Good afternoon and welcome to Research Frontiers' Investor Conference Call to discuss the Second Quarter 2025 Results of Operations and Recent Developments. 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 the call. Some statements today may contain forward-looking information identified by words such as expect, anticipate and forecast. These reflect current beliefs and actual results may differ materially from those expressed due to various risk factors, including detailed in our SEC filings. Research Frontiers assumes no obligation to update or revise these statements. [Operator Instructions] The call is being recorded and will be available for replay on Research Frontiers website at smartglass.com for the next 90 days. [Operator Instructions] I will now turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Erica. Hello, everyone, and welcome to our second quarter of 2025 investor conference call. From an accounting perspective, the second quarter of 2025 results look disappointing, but much of this relates to onetime and noncash charges and expenses that we elected to take in the second quarter. I'll go into this in more detail. From an operational perspective, things were actually much better with higher economic activity and sales of SPD SmartGlass during the second half of this year and lower cash expenses. But when you back out onetime accounting charges from the bankruptcy and replacement of 1 of our licensees supplying Ferrari and noncash accounting charges from options issued last year that were approved for issuance by our shareholders this year, expenses would be essentially the same or lower than last year and royalties would be up compared to last year. Deliveries of the Cadillac CELESTIQ to GM customers have started. Sales of SPD SmartGlass sunroofs to Cadillac in Q2 2025 were substantial multiples higher than Q4 2024 and Q1 2025 combined. Ferrari roof sales were strong in the first quarter of 2025. However, because of the bankruptcy filing of the European licensee that was supplying Ferrari with the bankruptcy coming from this licensee's loss and from other customers not Ferrari, this licensee shut down operations in Q2 2025 so we did not book any royalty income from them for Q2 and wrote off some amounts. This is why royalty income was down this quarter. Also, this bankruptcy filing was anticipated by Ferrari, Gauzy and Research Frontiers and another existing licensee of ours in Europe was successfully transitioned to supply Ferrari and additional production for Ferrari has already started by this licensee. Now we get into a little bit of the accounting. Because we don't book additional…

As I mentioned earlier, we included some questions previously sent in by our shareholders in our presentation today. I'll now answer some questions that have been e-mailed to us. So the first question comes from John Nelson. There's a number of questions here. SPD Black development update? I'm happy to report, John, that Gauzy may go into more detail on this on their call next week on August 13. But everything is going well and faster than I anticipated. I was recently in Israel visiting their factory and saw the latest SPD film and it looks really, really great. It looks far better than what I saw in January at CES. And I think even more important than what I think, the key OEMs really like it as well. You asked me about how the architectural window project is going and has it officially launched? Well, it's launched on the development side. We've submitted samples to testing for energy efficiency. We've worked out all of the details in terms of wiring and installation and production and things like that. And you ask can you identify the licensee for us? Yes, it's LTI Smart Glass, which is in Massachusetts and AIT, which is their affiliate in Largo, Florida. And you asked about some of the projects. They're definitely in the works. And you asked the last question, any effects on your business from ongoing U.S. trade and tariff policy? No effect that we could see. Basically, the general automotive industry for example was shaken up quite a bit by tariffs, but they seem to have settled in now and stabilized. The areas that we're in weren't affected at all, but the general market in automotive was affected. Okay. Next question is from Steve A. With world opinion turning against Israel, how…

[Operator Instructions] Our first question comes from [ Bill Denny ].

I think you may have answered it a little bit ago. I recently drove the new Audi S5 and they have the tinting technology in their sunroof. I assume that is not from REFR.

No. Since Audi is part of VW, they tend to consistently have been trying to introduce PDLC. It's not getting a very good reaction, but I think that will change over time.

I was not impressed with it and I kind of figured it wasn't from your company. So I really appreciate you clearing that up.

Our next question comes from Bruce Danny.

Joe, on a recent conference call, you said that we have a future project that will dwarf all our previous revenues. And I was wondering if you could at least give us what category it's in, architectural or whatever?

Domestic and automotive.

Our next question comes from John Nelson.

Joe, my question is a replay of prior quarters. The auto sun visor update built in and aftermarket?

Sure. I sent you an e-mail about this last night, which you might have missed. But basically the licensee in that has been somewhat distracted by other events in the automotive industry, including general tariffs and moving their factories from overseas to North America. So I don't have much to report on that yet, but there's a little more detail on what I had sent to you last night.

Our next question comes from [ Chuck Michael ].

Two questions really. One was the architectural office windows, you haven't mentioned anything about that today and I thought we were going to make some progress due to domestic as the law was passed on that. And so I haven't heard anything. So if you could comment on that first of all.

Okay. I just wanted to understand about the architectural. I spoke a bit about it in terms of the retrofit being moving forward and that's being spearheaded by LTI AIT, our licensee in Massachusetts and Florida.

That's for the architectural. Okay.

Right. That's the architectural, yes. And just for everyone's benefit, we think the reason that the retrofit application is going to be a game changer. First of all, no one else could do it. It's been one of the holy grails. The other being the Black SPD, which we talked about also, is being close to fruition here. But the retrofit we believe will substantially change the way people introduce smart glass into their homes and offices. What we mean by that is you can actually install an SPD window from the inside of a building. So you don't have to put up scaffolding, you don't have to get landlord approval. It's a lot more like a window shade, but it's not a window shade. It's a sturdy piece of glass that actually adds an extra layer of insulation to the building. And not having to do that means that you can measure and produce windows for any building or home and come in over the weekend so you're not disrupting tenants and installing these in the building. And that's in the private sector and that's somewhat driven by the Dynamic Glass Act because you also get a tax credit. In the government market, it's even bigger because the GSA has a mandate to upgrade the energy efficiency of their windows. Right now most government buildings have monolithic glass not insulated glass even and this is a great way to upgrade that to be much more energy efficient. And we've actually in the past done types of retrofits in government buildings and they like it. So it kind of proved out that this is not a disruptive process.

Okay. And the second one I think it's different from what you've described before today. But in several conference calls recently, you've mentioned or you hinted that I guess you can't say too much, but about a new manufacturer coming out with a vehicle soon. And do you have an update on that?

We have a number. So the Asian automaker is still on track to come out. The car hasn't come out. So that really is related to when the car comes out, but it's very much on track and there's activity between us and them and Gauzy as well. So that's moving. I mentioned some new other projects in Europe and in North America and those also are moving forward. So we continue to move forward in all fronts with everything. Sometimes the customer gets delayed for other reasons, including moving factories or adjusting to the reality of constantly shifting tariffs that now have settled in. So I think things are stabilizing there and we'll start to see things start to move.

Our next question comes from Art Brady.

Joe, Art Brady here. I know in the past you used to do a lot of work with Lincoln and as a matter of fact you used to have a Lincoln car where we had the annual meetings and now we hear zilch from them. What's happening with the Lincoln?

Well, I don't know if you remember, but even the CEO of Ford got on CNBC and said that the SPD SmartGlass roof was definitely going to be in the Continental and then it wasn't. So I don't want to go into too much details, but it didn't have anything to do with us or the supply chain. I think it had more to do with the car itself and you don't see the Continental on the road anymore. But we do have relationships with Ford. There's some projects going on there. And also, I may say that Gauzy has publicly stated that they have good relations with Ford and projects going on. So I think it's just these things have to percolate into cars on the road.

You think that will happen in the next 12 to 18 months?

I don't want to put a time frame. It could happen sooner. It could take longer. I would have thought when they announced it -- when the CEO announced that we were going to be in the car that it would have happened in the next week, but it didn't and this was their CEO not me.

Can you also talk a little bit about the whole concept of when you have direct sunlight and you don't have SCD, you really can't use it when there's like sunlight, very strong glare and 6 feet away you cannot read the time.

I think we'll talk about that offline, Art. It sounds like a very specific idea or application you have and I'm happy to talk to you about it offline. But yes, controlling heat, light and glare is what we do best. So I'm sure that we can be a benefit to what you're thinking about. I think we got a breakroom for more questions. Art, I'm sorry. Why don't we continue our discussion at another time.

Our next question comes from Leonard Letzso.

I was just looking at the last conference call, you said you had a couple of new things coming out this year, new OEMs and several right behind it for next year.

We're still moving forward. I think that since that call, we've had other models introduced as well to the mix. So it's something that we and Gauzy aggressively have been pursuing as the automotive market together.

Well, I'm sure you're pursuing it, yes. Do you think we'll see that in the next 6 to 9 months?

I'm hopeful, yes.

We are too.

Our next question comes from [ Francis Coterra ].

The Asian car that hasn't been released yet, was that the reason why the prediction for 2023 was going to be good for your shareholders collapsed and we didn't see that come forward?

Yes. We expected the car to come out. We were told, Gauzy was told, the R&D people within the Asian carmaker were told and it just didn't happen. No, I think it had something to do with other things in the car.

Are they going with a different technology or that still.

No. We're having active discussions about not only our current SPD, but the new SPD as well.

Okay. In the architectural market, what's going to be the main driving force for someone to install it, savings, energy savings?

One thing I must say, our website has now become really effective at bringing in large projects. I notice the new updated website has attracted very, very large companies and projects and things like that and on those, it's energy efficiency. On the smaller ones, high- end homes and things like that; a lot of times it's view preservation, heat management, privacy. There's a lot of different things that are driving why people have been asking us to retrofit their windows with SPD.

For a large application?

Large and small. But for the large ones, it's mostly crunching the numbers; nuts and bolts, energy efficiency, ease of facility management. There's a lot of different things that have gone into the decision-making on that. If you don't have to, for example, put window shades in a building or if you can replace motorized window shades, which are very, very prone to jamming and error and things like that with something that's very reliable like SPD and give centralized control to the facility manager, these buildings become much easier to optimize for energy efficiency. And if you look at some of the studies that were done, there was a Saudi Arabian study that talked about the optimal place and tint for SPD windows in different parts of different types of buildings and things, and there's other studies as well. You're starting to see architects really drill down now into what I call the nuts and bolts of why you would use it and that's good because the data is very favorable to us.

Are there reductions in temperatures?

Yes. Some of the studies that have been done show a 20% reduction in electrical usage in zones that use SPD. In cars, we can reduce the temperature by 18 degrees Fahrenheit. So instead of getting in a car and it being 90 degrees, it's 72 degrees and you haven't used your air conditioning. Each application kind of has its own footprint, if you will, and benefit. And then it also depends on where the building is and what it's used for.

And being that there are no competitors in that market, price really might not be that much of an issue?

Well, everything competes with everything. I mean we may not have smart glass competitors in the architectural market with View and Halio going bankrupt. But we still compete with window shades and vertical blinds and curtains and the more traditional ways of controlling light and shading. So everything has a competitor. We can't go crazy. But on the other hand, there's really demonstrable benefits to use this.

What type of voltage is needed for your switch?

In the architectural applications we're using, it maximizes transparency at around 80 volts so AC and then what you're doing is using milliamps per square foot. So the power draw is negligible even at 80 or 90 volts from a home application. In cars, we're running off the 12-volt battery.

Which probably goes to a converter to AC.

Exactly.

Our next question comes from Jared Sherman.

Who is the licensee that went bankrupt?

We're not naming the name, but it was a European licensee that was supplying Ferrari.

What's the secret? Like why is it so top secret? I don't understand.

Well, I think if you do a search, you'll see which glass companies have gone bankrupt. I just don't feel comfortable revealing private information that I've been given. And to the extent it's been public, you'll find it. It doesn't really matter though because we've moved that over to another European licensee as I said earlier on. So it's not...

But how do you guys have a licensee go bankrupt? You don't vet them? Like you don't think it's a big deal, but now we're out a quarter and we made $100,000 deal. It's a disaster, an absolute disaster.

All right. Well, excuse me, okay. And I understand your frustration and I'm as frustrated as you because on June 30 when they filed their bankruptcy, that's when we had to take the accounting action we did. We did get paid by the way. Now we do vet them. They're a well-established company and unfortunately, they overextended themselves with other customers. The Ferrari business was a good business. The rest of the business they had wasn't so good and the customers left them. And if you know what's happening in the automotive industry, there's always changes in suppliers. This was something that with their overextension, they weren't able to handle. It has nothing to do with SPD. The SPD business was probably the crown jewel of what they had. But given the size of the company and the weight of these other -- the loss of these other customers, they weren't able to sustain it.

It's not a good look. It's just 1 more thing that goes wrong with you guys over 30 years of the same thing.

Sure. And let me ask you if you have a well-established company that's been in the glass business for decades that goes bankrupt, what do you expect?

Well, they're not that established then. How well established are they if they went bankrupt? They're not that established. What happens to Gauzy? How's Gauzy? Like what happens if Gauzy goes belly up? What do we do then?

You could start chasing shadows, but you should understand that one of the benefits of our business model is when somebody goes bankrupt, we were able to move the business seamlessly to another supplier. We didn't lose the Ferrari business and that's I think the important thing, okay? One licensee because of activities unrelated to SPD went bankrupt. I don't run their business.

I get it. I get you don't run their business, but it just seems like we can't move forward at all. We're making no progress. I mean it sounds like you always say we have something next quarter, we're doing well. But there's never any revenue that associates with it, Joe. It's ridiculous.

Okay. Look, if you're not happy with the state of affairs, then nobody is forcing you to be a shareholder. But I'm telling you that we got paid in full. We got paid in full for what we were owed, okay? They went bankrupt and we weren't able to book additional revenue for the second quarter. And the way that our accounting systems are set up under ASC 606 is that the new licensee that took over that business in the second quarter didn't exceed their minimum royalties because of the timing. So we didn't book additional revenue from them and we lost the revenue from one. It's just an accounting issue, okay? From a cash flow standpoint, we're basically whole.

So can we expect any guidance for the third quarter that you're going to show that you're going to have a bump in guidance from the original third quarter?

Well, I can't tell you until I get the royalty reports what it is. But I think, yes, we're definitely going to be up from the second quarter.

Yes. I would hope so.

No, no. Look, I share your frustration. Nobody likes to pick up an e-mail and see that this happened. But fortunately, we're able to plan for it.

Our next question comes from Alan Ginsberg.

On the same topic that the previous caller just talked to you about.

Yes, about the bankruptcy.

Well, not really. It's more like multiple suppliers. For example in this promising area in architectural where you have retrofits, do you just have 1 supplier? I mean what would happen if they had a problem? Why wouldn't you have multiple suppliers?

We do and that's exactly why we were able to transition the business with Ferrari seamlessly because of that. I think one of the thins -- and I'll talk about this more in my closing remarks. But I think one of the things that we were very successfully able to do is minimize risk to investors in our company, okay? If this happened to 1 of our competitors, View or Sage or Halio, where they lost a major, major either source of supply or customer; that s it. It's game over, nothing happens, they go bankrupt. And they did, last year 2 of them went bankrupt, okay?

That doesn't have anything to do with Research Frontiers. You always bring that up.

Alan, but our business model and the fact that we do have a diversified group of licensees allows us to adjust to these things that would kill other companies. We were able to shift this over so that there was no supply disruptions. It may have an accounting blip and not a cash flow blip for us, but we were able to do it. And I think that's one of the hallmarks of our technology and our company is that it's a low risk way of investing in the smart glass market. And if you look at the history, look at the last 30, 40 years, all of these companies that have tried to do what View and Sage and Halio did are roadkill on the side of the road. They don't have the same risk management approach that we do. We're very good at this.

But you only have 1 supplier of film, Gauzy. Why wouldn't you get another one to mitigate what you're talking about in that area?

If I thought there was a need for it just like when I thought there was a need to find a replacement for the licensee that went bankrupt, we would act on it.

Our next question comes from Bruce Danny.

Saudi Arabia, as you probably know, has a gigantic project called the 1,000 Mile City.

I would love to get into that and we've tried and we are trying. It's a cool project. It would be very interesting to see that. I think it's going to be one of the 7 wonders of the world at some point.

Well, they're saying they want it done by 2030.

If you throw enough money at it, you can do that and if we have a retrofit, you can make it smart.

Well, I think you should try and get in on the ground floor.

Absolutely and the top floor. We have a presence in Saudi Arabia.

Our next question comes from Neal Goldman.

Couple of questions, Joe. First of all, will the third quarter have a bump up because of the new licensee since you didn't lose any sales, but they didn't meet the minimum number?

Yes, to the extent that they exceed their MAR for the year and they have a pretty high MAR. So I'm not sure how much of a bump it would be because they still have to exceed it. But if they exceed it, it will definitely bump it up there. And then we have other projects too that we've already been -- some licensees report early. We know that there's Q3 revenue coming from automotive too.

Okay. And in terms of the architecture, when you're dealing with large commercial buildings and you don't have to use the scaffolding, is there a major even cost savings separate from the heat issue and...

Sure, yes. So anybody that's lived in a major city, Neal, is alluding to the scaffolding that you have to put up anytime you work above the sidewalk so that windows, bricks and other things and tools don't fall on pedestrians. It's expensive to put that up. First of all, there's materials and there's labor unions and there's disruption to the business. If you're a retail outlet on the ground floor of one of these buildings, your business suffers. The only people that like the scaffolding is me when it's raining because I could take my dog outside and he doesn't get wet. But other than that, we haven't figured out any benefit to it and it's very disruptive. So being able to avoid it by being able to put the smart glass from the inside is a huge, huge benefit.

In the past you've indicated that the second half you'll start seeing revenues from architectural.

Right. From the retrofit specifically, yes.

Yes. And you're starting to see that?

Yes. And what we're seeing, Neal, is that there just like investors have a different entry point into anything, architects and designers and facility managers also have different entry points. Some are going to want full energy data and things like that and some are saying intuitively I think this is going to make a big difference and I'm going to put it in now without that. And you'll start to see those are the early adopters. And I think the government also will see it as an early adoption thing and that could be a huge customer. I mean the GSA is I think the largest customer in the world.

What's the capacity of your supplier of that in dollars?

They can do -- their projection is high tens of millions in year 1 in sales and I know they have expansion room to do more if they needed to. And the profit on this is high enough where they can easily replicate what they're doing.

Okay. So you're saying that it's starting now. You're getting some orders and this is the first year. So let's say, the second half of '25 is the first half of the first year. So you're saying tens of millions between now and June of '26 and then it ramps from there significantly.

Yes. Although I wouldn't count now as the starting gate because we still -- like I said, there's a continuum of adopters that are going to want lay energy data in, which takes several months to get and things like that. So you'll start to see early adopters come in probably now. But I think when we look at that high tens of millions in sales that are being projected by the licensee, he's talking about when they have everything kind of wrapped up in a bow. So you'll see revenues this year I believe, but you'll see the big revenues start when we have it all tied up and that may be several months before that starting gun happens.

Okay. I assume you'll announce the first meaningful architectural wins using the retrofit.

Yes. And I think that unlike automotive where they're very secretive, I think in architectural they'd be very proud to talk about smart windows because it becomes a building feature that helps them sell or rent space.

Our next question comes from Bill Denny.

Joe, it's my second question today. I'm a shareholder. And I did hold shares about 26 years ago for some time. So I'm back. My quick question is regarding the automotive industry, I hear a lot about the sunroofs. Is the SPD technology also being used in like windows and the doors and around the car?

Yes. So that's a great question, Bill. The primary market up until now has been sunroofs because you have a really demonstrable benefit, 18-degree difference in temperature just by putting it in the sunroof and getting a couple of extra inches of headroom by avoiding the pull across shade and all these other things that increase the comfort, stability and energy efficiency of the car because of just the sunroof. Now Mercedes this past quarter introduced a combination SPD-PDLC in their luxury van and that's on the side windows. And some of the things that we have in development at other automakers are in different areas of the car than even that. So it will be interesting. I mean I've made the analogy in the past, but it's maybe becoming a little bit more close to reality that I view what we have almost as like having 250 patents on stainless steel. We haven't figured out all the things that stainless steel is going to be used in, but having the patents on the material is very, very valuable. And I see SPD SmartGlass is just like stainless steel. It's a material that enables people to do things and that becomes a very valuable asset to have as a company.

Okay. And 1 quick follow-up. The residential market, I'm a real estate agent. What's the growth like on residential homes across the country?

Well, we're getting inquiries from some really, really high-end homes. We're also getting lower end -- not lower end, but smaller projects. But in terms of focus if we're going to put it in residential homes, it will probably be the bigger ones first and then it will move itself there. It's not a cost issue. It's really just a focus issue because if you have office buildings where there's 1 decision maker, but thousands of windows, you're going to pursue that first. If you have large homes that are somewhat billboards for the technology because of how nice they are, you would focus on that as well to some extent and then you work your way into the mainstream.

Our next question comes from [ Jared Albert ].

I got a couple of real quick questions. I don't want to go on and on. But the 1Q '25 was a nice bump, the 4Q '24 was pretty bad and this quarter obviously we see that it has to do with the EGP bankruptcy at least in part. How much of 1Q was stockpiling by Ferrari ahead of this bankruptcy?

I think they started long before that. We've been talking to them for quite a while about what the contingency plans would be if something like that happened. We keep our ears on the ground with everybody that's important to try to make sure that there aren't disruptions. And I think up until a week before the bankruptcy, they thought they were going to reorganize and sell the company. So just with the customers pulling out, it became something that wasn't practical for them.

So with the current automotive mix kind of ceteris paribus in terms of architecture, somewhere between 4Q and 1Q is kind of the steady state run rate for fee income. That's kind of where we're at now?

I don't know if you could say there's a steady state. Fourth quarter is always low for automotive because you're trying to clear things out of the showroom. I don't think Ferrari had that problem by the way. I think they sold anything that they put out there and it wasn't an issue. And some carmakers, I don't think Ferrari had to do this, but some carmakers stopped production. Jaguar for example wasn't selling into the U.S. for a while until the tariff situation stabilized, but it didn't affect us. But Ferrari, they were merrily selling this roof and making a good profit on it.

Okay. In terms of the Corvette, I was glad you willing to mention it. It has an intermediate state. I noticed that Toyota Crown now has an intermediate PDLC state, but it looks like it just varies behaves. It sounds from what you're saying that you're guiding against the Corvette even though it's a General Motors product. Is that the takeaway that we should not expect the Corvette to be using SPD [indiscernible] I would say.

Like I said, it's a mystery. I'm hearing different things out in the industry about it. The GM Authority had an article where they said it's a technology similar to what's in the Cadillac, which can mean it's the same thing or it can mean it's a different one, but sort of looks like it. It's like the difference between Kosher and Kocher Style. And then I guess the other part of it is probably I would have seen in our royalty reports some mention of this unless it's such a small amount that it didn't hit the reporting thresholds. But I don't think it's us. I think that will be in other cars outside of Cadillac within GM, but I don't think that's us. And as far as the intermediate states, yes, just to go back to the other question, you can do intermediate states with PDLC too. It doesn't look good at all because what you're doing with PDLC is increasing the haze levels and the light scatter. So an intermediate state would look like a dirty window. You know what I mean.

Yes, I understand. Moving on to LTI AIT retro. Should I be concerned that their website is still down in terms of putting in orders for this stuff or am I wrong? The link in the PR is dead and the link from the LTI site doesn't really go anywhere.

Yes. I don't think you should read anything into that. I don't know. But I think that the initial projects are going to be direct sales from people they know like the government. They already supply the U.S. government. So I think that when they have everything ready with the data and everything is tied up in a bow, they probably will reactivate that.

Okay. Last question, Joe, very last question. Like the other Jared, we're all disappointed if you called in. But my question is at this point not your insight from being the CEO, but your personal opinion. My personal opinion is SPD is not yet good enough. PDLC is good enough to get into these models. But we have...

That's not my personal opinion.

That's my personal opinion. Okay. Let me finish and I will get off the phone to let the big guys have their time. My basic point is that with the sole supplier, you' talked about themselves a sole supplier and they have to protect their margins. But you look at a project like the CLA Shooting Brake and you think there's probably a good, better, best upsell, downsell kind of model internal to them. And so

Yes. I'm glad you mentioned because I think -- no, no, no, I think I'd like to actually -- it maybe is where you were going with your question. If not, I apologize for adding more information to the mix, but I think more information is always good. So with the CLA Shooting Brake, we've actually had specific discussions with Mercedes and they were trying to get that in at a particular price point, which wasn't going to happen with SPD. The car itself had to be at a certain price point because of who they're competing against. It also was very strategically important because the high-end electric vehicles within Mercedes -- and I'm not sharing anything that hasn't been talked about in automotive news or anything like that. The high-end electric vehicles at Mercedes, the EQS, the replacement for the S-Class on the electric basis wasn't very successful and they've said that. And what Mercedes told us is Joe is going to be disappointed. But we know that SPD is a better technology. We know that it performs much better and it's going to do what we need it to do. But it's not going to come in at the price point that is going to allow us to achieve our strategic objectives with the Shooting Brake because of the price. And I was told that PDLC for that and maybe it was a subsidized price because someone is trying to get either volume business or something or get their foot in the door at Mercedes was 75% less than the SPD. So going back to your question about is at that price differential if it's sustained, it's going to be tough for somebody to put SPD in when they don't know if the PDLC will kind of perform what it's supposed to do in a general way if I could be very vague because they're very wishy-washy about why they put PDLC in these cars. Rivian put it in. If you sat in one, you'd be unimpressed. Denny I think mentioned before, he sat in an Audi and he was unimpressed with the PDLC. I sat in the ID.4 and the ID.7 and it didn't look very good. It's not something that...

I've been in an IX and I've been in an S-Class. So I understand that. But my point is and I know I said last question, but I'm going to leave you with this thought because the issue is not price. The issue is the Venn diagram that leads to value. And at this point SPD is too expensive. It doesn't offer enough performance advantage over PDLC or it's just too difficult to source for a variety of reasons to that equation.

Not difficult to source and the price I think is the issue here.

But like, for example, Gauzy has put out a pretty [ LAM ] stack that I assume reduces some of the issues around refraction and makes it cheaper. So you kind of keep chipping away at the various issues. Maybe you'll get there. And that was really what I was going to ask you about. That was actually the thrust of my question. So that's your answer is that there's an incremental improvement to get down to a price where this thing can actually go into stuff.

I don't think it's that rational. I think that every time you land the high-end car, you get your cost down on the low-end cars. So I think that's just -- we just keep approaching that point where the performance differential between SPD and PDLC becomes much more important favoring SPD as we get the price down. So it s something we're all working on.

Well, I mean we're the same stable of cars all these years.

Our next question comes from John Nelson.

Joe, I might have missed this, but is the retrofit expected to launch in the third quarter or the second half of this year?

Second half. And when I say launch, you'll probably have a soft launch with some key customers and then a bigger launch when you have the data all tied up in a bow.

At this time we have no further questions. I'll turn it back over to our host for some closing remarks.

Okay. Thanks and thanks, Erica. And if we haven't fully answered any questions that were either e-mailed to us or in our presentation or in the Q&A, just call or e-mail us. We're happy to talk to you. I'm going to make a few closing remarks. I think it's pretty clear not only from us, but from the history of what's happened to our competitors, we're in a tough industry, but also as history has shown, we're tougher. We know that there's never a straight line to success and because of this, we built our business model to reduce risk to our shareholders as new projects for our technology come online and generate more revenue. We have the staying power. We buttressed this by investing and having a robust and high-performing technology that controls light and that has been proven itself in tens of thousands of cars, aircraft, boats and buildings. We face competition from the Chinese market mostly from PDLC, which has inferior performance characteristics when used for anything other than privacy or projection applications. We face competition from electrochromics in small surface application areas such as rearview mirrors and to some extent aircraft windows although we're in Boeing and Airbus now. So I think we're starting to do very well there. But we also have superior performance head-to-head in every high volume area such as sunroofs, panoramic glass roofs, windows for homes, offices, apartment buildings, yachts and cruise ships and museums; high volume, high surface area where electrochromics are just going to get too slow to work and work well. We're not the low-cost alternative to these other technologies. We're the high performance alternative. We don't have to be the low-cost alternative although lower the cost, the better for everybody. And if you look at many technology-based products,…

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