Good afternoon, ladies and gentlemen. Welcome to Research Frontiers Investors’ Conference Call to discuss the Third Quarter of 2022 Results of Operations and Recent Developments. During today’s presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened to all questions [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 future periods to differ materially from those expressed. Significant factors that can 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. This conference 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 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 call over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Bailey, and welcome aboard. Hello, everyone, and welcome to our third quarter of 2022 investor conference call. In our last call, we discussed how inflation and recession would probably not affect our business and the reasons for that. We were also asked about the energy situation and its impact on our business, especially in Europe. We also discussed in our August 4 conference call, new cars being introduced in the third and fourth quarters of this year as well as other developments in the smart-glass industry. Let's see today how well we did so far with our predictions. A quick financial summary. As noted in the press release we issued earlier this afternoon, fee income from the automotive and aircraft markets were up this quarter. Expenses were down in the third quarter compared to the prior year. Expenses in the third quarter were also $192,000 lower than in the second quarter. It's not bad for an inflationary environment, and we run a pretty tight ship. And our net loss this quarter was $258,000 lower than the previous quarter. We remain in strong financial condition. We raised capital on favorable terms continue to have no debt. And as of September 30, 2022, the Company had cash and cash equivalents of $4.8 million, working capital of $5.2 million and total shareholders' equity of $5.4 million. We expect to have sufficient working capital for at least the next five years of operations. This is based upon our further reduced quarterly burn rate of $250,000 to $300,000 with higher projected revenues during the next 12 months, mostly from new car models. In our last conference call, we spoke about new car models being announced in Q3 and Q4 of this year with our SPD-SmartGlass technology in it. This has indeed happened as…

[Operator Instructions] And our first question comes from Jeff Harvey. Jeff, your line is open.

Hi Joe.

Hi Jeff

So my question is -- so I understand that SPD roof will save energy on an EV. The question is how many EVs are going to have roofs at all? I mean how -- what -- do you have any feel for what percentage of new EVs are going to carry a panoramic roof, -- that's really the just of the whole.

Yes, it's a great question. So what we're finding is that if you can control the shading, roofs are very popular. And if you can make them stationary, which is what you're seeing now the panoramic roofs , you save a lot of weight and also components. A couple of EVs have had massive complaints, though about their panoramic roofs that didn't have a shading system. And customers have resorted to all sorts of ad hoc solutions to try to solve that. And the carmakers are not unaware of that. They actually have approached us because they know that they have a problem that needs to be addressed. But getting back to your question, typically, what we're finding in the mid-level and upper level market is about 80% of the cars in the United States have Sunroofs, it's a little different in Europe. Historically, Sunroofs have been less popular in Europe. They're certainly popular in the Middle East also. And depending on the styling of the car, you usually see this more on the luxury cars and also on the sportier cars. So I think it's going to be a big market. But -- I'm sorry, go ahead.

If you were to guess like on the, say, the $30,000 to $40,000 range, how much added cost would it be for somebody to order one with an SPD roof? I mean that's really the thing we have to discuss is it's an extra cost. It is not a cost and it's then -- and as you said, if they're getting 80% of people are ordering panoramic roofs then it makes a lot of sense.

Right. So there's two aspects of that question. So number one is, what does it cost the automakers? And then what do they charge the customer. And typically, the customer is going to pay 3x to 5x what it costs the automakers for a component for an option because that's where they make their money. But that's going to depend also on what the market can bear. And let's just take a present example. If you look at the McLaren, for example, the roof is about $8,000, okay? But it's the same glass, the same roof, actually the same supplier as a $2,000 retail roof at Mercedes. So it depends on what the market for the car will bear, the same glass, same supplier, but a much different retail price. So, it's up to the automakers to decide how much they think they can get and still maximize profit and revenue. But the good news is, on our end, we're focusing on the cost side of the equation. We want to make this as affordable as possible for even mid-level cars. And some of the cars that I mentioned earlier in the call are actually mid-level cars that have panoramic roofs and are specking in SPD. So, I think it's going to be a popular option even at the mid-level. Just so you know the unit volumes, the premium market is about 3% of the unit volume of the car market. If you get down into the mid-level, you're talking about many, many, many multiples of that in terms of your home...get into that

To get into that space.

Absolutely.

Absolutely.

And that's always been our goal and that's always been the focused effort that we and Gauzy and our other licensees have had is to get into that mass market.

Thank you,

Thanks, Jeff

And our next question will come from Michael Kay. Michael, your line is open.

Hello Joe.

Hello Michael.

Could you clarify. You said fee income increased compared to the previous quarter and also for the one in 2021. But I looked at the SEC filing, and I could be mistaken it, so I apologize, but it seemed that there was a sharp decrease in fee income in the...

If you read the press release and what we said is that when you exclude the one-time items from last year, fee income last year to this year is up in automotive and aircraft. And last year, we had some collections from licensees that were in a different period than when they were incurred, which contributed to a higher amount and also some other one-time things like new contracts and large payments under them. So, if you just compare apples-to-apples last year versus this year, we were higher this quarter than the same quarter last year, and we were certainly higher. And I think this is more relevant also last quarter to this quarter in terms of our revenues.

And when will the sun guard come out that's supposed to have been for the cause that could be fitted onto existing cars, Isn't Vision Systems going to market that eventually?

Yes. The sun visor you're talking about...

The sun visor, yes.

Right. Right. That's being worked on not only by Vision Systems, but by others as well. And you're also seeing it incorporated into the windshield itself on some cars like the McLaren where they build it into the laminate itself, which is kind of cool.

But would people eventually be able to buy it separately and install it under existing cars?

Yes. Yes. And aftermarket sun visors...

I think that would be an easy thing to do yes an easy thing to do. That would be a big source of revenue because people wouldn't have to actually buy just the car that had it already in . And if they could just install it themselves...

I agree. I agree. And people like to upgrade their cars. And that seems like a very not only practical but interesting way of upgrading your car that puts something very, very cool in it.

And are you not allowed to name the sports vehicle that you mentioned that has installed SPD?

I'm not yet allowed to name it, but I think that everybody can probably ascertain from the timing of the introduction in mid-September and the fact that they're very well known for their sports cars and some of the comments by their CEO, what I'm talking about. If you look back on this conference call, you'll probably be able to have a reasonable degree of confidence. Ok thank you Joe, You’re welcome.. Good talking to you

And our next question comes from John Nelson. John, your line is open.

Thank you. Hi, Joe.

Hi, John. Thanks for the earlier questions also. Appreciate it.

You're welcome. I just feel real good about the course that you're taking. And again, the private placement, I think, was excellently designed and executed. So thank you from one of your shareholders...

Thank you, John. I appreciate that.

I've got a couple of questions. One is related to a kind of an offshoot of transparency, Anderson Corporation, and Ubiquitous Energy, announced plans recently in a press release in August to develop energy-generating windows and doors without aesthetic compromise. And so my question is, is REFR working with any glass or window manufacturers on using SPD in this space, which is being called transparent solar for windows and doors?

Yes. Yes. So actually, one of our licensees, Vision Systems had the Energia window, which was a transparent photovoltaic. So very similar to what Anderson was starting to work on today, but this was years ago that can generate 20x more power than the window needed. And one of the hallmarks of what we do is we use such low power that things like even low-efficiency transparent photovoltaics can work well with this. . And what they did is they actually had an aircraft window where it would be completely self-powered. Now not only is that important because of the energy savings but also the installation. Imagine just snapping this in and some of their videos, you could actually see them snap this into the side of an aircraft, and it's in. So you don't have to wire, you don't have to so it’s pretty much literally plug and play. And it was generating so much extra power that they put a USB charging port on it so that you can power your cell phone on also. So it’s very, very feasible to do. A lot of the transparent photovoltaics that we've seen though have been ones where you can see visible lines in the glass. And for a lot of window applications, you don't want that. And I don't know if this ubiquitous energy has that. I've seen a number of companies, some came out of Princeton that have been working with and things like that, where they have a fairly good aesthetically pleasing transparent photovoltaics and you might as well use the real estate on your window to generate power if you can. And certainly, that's very feasible because of our low power consumption.

Well, it might be something worth SPD investigating as far as whether they could be combined with the transparent solar.

Yes. No, we very much have development work going on in that area.

Okay. Terrific.

Yes. A lot of that also just to be kind of fair to people's expectations, our costs have come down a lot. The cost of any new technology typically starts out high. So I think it remains to be seen whether some of these transparent photovoltaic technologies will be economically feasible to be adopted. But that's not -- that's kind of independent of us. What we offer not only is a smart window but probably one of the largest markets for self-powered transparent photovoltaic for a window.

Okay. Got it. Second question is. Do you know at this time whether the magic roof on the 2023 Hyundai Grandeur would be offered as a single option or part of a package on unlimited or a broad set of the model tanks for that for the Grandeur?

I don't think that decision has been made yet. I don't think it's going to be standard equipment, but I don't know if it's going to be part of a stand-alone option like Mercedes, did or part of a package. I hasten to add, it hasn't been officially announced yet. So...

Okay. Got it. Right. And last question regarding the Research Frontiers press release on October 17. You mentioned 41 Vision Systems contracts in transportation.

Very impressive, they have been busy.

Yes. Were they...

I know the question you can ask me, how many were new and how many were legacy ones, most were new.

Yes.

Most were new -- that's all I could say. But -- they've been very active.

Yes. Okay, excellent.

I wish I could clone those guys they’re amazing.

Yes. the other subset question for that one does -- you've got in this the listing specialty vehicle contracts. Does that category include automotive, automobile companies, such as Hyundai and the…

No, but remember, Vision Systems is licensed for certain things and automotive passenger cars is not one of them, although I wouldn't mind if they got involved with that. Specialty vehicles are more like harvesters and construction equipment and things that have a lot of glass that really have a need for solar control. I mean if you -- you wouldn't think about it, but if you sat in a big harvester, it's a lot of glass in there and you’re out t in the field, and you want to make sure that you don't have to truck around the second air conditioner just for the cab of the harvester. So, this is where the glass really helps.

Okay. And the last one is related to the sun visor update that a previous questioner mentioned. Do you have any comments that you can give us on a timetable for that product?

Not that I could share.

Okay. Thanks.

Thanks a lot, John.

And our next question will come from Alan Ginsberg.

Hi Joe.

Hi Alan, how are you?

Pretty good. My question is this. It seems like a lot of things are coming together now and from all of what you said.

It wasn't an overnight success. I'll assure you and you assure me also.

Believe me I know it's not an overnight...

You know the hard work that went behind it.

I'm not -- I understand. My question is this, with everything coming together, wouldn't it be prudent, especially since you have some money now to increase your investor relations. I mean, the stock, you could tell me that the stock has been doing better, blah, blah, blah, blah, but it has no volume. And from what you're saying, it could really do very, very well in the future, much better than what we're talking about in the past year. And wouldn't an increase in exposure to investors be something that you would think would be a good timing right now?

I think that increasing our investor relations, especially since we have so many good things to talk about to investors is appropriate. How quickly and how much we ramp it up is a different story? But right now, I focus obviously, as a shareholder, I'd like to see our stock price always be higher. It's where my net worth is. But I also have to focus on the business, and that's really what I have been really focusing on. And I think that as we generate revenues, the population of investors that will invest in Research Frontiers grows and my wife likes to invest in companies that pay dividends. I'd like to be a dividend-paying company very soon so...

But maybe you could hire a few people or one person that would have investor relations. function working

We do have an Investor Relations function working.

Okay. Thank you.

Thanks, Alan.

And at this time, there are currently no more questions. I will hand the call back over to you, sir.

Thanks. And I'm just going to make some closing remarks. Some people have chosen to throw enormous amounts of money at this industry, and they have high labor costs and high raw material costs and high manufacturing costs and high levels of capital expenditure and high levels of debt. And resources, of course, are necessary to build and grow in the industry. However, I believe that the way that some of these other companies are doing it is not the best way. And based on their existing cash positions and what they had to do to raise money and their high cash burn rates, which are 10x to 30x higher than ours and their methods of doing business. By the time we have our next conference call, these companies may be close to being completely out of business or have terrible and unrecognizable balance sheets. But we chose to take a different approach and it's quite straightforward. Approach is to have the best-performing technology even if it starts out as being like any new technology, more expensive. Then we get the best people to work with us. And then together, we work hard to get the cost down. And the way we set up our industry for SPD is to have these great companies deploy large resources in a sensible way. We've done this and so have our licensees. They hire the best people, make focused decisions and expand what they're doing as their customers' need for SPD-SmartGlass expands . And a great example of this is what Gauzy has done. I mentioned in our last conference call that they have expanded their emulsion production capacity by 5x. In the last month or two, you've seen where a lot of that activity is being directed. -- in new cars. And…

Thank you. And this concludes today's conference call. Thank you for attending. You may now disconnect.