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

Thank you, Paul, and hello, everyone, and welcome to our fourth quarter and year-end 2021 Investor Conference Call. I also want to welcome our Board of Directors, Darryl Daigle, Alex Kaganowicz and Graham Settle, who are joining us today as well. Let's review the past year together and look forward to this year and some exciting developments that we expect to happen in the next nine months. This year, we showed our lowest loss in 27 years. For the third quarter, we even earned a profit, something no other smart window company has ever done. The company's fee income from licensing activities increased by $434,584 or 52% for 2021. Total annual expenses decreased by $304,000 or approximately 9% in 2021. 2021 was the seventh consecutive year that expenses were lower than the year before at Research Frontiers. The company's net loss decreased by $494,512 to $0.06 per common share. The net loss for 2021 was Research Frontiers' lowest net loss in 27 years. We're also in strong financial condition. We continue to have no debt. And as of December 31, 2021, we had liquid assets of about $3 million and working capital of approximately $3.7 million. The company expects to have sufficient working capital for at least the next 22 months of operations. And as you'll hear later, this will probably last longer because we expect increased revenues from automotive in the second half of this year. That 22-month estimate does not factor in these additional revenues. Some of the highlights in this past year include increased revenue from automotive. Also, now that Gauzy is shipping wider SPD film, we saw the beginning of shipments of SPD-SmartGlass for architectural projects. This year, there are also significant new projects in the aircraft industry, including the ACJ 220 program by Airbus, Comlux…

And our first question comes from John Strobel .

Hi, Joe, two questions. One about Germany, one about China, two very big countries to Research Frontiers. With this invasion of Ukraine, Germany has done a U-turn and about its defense spending and cutting off the Nord Stream two pipeline, which is going to have dramatic effects for Gauzy, I suspect. Do you have any feel for this? And maybe Graham Settle might have a thought about it, too.

Well, Graham certainly has a lot of field experience in many areas of the world. As far as we can tell, so far, there has not been any disruption in Gauzy's business. A lot of the flow is actually coming from chemical production done in Tel Aviv, where the emulsion facility is, and then shipped to Germany for coating. And, of course, any time you have this kind of turmoil and disruption anywhere in the world, there's going to be things that are more difficult. But Gauzy is pretty, pretty creative in how they deal with unusual situations. Remember, they were able to go through the pandemic when Germany was shut down numerous times, still figured out how to get people in and out, to facility up and running and shipping product. So we'll have to see. I think some of the bigger problems are going to be from disruptions to the general automotive industry. I mean, they started with chip shortages, and now with what's happening in Ukraine, there are so many other components that they rely on that's affecting things. So -- but I don't think, ultimately, it's going to affect our revenues. And hopefully, this will be over in a positive way soon, and we can all get back to normal. Still praying for that.

The second country is China, and Xi Jinping has ordered that everybody cut back on luxury goods. Of course, China has been one of our key markets for automobiles with SPD. Any thoughts for that?

Yes, it's the largest auto market in the world. The -- it's hard to say how the Chinese people will react to that kind of directive. But in terms of -- there's really two aspects of China. Number one is it is a consumerism market. And obviously, it's an important market for luxury goods. Some of the cars that are coming out that were more general-purpose cars, so I don't think they're going to be affected. And I think that, based on the production numbers of some of these luxury cars, the rest of the market will pretty much take up the slack. So I'm not expecting too much in terms of a disruption from China in that regard. And we're really unaffected by China as a manufacturer, because we've always taken great pains to stay out of China, especially with our intellectual property and our chemistry. And we've established production in other areas of the world for a specific reason. And that's not going to be affected by this either, as far as I could see. It's an excellent question though, and we'll find out together.

Yes. Thank you. Good answers on both.

Thank you.

Our next question comes from Art Brady .

Hi, Joe. How are you?

Hey, Art. How are you?

Listen, can you explain a little bit about disposition of Vision Systems regarding safety. And the reason why Gauzy wanted to buy their technology, they call it ADAS. A-D-A-S.

Right. Well, basically…

What is that whole effort?

The ADAS are basically assisted-driving technologies. And what the safety tech division is, is camera-based and sensor-based systems that Vision Systems has developed over the years. And not just for autonomous vehicles, they cut their teeth on passenger control systems for trains and buses and things where that kind of technology also used, but they got quite good at it. And if you think about -- and this is something that I think is, maybe, important to note, so thank you for the question. You have one company that is a material science company, Gauzy. They were very well-known in the PDLC market. They're the highest-quality PDLC out there. And they saw the market for SPD being bigger and became a licensee and the rest is history. They opened up two factory lines and expanded their emulsion production in Israel and really have made substantial investments in SPD for the future. And they also have a component of their business where they actually started, before they were a material science company, they were an electronics controller company, and they got involved with PDLC actually, because they were asked by a PDLC manufacturer to controllers for them. And they realize the quality of what was being produced in the PDLC market, the real problem, not the controllers. So they ended up saying, well, we could do better and became a PDLC manufacturer. So they do have expertise in electronics as well. And if you think about SPD-SmartGlass or any smart glass as a system, you have the solar, the intelligence for the controller and the thing that it controls, the Internet of Things, if you will. And now they have all of these expertise really, really in one place. And along the way, Vision Systems also became a material science company. They've developed certain interlayers that's highly desirable by our licensees, because it has very good eye-UV protection and very good laminating capabilities and characteristics. So, the materials they developed as a laminator of SPD product is very complement the film that Gauzy produces. So now they have the ability to supply entire pre-laminated stack, if you will, to the entire industry. And people are -- I'm sure are very happy about that. They're rallying around that. And that's why you're seeing a lot of this, especially in automotive that I alluded to earlier, really coming to fruition.

Will the SPD fit into this whole technology?

In the ADAS technology or in general?

Both.

Okay. In ADAS, it's used for things like covering sensors or protecting them or regulating the light that is going into sensors, so they can work more effectively. And also, these sensors act as controllers. So, for example, your camera may tell your window what to do. So, it's a very simply ADAS system.

,:

Well, I think these micro lenses will be part of -- if they work as advertised, will be part of the ADAS systems to make them better. So they could, if you will, see better. So I think there's -- it's certainly a complementary technology that would benefit making the entire system better. And all these developments really are -- things were excited but agnostic about, because we work with almost every system out there. We have a very easy to work with technology, so it's very easy for these systems to address our smart glass.

How do we benefit from the ADAS systems if they're installed?

Like I said, it's one of the ways you could control our smart glass. So, we could take this conversation offline, just to leave time for other people that might have questions. But basically, think of the ADAS system as a type of intelligent control system that can benefit. And also, one other thing which may not be obvious, the ADAS system is used in autonomous vehicles. Smart Glass is a very -- is expected to be a very integral part of autonomous vehicles, self-driven vehicles because of things that I've talked about in the past about the interaction between the passengers and their outside world and their devices. So the SPD, in conjunction with an ADAS system can be quite sophisticated.

Thank you.

Thanks a lot, Art.

And we have a question from Michael Kay. Your line is open.

Hell, Joe.

Hey, Michael. How are you?

Okay. Now that the so-called sweet spot was reached in terms of the price, the declining price of SPD film and also the fact that Gauzy now could produce it in much wider sizes, could you indicate what progress has been made in terms of getting SPD, the architectural market, since we had the last conference call?

Sure. So Gauzy ships film that is much wider than Hitachi ever shipped before and there are some architectural projects that, that glass is being used for. One of the things, just to kind of maybe go to the other part of your question about the sweet spot and the costs, one of the things that we designed into their coating facility is the ability to do variable with coating. So for example, for the train project that I mentioned, that series of commuter trains, they had ship film that was 1.55 meters wide for them. Now, I mentioned that precise number because in the past, you'd have to either take a roll of film that was 1.6 or 1.8 typically, and cut it down and lose 10% or 20% through cutting. Now, you don't have to do that, you could actually coat the film for large projects exactly the width that's needed. So you eliminate any kind of wastage from cutting and things like that. And actually, I was happy to hear, in connection with some of the automotive projects that I had alluded to, that part of the thing that Gauzy is focusing on with that in order to bring in the product at a good price for the OEM was the cutting and the – getting the film exactly custom sized for the customer so they don't have wastage. So these are the happy problems we focus on now, not whether the technologies will work or whether it could be coated wide enough but instead, how do we make it more effective or better for the customer?

Do you foresee the price of SPD film further declining, so it will be even more attractive to –?

Yes. In the business plan that I've seen for the facility in Germany, the cost can come down substantially even more than what they are now. So I think we're well on our way towards being a very feasible technology for all different types of applications, not just high-end ones.

But Hitachi still is producing SPD film as well. So we have like two suppliers. Is that – are they...

Yeah. It's always good to have multiple suppliers, especially for competition and redundancy and the automotive industry likes that.

Are you still trying to get a third one in the United States? You once mentioned the geographic?

Well, at one point, Gauzy was considering putting their factory either their second factory, the one that's currently in Germany in the United States, in Asia. My guess is with the connection with European and Asian car manufacturers, you might see the next one in Asia first.

Oh, I see. Okay. Thank you for…

But it's not a big deal, because we had projects here in the United States, some government projects that they were able to send by air shipment, DHL, the film. So it doesn't really matter where you are in the world, and that's one of the advantages of our film-based technologies, you can do that.

Thank you, Joe.

Thanks a lot.

Our next question comes from Alan Yakuboff. Your line is open.

Thank you. Hi, Joe. How are you?

Hey, Alan. How are you?

I’m well, I’m well. Is it any – is it possible that you could provide any revenue projections for this year and next, since a lot of things seems to be coming together?

No. I don't mean to be glib about it, but these are going to depend on things such as what month this year production starts for some of these vehicles and whether they front mode and based on demand or whether they have more of a steady-state production of cars with our technology. And not even our production licensees know those questions yet. But we're not capacity constrained, so it doesn't really matter. I mean, we obviously want to do as much and as fast as we can, but we have the capacity to do it.

No, I understand that, but it's been a long time coming, so to speak. I mean, in 2011, when you got to deal with Mercedes, your stock was at $10, it peaked out at $10, it's 1/5 the price. And nothing has really happened in 11 years, Joe. I just -- and I've been a longtime stockholder. I don't know why the current management team is still in place if they can't generate the revenue that we all hope to see from this company.

Well, I appreciate the fact that you and I are both long-term shareholders and...

It looked like you've got a great technology. That's the problem. I mean it looks like you got a great technology, but -- yes...

Yes. Alan, the two things that we had to solve were cost and cost. And we did that. And the added benefit was width as well. So markets that didn't exist to us now exist like architectural. And I guess maybe what I would also say is, we're in an industry that's not very easy to do. If you look at our two closest public competitors, one is their stock has been decimated.

Yes, what's the name of that company?

That's View. That's View. And another one, Crown, has no revenue. So, maybe we're the tallest midget, but start to use a politically incorrect thing. But it's not an easy industry and they would kill to be in some of the markets that we're in, like automotive and aircraft.

Yes. I see View is $1.50, $1.60 that it was $10 not in the past year...

It was $10 when they reach back -- yes, it was $10 a year ago.

Look, I don't mean to see -- you're a great guy, and I just -- we just like to see this thing gel together eventually. Because -- I mean everybody feels -- and we all do that there's tremendous opportunity here.

I was born three months premature. Patience is not my strong suit. So there's nobody more than me that want to see this happen sooner. But you want to also see it done right. And I think that what you see when things aren't done, right, is some of the disasters that have existed in other parts of our industry. So we focus on quality customers, quality installations and doing things right and also not subsidizing it. I mean, we obviously will make long-term investments in things. But if you look at for economics on View, every dollar of revenue cost them $4 and there's no expectation that they're going to get economies of scale. So, every time they announce a new project, I love it. I mean they're digging a deeper hole. And when you're digging a hole, you should stop digging.

I know you did say that a while ago, and obviously, that stock has not performed well. But the stocks are voting machines. And at the end of the day is voting on how your company -- any individual company is doing.

And I think once we generate revenue, you'll be able to model us more like a traditional company. But right now, out of the smart glass companies, we're doing quite well and we're certainly not resting on any laurels. I mean 20-hour days and filled with opportunities are things that I love. So for me -- and honestly, we are blessed with some world-class people that work at our licensees that have been working very hard and other people at Research Frontiers that are quite talented. So, we're firing on all cylinders. It's just a tough industry to be in. And we seem to be the ones that are going to emerge successful out of this based on everything I can see from competitors...

I think View is focusing in on more of the architectural industry or China and skyscrapers...

Yes. They -- and it's mostly domestic that they're focusing on because one of the problems with a glass-based technology as compared to a film-based technology is that the logistics are difficult. You got to ship fragile, heavy expensive glass across the world if you have a project somewhere else. That's not easy to do and certainly not in this environment where you have supply chain disruptions, or as in our case, you're just shipping film by airfreight and laminating it, so it's much easy.

All right. I have patience, and I just hope your execution moves forward, and we can get to a profitable company eventually.

Thank you. Thank you. Well, we did something no other company did. We stop it. Now the idea is to show a consistent profit. And while revenues may be choppy in the beginning as these markets start to emerge and develop. Over time, because of our business model, we have very modest expenses and it all flows to the bottom line. So we should be a very profitable company.

Okay. let's hope so and thank you for your time.

Our next question comes from John Nelson. Your line is open.

Hi, Joe.

Hey, John.

Thanks again for all your efforts and especially an excellent job in controlling costs over the years. I have to ask this question, and if you can't say anything about it, I understand. But the -- one of the sources of revenues listed though was a special government contract in the automotive area. Can you comment any further on that?

Without naming the government agency, I could say that it's a very highly visible high-end use of SPD-SmartGlass that can promote security and comfort inside a vehicle.

A vehicle?

Actually, a vehicle, but a fleet of vehicles and the expectation is that this will have uses outside of the initial agency that we're working with on this? It tends to -- this type of thing tends to start there and end up in a lot of different within the -- and I apologize for being a little quick.

All right. No, and you're protecting the business, so -- potential business. So I understand that.

Well, I'm also -- I think in my license agreement with this agency, it's demeanor effect. So I want to stay out of jail, if you don't mind. Doing better outside than I'm inside.

Yes. Okay. Understood. Thanks. Thanks and go Research Frontiers.

Thank you, John.

We have a question from Alan Ginsberg . Your line is open.

Yes. Hi, Joe. How are you?

Hey, Alan. How are you?

Okay. Now you mentioned in your comments that the cost has gone down. Does that mean that we could see in car models that are not as expensive as some of the ones that you've already been in, but more moderately priced cars?

Absolutely. Absolutely. Yes. That was the goal…

That's something that's on the horizon? That's what I'm asking.

On the near-term horizon, yes.

Okay. That's all I have. Fair enough. Thank you very much. Bye-bye.

You’re welcome. Bye-bye.

We have a question from Francis Cordoba . Your line is open.

Hello, Joe. How are you today?

Hey, Francis. How are you?

Pretty good. My question is, what has been the problem with costs. It seems as if that's been the main problem. Years ago, when I met with Bob, he said it was very inexpensive to make. And that was quite a few years ago. And now you're finally talking about costs coming down. What was the problem?

So yes, so let me break it down into different components. The SPD are materials that are synthesized. So that's not the expensive part. Some of the transparent conductive coatings on the plastic is probably the most expensive part of the system. And when you have a single supplier like Hitachi, nothing wrong with Hitachi. They make a great product, and we're very happy with not only the product, but how it's fared in automotive as being highly reliable, which was essential for a new technology coming out of the gate. But a single source of anything, they tend to act like monopolistic suppliers and adding a second layer immediately Hitachi to drop price. So it wasn't all inherent in the tech now that there is high cost. But also with volume products, the ability to buy the components like the coated PET and others becomes substantially cheaper and that also contributes to a lower cost. And then you add to it manufacturing yield. So the Gauzy facility in Germany is state-of-the-art, it's 11 years newer than the Hitachi facility. The technology that just, quite frankly, didn't exist when Hitachi opened their facility, such as LED-based UV curing where you don't have to generate a lot of heat from the UV lamps to cure the materials. So it means that you get better throughputs and a quick around -- turnaround time and more control over the process. So things like that were things that Gauzy built in, and they gave a lot of thought to other things, and I mentioned one of them, which was variable width coating so that you can eliminate a lot of the cost in terms of materials loss through cutting and stuff like that. So those were some of the things. And then you have typical economies of scale. You put this in one vehicle, it's expensive. You put it in a million vehicles, it's a lot cheaper. So as we get closer, prices come down, and that's what I alluded to earlier when I was asking this make it into the mass market. I've seen substantially lower prices even from today's prices, which are lower than Hitachi's, substantially lower in volume. So...

Are they experiencing any problems coating?

Was that Gauzy or Hitachi? In the beginning, everybody does. I mean coating is an art, but the yields are quite high and their quality is quite high on both products. You'd have to be. I mean if you have experience as a customer, you're going to come out with something that's not topnotch. So one of the best things that happened to our industry, Francis, was how hard Mercedes kicked the tires in the beginning because with the entire supply kind of -- which is what we needed.

Is there a difference in the actual color of Gauzy versus Hitachi film?

Subjectively, yes, the Gauzy film looks blacker, to me. We've up side by side with the Hitachi film and it looks blacker. And for a given coating thickness, it looks darker. And -- but it's the same basis of materials.

McLaren is getting it from Gauzy or Hitachi?

I'm not allowed to discuss where they're getting it from.

Okay.

Initially, before -- but well, I will say -- I'll say this. Initially, before Gauzy was on the scene, they were still producing the McLaren. McLaren, in the past, at least has used Hitachi film and likes it.

I don't think they would prefer a darker film than the lighter one, but that's just me.

I think you might be right. They're both great products though. Thanks.

Okay. Thanks.

Bye.

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

Hey, Joe. How are you?

Hey, August, how are you?

Good, good. Just one question for me. The new autos that you're talking about that are going into series production later this year, are those more moderately priced vehicles?

Some are, yes.

Meaning sub-$60,000 cars?

I don't know what they're going to charge. They're typically known to be much less expensive than the cars we've been in.

Got it. Perfect. Thanks, Joe.

You're welcome.

And we have no more questions in queue at this time.

Okay. Well, look, if we haven't fully answered any questions that were either e-mailed to us or present in our presentation today or during the Q&A, just e-mail me and we'll do our best. A couple of closing remarks. began a year of great accomplishments for your company. In our main revenue segment, automotive, great companies like Gentex who I'm a big fan of saw Q4 revenues down 21%. And weakness was driven by an overall double-digit decline in production. But even in the midst of this and the pandemic and the chip shortage and the supply chain disruptions and other logistic disruptions, Research Frontiers' automotive revenues were up for the year. I mentioned in January 2021, Cadillac announced the use of the four-quadrant SPD-SmartGlass sunroof on their all-new electric flagship, Celestiq. And during the year, more-and-more companies increased their investment in electric vehicles, and they also accelerated their timetables, both were helpful for us. Every major car company has announced an all-electric strategy and energy efficiency and the reduction of CO2 and other emissions remains an important topic for the industry, and our ability to extend the range of electric vehicles by 5.5% is significant. And the advantages of using, SPD technology has been recognized by virtually every major automotive publication out there. Hyundai made an equity investment in our licensee, Gauzy. And when I was at CES two months ago, the Chairman of Hyundai Motors himself, along with the CTO and the Korean Economic Ministry visited Gauzy's booth where SPD sunroofs were on display. Spent quite a bit of time there, too, I must say. It was an honor to meet them. Other licensees have also moved forward automotive projects put SPD-SmartGlass into serial production. And next week, we're demonstrating a new concept in solar protection for a…

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