Q3 2021 Research Frontiers Inc Earnings Call
Good afternoon, ladies and gentlemen, welcome to research Frontiers Investor Conference call to discuss the third quarter 2021 results of operations and recent developments.
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 call will be available starting later today in 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 $19 95.
These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed.
Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC.
Research Frontiers undertakes no obligation to update or revise these forward looking statements to reflect new events or uncertainties.
The company will be answering many of the questions that were emailed to it prior to this conference call either in their presentation or as part of the Q&A session at the end.
In some cases the company has responded directly to email questions. Prior to this call or will do so afterwards in order to answer more questions of general interest to the shareholders on this call.
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 questions brief in 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.
Thanks, Paul and Hello, everyone and welcome to our third quarter 2021 Investor Conference call.
This year, we showed our lowest loss in 2006 years.
And I'm sure. It did not escape notice that in today's 10-Q filings and related press release were able to use the word that neither we nor any other smart window shading company was ever able to use before.
We had earned a profit in the third quarter.
As I have said in the past however, because of the nature of our business revenues can be choppy, depending on the timing of projects vehicle production volumes square footage of glass being used in projects and other factors.
We and the other companies in our industry are clearly hunting elephants.
Sometimes we land an elephant or two in the quarter and sometimes we take down a hole.
In my view.
The animal lovers like myself out there, but I thought that the amount of floor was instructive.
This quarter, we had three major new events to.
To involve royalties due in the automotive and fuel markets from licensees past activities. The third was the government contract in the area of specialty automotive.
More information about these developments are in our 10-Q.
Can't say more especially when you deal with certain areas of our government.
Besides landing some big elephants, we had some <unk> had success over the years hunting herds. Examples of this are having our technology go into serial production with decent Mclaren.
We kicked off this year in January with a new customer Cadillac announced at the prestigious consumer electronics show or CES, there were introducing the new all electric luxury flagship this less steep within all SPD smart glass for quadrant roof.
More lead the prestigious publication GM authority with over 3 million readers highlighted the range extending benefits of SPD smart glass and this and other electric vehicles with a highly coveted five 5% increase in driving range. They also noted the significance of the four grams per kilometer reduction.
Emissions when SPD smart glass is used in internal combustion engine vehicles.
But these are not the only benefits 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 sentiments within.
There is a greater need for smart glass roofs, because of the movement fixed non movable panoramic roofs and cars.
We noted that SPD smart glass can also reduce the weight of the roof.
13 pounds and eliminate the need for 54 components.
This reduces costs and further increases driving range and reliability, while contributing stability of the car on the road.
These benefits in the automotive industry were also discussed in many other prestigious automotive publications such as automotive news auto line, the Detroit Free press, Ward's automotive news and others.
Recently, we appeared on the automotive News Daily News program shift and also on the widely followed daily drive podcasts and I invite you to check some of these articles and videos out on our website and our social media platforms.
Yeah.
And with our strategic benefits in the areas of electric vehicle range extension, and reducing cotwo emissions and IC E vehicles, I expect automotive attention activity to continue to accelerate especially when you consider that Hyundai second Sui and others heavily involved in the automotive industry have made substantial investments in our.
Treat through equity investments in our licensee galaxy.
Okay.
Let's talk about important developments in other key markets for our SPD Smart glass technology.
Airbus announced this year that they are a $2 20 VIP jet.
Would have SPD smart glass chronically dimmable windows.
Airbus has already announced orders for 15 of these transport transportation category size Jets.
Each of these <unk> hundred 20 aircraft will have SPD electronically dimmable windows covering 50 structural windows.
This year aircraft manufacturer ethic started delivering just the customers with SPD smart edw's.
These plans are quite popular with our backlog and our licensee vision systems expects a good year ahead.
In addition to the Airbus and epic there are a number of other new aircraft models that have not yet been announced by our licensees in the aircraft industry, who are vision systems inspect that can easily Kramer.
And yeah, it's how does it now as SPD smart skylights in three different production yachts. They joined Choi lead these design in the production area.
Mega and custom YOD builders enjoy giving the best to their customers with SPD Smart glass and you can expect other boats and cruise ships as well to deploy us.
This year, our shareholders saw Panasonic combined OLED display technology with SPD film to make high definition displays in televisions that turn into declared windows at the touch of a button.
Last month, you also saw LG display do this for transfer and vehicle windows at the Munich Auto show.
You also saw BMW introduced in Munich, a stunning concept car using SPD smart glass to control the look and output of the car's headlights.
And while we're still on the topic of.
New markets, let's talk about the architectural market as many of you know from prior conference calls with the opening of <unk> Stuttgart factory in the fourth quarter of 2009, and its ability to SPD film one eight meters wide. This a lot.
Orders for the first time to practically address the large potential architectural market.
The architectural market uses twice as much of the world's glass as the automotive market.
Smart homes and buildings are potentially our largest.
As evidenced by the high valuations that some of our competitors are aspiring for on just this market alone.
Okay.
And we also learned in the process of competitive bidding on some very large our girl architectural project for SPD that we actually have gone from having a size disadvantage I'm, referring to when SPD film is only coated one meter wide to now having a size advantage over electrochromic since they can do similar words too gassy film.
Plenty of meters, but have limitations on the height of the window and of course, the bigger than electrochromic window gets overall the slower it gets with 10 switching.
Taking tens of minutes with electrochromic compared to two seconds with SPD, regardless of the size of the window.
Okay.
And trains our licensee <unk> delivered SPD smart glass.
Train glass to their customer rehab for the Deutsche Fun idea train rehab is a large supplier to the train and other industries with over 20000 employees and I started talking to them.
19 about using SPD and trains.
I'm really pleased that it has progressed the way it has in that industry trends. These a lot of glass and SPD smart since preserve views on such iconic luxury and sightseeing trains is the sugar Shimmy train in Japan in the Rocky Mountain Air trains in North America, The Deutsche Bahn train opens up SPD to a much larger new market.
Commuter and regional transport rails.
We talked about the new markets now lets talk about financial stability and why this is important.
Our financial strength, and low overhead and operating costs enabled us to survive and even thrive.
Old events supply chain disruptions and other kilometers that have affected other industries.
These resources have also enabled us to move for firmness.
As of the end of this past third quarter. The company had working capital of $4 $2 million, including $2 million in cash we continue to have no debt and have been debt free.
26 years.
We have very steady low and predictable expenses and cash to last for at least the next two years. So.
So now let me take some other questions that our shareholders have emailed to me.
Yeah.
Chuck Michaels asking.
As the number of questions.
One of which is please advise on reefers plant current plans to get to profitability I think today's press release.
Probably was a good example that we were successful at least and recording our first quarterly profit and.
The secret to this is.
It has been discussed.
On numerous prior calls basically worked to increase revenues you do that by.
Expanding existing markets and opening up new markets and you could see this year that theres been a number of new markets that have been opened up.
And add new customers like Cadillac and also decrease expenses and I think we are in our sixth or seventh year of.
Constantly low year over year expenses.
These two areas increasing revenues and decreasing expenses are a constant focus.
Jared Albert asks Alright, Hi, Joe.
Please give us your thoughts on the dynamic Glass Act as you know I think if it passes in its current form it will ignite a feeding frenzy in the smart glass world just like blown insulation rooftop solar replacement Windows and every other technology they've got critics and then specifically can you talk about the combination of enhanced leads credits.
On the DGA credits given that their direct and most importantly, if two years after being told Gouge you were shipping one eight meter film.
Are they able to actually ship film I note Valentin Hoffman's post that Galaxy is hiring for full time production line workers in Germany, which I see as confirmation that they have mass production insight Jared.
Well thanks for the question Jared first of all the dynamic Glass Act gives a 30% to 50% tax credit.
And we clearly fit within the definition of dynamic glass is the final.
Legislation.
I do think that Australia substantially transform the economics by making smart glass more affordable.
The question will then become what about performance because I don't think that the dynamic glass act will cause major projects to adopt the technology they want otherwise use.
But I do think that will make us more affordable with this tax code subsidy and that certainly makes the payback to the owner of the property or the facility manager.
Much faster for them and it also makes it less likely that SPD will be cut out of projects.
Pesified in because of budgetary concerns so lower costs are always a good thing and we've been working very diligently and quite successfully to reduce the cost of the technology to the customer.
This tax credit.
It will give us an additional window ourselves.
Regarding your other question Ghazi is indeed shipping film, we and several license he's actually got goals recently that look quite beautiful even in comparison to the Hitachi film and yes, theyre wider roles then attach produced one four meters wide and they concurrently code up to one meters. If a project requires it.
And I believe this also answers another question that was emailed to me Robert Wing World.
Another question.
What if any is the potential impact on research frontiers business potential of infrastructure Bill gets passed by Congress and the president.
And as SPD product designed for Cadillac lyric electric vehicle going to be standard and independent option are part of an option package, if an independent option or an option packages have price has been set for it.
Well first of all I think we discussed the importance of government legislation with the dynamic Glass Act and certainly the infrastructure Bill.
It's very oriented towards environmentally friendly.
Improvements in our society, so that benefits us well regarding your question about Cadillac.
Yeah, right now, it's always the celestial which is there.
All electric luxury vehicle.
But.
I think and it's our expectation that it will be standard on the celestial and it'll either be standard or in an option on other Cadillac models. So thank you John.
Our next question is about our stock price from.
Jeff.
Submit that regardless of the progress and advances that the company has made over say the past three years. The share price has not provided the company with a vote of confidence why this confidence misplaced and what would you consider to be the company's most significant advances or events that are not well understood and that would you'd expect to act as a catalyst for the share price.
Well.
Now I'm going to sound like my prior training as an economist stock price most of the time, it's not a fun function of fundamentals, although you do need funding performance over as you know.
Sustained period of time to establish credibility.
Stock price, especially in micro cap and small caps is more of a function of supply and demand stock itself and there could be an oversupply of for example, if a company issues a lot of stock in a stock offering or if a shareholder has to sell a major position to say, let's pay for a wedding or some other reasons.
And then there is demand for this stock in some sectors become very hot in that night.
Sometimes demand for our stock comes from investment banking transactions and the follow up an analyst coverage.
Money flows and funds tend to go into big Tech ex bonds, rather than individual stocks. So I don't think its really a reflection on.
Any small cap company, including research frontiers.
In terms of confidence or lack of confidence as much as it sees extraneous supply and demand factors.
But now if you look at research frontiers operations compared to others in the smart window industry, where we have crown electric kinetics, which.
Once again has reported no revenues and probably our closest competitor gets actual smart glass market as view and our view lost $441 million in 2018.
290 million loss in 2019, and it was a 257 million.
Loss in 2020 and in 2021 before they were forced to stop reporting their financials because of an accounting issue.
They lost $55 million in their first quarter.
So I guess, you know I'm a shareholder like you. So I certainly watched the stock price and you know.
Wanted to go up.
As much as everyone else that's.
Shareholder in our company, but I ask shareholders are happier.
View had a $4 billion valuation about two to three years ago and Softbank invested.
And that sounds like a lot, but by March of this year when they went public in a stock transaction. They lost half of that value our $2 billion. So they went from four two and then since mid March they lost another third of their value or another 600 million in shareholder value. So yeah.
Industry, but I think that especially this quarter, you could see that being lean and mean and focused on profitable business can.
Can be can be the right approach to this and that's what we did.
Our next question can you comment on the general state of the worldwide economy on your business and more specifically the impact of the automotive chip shortage in the COVID-19 pandemic.
So once a mind keeping in mind in my former job as an economist at the Federal Reserve Bank of New York.
I do think about and factor in macroeconomic trends into a lot of the strategic planning for research frontiers.
And first as you can see we are still actively doing business, especially.
As our recently reported as reported numbers show.
Of course.
Supply chain disruptions inflation, and an inconsistent and ever changing economic outlook are never good for business or for planning purposes.
And I hope that as the World economy, we don't have the same whipsaw effect that happened in the 19 seventies, where you had inflation and when that was combined with certain labor market condition, and a drop in productivity and efficiency.
That led to an inflationary wage spiral that took my former boss Paul Volcker, a lot of effort and pain to contain universe.
But turning to our business, specifically and maybe more to your point of the question.
You know first of all let's look at the general trends in the automotive industry in the aircraft industry suppliers in that industry reported a 34% lower revenues this past quarter.
We had increased revenues in the automotive sector.
And we have some things about our business that.
It should make us less impacted by things like supply chain disruptions.
One example is where a film based technology.
So rather than having to code directly on glass.
And this makes for much better logistics, including shipping we could bypass bottlenecks with ocean freight lines and ports and even before that and that came before the recent supply chain disruptions, that's pretty some roles roles could easily be in were shipped by air whenever needed. So you kind of have the ability.
A bike bypass a lot of the issues that are out there.
We also have the advantage of flexibility and diverse markets.
For example, if the construction industry in the North East has stalled there may be slow, we and our licensees can easily target and deploy our efforts in markets, where construction is strong such as Florida, Texas and elsewhere.
Note that our licensees Gal Z and vision systems have offices in Florida and gas. He also has enough taxes and as I mentioned, we have a very strong footprint internationally as well so that gives us the ability really to cover a pretty wide berth where the economic activity.
Next question.
What are the advantages from Rodman what are the advantage of SPD over PD L. C. What applications could use PD L. C. Instead of SPD, great question and thank you for it.
<unk> is good for privacy and for video image projection.
And sometimes you'll see both of those things combined with SPD to make even better performance.
But you know even by itself SPD is good for these uses but it's importantly.
But importantly, as a shading technology and not just for privacy and projection. It adds the ability to control heat light and glare, which gives us substantial environmentally friendly benefits.
So we've discussed a lot of topics the questions that have been emailed to us I'm going to ask now our operator, Paul to open up the conference to any additional questions that people.
Participating today might have that we haven't already covered.
Okay.
If you would like to ask a question. Please press star one on your telephone keypad now.
You'll be placed into the queue in the order received.
Please be prepared to ask your question when prompted.
Once again, if you have a question. Please press star one on your phone now.
And we have a question from Leonard leaps out.
Your line is open Hey, Joe Hey.
And how are you.
Doing all right Sir.
Florida.
Things are wonderful down here in Florida.
I know, there's a lot of I know I know firsthand and Theres a lot of construction going on.
Oh My Gosh, all the time every place you know.
We've got 22 million people here now.
And in the last 50 years I've been here, we've gone from six 5% to $22 million. So.
<unk> is every place.
Interrupted everything is happening.
But supply chain is definitely slowing things down.
Sure.
But we'll get there in any of that.
Several years ago.
We talked about the.
The company and the future of the company, we were kind of thinking about once.
We achieved profitability.
Probably get better quarter by quarter and that was prior to COVID-19 and supply chain problems and everything else.
Do you anticipate that that will be continuing in that vein.
There's too many disruptions or things are going I think that.
Yeah, I think that's a great question. So if you.
Or are you know when we had that discussion our main business was in automotive so.
You have a typically an eight year program with an automaker and we ended up going from vehicle to vehicle within Daimler and then we added Mclaren and went from vehicle to vehicle. So we were in five different models of Mclaren.
And each one of those adds additional revenue so it becomes accretive and it builds on itself.
Now that we're going into.
A market, where our revenues are also going to come from things that are less predictable and less steady.
Like architectural potentially much bigger in terms of dollar value, but but less good well you don't know if a building is going to have 10000 square feet or 100000 square feet of smart glass and you know and in Naples.
You know, there's some buildings going up that could do either.
We're working that so.
The.
The predictability goes down but the sheer volumes go up when you move into the architectural market. So I think that youre going to see some choppiness, but.
Intermediate term trend that Choppiness gets smoothed out and becomes a kind of a steady.
On a positive trend so yeah I think that.
The same thing will happen, although you may not see.
One quarter to the next steady increase you may see some ups and downs, depending on when projects come in and the size of the glass from the projects but.
But overtime you get enough irons in the fire where that smooths itself out.
Yeah, well, that's again I'm really happy to see is an architect Shelby guys.
I just came from an investment conference last week.
And I see some of the predictions when we get to the new.
AI in the automotive market.
Where things are going to change as far as number of units are expected to be produced in that market.
And you know things like parking lots or not that would be needed et cetera.
The number of automobiles over the longer trend.
<unk> are going to be going down not up in numbers of cars, because it'll be used more than 5% of the day or whatever it is so be.
And in these other markets would trains and buses in.
So I like those guys and there.
Young aggressive and connected so it's a good combination.
Right.
Any product development at this point in time.
I'm not going to kind of pre announce what they're what they're doing they they will do that.
Can you comment on Libert I think they are working with.
Lippard. Yeah. Then they were also worked with other licensees like vision systems are very good.
Company there in many many different industries or vs is one of them now that we know them very well for and.
They they bought a lot of companies so their business keeps expanding into new industries.
Well no question is.
Do you have any perspective.
As too right.
Last year, you commented you might be going into a second production factory.
Has that been.
Hi.
Sure.
Is there some projections as to when that might start up again.
Well I think that.
You said you saw part of it start to happen where for example galaxy has quadruple.
Pulled their production capacity for emotion in Israel, what they do is they make the chemistry in Israel. They ship it to their should card facility, where it's coded and in the Stuttgart facility, it's a very efficient.
And it was designed only for SPD and to be Superefficient. So we can get the costs down like we have and get them down even further with more volume, but they did build in the ability to either build a replicated line right next to the current one if they wanted to keep everything in Germany.
Build it somewhere else in the world, where the customer needs are and you know when you consider the fact that hunt.
Hyundai has made a major investment in Guernsey.
Well.
But it's 30% to 50% or view of the installed cost stratus like solar panels that we have the same kind of credit right.
Right, so I'm being a little deserved I'm being reserved a little bit Jared because you never know what the final bill, but but yes.
30 to 50 million.
Credit, it's a huge credit.
That basically takes you.
You know any cost disadvantage that SPD may still have and we're not sure. There is a cost disadvantage by the way because.
We're operating on a non subsidized basis and and winning business.
<unk> like view and Sage.
You know are subsidizing heavily there their bids, but so I don't know what their real costs are but but it definitely makes it.
A very significant game changer, when when you get a tax credits and you know this is kind of what they call a tax expenditure, where you're trying to promote a certain result by encouraging people to deploy energy efficient dynamic glass is great for our industry and great for us I mean, no claw.
No question.
Just maybe I'm just being reserved because you never know what's going to make it into the.
What gets signed into law.
Hopefully hopefully the Congress passes Tonight in the Senate seat in that part of it.
No I understand that also I'll make a few phone calls when we're done.
[laughter] right.
You know I'll also stress to show not tell at this stage I mean I've been in this thing for decades, So Oh boy.
It saw the electronics.
The framing.
All of that is.
Which is B R. S. Five eating b box are coming standard now it looks like with magic Sky on the phone.
On the front sunroof, but not on the back is that is that correct.
It depends on the market you know Mercedes has a very interesting way of deploying.
But if we if we look at past history. My memory is not as good on the 562 T. Ts pull my memories that started in the Q pointing to me block both as options, then finally gotten with Sudan.
He was kind of the first build of the mailbox.
Right, and then but who knows I know that I know that on the S. $4 50, which is what we Havent research frontiers for demo purposes, it's on both the front and back Windows sunroof.
I remember, though that I mean, maybe I'm wrong, but in some markets you started on the front as an option to backwards fixed then it became an option on both pieces of glass on the sedans and now it looks like it's it's built into the price on the knee box Oh, it'll just migrate the way it did last time.
Okay. Thank you very much Joe fingers crossed thanks, Sharon says, okay, yes, absolutely.
Yeah.
As a reminder, if you do have a question. Please press star one on your telephone keypad.
And we have a next question from Alan Ginsberg.
Your line is yeah.
Yeah, Hi, Joe how are you Hey, Alan how are you. Okay. I was just wondering if you could give us any update on whether there's been any progress on that.
The color of the film whether you could you know too from blue to grey or a dark blue.
Hey, Ken added scalzi working on that.
Okay. So yes, we are working on.
<unk> Z.
As you know has been informed of what we're working on it's not ready yet.
They're working on their own approach.
But one thing that.
I think it's very important to note.
And.
All I will say that the film that were getting now out of Galaxy looks if.
Dark blue and that's what's being transmitted through the S. P D material.
That's why it looks blue, we're blocking 99.5% of the light with a <unk> with a Hitachi film, which means half a percent of the light.
Is coming through and some of that is blue and that's why it looks blue.
For whatever reason.
The.
Galaxy film.
Mmm particles I mean, obviously, they do their own chemistry, so they have their own secret sources that they put onto it it looks much darker.
So side by side, you put up a gallery film next to a touchy film and you're Gonna see that the gallery film looks a little bit more grayish or blackish because you're blocking.
That so there's less than half a percent of light coming through you know so it looks blackish, but we are working on other things, where the part of ourselves or the materials that the particles are in we'll we'll.
You know also block in you know more of the neutral spectrum, so black a little bit of a blue so that it becomes black or gray.
Do you find that there's a resistance sorry about the size by the way sorry about the science lesson.
But I think it's important to understand where we're going on it.
What do you do.
Do you think that if if you make progress and and getting the call or more neutral.
That that will accelerate inch.
Interest in the product that there's some assistance because because of what you. Just described you know if if I had it you know if I had a allen.
Pinpoint where the resistance was it was on the high price of the film initially when we had one supplier and by the way that reminds me someone ask the question why do I consider the most significant development that maybe the market doesn't understand the fact that costs have come down and the fact that we have two suppliers. The fact that we can make are all you know huge.
Second events in in research frontiers in the S. P D industry sound. Good my apologies for answering someone else's question during yours, but I don't think that the blue is a showstopper and they're actually where reports that uhm, one carmaker had advertised a switchable glass and it was using it.
Yeah.
We have our next question from Ronald Rosato.
Your line is open.
Hello, Joe How're you doing.
How's it going.
Alright, Thanks, a lot okay.
Thank you.
Our next question comes from Bruce Denny.
Your line is open.
Hi, Joe how are Ya.
Hey, Doctor Danny how are Ya.
Alright, well thank you.
A couple of quick questions Uhm, we've heard a lot about the display market with SPD used as a back white or light light blocker for.
See through this place has any of this stuff really hit the market yet and is is a is the market visibly expanding already or what's the status of that.
Okay. So there's been where do we say hit the market, there's kind of a couple of different markets that they're targeting both a panasonic and at L. G.
Be one of the market's is what you saw at the Munich Auto show, where they're targeting vehicles and putting information systems into the windows on vehicles.
That's not their only market you know when I was a T. Yes, I saw some amazing L. G displays that were targeted towards other markets Panasonic the same thing, but if I had to kind of.
You know <unk>.
Break it up I would say that Panasonic is more focusing on.
The consumer in certain aspects of the <unk> market and L. G is is going after other other aspect b market and then the vehicle market and you know, there's and then there's things like museums and exhibitions and things where they have deployed this commercially as well.
So is it beginning to generate any significant revenue for us well, our our revenue in the display market was up you know this year and you know compared to last year, I think with both Panasonic N L. G display.
You know out there. These are two huge marketing and and consumer electronics powerhouses. So I think you know it can be significant.
And you know <unk> remember Panasonic basically there.
But adding the functionality of having it automatically adjust.
Oh I see final question, our last conference call I ask you about Sky Scrapers and you know a major architectural.
Installations, and you said there is a few of them that had been specced in and I realize that I forgot to ask a very pertinent question.
Whereas they they could we expect in our these specced in for like an entire while all of the building or expect in or maybe the the lobby or some small installation like that usually the way it gets deployed and skyscrapers and this is true of every smart glasses that they'll pick one area first.
That they think is.
Either the most in need of.
Controlling heat light and glare, so, let's say a lobby or something like that and then what they do is they make it available to the residents or to the offices on a case by case basis. So once you have this in the lobby you could also have an independent house you could also have it on you know have tenants decide whether they want it or not and then eventually.
And you know, we're not there yet but.
This can be something that just gets deployed as standard shading.
And gets hooked into the whole building control system and that's you know obviously, our our goal and our dream is for that to happen and with costs that can happen. So you know cost reduction so we were getting there.
Right. It is Europe subsidising any of these.
These green.
These green projects.
In the U S. We're now discussing.
Whether or not we're gonna subsidized SPD glass.
Right.
Yeah.
Okay, Yeah discussions.
Europe I don't know if there's specific discussions about dynamic glass, they're certainly penalties I mean, if you look at whats in the automotive industry for example.
There's a penalty of 95 euros per gram per kilometer that your fleet, if you're an automaker.
Multiplied by the number of cars you sell in Europe.
That's the penalty that's a big number you know in some cases, it was a billion and a half top multi for some of the automakers in some cases like Mercedes It was only 100 million I'd say, only 100 million, but facetiously, but you know.
Additionally chose to legislate energy efficiency through penalties is the incentive for avoiding penalties, but.
But Europe has always been on the forefront of.
Energy efficiency because of the high energy prices, so usually they're well ahead of us on all of these things and I don't I don't know specifically.
Imagine, Germany, and France, probably have strong incentives for this and maybe some of the other countries.
Okay.
Right very good thanks, very much Joe Thanks, Doctor that had good talking to you.
Okay Bye bye.
Okay.
Yeah.
Thank you. Our next question comes from John struggle.
Your line is open.
Hey, Joe So crazy.
Follow up questions.
Your opening remarks.
You talked about research frontier is earning a profit in the third quarter and if I'm reading this correctly it's $17000.
Much but still.
'twenty 'twenty 'twenty 'twenty with that with some other things, but right. It's a start and I don't want people to get ahead of their skis on this because we are you know.
Like other companies is probably going to.
See Choppiness until you know we hit a steady state of.
You know as you have more irons in the fire it becomes less choppy.
Back to start rolling out.
Well, you know I think and first of all let's keep our fingers and toes crossed John that.
Those things happen and that you know and that things do.
So we're returning more to normal because we were on a good path before the pandemic.
Yeah, and before some of the things that have happened that have caused the supply chain disruption and as you know a lot of times things don't happen in a straight line and with Covid we saw.
A temporary easing and then it resurrected it and then you know in some places.
It's now back well under control. So, let's just hope that you know we're able to lick. This like polio and you know and not have to worry about it ever again, but but assuming that it does happen.
You know.
The pandemic is good and bad for us.
And I hate to say that there's anything good about a pandemic but.
It did cost caused some projects to actually get accelerated.
People were able to focus on the things that were more intermediate term because you know you. If you can't make cars today, you still can develop cars for the future. So if you can't get a you know a car off the assembly line because you don't have the chips.
It doesn't mean that your you.
I I.
I do watch the Chinese.
Government and the Chinese market very carefully.
So auto market in the world.
But it's not some place where I would even is the secret sauce, so to teach them how to do it.
I've been there I know what the markets are and I think we just have to you know.
We have a strategy for the Chinese market, but it doesn't involve teaching them how to do anything.
Oh good okay. Thank you that answers my question.
Great I appreciate you asking that question.
That's it for me.
Okay.
One more question Paul.
Alright, and our last question comes from August Berman.
Your line is open.
Hey, Joe how are you doing.
So that'd be calling your doctor Bourbon.
Yeah and then.
Peter that's funny, you said that that but.
Okay, I thought I saw somewhere that there was a doctor I thought I saw in the beginning of your name there was a doctor. So my apologies if I missed that.
The address to you in the past, but that's okay. That's okay. Now we're now working on that and good luck.
A couple of questions here are front and center Gauzy mentioned at the show in September.
Something about serious production in 'twenty 'twenty, three because we know if they're referring to.
Specifically Ah orders with SPD or auto it's the algae.
A combination SPD product.
You're talking about Oh Gee.
Oh sure Yeah.
Yeah.
We don't know specifically and you know unfortunately, even if we did we wouldn't people we wouldn't be able to put a finer point on it just because you know we like L. G and we want them to like us.
Right.
Okay and then they also get on a separate note they had mentioned that.
Have infinite variability and segments.
So all of a sudden now you have almost no labor costs to make a multi segmented this headline.
Headlight, so you're going to reduce cost there. So yes personality you could demand you could vary the output, which is very hard to do with an OLED and you're reducing the costs because of the assembly costs and things. So you have one component.
Headlight and so as opposed to something else. So yeah. That's.
It's you know, there's there's some real practical benefits to that.
Perfect.
And another question.
Just going over the company I think.
And CIO I believe is the name.
Yes, it seems to me seem to be getting a bunch of these lower priced vehicles with their technology. It looks like a PDC TD LTE product.
But.
Reading further until it looks like they also like the contracts that are Mad love speed train them is it is it just costs at this point or is it.
In terms of it it looks like it's maybe the headquarters might be in China. So maybe they're getting some of those contracts versus looking at us.
Rollout SPD on on air.
Anything that you all have I wouldn't rule out SPD on anything that through your own house.
That's all I can say I think that you know.
You'll see it on different things.
And then one last question.
Uh huh.
Mentioned Hitachi earlier today show a tango I guess, it's been it's been even with.
Uh huh.
Right.
Geochemical right are they I, just think about that I know we hear doubts.
He is fantastic and they are they are just what I wish you know.
We would've heard many many years before.
But it show a deck are are they making any stride. They are they are they still fighting for contracts or are they working on their technology to compete with with SPD.
These SPD.
Yeah I just you know I don't think there is public about what they do for two reasons number one it's cultural you know and number two is in the overall scheme of things Showa Denko is a much bigger company than Hitachi chemical even so this is a route or perhaps in terms of their business, whereas.
With Galaxy this is their bread and butter.
The meat of it. So you know you kind of want both of them. If you wanted a company with substantial resources doing this and Gals me, though as you know garner together substantial resources based on you know.
Pretty large investments that have been made in them. So they have they have the strength and the firmness to to get the job done too, but they do have this is not a rounding error for galaxy. This as you know our central so.
Panics and veal vehicle electronics, such as what you've seen with Panasonic an L. G display.
And our licensees have expanded production capacity in all areas of theirs chain from the chemistry production to the film.
[noise] coding to the fabrication of the end products for all industries in architectural automobile aircraft Marine transit and can <unk> tronic industry, so pretty much across the board.
You know pretty substantial increases in the footprint that we and he's industries.
And then you have things like the dynamic Glass Act, which is winding its way through Congress and seems likely to be enacted you know right now, it's offering a 30% to 50% tax credit.
So it's making it very similar to other things and the energy efficiency area.
That you know I've been promoted by the government you know.
<unk>, what a side and I I just thought of this lowy glass low emissivity glass was invented by S. I. It was there palaver Bell subsidiary, which you know has been.
Licensee since.
I think I got to the company in 1992, so, but they they invented lowy glass and for a long time very hard to sell until.
<unk> in legislation and in government and just made it and now almost all that glass is energy efficient Louie glass. So you know, let's not underestimate that.
You know government mandates and proper areas and I got in every area, but in proper airy and have a meaningful impact in changing the way people behave and you know the dynamic glass that can be a game changer in terms of the relative cost and performance.
Mm of SPT smart glass in the architectural markets.
Often and.
Uhm.
A quarter and share it with you guys and I look forward to future discussions.
And good events as well thank you.