape, Gary. For architectural, aircraft, marine, pretty much everything but automotive, we get a 15% royalty on product sales by the licensee to their customer. And in automotive, it's 10%, and that's public. So I'm not sharing anything that I shouldn't. And they're a great company to work with. Back then, they had 50 employees. They have maybe 130 right now, and most of that has been hired in the investments they've been making based on SPD. So we couldn't ask for a stronger commitment from licensees and the amount of people and money they've put into property, plant and equipment in Germany, in Israel and the United States and other areas of the world.

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

All right. Thank you, Paul. So I'd like to make just some closing remarks. Over the past 6 months, we've had the opportunity to get a more detailed look at what some of our competitors are up to. View had large losses, increasing costs associated with their revenue and their market value is down since they went public in March. Even so, with a valuation of $1.8 billion, their market value is still considerably higher than Research Frontiers', and that tells me that investors put a great value of smart glass. View focuses on the architectural market. We just started in that market, and we are already seeing success. We're also in additional major markets that they're not in, such as automotive, aircraft, marine, museum and consumer electronics and information displays. These are additional markets that add further value and market and revenue potential. In their main market, architectural, View's electrochromic glass take 20 to 40 minutes to switch to the most commercial price smartglass panels. Our SPD-SmartGlass can switch in 2 seconds, regardless of the size. Does that mean that View has a bad business model or bad technology? Not necessarily, time will tell. But for now, we can say that our business model is different and we're quite proud of our leadership position and accomplishments in the smart glass industry. At the end of our last conference call, I took some time to list some of the areas where we were either first and some where we're the only company to achieve things in our industry. There were dozens of items on that list, and it took over 5 typewritten pages just to list them. We can say that we're not only seeing traction in View's main market, architectural glass, but also markets that they are not in,…

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