Q4 2021 Research Frontiers Inc Earnings Call
Yes.
Good afternoon, ladies and gentlemen, welcome to research Frontiers Investor Conference call to discuss the fourth quarter and year end 2021 results of operations and recent developments during today's presentation, all parties will be in a listen only mode.
Following the presentation. The conference will be opened for questions by pressing star one.
This conference is being recorded today a replay of this conference will be available starting later today in the investors section of research Frontiers website at Www Dot smart glass dot com and will be available for replay for the next 90 days. Please.
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 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.
In their presentation or as a 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 shareholders on this call.
Do 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.
Thank you, Paul and Hello, everyone and welcome to our fourth quarter and year end 2021 Investor Conference call.
I also want to welcome our board of Directors, Darryl Dago, Alex going on a bench and Graham settled are joining us today as well.
Let's review the past year, together and look forward to this year and some exciting developments that we expect to happen in the next nine months.
This year, we shut our lowest loss in 2007 years for the third quarter, we even earned a profit something no other smart window company has ever done.
The companys fee income from licensing activities increased by $434584 or 52% for 2021.
Okay.
Total annual expenses decreased by 304000 or approximately 9% in 2021.
2021 was the seventh consecutive year that expenses were lower than the year before at research frontiers.
The company's net loss decreased by $494512 six per common share. The net loss for 2021 was research frontiers lowest net loss and 27 years.
We're also in strong financial condition, we continue to have no debt and as of December 31, 2021, we have liquid assets of about $3 million and working capital of approximately $3 $7 million. The company expects to have sufficient working capital for at least the next 22 months of operation.
<unk>.
And as Youll hear later.
This will probably last longer because we expect increased revenues from automotive in the second half of this year.
That 22 month estimate does not factor in these additional revenues.
Some of the highlights from this past year include increased revenue from automotive.
So now that gals view shipping wider SPD film, we saw at the beginning of shipments of SPD smart glass for architectural projects.
This year there were also significant new projects in the aircraft industry, including the AC J $2 20 program by Airbus <unk> and systems.
Airbus has already announced orders for 15 of these transportation category sized jets.
Each of these 820 aircrafts will have SPD electronically dimmable windows covering 50 structural windows.
Aircraft manufacturer Epic also started delivering jets to customers with SPD Smart EDW.
And last month, a merger between two of our licensees Gal Z envision systems was announced.
This was a transaction that had our full support and one that I had personally worked on with Galaxy and vision systems for the past two years. It created the largest internationally diversified smart glass technologies manufacturing company in the world.
<unk> raised $60 million in the series D financing to acquire and fund the growth of the newly combined company.
The combined entity now has over 70 certified industrial partners five dedicated manufacturing sites 14 global offices international subsidiaries, six continents and customers and only fifth in over 50 countries and also has over 60 patents and 20 unique category.
It has 180 employees globally.
$50 million in 'twenty one revenues.
So let's discuss now some of the other development 2021, let's start with our largest market.
And we.
We kicked off 2021 with an announcement in January by Cadillac at CES, which highlighted a four quadrant SPD smart glass roof and their flagship all electric <unk>.
Also in automotive there was a new government contract in the area of specialty automotive. We also had continued and growing use of our SPD smart glass technology in serial production with Mclaren.
And more upcoming models are also being discussed with them. Mclaren has told me that the SPD smart glass roof has very high take rates and it's quite popular with customers.
Prestigious publications with millions of readers each have highlighted the range of extending the range extending benefits of SPD smart glass and that's the <unk> and other electric vehicles with a highly coveted five 5% increase in driving range.
They also noted the significance of grams per kilometer reduction to emissions when SPD smart glass is used in internal combustion engine vehicles and these are not the only benefits. We also make people more comfortable and safer and protect the interior of cars and Bentley noted that SPD smart glass used in fixed non movable.
Panoramic roofs in cars, which is the trend can also reduce weight in the roof by up to 13 pounds and eliminate the need for 54.
This reduces costs the increase is driving range and reliability, while contributing to the stability of the car on the road.
Yeah.
The benefits of SPD smart glass for discussed in many prestigious automotive publications, such as automotive news auto line, the Detroit Free press Ward's automotive news and others more recently on the automotive News Daily News program first shift so on the widely followed daily drive podcasts and just.
Last week with political appear in Ward's automotive and I invite all of you to check out some of these articles and videos and avoid and social media platforms.
Okay.
And with our strategic benefits in the areas of electric vehicle range extension, and reducing cotwo emissions and internal combustion engine vehicles, we have certainly gotten the attention of.
The automotive industry, both car manufacturers and their suppliers note debt and day and sector Sui.
And others heavily involved in the automotive industry and made substantial investments in our industry through equity investments in our light galaxy.
Okay.
Now, let's talk about other important developments in other key markets for our SPD Smart glass technology.
This year you also saw display manufacturer L. D display of Korea combine their transparent OLED display technology with SPD film to make vibrant high definition displays in televisions that turn of declared windows at the touch of a button.
These were exhibited at the Munich Auto show showing use of these products in automotive and at the January 22, CES in Las Vegas, showing the consumer electronics use of this product.
One recent report indicates that LG has moved forward with plans for a new T V with a 55 inch transparent OLED SPD screen, that's intended to the home entertainment market and slated for release in 2023.
This fall 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.
Other new areas, such as more yachts consumer electronics in architectural applications have also grown.
And in trains our licensee <unk> delivered SPD smart train glass to their customer rehab. So the Deutsche Bahn idea trained rehab is a large supplier to the trained in other industries with over 20000 employees and trains use a lot of glass and SPD Smart glass is preserve views on such iconic luxury and.
<unk> trains as the chicken shimmy trained in Japan, and the Rocky Mountain your trains in North America.
And the Deutsche Bank train ups opens up SPD to a much larger new market commuter and regional transport trains and since our last conference call together SPD Smart glass were shipped to yet another large trained projects for a series of commuter trains.
Now, let me pause and take some other questions that our shareholders have sent me by email.
Yeah.
Some of them I addressed in our general presentation, but the additional questions that were emailed to us.
From Chuck Michaels, what effects will be down to the acquisition of vision systems have on fr and what are the prospects for SPD glass used an additional vehicle models beef production of the new EV Cadillac. Thanks.
Well thanks Chuck.
We spoke.
Earlier about the substantial advantages that we see in the Galaxy vision systems merger and that is why I have been supporting the efforts of both companies to get this transaction done two years are both great companies to begin and together, they're even more formidable.
Regarding your question about the near term timing of other automotive revenues.
And the GM Authority article in October about the SPD range extension on Evs. It noted that the Cadillac. So let's take is on track for launch with the 2020 for model year.
So this means that the car is actually coming out in calendar year 2023.
We expect revenues from automotive from other projects in serial production to come in Q3 2022 for one vehicle and in.
In Q3 2022 for one vehicle in Q4 of 2022 for another vehicle.
These may start generating revenue for us then or perhaps one quarter earlier than startup production, depending on when the OEM wants this glass delivered.
So to answer your question Chuck there could be several cars in serial production generally generating revenues for research frontiers prior to the celestial coming out in 2023.
John Nelson send in a series of questions, which I touched on in my presentation. Thank you John for sending those I think our shareholders benefited from my including those topics in my presentation.
What one additional one from Mr. Nelson how is the response to your products at CES in January .
Well many of you saw the Gals you post on social media of the chairman of Hyundai Motors spending quite a bit of time with us at CES, along with as Chief Technology Officer.
The Korean economic Ministry.
I actually took the photo they used we also had politicians in groups from Tesla still lantus another visitors.
CES was a great show and vision system Galaxy and everyone did a great job presenting our SPD technology there.
Okay.
We actually benefited also from the fact that some of the larger companies had pulled out of CES due to the omicron virus.
And the companies that were there got upgraded to better locations and actually got a lot more attention and.
We have people just stopping dead in their tracks when they saw the transparent OLED display that we had on the outer edge of the boots to catch People's attention.
It was a compelling video of SPD being used in so many different applications and also just the fact that you can do this with a transparent OLED really blew people away.
Sam Penta rights Theres been a lot of talk about Hyundai and Kia lately as numerous articles have popped up mentioning the new grand door and I quote below this.
This is from Sam a key feature of the all new granddaughter will be the magic roof like Mercedes Benz instead of irregular carton and will be capable of blocking light and heat or becoming transparent depending on what the drivers choose.
This is Sam continues this article was very specific and in light of the recent investments in Galaxy. One can assume this is SPD has hyundai or key I made any public announcements identifying that technology is being SPD or comment on how this project is progressing.
They referenced it as the Magic group, which is very close to Mercedes Magic Sky term is this the branding for smart glass well.
I think you can infer.
The strong interest in SPD by multimillion dollar investments by Hyundai that they made and galaxy and buy their chairman and CTO his visit.
Also more specifically in one of their recent reports about their innovation fair in South Korea, and they actually noted their work with <unk> on this and that it was moving forward towards series production. So I guess the answer to your question is yes, they've confirmed it.
One last question that you may be able to address on the call.
So I made was working on a sun visor product using SPD, what if any progress on this I end my brother have described such as <unk>.
Product of friends in many professions, including farming aviation trucking and general driving it.
It seems like a lots of demand for this product to be made available.
Much much more than sunroof, thanks, John Nelson well. Thanks for the additional question John and I made is working both with an OEM and this is to fund the development of the original equipment and aftermarket SPD Sun visor products and we're very excited about this product speaking personally when our founder Bob Saxe and I would drive home together after a long day.
The office, we were heading west and into the glaring Sun. The SPD Sun Visor was an application near and Dear to his heart and every time, we would get hit by the blinding signing today, Joe I can't wait for us to have a sun visor well he's getting his wish.
And you're right John people do look through their win both during the day and at night more than their sunroof and they need relief from the glare. So while an SPD smart glass sunroof, maybe in energy saving and comfort issue. The SPD Sun Visor is an important safety feature.
Another question from Jared Albert are there examples of intellectual property licensing businesses, whose history I think may foreshadow RFID future.
Well.
Typically Jared as you know from companies like Qualcomm and others asset and Capex light companies always seem to get higher valuations and that's because these companies are less risky than others and.
And I think you have to look no further than our competitor view to see the challenges in high capital expenditure requirements and manufacturing costs and substantial other risks and issues that they face.
And part of this is inheriting their electrochemical technology, but I also personally think that they met and enforced errors in their business that have contributed substantially to their current problems.
I also want to highlight that because we are a film based technology, the logistics of manufacturing and supplying SPD smart glass around the world are vastly easier and the performance and economics of SPD Smart light control technology is actually better.
From Jeff Harvey Joe the chip shortage is having impact on car production is this slowing the implementation of smart glass I would guess it has to my BMW dealer said that some floods come from Ukraine, and they anticipate problems ahead for production sincerely, Jeff Harvey well, Jeff. Thank you for that and also recounting.
The situation first let me say that our hearts and support goes out to the Ukrainian people, it's absolutely terrible what's happening to them in their country and lets all do what we can to support them and pray for peace.
To answer your question, Jeff Fortunately, we have not been as affected as other companies in automotive by the pandemic or the part shortages or the supply chain disruptions.
Part of this relates to the timing of projects and development cycles, but also we were blessed with better logistics because we're a film based technology. For example, SPD film can easily bypass clog ports N V shear air shipped wherever the projects are and then laminated locally.
Okay.
Well, we discussed a lot of exciting topics, so far and now I'm going to ask operator, Paul to open up the conference to any additional questions people participating today might have that we haven't already covered.
Yeah.
If you would like to ask a question. Please press star one on your telephone keypad now.
Would be placed into the queue in the order received.
Please be prepared to ask your question when prompted.
Once again, if you'd like to ask a question. Please press star one on your phone now.
And our first question comes from John struggle.
Hi, Joe.
Hey, John Good question.
One about Germany, one about China, two very big countries.
Research frontiers.
With this invasion of Ukraine.
Germany has done a U turn.
About its defense spending.
Cutting off the Nord stream two.
Pipeline.
Which is going to have dramatic effects.
For Ghazi I suspect.
You have any feel for this and maybe.
Ram settlement.
Thought about it too.
Well Graham It certainly has a lot of field experience in many areas of the world.
As far as we can tell.
So far there has not been any.
Disruption in <unk> business, a lot of the flow is actually coming for them.
Chemical production done in Tel Aviv, where the emulsion facility is and then shipped to to Germany for coding and of course anytime you have this kind of.
Turmoil in disruption anywhere in the world Theres going to be you know things that are more difficult.
But gasoline is pretty pretty.
Pretty creative in how they deal with unusual situations remember they were able to.
Go through the pandemic when Germany was shut down numerous times.
Still figured out how to get people in and out.
You know to facility up and running and shipping a product. So we'll have to see I think some of the bigger problems theyre going to be from disruptions to the general automotive industry. I mean, they started with chip shortages and now with what's happening in Ukraine Theres. So many other components.
A lie on that so that's affecting things so but.
But I don't think ultimately, it's going to affect our revenues and hopefully.
This will be.
Over in a positive way soon and we can all get back to normal.
I'm praying for that.
The second country is China, and Jean Ping has ordered.
Any cutback on luxury goods of course, China has been one of our key markets.
Sure.
Deals with SPD.
Yes, it's the largest auto market in the world.
It's hard to say, how the Chinese people react to that kind of directive.
But in terms of there's really two aspects of China number one is it is a consumer as a market and.
Really it's an important market for luxury goods.
Some of the cars that are coming out there or.
More general purpose cars, so I don't think they're going to be affected and.
I think that.
Based on the production numbers of some of these luxury cars are the rest of the market will pretty much take up the slack so I'm not expecting too much in terms of a disruption from.
From China in that regard and we're really unaffected by China as a manufacturing because.
We've always taken great pains to stay out of China.
Especially with our intellectual property and our chemistry and we've.
Tablet production in other areas of the World you know for a specific reason and that's.
That's not going to be affected by this either as far as I can see.
It's an excellent question and we'll find out together.
Yes. Thank you good answers on both.
Thank you.
Our next question comes from the Art Brady.
Hi, Joe how are you.
Hey, art how are you.
Okay.
Can you explain.
A little bit about.
This division.
<unk>.
Sure.
Regarding space.
And the reason right.
One.
Technology.
Sure.
Yes.
Right well.
Basically this one.
Hello.
That whole effort.
The Ids the E D's are basically assisted driving technologies.
And what the safety Tech Division is as you know camera base and sensor based systems that vision systems has developed over the years and not just for autonomous vehicles are you know they cut their teeth on passenger control systems for trains and buses and things where that kind of tech now also use but they got quite good at it.
And you know if you think about.
And this is something that I think is maybe important to note. So thank you for the question.
You have one company that has a material science company Guernsey they were very well known in the PD L C market.
It's quality PD L see out there.
And they saw the market for SPD being bigger and became a licensee and the rest is history. They opened up two factory lines and expanded their emulsion production in Israel and really have made substantial investments in SPD for the future and they also have a component of their business, where they actually started before they were in material science.
Company they were in electronics controllers company and they've got involved with PD L. C actually because they were asked by a PD L C manufacturer too.
Controllers for them and they realized that the quality of what was being produced in the PD L C market.
No problem not the controllers. So they ended up saying well, we could do better and became a PD L. C manufacturer. So they do have expertise in electronics as well.
And if you think about SPD smart glass or any smart glass as a system you have the dollar the intelligence for the controller and the thing that it controls the internet of things if you will.
And now they have all of these expertise really really in one place and along.
Along the way vision systems also became a material science company they've developed certain inter layers, it's highly <unk>.
Desirable by our.
Licensees because it has very good I, our view protection and you know very good laminating capabilities and characteristics. So.
The materials they developed as a laminate or of SPD is very complementing the film that galaxy produces so now they have the ability to supply the entire pre laminated stack, if you will to the entire industry.
People are you know and we are very happy about that they're rallying around that.
And Thats why Youre seeing a lot of this.
Especially in automotive that I alluded to earlier.
You know really are coming to fruit.
Yeah.
SPD.
Fit into this.
Technology.
And the added technology or in general.
Okay and that is it's used for things like covering sensors are protecting them or regulating the white that is going into sensors. So they can work more effectively.
And and also the sensors act as controllers.
So you know for example, your camera May tell your window what to do.
Yeah.
So it's a very symbiotic.
Yeah.
Back to you.
I think from.
Hey.
Yeah.
Hi, Jeremy.
No.
Research development company.
Yes.
And each of them.
About nyquil.
He said he has developed the smallest micro lenses as ever and I am wondering if.
SPD plays a part.
Yes.
Enhancing the quality of.
These lines as well.
Well I think theres micro lenses will be part of you know if they work as advertised well will be part of the Atlas systems to make them better.
So they can if you will see better so.
I think there's.
Certainly a complementary technology that would benefit you know, making the entire system better.
And all of these developments really are things where.
Excited but agnostic about because we work with almost every system out there where we have a very easy to work with technology. So it's very easy for these systems to address our smart glass.
How do we benefit from.
Our systems are installed.
Okay.
Like I said, it's it's one of the ways you could control our smart glass.
So we can take this conversation offline, but just to leave time for other people that might have questions, but but basically think of the AD system is a type of intelligent control system.
You know can benefit and also you know one other thing which may not be obvious. The added system is used in autonomous vehicles smart glasses are very.
<unk> is expected to be a very integral part of autonomous vehicles self driving vehicles.
Because of things that I've talked about in the past about the shouldn't between the passengers and their outside world and their devices. So the SPD in conjunction with an add a system.
Can be quite a sophisticated.
Thank you.
Thanks, a lot art.
Okay.
As a reminder, if you would like to ask a question. Please press star one on your Touchtone keypad now.
And we have a question from Michael Kay.
Your line is open.
Hello, Joe.
Michael how are you.
Okay.
So called Sweet suite.
Spot was reached in terms of the price the declining price of SPD film.
Yeah.
We now can produce.
Much wider.
Okay.
Okay.
It has been.
SPD.
Thanks, Joe.
Since we have.
Hello.
Sure. So ghazi of ships film that is much wider than hitachi ever shipped before and there are some architectural projects that that glass is being used for.
One of the things that just to kind of maybe go to the other part of your question about the sweet spot in the costs.
One of the things that.
Z designed into their coating facility has the ability to do variable with coding.
So for example for the train project that I mentioned.
You know that series of commuter trains. They had shipped film that was 1.55 meters wide for that now I mentioned that precise number because in the past you'd have to either take a roll of film that was 1.6 or one eight typically and cut it down and lose you know 10 or 20% through cutting.
Now you don't have Hum.
To do that you can actually coat the film.
For large projects exactly the with its needed. So you you eliminate any kind of wasted from cutting and things like that and actually I was happy to hear in connection with some of the automotive projects that I had alluded to.
That you know.
Part of the thing that <unk> is focusing on with that in order to bring in the product at a good price for the you know for the OEM was you know the cutting and the and.
And the.
Getting the film exactly custom size for for the customer so they don't have wastage. So these.
These are the happy problems, we focus on now not whether the technology is we'll work or whether it could be coded wide enough, but instead now how do we make it more effective or better for the customer.
Do you foresee the price of SPD film.
Declining so it'll be even more attractive.
Yes, yes.
And the business plan that I've seen for the facility in Germany.
The costs can come down substantially even more than what they are now so.
I think were well on their way towards being a very feasible technology for all different types of applications not just high end ones.
But hitachi still is producing SPD film as well so we have liked to supply us.
Yeah, it's always good to have multiple suppliers, especially especially you know for competition and redundancy and the automotive industry likes that.
Are you still trying to get a third one in the United States you once mentioned.
Well you know at one point Galaxy was considering putting their factory you know either there second factory. The one that's currently in Germany, and the United States and Asia. My guess is with the connection with European and Asian car manufacturers.
Might see the next one in Asia first.
Oh I see.
Okay, but it's not a big deal it's not a big deal because we had projects here in the United States. Some government projects that are you know they were able to.
Send by Air and Air shipment DHL the film.
So it doesn't really matter, where you are in the world and that's one of the advantages of our film based technologies you can do that.
Thank you Joe.
Thanks, a lot.
Our next question comes from Alan.
Yeah come off.
Your line is open.
Thank you Hi, Joe how are you.
Alan how are you.
I'm well I'm well is it any.
Is it possible that you could provide.
Any revenue projections for this year and next since a lot of things seems to be coming together.
No I.
I don't mean to be glib about it but these are gonna depend on things such as what months. This your production starts for some of these vehicles and whether they frontload them based on demand or whether they.
They have more of a steady state.
Production of cars with our technology and not even our production licensees know those questions yet.
But we're not capacity constrained so it doesn't really matter I mean, we obviously wanted to do as much and as fast as we can but.
But we have the debate in our capacity to do it.
No I understand that but you know it's been a long time coming so to speak I mean in 2011, when you got to deal with Mercedes Your stock was at $10 or peaked out at then it's one fifth to price and.
And nothing has really happened in 11 years, Joe I, just I, just don't I've been a longtime stockholder.
I don't know why the current management team is still in place if they can't generate the revenue that we all hope to see from this company.
Well I appreciate the fact that you and I are both long term shareholders.
And.
You know you've got a great example, because that's the problem I mean, it looks like.
But yeah, Alan that the two the two things that we had to solve.
We're cost.
And cost.
And we did that and you know the.
The added benefit was with as well so markets that didn't exist to us now exists like architectural.
And.
You know I guess, maybe what I would also say is.
We're in an industry, that's not very easy to do if you look at our two closest public competitors.
One is their stock has been decimated.
So that company.
That's view Pat's view and another one crown has no revenue. So you know maybe where the tallest midget, but you know what.
Sorry to abuse of politically incorrect thing, but but it's not an easy industry and they would kill to be in some of the markets that we're in like automotive and aircraft. So I see view.
Buck and a half $1 69 was $10.
It was $10 when they restocked, yeah, it was $10 a year ago.
Okay, I don't mean time.
Youre, a great Guy and I, just we just want to see this.
<unk> gel together eventually cause I mean, everybody.
Fields, and we all do that there's tremendous opportunity here.
Yeah, Alan I was.
Three months I was born three months premature patients is not my strong suit so.
There's nobody more than maybe they want to see this happen sooner, but you also see it done right and I think that you know what you see when things aren't done right as some of the disasters that have existed in other parts of our industry. So you know we focus on quality.
Quality customers quality installations, and doing things right and also not subsidizing. It I mean, we you know, we obviously will make long term investments and things.
But you know if you look at for Bakken.
The economics on view.
Every dollar of revenue cost and $4 and there's no expectation that they're going to get economies of scale. So.
Every time, they announced a new project I love It I mean, they're digging a deeper hole in when you're digging a hole.
You should stop digging.
I know you did say that a while ago and obviously that stock has not performed well.
The stocks are voting machines and at the end of the day is voting on your company.
Company is doing.
I think once we generate.
And I think once we generate revenue you'll be able to model us more like a traditional company.
But right now out of the smart glass companies.
We're doing quite well and we're you know we're certainly not resting on any laurels I mean, you know.
Our days and you now filled with opportunities or things that I love So [laughter].
So so far so for me and and and you know well.
Honesty, we are blessed with.
Some world class people that work at our licensees that have been working very hard and other people at research frontiers that are quite talented so.
You know, where we're we're firing on all cylinders and it's just a tough industry to be in and we seem to be the ones that are going to emerge successful out of this based on everything I can from what.
Got it.
Focusing in on more of the architectural industry with China, right and so and so I would describe as scrapers, what's that yes, they there and it's mostly domestic that they're focusing on because one of the problems with a glass based technologies as compared to a film based technology is that the logistics are difficult you got a ship fragile heavy expense.
A glass across the world. If you have a project somewhere else, that's not easy to do and certainly not in this environment, where you have supply chain disruptions or is it not.
Okay, and so you just shipping film by Airfreight and laminating it so its much.
Mhm.
Alright, I have patience and I, just hope you execution moves forward and we can get to a profit.
Profitable company eventually.
Thank you. Thank you well you know we did something no. Other company did we stop it now the idea is to show a consistent profit and you know while revenues may be choppy in the beginning as these markets start to emerge and develop.
Over time, you know because of our business model. We have you know very modest expenses and it all flows to the bottom line. So we should be a very profitable company.
Okay, Let's hope selling thank you for your time.
Thanks, a lot Alan.
Our next question comes from John Nelson.
Your line is open.
Hi, Joe.
Hey, John Thanks, again for all your efforts and especially an excellent job in controlling costs.
Over a over the years I have to ask this question and if you can't.
Seeing anything.
Did I understand by the engine.
One of them. Our sources of revenue is listings down was a special government contract in the automotive area.
Yes ill comment any further on that.
Without naming the government agency I could say that it's a very highly.
Billy visible high end use of SPD smart glass that.
Can promote security and comfort inside of it.
Vehicle.
[laughter] bonds.
Actually a vehicle, but a fleet of vehicles and the expectation is that this will have uses outside of the initial agency that you know we're working with on this.
And then it tends to this type of thing tends to.
Start there and end up in a lot of that sits within the.
Mhm.
Alright.
And I apologize I apologize for being a little coy.
No.
And you're protecting the business so a potential business. So I understand that well I'm also protect as I I think in my license agreement with disease, It's a misdemeanor offense.
So I bought I wanted I wanted to I wanted to stay out of jail, if you don't mind doing better outside than on the inside.
[laughter].
Okay understood.
Thanks and.
GUL research frontiers. Thank.
Thank you John .
Yeah.
Yeah.
We have a question from Alan Ginsberg.
Your line is open.
Yeah, Hi, Joe how are you.
How are you.
Okay now.
You mentioned in your in your comments that the cost has gone down does that mean that we could see and.
Car models that are not as expensive as some of the ones that you've already been in but more moderately priced cars to absolutely absolutely, yes, and that was the goal.
Yeah.
That's something that's on the horizon, that's what I'm asking.
On the near term horizon, yes.
Okay. That's all I wanted to know thank you very much youre welcome.
Yeah.
Okay.
Yeah.
We have a question from.
Francis CT TOBA.
Line is open.
Hello, Joe how are you today.
How are you.
Pretty good.
My question is.
What has been the problem with call.
It seems as if.
That's been the main problem years ago, when I met with Bob You said it was very inexpensive to make.
That was quite a few years ago, and now you're probably talking about cost cutting.
Dan what was the fault block.
Yeah. So let me, let me break it down into different components.
The SPD limits.
Materials that are synthesize so.
That's not the expensive part some of the transparent conductive coatings on the plastic.
It's probably the most expensive part of the system and you know when you have.
A single supplier like Hitachi and there's nothing wrong with Hitachi they make a great product and we're very happy with not only the product, but how it's fair to automotive as you know being highly reliable, which was our central for our new technology coming out of the gate.
Hum.
A single source of anything.
And the act like monopolistic suppliers, and adding a second layer immediately.
Hitachi to drop ice so it wasn't all inherent in the tech now that there is high cost, but also with volume.
The ability to buy our components like the can coating P T and others.
As you know it becomes substantially cheaper and that also contributes to a lower cost and then you add to it that extra yield so the <unk> facility in Germany is state of the art, it's 11 years newer than the Hitachi facility.
Technology that just quite frankly didn't exist when Hitachi opened their facility such as you know L. U D based UV curing where you don't have to generate a lot of heat from the UV lamps to cure the materials. So it means that you get better throughput and quick around turnaround time and more control over the process. So thing.
Like that where things that gals, he built in and they gave a lot of thought to other things and I mentioned, one of them, which was you know variable with coding.
So that you can eliminate a lot of the cost in terms of you know.
Materials lost through cutting and stuff like that so those were some of the things and then you have typical economies of scale you put this in one vehicle. It's expensive you put it in a million vehicles, it's a lot cheaper so.
Now as we get closer to the prices come down and that's what I alluded to earlier when I was asking this make it into the mass market I've seen substantially lower prices, even from today's prices, which are lower than Hitachi.
Substantially lower in volume so.
Okay experience.
Are they experiencing any problems coding.
Yeah.
Was that gonna Gauthier autonomy in the beginning everybody does I mean coding as an art, but but the yields are quite high and the quality is quite high on both products.
Have to be I mean, if you have it as a customer.
You can't come out with something that's not a top notch so.
One of the best things that happened to our industry Francis was.
How hard Mercedes kicked the tires and the big because it lift the entire supply to place which is what we needed.
Is there a difference in the actual color of scalzi versus Hitachi film.
Subjectively, yes, the Gatsby film looks Blacker journey, we've up side by side with the Hitachi film and it looks blocker.
And for a given cutting fares thickness it looks darker.
And but it's the same basic materials.
Mclaren skating get from Ghazi or.
Gotcha.
I'm not allowed to discuss where they're getting it from.
Okay initially before that day.
Well I'll say I'll say this initially.
Before gals, who was on the scene.
They were still producing Mclaren Mclaren in the past at least who choose to touchy film and likes it.
Mhm.
I would think they would prefer a darker.
In the light of long, but that's just me.
Yeah, I think he talked I think you might be right.
They're both great products to them.
Okay. Thanks Bye.
Okay.
For those of you, who just joined the call today.
Ask a question. Please press star one on your touch.
Keypad now.
And we have a question from August Berman.
Your line is open.
Hey, Joe how are you.
Hey, I guess how are you.
Just one question from me.
The new orders that you are talking about that are going into serious production later this year.
There was more moderately priced vehicles.
Some are yes.
Meaning meaning sub 60000 dollar cars.
I don't know, what they're going to charge their typically known to be.
Much less expensive than the cars we've been in.
Got it.
Thanks, Joe.
Youre welcome.
And we have no more questions in queue at this time.
Okay, well look if we haven't fully answered any questions there either emailed to us are presented in our presentation today or during the Q&A, just email me and well do our best a couple of closing remarks.
2020 began a year of great accomplishments for your company.
And our main revenue segment automotive great companies like Gentex, who I'm a big fan of saw Q4 revenues down 21%.
Weakness was driven by an overall double digit decline in production, but even in the midst of this independent depth.
And the chip shortage in the supply chain disruptions and other logistic disruptions research frontiers automotive revenues were up year.
I mentioned in January 2021, Cadillac announced the use of the four quadrant SPD smart glass sunroof on their all new electric flagship celestial <unk>.
During the year more and more companies increase their investment in electric vehicles and they also accelerated their timetables both were helpful for us.
Every major car company has announced an all electric strategy.
And energy efficiency and the reduction of C. O two and other emissions remains an important topic for the industry and our ability to extend the range of electric vehicles by five 5% is significant and the advantages of using SPD LG has been.
By virtually every major automotive publication out there.
Hyundai made an equity investment in our licensee Galaxy and when I was at CES two months ago. The chairman of Hyundai Motors himself, along with a C. T O and the Korean economic Ministry visited Southeast Booth, where SPD Sun roofs were on display.
I spent quite a bit of time, there too I must say it was an honor to meet them.
Other licensees have also moved forward automotive projects pretty smart glass into serial production.
And next week, we're demonstrating a new concept in solar protection for a major OEM on one of their new electric vehicles.
Okay.
As noted we expect revenues from these new automotive programs to start coming in perhaps as early as the next for which started production of these vehicles in Q3, and Q4 2022 and the Cadillac <unk>.
Yeah.
Also a vision systems had a major project win with SPD Smart EDW is being used on the Airbus a C. J two 'twenty as well as the epic and other areas.
And trains using large amounts of SPD smart glass or transporting passengers on the rails and new higher volume train projects were started this year internationally.
LG display announced the new transparent OLED technology that thanks to SPD.
It turns a clear window and window into a high definition TV.
And in architectural it remains to be seen whether companies like crown will overcome the financial scale up another technical challenges. They currently face.
Whether the economics of long good electrochromic business will ever make sense for the architectural windows or whether companies like view will even survive the year.
My estimate they have between nine and 11 months worth of cash. So if I was round my pori is it.
I need my advice, he's probably out there trying to capital now which is why they probably haven't filed their financials in over a year.
But a small well because they help promote the idea of smart windows to the market. Their sales teams are helping us and our licensees businesses by building awareness of the benefits of dynamic variable tint windows.
And their performance also makes our SPD technology look good.
So architectural projects using SPD smart glass have now begun to ship because gallons you can coat wide film on their dedicated SPD film production line outside of Stuttgart, Germany.
And they also expanded this year the emulsion production capacity in Tel Aviv and in fact, our licensees have expanded production capacity in all areas of the supply chain from the chemistry production to the film coating to the fabrication of end products for all industries, including the actual automotive Eric.
<unk> Marine <unk>.
Transit and consumer electronics businesses.
And the merger between our licensees Galaxy envision systems created a powerhouse who has good growth on our SPD technology and unlike competitors view Sage and crown in the architectural space, we have a worldwide coverage and much better economics, and logistics and certainly a better performance.
So the seeds of success and growth have been planted and are beginning to sprout future.
Future looks bright.
I'll enter 'twenty, two with strength and a strong position to grow and prosper I. Thank all of our loyal investors for their continued support and trust and I. Thank you for participating on today's call.
This concludes today's conference call. Thank you for attending.
Yeah.
Okay.
The House has ended this call goodbye.