Research Frontiers Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 2, 2023

There are 9 speakers on the call.

Operator

Good afternoon, ladies and gentlemen. Welcome to Research Frontiers' Investor Conference Call to discuss the Q3 of 2023 results of operations and recent developments. During today's presentation, all parties will be in a listen only mode. And following the presentation, the conference will be open for questions. This conference is being recorded today.

Operator

A replay of this conference call will be available starting later today in the Investors section of Research Frontiers website at www.smartglass.com and we'll 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 Litigations 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.

Operator

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 emailed to it prior to this conference call, excuse me, either in their presentation or as part of the Q and A session at the end. In some cases, the company has responded directly to e mail questions prior to this call or we'll do so afterwards. In order to answer more questions of General interest to shareholders on this call, if you find that your question has been answered We ask that you keep your questions brief in the interest of time. I would now like to turn the conference call over to Joe Harari, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Speaker 1

Thank you, Paul, and hello, everyone, and welcome to our Q3 of 2023 investor conference call. First, let me start off by saying a number of our shareholders have asked about Gauzy and their safety and business with the war going on in Israel. Some of the questions. To date, has the Israeli war with Hamas impacted Gauzy's business operations in any significant way? Please comment on the effect of any of the war in the Middle East is having on Gauzy's operations in Israel.

Speaker 1

Is Gauzy currently producing and shipping SPD film coating To their plant in Germany, Gauzy has worldwide locations, but can it continue to function effectively if its headquarters Location is seriously impacted by conflict. Well, first of all, I want to thank all of you for your concern. And Eyal Peso and I and everyone at Gauzy really appreciate the messages inquiring about their safety. Thankfully, everyone is safe. And while I'm horrified by the situation in Israel and see things happening in the world that I never thought I'd see in my lifetime or ever, I can report that Gauzy's operations have not been interrupted by the war there.

Speaker 1

Of course, they pay attention to it. How can one not do that? Good entrepreneur must factor in things like resources and competition. An Israeli entrepreneur has a whole different dimension of things to add To that normally and especially right now, and Gauzy has been incredibly busy both before and after October 7. And they've been admirably juggling work and family safety and doing it with very calm determination.

Speaker 1

Everyone pulls together in normal times and especially now. And they know they have investors and employees and customers and they're depending on them. And we've been working with them daily and things appear much closer to normal than one would expect. As a matter of fact, the only reason Eyal Peso cannot be on this Call today is that he has a packed business schedule and that should give you an idea about business pressing on even more time. Once again, thank you.

Speaker 1

And on behalf of Yali, ask me to thank everyone for their good wishes and concerns. The Tesla Cybertruck was announced in 2019 with production slated for late 2021. Reports now indicate that production will start November 30th this year, 2023. When the first prototype of the Cybertruck was demonstrated at the launch event, my friend Franz von Holthausen, Tesla's Chief Designer, Threw a metal ball at the bulletproof glass and it cracked. When I first met Elon Musk in person, it was at the Model S Concept launch event in New York.

Speaker 1

And prior to that, Tesla was making the Tesla Roadster with the body being produced by Lotus out of fiberglass. At another in person meeting, Elon Musk was trying to figure out how to produce 10,000 cars a year. Well, in 2022, Tesla produced 1,370,000 vehicles, which was a 47% increase over 2021. And in 2023, Tesla is expected to produce and sell around 1,800,000 vehicles, far more than the 10,000 they were originally trying to figure out how to produce. So what do all these things tell us?

Speaker 1

That if you're in the automotive industry, even the most capable players don't always get it right, at least Not right away. And sometimes there's technical issues like the glass on the Cybertruck prototype, which incidentally was not our smart glass at the time. And sometimes it's timing issues as shown by the multiple delays in the introduction of the Cybertruck. But for the most part, a company that had never produced a KAR is now the dominant player in the electric vehicle market with the highest margins and volumes. In other words, Things get done and they often get done in a big way, but rarely on schedule and almost never in a straight line.

Speaker 1

This is the world of the automotive manufacturer, and it's also the world we live in. We are told time frames and sometimes they are delayed, As witnessed by the 1st car to use our technology, the SLK Convertible Roadster, which is 5 months overdue, Once again, not because of our glass, by the way. And sometimes things are ahead of schedule. The SL Convertible came out With our glass and it was ahead of the target date. And sometimes marketing plans change.

Speaker 1

Just 6 months before the launch of the Cadillac Celesteq At CES, the HEZDA project did not know when it would be launched and when it would be announced. It came out 6 months later with much fanfare. So we do our best to operate in this environment and we try to strike a balance between providing guidance when we can to our shareholders We're simply waiting for something to happen and announcing it afterwards. So there's a balance there. And many people, including myself and our licensees, We're disappointed to learn that an Asian mid priced auto manufacturer had decided to move back the introduction of its special luxury edition for the first half of next year.

Speaker 1

We share what we know when we can, and often, it is just what we're told. And in The world we live in, it's not possible to thread the needle in terms of timing. So there is that balance and The Asian automaker has moved the timetable back by about half a year, but It's still on track there. Fortunately, we plan for such contingencies to make sure we're not going to run out of Before anticipated events happen. For the past 37 years, we've been debt free.

Speaker 1

We have been successful at raising capital long before we may need it To keep the number of shares outstanding relatively low compared to our peers, for the past 8 years, we've been constantly focusing on reducing operating Some of our competitors are not so fortunate or successful at achieving the same thing, and we are rapidly running out of cash. While they may measure their cash runway in terms of weeks, we have over 5 years' worth of cash and continue to be debt free. View is trading pre reverse stock split at less than a nickel per share And see at Kraken is at less than 0.5 dollars. At Research Frontiers, we don't want our shareholders to have to Speculate about whether our technology will make it out of the lab and into the real world. It has already done that in multiple industries.

Speaker 1

We don't want our shareholder staff to speculate about whether the technology will be high performing and reliable, two qualities that are essential in any upscale market. Mercedes and then McLaren and then General Motors and then Ferrari all have proven this in serial production. Airbus and Boeing and numerous other jet and turboprop and helicopter manufacturers are also proving this. New products in addition to the manufacturers I just mentioned will be coming out. Since our last conference call, we added yet another auto manufacturer project.

Speaker 1

This one is from North America. Now the caveat for this new project, do we have an estimated timeline and volumes? Yes. Will there be a straight line towards commercial production on that timeline? Maybe yes, maybe no.

Speaker 1

However, our long standing experience And this industry has taught us to plan for both, things coming out ahead of schedule and things coming out behind schedule. Let's go to the numbers. Our fee income was up 46% for the 1st 9 months of this year. Automotive income was up 81% in Q3 2023 Compared to Q3 2022, for the 1st 9 months of this year, automotive fee income was up over 120% from last year. And Ferrari has shown healthy growth in sales each quarter of this year for their new Purosangue.

Speaker 1

Our net loss is substantially lower, and we're looking forward to becoming cash flow positive and profitable by executing on our business plan. We expect revenue in all market segments to increase as new car models, aircraft, trains and other products using Our SPD SmartGlass technology are introduced into the market. And with that, I look forward to answering your questions. And we took some of them that were emailed to us And included them in my presentation earlier, here are some additional questions that were emailed to us. And in some cases, I'm combining several related questions into one.

Speaker 1

John Nelson had asked, in the markets that the film is sold into, which market sales are growing fastest quarter over quarter and year over year? Clearly, automotive followed by aircraft, and we expect architectural to become more significant in 2024 and later years. Another question by Mr. Nelson. Any potential new markets that REFR plans to move into?

Speaker 1

I'm certainly excited about our Bread and butter industry growth prospects, more cars, trains and planes, the traditional usage. As far as nontraditional markets, I'm particularly excited about the use of SPD with transparent OLED technology for displays And alternative areas of the car to the sunroof such as headlights, heads up displays and sun visors. And in SunVises both as an attached visor or built into the windshield. I'm also excited about some of the new projects And there, we believe it's going to be both in retrofit and in new installations. I think that's going to be very significant.

Speaker 1

Next question, given the slow sales of EVs and no announced adoptions, the market for BD may not be a high priority considering, say, Ford is losing $40,000 a vehicle. The EV market is slowing down as The lack of interest stems from the lack of charging stations. Coupled with the auto strikes, I presume the royalties from the auto sector are now pushed out further And also why we not heard about any architectural wins. Well, thank you, Jeff, for that question. First of all, based on what's in the pipeline, I expect architectural projects, Both new and retrofit in 2024.

Speaker 1

And I don't think the UAW strike affected us at all. We're mostly in Europe and in Asia and the strike is also basically over now and things are returning to normal. Regarding EVs, I think a lot of companies were caught up in the EV development momentum and did not fully realize the economic and technical challenges. I don't think that will help us, however it will affect us, however. I don't think it's going to hurt us.

Speaker 1

First, some companies like BMW and Mercedes And Tesla have a leg up on other traditional car companies trying to make EVs, much higher margins than, let's say, Ford. Also, The same 5.5% increase in driving range for EVs applies to increased gas mileage for internal combustion engine vehicles And is also added in ICE's 4 grams per kilometer reduction in CO2 emissions. So we'll be fine either way. I mean, there's even an argument, Jeff, that if EVs slow down, you're going to have to do more to reduce CO2 emissions through The reduction techniques of using things like smart glass, so it may actually help us. Although I'm not rooting for a reduction in EVs, I think some are Very good vehicles and some have challenges that eventually will be overcome.

Speaker 1

Next question, LG is introducing multiple models of transparent OLEDs for commercial and residential applications. I would think that any used in windows In an outdoor sunny environment, we need SPD. Do you have any ballpark estimate as to what percentage of these different markets might use SPD? Thank you. First of all, I agree that any time a transparent OLED is used outdoors or with daylight behind it, such as turning The window in your home into a television or putting it info on a vehicle window like BMW spoke about at CES this year with their SPD SmartGlass equipped car that they demoed and highlighted at Oliver Zipse's keynote address, You're going to need SPD film.

Speaker 1

Anytime there's daylight behind a display, I think you're going to need it. I don't think anyone can predict today, including LG, the penetration But I think that the markets are enormous. And I mentioned earlier, it's one of the new markets for SPD that I'm quite excited about. Another question. Hi, Joe.

Speaker 1

In the Q1 2023 conference call, you talked about retrofit SPD windows, Quoting me, but we have a very well established mature, well capitalized licensee that has developed their own retrofit solution for architectural And we see that as being a game changer for Architectural SPD Smart Windows 2. And then in Q2, I'm quoted as saying, We haven't put a timeframe on it. I don't see any showstoppers and why it couldn't come out tomorrow if it needed to. And I think we're all pushing for that because I think we all understand that in the Well, thank you, Rick, for the question. As I mentioned earlier, this is one of the new emerging areas that I'm quite excited about and expect retrofit architectural applications To come online next year and just to kind of maybe put a little bit more detail into why I think it's a game changer.

Speaker 1

Right now, You either have to take out your glass and put a new glass, which in a residential application for a home is not that big of a deal. But for a building, a multifamily unit, which is the prime area for smart glass, You would have to put up scaffolding if you're in New York, get landlord approval and all sorts of things. So being able to retrofit it From the inside, like the system we have allows us to do, I think is definitely a game changer and would substantially reduce the costs And simply allow a building to be retrofitted perhaps even over a weekend, when there's nobody in the building, if it's an office building. Another Jeff asked 4 questions. We've answered 3 of them.

Speaker 1

Here's the 4th. Does management believe the company website is adequate in upgrading with fresh content and a new design is unnecessary? Well, thanks for that question, Jeff. We're a business to business company. So while websites are important, it's less critical than if we were a B2C business.

Speaker 1

And there are some differences of opinion. Some of the automakers we work with actually have complimented us on our current website. So I don't think it's affecting sales and they know where to go and they want to get the best switchable glass. But having said that And to put this in context, in 1995, when the Internet was first becoming commercialized, we saw the potential. In 1995, there were an estimated 23,500 websites in the world.

Speaker 1

We were one of them. And I actually had to learn HTML coding because the current tools for web design just didn't exist back then. And today, there's over 1,500,000,000 estimated Web Over the years, we've gone through multiple evolutions of our website. And while it may not be an immediate priority, I'm sure we will upgrade it. And while opinions can differ on our website, there's always room for improvement in everything we do.

Speaker 1

So something that we'll probably focus on. Next question. The Lucid car has a large sunroof and I have read that they are complaining about the interior heat. Has anyone approached Research Frontiers for a solution? Well, thank you, Mr.

Speaker 1

Houghton, for that question. Yes, we actually have an ongoing project with Lucid to help them with this. And we're seeing heat buildup inside the vehicle is becoming more and more of a problem in need of a solution, especially with panoramic glass roofs Becoming more common. And if you just go out there and look at the blogs, you'll see a lot of people are complaining about a number of different vehicles that have And a massive heat buildup. And I remember there was a wonderful video actually.

Speaker 1

When the McLaren first came out, The automotive news reporter that was doing the test drive did a video and he was talking about how the prior version of it It was like sitting in a microwave oven, but how cool the SPD SmartGlass was in that vehicle and how cool to the touch it was. Anyway, today we've discussed a lot of exciting topics. And I'll now ask our operator, Paul, to open up the conference to any additional questions People participating today might have that we haven't already covered.

Operator

When prompted. And our first question is from Francis Corteva. Your line is open.

Speaker 2

Good afternoon, Joe.

Speaker 1

Hi. How are you doing?

Speaker 2

Pretty good. Last conference call, you mentioned that the shareholders are going to be greatly rewarded in This particular year, 2023, do you stand by that statement?

Speaker 1

Well, the timing is obviously off. Our stock is down. And as a shareholder, I don't I'm not happy about that because my net worth is tied up in this company. But I do think that part of this was the delay in the Asian vehicle that we were expecting to have Happened in the Q4. And like I said, we take ownership of that.

Speaker 3

Yes, but with

Speaker 2

all the uncertainty, why would you make such a statement like that, Joe?

Speaker 1

Because We were told that that would be the timing and then we were told that the timing changed. That's the nature of the automotive industry.

Speaker 2

But it's the nature of the CEO to present himself in such a case that he doesn't bring all the hope together for all the shareholders. Don't you agree?

Speaker 1

It's a fair point. Like I said, we do the best we can with the information we're given. I The alternative is just wait for everything to happen and announce it after the fact. But I think that a lot of people would prefer to get at least a sense as to The directions that we're moving in and the progress we're making. And I'll admit, It was a judgment call, and I was wrong on that one.

Operator

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

Speaker 3

Hi, Joe.

Speaker 1

Hey, John.

Speaker 3

Hi. By the

Speaker 1

way, thank you for your renewed investment in the company.

Speaker 3

Well, it's all about potential. So I Feeling good about my investment in Research Frontiers. The press release States that fee income during the 1st 9 months was up 46% Versus last 9 months last year. And then fee income for the 3rd quarter was up 9% quarter compared to last year's quarter. What's Why the what accounted for

Speaker 1

the year? Why the difference? Yes. Yes. A lot of it is timing.

Speaker 1

I mean, when you're comparing quarter to quarter, There could be specific events in one particular quarter last year that where there was a blip up and when you take a longer A period of time like 9 months versus 9 months, you get it's a little more smoothed out. And that's why the Automotive income was up substantially for the 9 months.

Speaker 3

Okay. Good.

Speaker 1

And also, as I mentioned earlier, I think You started to see Ferrari really kick in with good growth and the adoption of SPD This is Jim. Okay.

Speaker 3

Thank you.

Speaker 1

Thanks a lot.

Operator

And our next question comes from Art Brady. Your line is open.

Speaker 4

Hi, Joe. Art Brady here.

Speaker 1

Hey,

Speaker 4

Art. Can you give us a little picture on when the actual billings would start With

Speaker 1

LG. All of our license agreements have a provision that The licensee typically pays us 45 days after the end of the quarter in which a product is sold. So there may be products sold as part of the development process and things like that, but the real numbers come in when it It's the consumer markets, just like automotive, just like aircraft, just like architectural.

Speaker 4

So that would mean starting maybe early January?

Speaker 1

When they decide to introduce the products, that's when you'll start to see revenues kick in. And I understand there's also a lot of licensees have to achieve a minimum royalty before you see additional income. And they would have to exceed the minimum royalty for the year before you start having accretive new income. Just to use numbers, if somebody had $100,000 minimum royalty, that means and a 10% royalty, let's say, for automotive, You only see new revenue come in after they've achieved the $1,000,000 in sales of product, which would generate $100,000 in royalty income, then the next dollar after that generates another additional revenue.

Speaker 4

Okay. Thank you.

Speaker 1

Thanks a lot, Art. All

Operator

right. And if there are any final questions, And we have a question from David Paradiso. Your line is open.

Speaker 3

Hi, Joe. Hi, Dave.

Speaker 1

I've been a shareholder for 29 years now and still waiting. And given that the price of the stock is where it is, I'm concerned once again about delisting. Can you talk about the timing of when Reefer could be delisted and ramifications and all that. Sure. So, first of all, I don't expect it to happen.

Speaker 1

And I don't think we're going to have to do what our 2 competitors did with a 60 to 1 reverse stock split just to get their stock over a dollar. And one of them has already drifted down and got another delisting notice. But Typically, the NASDAQ rules require that if you trade below $1 for a certain period of time, then you have 100 and Days to come into compliance and trade above $1 And if that doesn't happen, typically there's another 6 month period That's granted. And usually what companies have done is do things like what View and Crown did, which is reverse stock splits to try to get their stock above the dollar. I don't expect that to happen.

Speaker 1

I think we're kind of in A period where there hasn't been any news and I'm pretty confident that there will be good news well within the timeframe I just mentioned. So Not at all even thinking about it. Okay. Thank you. Thanks a lot, Dave.

Operator

And our next question comes from David Forster. Your line is open.

Speaker 5

Well, actually, it's Michael Forster, if you can hear me.

Speaker 1

It's Michael Forster. How are you doing, Michael?

Operator

I apologize, sir. Michael, first.

Speaker 5

In regard to we had 2 suppliers of the film, Gauzy for 1 and Hitachi, which I think sold off its interest. Is there a problem in getting people To adopt the SPD technology because of a lack of multiple suppliers?

Speaker 1

No. And There's more to the Hitachi story, which I think people will be pleased with when they hear about it. But no, we haven't Encounters that. What the automakers, especially where they like to have multiple suppliers, have been focusing on Is on multiple sources of lamination. So do they have a glass laminator that which is the person that set the company that sets the price For the automaker, for things like sunroofs, it's having multiples in that part of the supply chain that has been important.

Speaker 1

And we have Basically, the who's who of the auto glass industry license. So the automakers seem very comfortable with everything. In this recent North American project, we went through a good list of potential licensees To supply the project and they were all companies that the automaker would welcome working with. So It's been fine. Well,

Speaker 5

you brought up at the beginning the problems in Israel right now. And I'm just it strikes me that if it's realistically that Gauzy is the only producer of volume of film, there's a limit on What Gauzy can currently produce and maybe they haven't hit the limit yet, but is that a barrier? Do you get that feedback from Potential customers?

Speaker 1

No. I don't. It's a fair question So let me delve a little bit deeper into that, maybe give people some comfort on that. So Gauzy actually has Locations throughout the world. It's not just in one place.

Speaker 1

And They also have multiple locations even within Israel. So if God forbid something happened to their Main facility in Tel Aviv, Yafo, and I've seen the Iron Dome at work and it works quite well. So it's A low chance in a populated area like that of something striking, but even if it did, there's a facility not 10 minutes away that Things can be moved to. And then there's also facilities in Germany and other places that can house us. So they Unfortunately, the world they live in involves contingency planning that we don't have to do in New York, At least, frankly, not right now.

Speaker 1

So it's very much part of their strategic planning You'd be able to deal with situations like that. I have another Sure.

Speaker 5

Yes. You've talked about the reduction of costs. That's primarily Administrative or internal?

Speaker 1

At Research Frontiers. Yes, at Research Frontiers. The other focus on cost is at the end product side and there we've gotten the cost of the SPD film to a fraction of what it was in the beginning.

Speaker 5

Well, I'll preface my question with, I understand you have contracts With various licensees and I presume, correct me if I'm wrong, that a typical provision is that the licensee gets the Cheapest price that's offered to any licensee now or in the future?

Speaker 1

No. Okay. Well There's no most favored nation's provisions. But with volume, you get discounts. And if somebody is developing a large use of SPD film, for example, they'll get a better price, I'm sure from Gauzy then someone that's doing a couple of windows.

Speaker 5

Well, our Return as I understand it is typically 10%.

Speaker 1

10% in automotive, 15% in the other markets Of the revenue.

Speaker 5

In that regard, if we offered 9.5% To a big buyer, so that it increases the use of the product and gets other competitors of that buyer Interested in competing, has that been considered as a way of even though we lose some revenue

Speaker 1

It's certainly been yes, yes. No, it's certainly I mean, look, and that's an excellent question. Maximizing revenue because we get paid based on revenue is positive for Research Frontiers. So going from, let's say, 10% to 9.5%, If there was huge volumes in a product that someone could commit to, is definitely something we've considered and discussed. The issue though is that for that to happen, the licensee has to commit to large volumes.

Speaker 1

And for that to happen, Their automotive customer has to commit to large volumes. So they have to either make the standard equipment, then you know how much Glass you're putting in a vehicle and how much of it is smart glass or commit to a certain make rate. So you know Once again, how much glass you're putting? Or the way it is now, it's the customer deciding the configuration of what cars they want. And that's less predictable for the automaker, obviously, and less predictable for the Glass laminating licensee.

Speaker 1

So if someone is willing to make a commitment, we certainly would consider A reduction if it was an impediment or if we can get more revenue out of it, because our costs are vastly fixed.

Speaker 5

Last topic. I see that there's warrants were purchased. Can you tell us what the Lowest cost price to purchase stock of Research Frontiers by a warrant

Speaker 1

Holder? I'd have to look. I don't have that number in front of me. It's in our 10 Q though, the weighted average and the exercise price of the warrants, some go as high as $4 or $5 Yes. Some go some are exercisable at 4, 4.30, some are exercisable at lower prices.

Speaker 1

No warrants were purchased though. I mean, there were some that were exercised in the 1st 9 months of this year because they were in the money. I think that was at $1.38 if I remember right per share.

Speaker 5

All right. Well, last question. Are there any Warren holders who could purchase stock now at a price less than the market?

Speaker 1

No. All right. Thanks. Thanks a lot, Michael.

Operator

And we have a question from John Nelson. Your line is open.

Speaker 3

Hi, Joe. Just to A follow-up. Earlier in the call, you mentioned the project near and dear to Both of us, due to the massive potential size of the market, The visor project, we either attached or

Speaker 1

Built into Built into the windshield, right?

Speaker 3

Yes. Can you share without naming names, can you Share any further details on the Vizer project.

Speaker 1

So I could probably talk about what's been public only. And in the McLaren, there's one version of the McLaren that has what's The cello roof, which is a panoramic roof that kind of wraps down into the windshield of the car, If you can imagine, so that band between the windshield and the roof is not metal, So it's a curved piece of glass. And they've actually done the sun visor built into that. It's been done in low volume. And for other manufacturers that have much higher volumes, we've had development projects Building that into the windshield itself.

Speaker 1

And what's cool about that, John, is that you can actually do multi segmented Multiple segments in the Sun Visor. So then if you combine that with, let's say, a photocell that detects

Operator

I'm sorry, Mr. Harari. We've seemed to have lost you.

Speaker 1

Okay. Is that better now?

Operator

Yes, you're back, sir.

Speaker 1

Okay, thank you. Yes, so you can adjust the which segment of the sun visor It goes up and down or goes dark or light with a photocell when you build it into the windshield.

Operator

All right, thank you. And our next question comes from Allen Ginsberg. Your line is open.

Speaker 4

Yes. Hello, Joe. How are you?

Speaker 5

Hi, Alan. How are you?

Speaker 4

I'm good. My question is a follow-up to One of the previous questions and that has to do with suppliers. Now I understand what you said about fabricators, etcetera, but I'm sure that End users also look at the situation in Israel. So you mentioned Hitachi and that we'll be hearing something. And I'm very interested in that as a second supplier.

Speaker 4

So can you give us a little more color on that?

Operator

And Mr. Hari, I think we've lost you again. And ladies and gentlemen, please standby. We're having technical difficulty. Mr.

Operator

Hari, are you there? Mr. Hari, can you hear us? And once again, ladies and gentlemen, please standby. We're just having a bit of technical difficulties.

Operator

I'll have Mr. Harari back in one second. Thank you. And Mr. Harari, you're back.

Speaker 1

Okay. Thank you. I apologize. We had a voice over Internet issue and I think it's been resolved now. Hello.

Speaker 1

Yes. Can you hear me?

Speaker 4

Yes. Am I on the line with you now, Joe?

Speaker 1

You still are. Okay.

Speaker 4

Yes. So I had asked hi. I'd asked you about Hitachi and that's when we got cut off.

Speaker 1

Okay. Yes. At this point, I'm not able to give more details about that, but I think everyone will be very happy with some of the details when they do come out. And hopefully, there'll be a Time soon when I can do that.

Speaker 4

So is that a near term thing that we might hear something about it?

Speaker 1

It's not within my control, but it could be very near term.

Speaker 4

Okay. That's important to me. Thank you.

Speaker 1

You're welcome.

Operator

And we have a question from Tom Smith. Your line is open.

Speaker 3

Hi, Joe.

Speaker 1

Hi, Tom. How are you?

Speaker 6

Good. Good. So as you've probably seen, there was rumors that Cybertruck might have sort of electrochromic. You opened the conference call mentioning the Cybertruck. Then you mentioned not at that time it didn't have SPD.

Speaker 6

I don't think investors have much information.

Speaker 1

I don't want you to read too much into that. It was more of an example of a vehicle that Came out from a very reputable and innovative auto manufacturer that had It's share of delays and technical issues too. And is this the world we live in? Making sure. And thanks for asking that.

Speaker 6

And then how about Rivian, On Rivian talk, they seem to be growing and they had shown SPD before?

Speaker 1

Yes, they had shown SPD and we hope that they will Show it again because they are having issues with the heat buildup inside the vehicle. So we're out there as a solution for many, many people.

Speaker 6

And then as far as the Honda, you said first half, I mean, that's kind of a large timeframe. Is it more towards Q1 or Q2 or you just have no idea?

Speaker 1

I'm reluctant to give more of a precise timing because last time I did, I It was called out on it. So, if you don't mind, I got to leave it somewhat long term.

Speaker 6

Has there been any

Speaker 1

more We're talking about the next yes, we're talking first half, we're talking about within the next 6 to 8 months.

Speaker 6

Has there been any more confirmation on it? Or does it stand where the confirmation was before? Or is it looking more certain? Or Can't say, you don't know.

Speaker 1

It's looking more certain, but I like I said, I'm reluctant to make any predictions given the fact that You know, one of them just bit me in the butt.

Speaker 6

Okay. All right. Thank you.

Speaker 1

Thanks.

Operator

Thank you. And we have a question from John Nelson. Your line is open.

Speaker 3

Hi. We got Joe, we got cut off.

Speaker 1

Sorry about that, John. What happened? We had an Internet issue that he said.

Speaker 3

Did I miss anything on comments, any more comments on the or details on the Vizer project.

Speaker 1

Other than, we have development efforts in the past and currently Both in the windshield and as a standalone and that McLaren had actually put it in series production and you can have a System where it detects where the sun is on the horizon and decides which segment to darken and lighten based on where the sun is. It's something that I think is a very good application and something near and dear to my heart as well. Okay. That's something drives into quite a bit.

Speaker 3

Are the partners that you're in project with this One partner for both fixed and attached or 2 partners?

Speaker 1

Different. Different licensees.

Speaker 3

Okay, excellent. Thank you very much.

Speaker 1

Thanks. Thanks a lot, Tom.

Operator

And our next question is from Tom McCarthy. Your line is open.

Speaker 7

Hi, Joe.

Speaker 5

Hey, Tom. How are you?

Speaker 7

Good. Enjoying retirement. And as a former financial advisor, I'm very aware that the investment community is going to be looking at Research Frontiers and painting it with the same brush As it did View and Crown and other similar companies or similar products that aren't Going to be successful. In other words, Research Frontiers is going to have to do a good strong aggressive PR initiative, I believe, to really get the investment community to take a serious look at it. What are the plans To do that,

Speaker 1

Sure. So that's a fair question and something that both we and Gauzy incidentally have Discussed many, many times in terms of that. There are big differences between us and Crown and us and View. First of all, the economics. View is a bad company in my opinion because the technology doesn't perform well And they had an accounting fraud issue and it's not for lack of sales, it's for lack of performance and they highly subsidize Their sales, so they lost $250,000,000 in cash last year.

Speaker 1

We didn't. So And I could pretty much assure you that there's nobody in our supply chain that is building a business around that business model of Highly subsidizing to the point of losing massive amounts of money. It's just not in anyone's DNA. Every project has It stands on its own economically and it will and that's one of the key differences in it. Crown doesn't have a product that came out the door.

Speaker 1

So I don't think anybody is comparing us to them. There have been a lot of It's comparing us to them. There have been a lot of promises over the years in moving goalposts and things like that, but their smart Window insert has not come out yet, and it's always around the corner. So I don't think we have to Worry too much about that. And you have things like the Dynamic Glass Act that's part of the IRA that It's giving tax credits for Smart Windows, so that changes the economics also in our favor.

Speaker 1

So I wouldn't really say that View is a fair comparison. I think that it's certainly something that we and Gauzy have to work to distinguish ourselves from, And we do. Yes. But it's not a direct comparison. And I've been in the last 3 to 4 conference calls pointing out from time to time some of the differences between us and them.

Speaker 1

But on the marketing side, You have a window that goes darker, goes lighter and switches faster. It's not a direct comparison. We're much better performing than them. It's a film which makes the logistics easier, which means we don't have to ship glass across the world. We could ship film and have it laminated locally.

Speaker 1

So there's a lot of things that are different and we point that out to the customers.

Speaker 7

I know that and there are major differences. I'm not talking about potential customers. I'm talking about brokerage firms and newsletter writers and research services. They can be very superficial when they're looking at something new. And the inclination is going to be to think that reefer is another view or another crown.

Speaker 7

My point is

Speaker 1

Yes, except that anybody that does even more of a Then superficial analysis, we'll see we're not losing a $250,000,000 a year in cash. We're not subsidizing the product And we're in multiple industries. So it's a little bit different. Good point. I always It's very different.

Speaker 1

But

Speaker 7

The point I'm trying to make, I guess, and I'm sorry, I'm belaboring this is, you can't expect The folks I'm talking about to come to you unless you've gone to them, so to speak, unless you've

Speaker 1

Right. And I think that yes, yes, and there is a messaging and PR initiative that is being launched You'll see as well.

Speaker 7

Terrific. Okay, keep up the good work, Joe.

Speaker 1

Thanks. Thanks and I appreciate the question.

Operator

And our next question is from Gerard Sherman of Strategic Planning Group. Your line is open.

Speaker 8

Thank you. Hey, Joe, at what point do you yourself or the Board or any other insiders feel that it's A fairly cheap price to purchase the shares in the open market. I can't think of a better way because you can't control any other news of supporting the stock just Good morning.

Speaker 1

Yes. Well, some of our directors have purchased stock. There's at any given time different levels of information within the company that would restrict people also from buying it. I'm sure you're familiar with windows opening and closing. And right now, the window is closed.

Speaker 1

It may open up soon, it may not. Yes. So we don't have free rein to purchase anytime we want because the insider trading rules that apply.

Speaker 8

I understand that, but I mean it's been years since it's been news other than a Ferrari. I'm sure there's been plenty of windows that you guys could have dabbled and Other than a few 1,000 shares here or there, which is not really an impactful purchase, I just think that it would bode us all well if you guys Stepped up and actually purchased some shares in the open market.

Speaker 1

Yes. Well, I agree and we try to do what we can do when we can do it. There also within the last year was a fairly significant event that was expected to be right On the horizon, which would have made any kind of purchase inopportune. So You do have restrictions even within a long period of time. But I hear what you're saying and I appreciate the question.

Speaker 7

Okay. Thank you.

Speaker 1

Thanks.

Operator

Thank you. And seeing no further questions, I'll turn the call back over to Mr. Harari for final comments.

Speaker 1

Thanks. I'm going to make a few closing remarks and thank you, Paul. This year, our fee income was up 46% for the 1st 9 months of the year, with automotive income up 81% Quarter over quarter and up over 120% for the 1st 9 months of the year compared to last year. Ferrari has shown healthy growth in sales In each quarter of this year for the NERAPIRO SANGWAY and that uses our SPD SmartGlass in the roof and I'm told that further growth is expected in sales in the Q4. We expect revenue in all market Segments to increase as new car models, aircraft trains, architectural and other products using our SPD SmartGlass are introduced into the market.

Speaker 1

And we're very much on our way of becoming cash flow positive and profitable by executing on our business plan. There's a lot of analogies between sports and business and perhaps I'm just making this analogy because I have the World Series on my mind. But in baseball, Less than 2.7% of games are won at the end with a walk off home run. And in football, less than 10% of Hail Mary passes are completed. Statistically, baseball games and division titles are won mostly by hitting singles.

Speaker 1

And if you're investing in Research is based on the battery getting a grand slam home run. It has happened several times, but it's much more likely that your success will Come from the singles and doubles and triples that we've hit and all the preparation that has gone into that. We have long standing seeds placed throughout many industries. And I'm pretty sure that we're well on our way to victory and have a very good team of players throughout the world to get us there. And in keeping with the sports analogy, some of the players on the opposing team are on the injury list and may have even had some career ending mistakes, But not us.

Speaker 1

We'll continue to focus on handing singles, doubles and triples and an occasional home run, And we also hope to throw in a grand slam from time to time. We hope you'll be enjoying the game with us and we're working hard to win in all of our industries. Thank you all.

Operator

The Research Frontiers Investors Conference call has now come to an end. Thank you for joining and have a pleasant day.

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Earnings Conference Call
Research Frontiers Q3 2023
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