Q4 2020 Research Frontiers Inc Earnings Call
Okay.
Good afternoon, ladies and gentlemen, welcome to research Frontiers, and Investor Conference call to discuss the fourth quarter and full year 2020 results and recent developments during.
During todays presentation, all parties will be in a listen only mode.
And following the presentation. The conference will be opened for questions by pressing star one.
This conference is being recorded today a replay of this conference will be available starting later today and the investors section of research Frontiers website at Www Dot smart glass Dot 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 <unk>.
Significant factors that could cause results to differ from those anticipated are described in our filings with the S. E C.
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 either in their presentation or as part of the Q&A session at the end.
And some cases the company has responded directly to email questions. Prior to this call or will do so afterwards and order to answer more questions of general interest to shareholders on this call.
If you find that your question has been.
Substantially answered as a courtesy and to allow time for other shareholders to ask their questions. Please remove yourself from the queue by pressing star two.
Also we ask that you keep your question brief and the interest of time.
I would now like to turn the conference over to Joe Harare, President and Chief Executive Officer of Research Frontiers. Please go ahead Sir.
Thank you Paul and good afternoon, everyone and thanks for being here.
I'm going to try it today, because we have a lot of ground to cover to incorporate a lot of the questions that we did get part of the call into my presentation.
Things were definitely going to be talking about today, our Cadillac and.
Airbus Galaxy and even view.
Yeah.
Last year at this time, the world began to shut down.
Some people said the world did pause and some people view this as a complete reset and the way we do things.
It has been both negative and positive for research frontiers.
COVID-19, and not only has affected every business and the world and also took a dear my Dear father in law on April and my father six weeks ago.
Many of you have also lost loved ones since last year and I'm sorry for your loss.
My father, and Marine Surety was 104, when he was generally taken from us.
The wonderful lives filled with friends family and hard work and success.
He also proudly served this country and U S military counterintelligence during World War two.
Some of the things. He did back then could have been put into a moving.
And they have not been classified.
Helps toward a plot that could've changed the course of the war.
I am proud to have been a sun and to learn so many things from them throughout my life.
Despite adversity, we move forward and research front there is definitely advanced this past year, despite the global pandemic and supply chain issues that affected all industries and continue to affect them today.
So let me take some time this afternoon to reflect upon and discussed with all of you.
Last year and the year to come.
As outlined in prior conference calls, our revenues and automotive for 2020 were affected by two factors number one and industry wide production halt due to COVID-19 and to the end of the nine years that we were on.
On the Magic Sky control Smart glass roof option on certain models of cars within John.
You saw this and the first three quarters of this year. So the fourth quarter revenue numbers are pretty much in line with this.
Offsetting that and automotive where some very important positive developments.
Our SPD Smart film licensee <unk> announced in April a series C investment from under a motor company and Avery Dennison among others. Since then things have been moving even more quickly than originally expected within Hyundai.
At the end of our last conference call in November I noted that and automotive we may cause more energy efficient.
The reduced cotwo emissions by four grams per kilometer and increase the driving range of electric vehicles by up to five 5%.
We also make people more comfortable and safer and protect the interiors of cars.
And as badly as noted in their public presentations about the future of sunroof within badly there.
As a greater need for smart glass roofs, because of the movement towards fixed non movable panoramic roofs and cards.
And we noted that SPD smart glass can also reduce weight and the roof by up to 13 pounds and eliminate the need for 54 components.
This reduces costs and assembly time, and further increases driving range and reliability while Ken.
Contributing to the stability of the car on the road.
Let me also take a moment and note that certainly is one of the companies that recently announced that they too were going all electric joining a rapidly growing list of major automakers that have announced that they are moving towards only offering electric vehicles.
For those that listened to our last conference call I said that I believe that the auto industry and certainly hearing our message.
Since then.
This was shown to have indeed been the case.
And late July and drove the Detroit to sign a license agreement with <unk>, the world's largest producer of Sun visors.
On that same trip I met with several other automotive manufacturers, including General Motors.
It seems as if our message about the benefits of using SPD smart glass technology and cars, especially electric vehicles was received loud and clear.
After numerous development meetings and discussions that started at an industry conference that I spoke at several years ago cash.
<unk> announced in January that their new ultra luxury all electric flagship vehicle, the celestial and we'll be coming out and offering and SPD smart glass roof that gives passengers the ability to control the amount of light coming in to four segments of the large patent roommate panoramic roof on the celestial.
They launched its flagship so let's take at CES and we were pleased to see that almost the entire teaser video about this magnificent vehicle featured our SPD smart glass roof.
Subsequent articles have focused on our roof as well.
Gms all electric strategy makes us development, even more important on it and.
And I expect that there'll be other car models within GM that use our technology using the Celeste <unk> program as a platform for development on many other cars within general Motors.
Like with Hyundai The press has been speculating that this car will come out sooner than they expected.
Because of this newsworthy event. Since then research frontiers has been interviewed by a major automotive publications, such as automotive news and auto lines.
This past weekend Ward's automotive news and other major publications on the auto industry feature to us and the benefits that we bring to cars, especially electric vehicles.
I urge you to check out some of these articles and videos on our website.
Purely and these successes were good old fashion and hard work and determination that has been the hallmark of research frontiers.
Hard work.
And by a very lean and mean operation and supported by the best performing Smart glass technology, and the world and by large investments and production capacity automation and by teams of people at our licensees around the world.
And none of US left the pandemic slowed us down or reduce our determination.
Also there have been firm and important and movements of SPD smart glass technology and new areas.
One new area was adoption of the SPD and a totally new vehicles and the automotive industry. You saw and example of this with the Cadillac and <unk>.
And others that we and our licensees are working on are yet to be announced.
Yeah.
Another important new area that we moved into this higher volume and higher volume segment of the automotive market.
With the lowering of the cost of our technology, new markets and automotive such as the high volume mid level market on.
And now working with us.
And of course, the new fast growing market for electric vehicles around the world.
Also new aircraft such as the Airbus <unk> hundred 20 VIP jet.
Airbus has already announced orders there are 15 of these transportation category size Jets.
Each of these day to 20 aircraft will have SPD electronically dimmable windows covering 50 structural windows.
In addition to the Airbus <unk> hundred 20, there are a number of other new aircraft models that have not yet been announced by our licensees and the aircraft industry.
Vision systems and spec any so claim on.
Like us they need permission from their customers to say something but that does not mean the business with these customers are any less real or the work. These licensees that achieved this and a less impressive.
Other new areas are more yachts and consumer electronics and architectural applications.
The architectural market uses twice as much on the world's glass as the automotive market.
Smart homes and buildings are potentially our largest market as evidenced by the high valuations that some of our competitors are aspiring for just and this market alone.
Let me take a moment to congratulate view electrochromic on ringing the opening bell on NASDAQ on Tuesday, we now have another company and the smart window industry that is on the public market.
It will be quite interesting to finally have more information about their operations.
And while it was while we are still on the topic of the architectural market.
As many of you know from prior conference calls with the opening of <unk> Stuttgart factory and the fourth quarter of 2019 and its ability to make SPD film one eight meters wide. This allowed us for the first time to practically address the large potential architectural market.
And connection with competitive bidding on some large architectural projects for SPD. We recently learned that we actually have gone from having a size disadvantage and I referred to the days when SPD films were only coated and one meter width.
Now, having a size advantage over electrochromic.
And if they can do similar with the Galaxy film, but have limitations on the height of the window and of course, the bigger and electrochromic windows gets overall the slow rate gets with 10 switching taking tens of minutes with electric film mix compared to two seconds with SPD, regardless of the size of the window.
I am pleased to announce to you today.
Since the ceremony to commemorate the opening of their factory and December 2019 <unk>.
<unk> made further improvements and the efficiency of that line and even has made large investments to expand further their production capacity.
I witnessed firsthand during my trip to visit Galaxy and December 2020, and so on more of this progress on Tuesday.
We talked about new markets.
Next let's talk about financial stability.
Why was this important on it.
Our financial strength, and low overhead and operating costs enabled us to survive and even thrive during the terrible world events of 2020.
These resources have also enabled us to move forward with firmness.
As of the end of 2020. Your company had working capital of $5 2 million, including $4 8 million and cash we continue to have no debt and have been debt free for 25 years.
We have had very steady low and predictable expenses and our cash burn now is even lower down from prior levels to about 400 to $450000 per quarter.
So while our cash on hand is 110th of the quarterly cash burn rate of our most direct competitor that still means that we have plenty of cash that will last us at least for the next 33 months.
I've emphasized that it is important to us to make sure that we are operating as efficiently as possible.
To make being cash flow positive easier to obtain.
And our expenses have continuously come down 2020 was the sixth consecutive year that expenses were lower than the year before at your company.
We expect this to continue in 2020 one.
Compared to 2019 total expenses in 2020 decreased by over $1.3 million.
The company's net loss decreased by $1 million $468114 to $2 $3 million or <unk> <unk> per common share for the year ended December 31 2020.
This compares to a net loss of 13 cents per share almost double in 2019.
And I want to point out that this was our lowest net loss and 26 years.
So now let me take some other questions that shareholders have sent me.
Okay.
Sure Michael said that.
A number of questions some of which recovered about Hyundai and about <unk>.
And let me take one of the ones that we didn't cover yet.
And.
I have heard that <unk> may be involved and making the Apple card I know <unk> as plans for SPD and a future vehicle and.
Anything you can say about possibly SPD being in a future applecart.
Okay.
Let me address that question.
Of course, as you know, we cant announce things before they've announced and actually.
On a couple of companies have gotten into trouble pre announcing and.
Involvement with Apple.
So.
Something that everyone on the industry takes seriously Fortunately none of those companies are involved with SPD technology that at least information but.
We have to be very careful I did say, though Chuck that one of the things you can look for and getting an idea of who is working with our technology.
And this would be something that would exist.
Often before we have the ability to announce it is look at the patents that have been filed that mentioned SPD technology and in fact, Apple has a patent.
Mentioning us.
And was recently published.
Rick I alert asked.
The celestial and Gm's plans for.
And how it fits into Gm's plans for 30, new electric vehicles by.
2025, and their new initiative and also about the relationship between <unk> and research frontiers.
And as I said earlier I believe that the celestial because just the development and platform for a number of other vehicles within general Motors.
And for SPD and we've seen this happen with other automakers to wear a program manager at the automaker.
Automaker will get funding to develop something like an SPD product and in our case that's happened several times in the past at Daimler and at Mclaren and then you see it migrate fairly quickly and to other cars as well because once it's proven and as they say on the shelf within these.
Automakers.
They come to use it as a design solution. So yes, I do expect.
The celestial to expand to the other vehicles that GM is introducing by 2025 and especially on the electric vehicle market.
And then not the only one that as I mentioned.
You also asked about a relationship between research frontiers and Galaxy, It's a very very close working relationship.
We roll up our sleeves and shoulder to shoulder we work on projects together.
These projects, sometimes involve automotive sometimes they involve aircrafts.
And sometimes they involve architectural and Theres a lot of.
And good collaboration going on between.
On us and the marketing and technical teams at <unk>, and I must say, our other active licensees as well and they've been a great partner and we look forward to continuing to be very close with them and work side by side with them.
Also there to answer another question, we got about.
Some of the recent projects that they've announced for PDL see remember this was the original business. So they're going to have a number of <unk> projects and the pipeline.
But for the new architectural projects SPD is.
Pretty much uniquely designed for these types of smart besides and.
And modern buildings and that's something that is being presented and encouraged by <unk> on a daily basis and.
Their contacts and their <unk>.
Relationship with the architects on these projects has been very helpful for us so whether it's PD L. Crs PD.
That makes it a lot easier for more and more SPD projects to come on line.
Some of the other questions, we got from investors before the call.
And <unk>.
Can I comment on Daimler and the S class.
It's still somewhat on determine what the future of the S classes like its predecessor.
The one that we were on the Magic Sky control option did not come out and the first year of the car is introduction and this was mostly a marketing decision by Daimler at the time and not due to any technical limitations with SPD smart glass.
We still not heard definitively from Mercedes about whether magic Sky control will become a mid model introduction on the new S class.
And most probably won't be on the new up sell because the ourselves moving to a canvas roof, which precludes the use of any glass on the roof.
But I am happy to say that we are working with Daimler for introduction of SPD Smart glass and other vehicles, both electric and internal combustion.
And using more glass per vehicle that was ever used before.
Yeah.
Yes.
Okay.
Well, we discussed a lot of exciting topics for today and I'll now ask our operator, Paul to open up the conference to any additional questions people participating today might have had that we haven't already covered and some of them and the interest of time, because we do have more to cover and the closing remarks.
You'll enjoy.
<unk>.
We may have to take offline, but I'll take questions of general interest to shareholders.
Okay.
And if you would like to ask a question. Please press star one on your telephone keypad and now.
It will be placed into the queue and the order received please.
Please be prepared to ask your question when prompted.
Once again, if you do have a question. Please press star one on your phone now.
All participants are now needed.
Thanks to on mute your line.
Yeah.
Mr. Jim Ginsberg. Please go ahead.
Yes, Hi, Joe.
Hey, Alan how are you.
Pretty well thank you.
Just one question do you expect to appoint a new chief financial officer at some point here.
I don't know right now and acting as interim CFO and on.
And our 10-K process was quite smooth.
So.
To be determined.
Okay. Thank you.
Thanks.
Okay.
Thank you Mr Ginsberg, our net.
Next question comes from Michael Kay.
Your line is open.
Hello, Joe Good to hear from you, Joe and Mike on your sales persons.
Let us say I always thought that.
All of these have it on.
[laughter] taste and it now that yield is a day when will they be trading as a public company do you know.
Yes.
And the opening bell on Tuesday, and they started trading on Tuesday.
And I'll have some remarks about about that too, but not as many people know.
Two companies and our smart glass industry went public and the last.
A few weeks and.
A company called crowd Electrokinetics.
Small company I would consider them development stage that no revenues last year and.
And.
And view a large company that has about a 12 year history and.
<unk> has a multibillion dollar valuation and the and the public markets now.
And I wanted to ask is if you were.
And what would be the competitive advantages that research frontiers has overview and this other company in terms of quality of the technology in terms of price and other factors and vice versa that has with these other companies have any competitive advantages over research frontiers.
And that could be attractive to potential.
Uses of light control technology.
Sure, Okay and Thats a good question.
Hard to compare crown electrokinetics, because theyre not out of the lab, yet as far as we can tell and.
They are using electro ferretti technology similar to what he inkjet.
And so you have the limitations that were inherent and electrophoretogram <unk> in terms of use and smart windows, because that's why you haven't seen them to date.
<unk> is using electric chromic technology, similar to what say juices and they both have.
Very similar limitations first of all you have to cope this on glass.
Now.
You may say, well what does that do it means that at the factory, whether it's in Minnesota or and Olive branch, Mississippi, That's where the glass is made and then it has to be shipped somewhere in the world to be used.
And I. Thank all of our licensees know from painful experience that it is.
Much easier and better to ship film and habit laminated closer to the job site than to ship fragile heavy glass throughout the world. So one advantages that we have the logistics of being a roll to roll coated film system that allows you to be eliminated.
Close to where high volume production as needed.
And other advantages that electric from X take tens of minutes to switch and that gets even slower as the window gets bigger and where that size dependent.
We're not size dependent so we don't think two seconds or so to put it.
Okay.
And in fact change.
Hello.
We have a low cross talk there yeah.
Why did.
And that price does.
And the other company undercut research frontiers in terms of price.
I believe they will they are.
They're subsidizing heavily.
Their bids on projects because they are trying to gain some market share.
And that didn't seem to work and the past for them or for other licensees that net licensees other competitors that have been.
And on the road that basically.
You need to build a business that is going to be profitable.
And have the economics to support it and I believe that if you look very carefully at some of the programs that are out there that give us sponsoring for example.
You may see that the subsidies are a lot more obvious.
And are there certain markets that view and.
And the other company.
It does not.
Go after that only research frontiers go ways after like maybe in the auto industry on the trains boy do they yes, yes.
Yes, they're only on one industry architectural and I think that maybe does the and.
Importance of that market, if the architectural industry will support a multibillion dollar valuation.
For a company like view.
And then.
If you add to that our bread and butter, which is just starting to be architectural now because of the wider film that's available but.
We could also address automotive aircraft marine and consumer electronics, just a whole host of other museum, just a whole host of other.
Applications that they can't touch so another advantage there is that we have.
And the ability to go after all of these markets and we have and.
And we're.
Well penetrated the pillow and the price of SPD.
Is that still ongoing or are you happy with absolutely.
Absolutely.
It's going to be ongoing forever.
If I look at the <unk>.
The retail price that I see quoted today versus.
Five years ago.
A third of what it used to be and it's getting lower because of the efficiencies of scale and we know that based on.
On the factory, especially in Stuttgart, and its capacity and its efficiencies that it could be even lower.
And with volume so I expect.
Cost to come down.
And continuously.
Okay. Thank you this was very helpful and informative.
Thank you Michael.
Okay.
Thank you Mr. Kay.
Our next question comes from France's Katrina.
Your line is open.
Yes, Joe How're you doing.
And how are you.
Sorry to hear from your loss.
We believe all that and lots of from here.
Yes, we have a very varying degrees of shades.
<unk>.
Research Frontiers, and if there are how is that actually created.
So we could actually to invoke yes, we could share too and our intent from dark to clear anything in between May simply turning and up.
We're looking at up to a smartphone a alexa speaker pretty much any control system, you could think of you could controllers and various <unk> and potentially some other technologies are really just on or off we can actually regulate light as well as block it.
Good question, but how and how dark and lit actually get we would get so we hit that you won't be.
You will see on so.
Yes, so we can block 99, 5% of the light with a standard 90 day Micron film and.
And some of the films I've seen could go even darker.
Yes.
Have you ever combined Galaxy P. L C D and.
Research and so together.
We do and some markets like the aircraft market.
Do you see that done and quite often where youll.
And a PD L C and and SPD film together.
And what kind of and effect will that create.
And it gives you a kind of an interest in combination of benefits one benefit is that.
Regarding that half a percent of life thats still coming through with the SPD Youre attenuating that but also what you can do is you could actually get privacy and still bring light into a vehicle or into our structure.
So net Mr dice them back.
Vacuum Fame has a combination SPD PDL.
<unk> LC window on his yacht.
And the reason they did that is let's say if he wants to changes close he wanted privacy and as state room, Greg to changes close, but maybe he doesn't want to turn on the lights, maybe wants to bring daylight again during the day. So he could put it and privacy mode with the PD LC or you could use the SPD to block the heat light and glare coming in so and yes, it's being done and a number of them.
Yes.
And what kind of a cost is involved with using two different types of so.
Well.
Each film ads ads across two at PDL C is actually less expensive right now that SPD.
No.
It is feasible to do that and in many markets.
And one last question.
Every Dennis and what we're very involved in mid day.
Average Denison as an investor and Galaxy.
Years ago. They were also a licensee and still are a research frontiers for a different application, but their main function now is they make very very advance inter layers. So a lot of this came from their acquisition of a company called Nida coatings that was in Israel.
That was really well known for making a number of different functional coatings, including a number of energy efficient coding so their involvement and I believe.
And we'll be.
To further improve the functionality of SPD film.
Okay.
Okay. That's all my questions. Thank you.
Thank you.
Our next question comes from Thomas Mccarthy.
Your line is open.
Hi, Joe.
Hey, Paul and Mike like everybody else, so sorry to hear about your father.
Thank you.
Okay.
Lower fees and automotive and aircraft markets.
Where according to the press release.
Partially offset by higher fee income.
From the display market.
Yes, and you tell us about the.
Despite market, how its doing its growth and future anticipated growth.
You don't break the dollar amounts out right.
Right right right yes.
Yeah, and nor can we I don't think Panasonic would like that.
So.
The market is emerging so it's something that everybody has.
Very enthusiastic hopes for that this would be a good market and it's the combination of OLED technology further display application and.
SPD to make that more vibrant, especially and ambient lighting.
And you see the same thing and.
And what BMW for example had at CES this past year.
<unk> was and this year was the year before at the beginning of.
2019 pre COVID-19 it was a combination SPD and display technology, because lighting conditions are always changing inside a vehicle as you move or different times of the day and you want your instrumentation to be very readable, just like you want your Tvs to be very reasonable, especially if there.
Doubling is a window and your and your smartphone so.
Our technology really allows that to happen for the first time.
How okay.
How big a market is it currently.
And.
What are the what's the thinking about its growth potential and it's so at what rate is it growing.
What can you tell us about that.
The only thing I can really say is that Panasonic is not the only player on this market.
And there is some other giants that are also working in this space with us so.
I think a number of companies see this as a very large market, but that's all I can go in and say at this point.
Okay.
Thanks, Joe.
Thanks, Tom.
Okay.
We have a question from art Brady.
Joe and his opening.
Alright.
And then the applications with Jack from dry Ash, where does that fit into.
This structure.
New uses for things like SPD.
We've used polycarbonate, our flexi glass and acrylic and other plastics and conjunction with SPD for years.
One of the nice things about being a film based technology is that we're somewhat agnostic to what materials are used in conjunction with us. So you can put a broad range of functionality. So example, if you are looking at a bullet resistant window.
And Thats, a multi layered clat of glass and polycarbonate.
And.
Yes, some of our licensees like ADP and <unk> so claim on.
Our very very good at matching these materials. So you get really good optics on it and.
Bullet resistance.
And also Joe Kevin will give us.
Prospective timelines as to when we might hit.
On a positive inflection point.
Oh, I think we're hitting inflection points all the time.
I think what youre going to see us as new cars, they're introduced Youll see revenues spike up because that's just the nature of that type of business, where you're in the automotive industry and you get awarded a program.
So you're going to see that youre going to see new users you are.
Going to see.
Big projects and architectural so all of these things are going to happen and while we're on.
Working of course on the topline the revenue side to generate revenues and and all of these markets. We're also working on the.
Below the revenue line and reducing costs, so that we become cash flow positive.
Much sooner and <unk>.
See we have a pretty modest burn rate right now and we've been working at that.
Continuously for six years and.
And.
Quite successful and reducing expenses too.
Joe.
But to me.
And a concept called smart airports, where airports are actually.
Refurbishing.
Good day outs and Im wondering if you.
And you've taken any initiative towards airports.
Right.
We have we have our licensees have certainly done that also.
These structures and it used a lot of glass so.
<unk>.
It's a natural fit for us.
Is there anyone out there marketing specifically to them.
Oh, absolutely absolutely.
Is that true gouging.
And so a number of licensees.
It's it's a natural use of our technology. So they're all moving in those directions, where there where you're going to have to the lower hanging fruit and.
Aircrafts airports are one of those.
Okay. Thank you.
Thanks Art.
And Q as a reminder, if you do have a question. Please press star one on your Touchtone keypad now.
And we have a question from Bruce Danny.
Your line is open.
Hi, Joe how are you doing.
Hey, Dr. Dennis how are you.
Very good again, sorry from your loss.
Thank you.
I have.
A couple of questions I'd like and discuss.
In relation to the display market.
And I guess by Panasonic are you getting any feedback on the acceptance into the marketplace, particularly the commercial applications.
We believe it's being well received and all of the markets.
<unk> approached this kind of and a multi pronged way and some cases you do.
Using it for things like Museum exhibits, where you want and multimedia experience. If you look at some of the earlier Panasonic videos about the transparent screen product.
It was geared towards that and industrial uses and retail uses.
And you're seeing kind of a.
A multipronged approach as to how this gets deployed and the marketplace and Panasonic.
Was supposed to be using this at the Tokyo Olympics obviously.
That did work out timing wise, the way that they want that.
But they've always been a very big sponsor of the.
On the Olympics.
And then perhaps wait and.
Especially their home their backyard and Tokyo.
Sure.
What about the.
Commercial acceptance.
And so no brainer, four storefronts and stock.
And you gain any clear feedback on that have they are penetrating that market yet.
Yeah, I wish I had more feedback from the licensees about specific comments and different markets. We just see kind of the raw numbers. So I can't really comment on it.
I see.
And then the architectural market.
Have you gotten any feedback or are there any major installations that are being.
Projected now and where we're at.
Yes, yes.
And yes were being spoken to some.
And some major architectural applications.
What kind of timeline.
We expect before we see those start taking place.
It varies.
Good thing about putting our glass and is that you don't need a lot of lead time. So some of these can be nearer term. Some are more long term you know.
Huge.
Corporate headquarter type projects showpiece type things.
Great. So that that's really really in the offing then.
Yes.
And there's always slips between the cup and the lip.
On any project so it could be timing wise, it could be budget wise or whatever so the way you deal with that as you just try to have as many irons and the fire as possible at any given time and push on all of them.
I see.
And the last question I wanted to ask is.
Carmakers and working on side Windows Rearview mirrors and.
And.
Some control on the windshield.
And embedded visor is long and rice oriented.
Yes.
And then mcclaren is the only one that's publicly done that and their speed tail.
But but.
But theres been a number of other automakers that are.
Yeah.
I wouldn't say playing them and they are developing that.
A better term.
That's good news because it you can do and you want about the S line of the vehicle and right words, we recently was writing about that about the the Sun visor application and making the top part of the windshield smarter.
Yeah excellent okay, well, thank you Joe.
Thank you.
Our next question comes from Leonard Lee Zone.
Your line is open.
Hey, Joe.
Hey man.
Yes.
Couple of questions. When you were speaking about on die early are they actively using SPD and the cars and Asia now.
I can only say, what they've said, which was saved noted that they hope to have SPD and future vehicles.
That doesn't tell you much because every vehicle coming out starting tomorrow and the future vehicle.
Yeah, well I think its electric vehicles come out I think they were they were looking for.
21, B and the start of the electric vehicles coming to market and then right up quite a bit and 22 show.
So we're going to talk about that a bit more on my closing remarks, if we could and forget defer that and the interest of time on theoretically for that.
And the only other comment I question and I have is I know originally they were using the divisor stuff and the bell helicopters as I remember that's total.
The other thing going on.
Is that still still going on yes, yes still using it.
Number of helicopter bottlenecks.
And by vision systems, and and snapped back all have.
Both fixed wing and rotary aircrafts.
Got it okay going on a lot of these haven't been announced so.
Yes.
They are there, but you need permission from the customer to talk about.
What they are using.
But the easiest way to see it will be and the revenue stream.
Or and that your private helicopter.
Yes.
Okay, well, thank you, Jeff and I appreciate it.
Take care.
Okay.
We have a question from Jared Albert.
Your line is open hi.
Hi, Joe.
Hey, Jared.
Hi, I had a call.
Real softball kind of questions.
If we look back 10 years ago toys Jared Albert.
Follow up questions.
This is a different approach today.
Okay.
If we go back 10 years, there were articles, we were glad and enthusiasm about Mercedes there were articles about Mercedes eventually replacing older traditional sooner.
And with SPD.
And then all of the CDR, India slow glass towards use of music and.
And then we went through prudent cost reductions, we're going to be the thing that drove it almost to a sufficient condition.
And into the S class through two to three would have been the platform to really take advantage of the volumes and it would go into the E class and that hasn't really happened on the last conference call. You surprised me by saying that we would be rewarded I haven't heard you see anything like that.
And I wondered if you could share your thinking.
And why this time is different rather than the technology have you been a value to be proved to be reliable and then dying on the volume for automotive applications.
I think that's an excellent question so.
And I don't think its died on the vine and I think defined as getting resurrected as I mentioned.
We are.
Working with Daimler on other vehicles, besides the ones that you know.
We've been on.
Or their successors.
<unk>.
I think that if you look back at 2010 2011, when the <unk> came out there was simply a matter of trying to increase a little bit by a couple of inches the headroom and the vehicle.
Now Youre looking at a world which is electric.
We're five five percentage.
Increase and driving range is huge.
So I think one of the things as it becomes almost unnecessary feature on every electric vehicle, if youre going to compete because battery technologies battery technology.
And if you are able to incorporate things that can serve the energy.
And like and SPD sunroof or side glass of beer glass or Sun visor.
You're going to have better driving range for any given battery and I think thats.
One of the major difference is the other differences caused have just come down and down and down and now when you have more than one film suppliers. So even though costs have come down and you had competition on the end product side and.
On the glass laminating side, the Asahi and Pilkington to the world.
And where they were sharpening their pencils.
When you only had one filmmaker that wasn't happening throughout the whole supply chain now you have some competition to even among filmmakers and Thats why I think you've seen such a dramatic decrease and the cost of the technology. So.
I think what's different here also.
Sure.
And so it's.
Prices.
Okay, I gotcha, well specced in.
Expect and is that day.
And once SPD or some switchable and a.
Project.
The architect and designated it usually designated with such.
Particularity that it's when I say expect and you almost have to be SPD. So and example of this would be.
On a project that says we're going to have 8700 panels of glass and going to vary their tent and sent us the very and less than 30 seconds.
Not much stuff from the world can do that.
How many steps between spec and and a purchase order.
I mean, they're not.
And he is and yet at the level of purchase order, but as it did this past holiday.
Yeah.
Now it could be actually like I said like I said.
And as specified in and then take it out.
Now all of a sudden you hit a budget snack.
You didn't raise as much money as you thought for the project interest rates went up.
No.
Whatever and.
And things change.
The proverbial slip between the cup and the lift that happens on every project.
Out there and not just ones that are <unk>.
And again SPD so.
It could mean something very firm.
And it can mean a strong preference towards.
SPD, but if someone comes in with something with comparable performance.
They'll consider it.
But there's not much stuff that is comparable performance to us.
Which we'll talk about and my closing remarks.
I'd like to maybe move on to the next question because there's a couple more on the Q and I want to give everyone an opportunity.
To ask and then to the extent I have announced.
Alright.
We could take it offline and and respond to anything to add.
Okay. Thank you thanks.
Yeah.
Our next question comes from Dennis Laval.
Your line is open.
Hey, Joe.
Hey, Dennis how are you.
I'm doing fine and the Thunder.
Right here.
And I was wondering if you could address that.
Green market.
E laptops.
And I'll phones.
Tablets.
The net Panasonic is doing and on Tvs is there a potential application and that marketplace.
There are potential applications and there are some positives and negatives to putting any switchable.
So one of the things that people would realize that.
And any kind of camera that happens to be in your home.
As taxable so.
A lot of times now Theres talk on putting a privacy filter over the camera lens.
So that you can turn it off so even if someone accident to your phone they can.
They can't see what the phone is pointed at.
Or is there other devices true.
Amazon Alexa speaker or something like that.
On the negative side and he kind of switching voltage that's going to attenuate light. So if youre trying to get a very bright display.
It will be good and outdoor conditions.
It definitely be able to control the glare coming in from ambient light but.
Youre going to reduce the glare.
Light coming through a backlight so.
It's a.
It's something that requires kind of thought and engineering to put it and something like a cell phone.
Where we're funding our real sweet spot, though as Dennis has that.
When you have something that is a.
Where there's a transparent material.
Think of a wall.
A window that turns into a TV.
And so Panasonic is doing or a heads up display on a windshield, that's what BMW is doing.
Those are the kind of things, where you really need something like an SPD and theres no. They don't have the same tradeoffs and I was talking about before.
And they're all positives.
Yeah.
Oh, Thank you very much.
Thank you.
Our next question comes from Paul Petros.
Your line is open.
Hi, Joe Thanks, a lot for a day Paul Ashton.
Sure.
I I have a question about the payback period for a typical let's say commercial install and then the second question is are you all working with local governments to try and get like subsidies or tax breaks too.
Net install.
Right.
Okay.
Excellent questions Paul So in terms of working with local governments, we do have.
On trade into some of the people that are writing building codes and things like that.
Which is helpful.
And even if youre not mandated you're often encouraged.
For to use energy efficient technology and.
And here in New York, Our Mayor was talking about Windows buildings at one point because of the energy efficiency of not having windows to look out of and.
And my reply to that and my rebuttal and also Rob.
Rama Cory the CDO view at the same opinion and our editorial he wrote US no no don't don't make these things without windows. It makes the windows more efficient and income smarter.
100% right, but.
That's the way to do it and these things now you start to go into payback and payback is really interesting discussion because of course, there's going to be energy paybacks, you're using a smart window and it's not just the energy savings through the window.
Okay.
And on that denigrating amazingly, good solar heat gain coefficients on our windows.
It's also.
The interplay between.
The window and interior illuminated both hardware and energy costs. So you break daylight and daylighting into a building.
Yeah, well the window itself may be about 18% to 20% of a buildings and introduced signature.
Or use of just coming from energy leaked through the windows that 25 to 35 percentage coming from illumination.
So think about building a building where you put it in a lot of lighting because you have very heavy tint on your window. What are you going to spend more on the hardware and more lighting and you're going to spend more on the energy.
And if you could change that dynamic where.
With just a flip of a switch and very little power youre, making the window much clearer so you're bringing in day lighting when you want a lot and more energy efficient and then take it one step further.
And then the northeast you're designing your buildings to be efficient and July and August.
The peak summer months. So you have your mechanical rooms, being much bigger and they need to be and.
And for 10.
10 months out of the year, you're building mechanical equipment is working at 30% efficiency. So you can have those benefits too so it's a very complicated but.
I think intuitive process that youre going to have these paybacks.
And switching to a dynamic system.
And then.
No.
From there you talk about performance.
Is it better to have a faster switching spent window and it's always better to have real time adjustment. So switching and two seconds gives us a real advantage of that market.
Is it better to have a uniform tent electrochromic don't have a uniform 10.
They'll do is they'll start to change on the outer edge of a window and move their way in and.
And.
That's sort of a little bit of a funky visual effects. So if you could have something that's very uniform and the switching that saw some were statically pleasing.
Yeah.
Oh, Oh, Okay. So could you give maybe lets say a 15 storey building.
And Manhattan gets.
<unk> gets a bunch of sunlight.
And what would the payback period being years, let's say if day.
And it really depends on us it really depends on what it's really it depends on whats there or what the exposure is what the usages and one of the challenges. The government has had is trying to model. These things because it takes three buildings that are exactly identical.
Same exposure same size, you know et cetera, one as a retail environment when does the law firm and one of the accounting firm.
So the law firm and get out people working from a day am to midnight.
Okay. The accounting firm you have people coming in and out because most of the work is done on the field and the retail store is also a different dynamic how do you model, what the energy efficiency and so on.
And that's kind of.
You know one of the variables that you have to factor it and what is it being used for what's the use.
Oh.
The building.
Alright, great. Thank you very much.
Youre welcome.
Okay.
We have a question from David Clean your line is open.
Hi, Joe.
Hey, David.
Yeah.
I'm wondering you know theres a lot of different technologies.
Users of the technology that have been called out.
You know from.
And from you guys and you know there's a lot of stuff that people are really kind of trying to wrap per head around.
Are there any.
Uses for the technology.
<unk> debt.
Research Frontiers, Hasnt shared or that you think would really surprise surprise us.
And the next year or so.
Well I was totally surprised by <unk> innovative use of our technology.
So yes, I think there's always going to be things that are going to surprise, even some of us to think about this stuff 24 hours per day seven days a week.
But.
I think also.
And what surprised me and maybe more practically.
As.
For the last four years or so we've been talking at industry conferences about.
Increasing the driving range of electric vehicles, but electric vehicles really havent accelerated.
Reduction or become mainstream and until like this last year. So some of the things that surprised me is how fast. Some of these uses or are coming up like electric vehicles, and we'll talk about that and the and the closing remarks.
Yeah.
Sorry, thank you.
My pleasure Thanks, David.
Okay.
And our last question comes from Robert Shapiro.
Your line is open.
On the call.
Sure.
Yes.
The and the architectural market would you say.
And so much classes.
Okay.
Uh huh.
And and retrofitting.
We could do both.
Yes, we could do we could do both and some of the things we're talking about are retrofits and some of the things we're talking about.
New glass being installed.
Yeah.
And it seems to me that the government is going to be encouraging and the great Big way.
The energy efficiency and building. So that's why I was curious about that versus fee.
100% right.
100% rate and also when you consider that most <unk>.
Say buildings and the Gulf.
And buildings are using monolithic old glass, there's really a lot of room for improvement there.
Which which would take and we'd say, it's the highest margin.
And make that determination.
Well the same film goes into aircraft automotive and architectural.
So in terms of.
The film its the same price, but the price of a bolt on and aircrafts as more than a bolt on up.
And the office so.
Probably the highest margin is and aircrafts.
You would think that.
Automotive, where there the purchased and guys, who usually pushing pennies would be the least likely market for our technology and it's our biggest revenue source.
And cartons.
Yeah.
And so.
It's going to be.
Is gonna be.
It's going to be something where.
There'll be good margins for our licensees and with volume.
The cost to the consumer will come down, but everyone and we'll make money.
Glad to hear that.
Thank you very much.
Yes.
Thank you.
And we have one additional question from August Berman.
Your line is open.
Hi, Joe.
Hi, Robert Hi day, he just had a couple of questions.
And it seemed like it seemed like ribbon with that with a few and just.
Based upon seeing it in person on.
Are we okay.
Were you surprised and not see it or.
And just based upon the conversations that I've seen on message boards and such.
And it kind of seems like Ruby and we're planning on doing something with the smart glass and then.
Kind of at the last minute and decided not to go ahead and do it and for their introduction and summer.
And then there were some comments like Oh, well well.
They have a UV coding that can and do.
And do a similar job and my opinion on bi.
Maybe I'm biased.
Share is at the company, but I would think hey, I would want and I glad to be honest way I don't wanted to just have the 610.
Right it can be quite give me.
And any clues in terms of why they didn't go forward with the smart glass.
Yes.
Yeah. So so.
And our number one and the last CES I went through in 2019, SPD was there with a Amazon Alexa controlled.
Control system, so it was pretty cool and I.
Right.
And there with RJ SKU range, the CEO and we were chatting about.
The use of it and it was very much and the plans there what happened between there and their decision to.
Super simplify the roof and they're not even offering.
Yeah.
And.
That much of a variety of roof options on the car.
And just me think that you know.
The pressure of putting a car out is really great.
There's tens of thousands of parts that has to be and their and their systems that have to work with other systems and sometimes you just need to simplify your life at least and the beginning until you get your head above water.
And.
And that may be one of the things and the other might've been cost although costs have come down quite a bit.
There and you are right.
Coating or and IR coding will not.
Duplicate the energy efficiency of and SPD.
So youre not going to get as good of a test and I think there are some examples where tesla is painfully learned that it.
Tried to do root systems that have no shades and they try to rely on.
Just a 10th of the glass and the coatings on the glass to do it and.
And it's been a disaster in the field so.
You know I think carmakers are not infallible they have to learn.
And.
And it could also be that they decided.
And that SPD is the right technology, but it won't be in the beginning introduction of the review.
Got it and.
And then just ask one follow up question on another matter do we.
Do we know.
And I may has finished.
And their trial and kind of just figuring out the platform for the advisors.
I think that we have the platform because when we signed the license agreement. There do you have the launch customer for it. So it's just a matter of engineering and refinement engineering and refinement and coming in at a cost that the launch customer feels comfortable with.
So it's an iterative process.
Got it.
Thank you Joe.
Thank you.
Okay I'd like to now make some closing remarks since we don't have further questions and the Q.
Over the past few months we.
We've had the opportunity to get a more detailed look.
And whether what other people and our industry are up too.
As I mentioned, one uses Electrophoretogram technologies similar to Yankee has no revenues and the last fiscal year.
And the other net comparable revenues in 2018 and 2019 as the estimated revenues from our licensees.
And they managed to lose $441 million, and 2018 and $290 million in 2019 and.
And in 2020, it looks like they'll only lose between.
202 hundred $50 million and.
Maybe lose another $250 million over the next two years.
So their net losses about one to 200 times greater than ours, and they went public through a stock transaction that value them and multibillion valuation.
So.
When you start comparing companies if you start comparing business models and.
And believe me.
I can't tell you how busy we have been fielding calls from new investors and our company.
Who are asking about how we compare to companies like view and sage.
Not so much.
<unk> electric and the kinetics, but I'm sure that we'll get those questions to at some point.
You know it becomes really apparent that from a performance standpoint, switching and two seconds and having a uniform tent switch is better than taking 20 to 40 minutes to switch and having it.
And not be that uniform.
Having hum.
I'll look at their business model and their expenses I think really validates the wisdom of what we did which is broadly licenses to the major glass companies of the world and have them do the heavy lifting and do what they do best and.
Where we're sitting now as a company with six employees.
A very very modest burn rate.
And.
Orchestrating through our relationships and through our intellectual property.
Yes.
Hundreds if not thousands of people around the world that are not on our payroll.
So I think that if you just look at relative business models and approaches to the smart glass industry.
Youre going to see that.
Research Frontiers, certainly has a lot to offer and it's a very positive development for us as a company to have finally.
You know another company with a public valuation as a reference point and the smart window industry.
And I think as Michael pointed out there are only and one of the five markets that we operate and.
Okay.
So we're pleased that shareholders will have a basis of comparing value and operational efficiency.
Okay.
Also in terms of performance and stability of our operations and efficiency of building value for our shareholders I think theyre going to.
Very.
Very favorably.
There's some noise in the background, maybe someone can mute themselves.
Paul you can meet everybody, but me.
Thanks.
And because of the five markets that we're in our.
Our prospects are quite good for delivering vastly more value to our shareholders.
Especially when one considers the rapid expansion of the market for electric vehicles and energy efficient building.
Once again, and automotive and aircraft yachts and consumer electronics.
And now EBIT and the architectural market, where we're being specced in when customers want the best performing and best quality windows, they're selecting SPD smart glass.
And the last year, we doubled the number of automakers, who are putting SPD smart glass and their cards.
Two new automakers made public moves towards adoption of SPD and one of the world's largest aircraft manufacturers did the same and additional ones are yet to be announced.
So.
There are many things that we can say that no one else and our industry can say.
We have the only smart shading technology that has survived and real world application. Since 2001, yes, that's 20 years folks of real life durability data.
We have the only variable shading technology that is put into high volume serial production and on the automotive industry.
We were the first electronically dimmable window and the aircraft industry.
We are the only variables shading technology that has been put on commercial aircraft since 2008.
We're the only variables shading technologies that has been used and tens of thousands of applications worldwide.
We believe that we have the most installations and the fields worldwide.
We the only we are the only switchable shading technology that has been used and the world's fair and architectural applications and fact, the architects of the USA pavilion and replaced our competitors electrochromic glass with ours, but that project. When he saw the favorable combination of cost and performance of our SPD smart glass.
And that will add over 6 million people to see and operate SPD smart windows.
We are the only switchable shading technology that has multiple sources of supply of smart windows, So that customers can choose who they want to supply it.
We were the first switchable shading technology to be used and commercial and residential architectural applications.
We were the first switchable shading technology to be used and yard applications.
We are the smart shading technology that has survived the longest and demanding environments, such as automotive and aircraft.
We are the only automotive smart glass that is not no reported problems across tens of thousands of cars, especially when put in the most environmentally demanding position on the car and sunroof.
We are the first shading technology need to be controlled by a smart speakers, such as Amazon, Alexa, Alexa or smart plug, where smartphone or automatically by a photo cell or other light or motion sensing device.
Okay.
Yes.
We are the only film based variable tint shading system and the world and commercial production with annual coating capacity of one 4 million square meters per year and multiple locations.
We are the only smart shading technology that can be used and a very long or very tall architectural windows.
We are the only variable tint shading technology and commercial production and that does not have just uniform iris effect and switching.
We are the only variable tint shading technology and commercial production that does not get slower as it gets larger and content and two seconds.
We are the only variable shading technologies you can avoid the shipment of fragile heavy glass overseas, we talked about that earlier lamination can be done locally wherever the customer is.
More first we're the only smart glass technology that gives customers a wide choice of which glass company to work with with the only smart glass company that has been adopted by multiple automotive manufacturers, where they always smart glass technology that is <unk>.
Opted for use as standard equipment and on electric vehicles, where.
We're the only smart glass shading technology that has been adopted for use and automotive aircraft Marine architectural museum and consumer electronics.
The only smart window technology that has been given giving public investors full disclosure about its operations for over 34 years.
Well other people try to enter this industry of course, and they're doing so now and hoping for last day public valuations, but only we can say all of this.
Years ago, I challenge any competitor and our industry to give the full disclosure about their projects or at least participate and a head to head side by side comparison and.
Still waiting for one of these companies to accept by invitation and.
And we're obviously not standing still while we wait for the past several years, we've been publicizing the benefits of SPD smart glass to multiple industries.
The World is going Green we.
And we make buildings and their internal HVAC and illumination systems more energy efficient, we make people safer healthier and more comfortable.
A number of recent projects and the architectural building space have unique designs that are enhanced and sometimes only possible using smart glass.
And the past it was brand new startup car companies, like Tesla, and bite and and Fisker and lucid.
Now, it's mainstream with well known and established automakers.
This year alone we have seen announcements of all electric or significant electric model lineups coming from General Motors Ford Jaguar Bentley, BMW, Volkswagen Daimler Audi and the reps the list keeps growing and growing.
Last week, Volvo announced that it too was going all the electric.
Car and driver magazine and made a list of all of the electric vehicles coming out. The article was 52 pages long.
The World is going electric and our SPD Smart glass technology will make those cars travel rather on a charge enhanced safety increased comfort and give drivers and passengers alike and unforgettable driving experience.
We will very much be part of that electric vehicle future and as our investors Youtube will be part of that future.
Thank you all for your support while we focused on this.
Have a good evening.
This concludes today's conference call. Thank you for attending.
The House has ended this call goodbye.