Q1 2022 Research Frontiers Inc Earnings Call
Yes.
Good afternoon, ladies and gentlemen, welcome to research Frontiers Investor Conference call to discuss the first quarter of 2022 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 that 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 these 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 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.
<unk> start to.
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.
Go ahead Sir.
Thank you, Paul and Hello, everyone and welcome to our first quarter of 2022 Investor Conference call.
We had our last investor call together, just eight weeks ago. So this call will be shorter on the presentation slide leaving more time for everyone in the Q&A portion later.
I also thank all of you have emailed in your questions that allows me to answer many of your questions in my prepared remarks to make these calls more efficient for everyone and to cover more ground.
2021 was the seventh consecutive year that expenses were lower than the year before at research Frontiers and this trend continued into the first quarter of this year.
With total expenses lower by about 3%, which is something often difficult to achieve and especially in the new eight 5% inflationary environment that we're currently in.
We are also in a strong financial condition, we continue to have no debt and as of March 31, 2022, The company had cash and cash equivalents of about $2 $5 million working capital of $3 million and total shareholders' equity of $3 $2 million.
We took a little bit of a market hit when we moved from investment securities into all cash and cash equivalents during the first quarter.
But with world events, and the new inflationary environment and market gyrations.
Wanted to play things safe. So that's why we did it.
The company expects to have sufficient working capital for at least the next 23 months of operations, which should take us into early 2020 for.
This is based upon our lower quarterly burn rate of 300 to $325000 thats per quarter with higher projected revenues during that period, mostly from new car models.
And our last Investor call in March we reviewed the past year together and look forward to some exciting developments that we expect to happen this year.
Despite everything else happening in the World I'm happy to report that everything is still on that positive track.
The companys fee income from licensing activities decreased slightly as a result of two factors lower to flat economic activity and various things that use the companys SPD smart glass technology.
Timing differences due to how revenues are recorded from an accounting standpoint.
We expect revenue in all market segments to increase beginning later this year as new car models and other products using the Companys SPD Smart glass technology are introduced into the market.
In our last conference call, we spoke about new car models coming into production in Q3, and Q4 of this year with our SPD Smart glass technology in it this.
This is still on track despite the supply chain and other disruptions around the world.
And aircraft last year, there were significant new projects in the aircraft industry, including the AC J two 'twenty program by Airbus <unk> and vision systems.
In our last call. We also highlighted the SPD electronically dimmable windows by vision systems, and the new epic aircraft.
There is yet another aircraft that is now adopting our edw's.
Those that follow the industry or follow us on social media you may already be aware of this let me congratulate vision systems. Once again on the debut in early April at the Florida Air show.
Electronically dimmable windows that have been put in serial production and the doctor.
<unk> 960, very fast turboprop aircraft. This joins a growing list of fixed wing and helicopters that vision systems is now.
Now supplying SPD smart electronically dimmable windows too.
The results have been further integration and expansion after the merger announced in February of between two of our licensees Gal Z envision systems.
As I mentioned in our last call. This was a transaction that had our full support and one that I personally worked with.
Galaxy envision systems on for the past two years.
<unk> the largest internationally diversified smart glass technologies manufacturing company in the world.
As of last year, the combined entity had over 30.
<unk> certified industrial partners.
<unk> dedicated manufacturing sites 14 global offices international subsidiaries on six continents and customers in over 50 countries. They have over 60 patents and 20 unique product categories, and 480 employees globally and had last year approximately $50 million.
Combined revenues.
After having visited both companies multiple times since the merger was announced in the first quarter I saw firsthand the synergies and expansion of their businesses that had resulted.
With vision systems and Gals, you have shown me their expansion plans.
For their production facilities, both here in the U S and in Europe and in other areas of the world.
<unk> also took significant steps and made a significant investment to increase the capacity and capabilities of their emulsion production facility in Israel and their SPD film production facility in Germany.
Another licensee of ours in automotive AGP recently also received $250 million in expansion capital and they certainly have become a quite a bit more active with our technology I think you'll be seeing their efforts more publicly this year.
We took some of the questions previously sent in by shareholders and here are some additional questions over E mail to us.
Yeah.
From Jarrett Albert Hi, Joe can you provide a per unit royalty range for upcoming car models.
Well, thanks, Karen we estimate between 101 hundred $50 per car and royalty income depending on the content.
Jared also asked is $40 to $60 per square foot, a reasonable range for views electric chromic installed and something similar for the electronics.
Jared Ive heard higher costs, as well, especially for the wiring in the electronics, but it's hard to tell because their installations are clearly highly subsidized with view paying in some cases up to 82% of the costs. So it's really hard to get an accurate sense as to what things really cost in that world.
Yes.
Another question of the vehicles that evaluated SPD and then use PD LC and production do you have any insight into why the decision was made and any feedback since production began.
Well a lot of the customers have reported that its just not blocking enough light and heat.
And there may be a variety of reasons from the using suppliers that the OEM had a separate equity investment into maybe not understanding fully the limited amount of solar protection compared to SPD that <unk> is able to achieve but I would just be speculating, but I know that a lot of these.
Customers of these cars are not very happy with the limited level of solar protection that the PD L. C is providing and it's only in small volume so it's hard to tell.
Really if that's a <unk>.
A widely held belief or not but whats been publicly posted as has been.
Dissatisfaction with the PDL seats.
Jared also ask what do you think of the recently published academic SPD study from Saudi Arabia Arabia do you like the conclusions and was the evaluation process is fair and this will just be useful in marketing SPD.
Well Gerry to answer your question, yes, I like to conclusions and it's a very useful business development tool for us and our licensees.
I also like the fact that the demographics and climate, where it was done Saudi Arabia are great for early adoption customers and here's a sample of some of the conclusions from that study.
First the scope in this study the overall energy consumption and visual comfort of suspended particle device or SPD smart window were investigated as part of the glazing integration of an adaptive building designed to consume less energy than a hot desert climate. So.
So they are building, an energy efficient building and designing it especially for hotter climates.
Typical floor of a commercial office building in Riyadh, Saudi Arabia was chosen for the energy and visual comfort stimulation in.
And here are some of the conclusions from the study.
The simulation results indicated that switchable SPD smart windows in the off an automated states achieved a promising reduction of net energy by up to 58% against double glazed low E windows will double glazed Louie windows as people in the industry now are pretty much the the.
The high end of energy efficiency, So it's a 50.
58% better.
Yeah.
Another conclusion, the energy required to operate an SPD smart window in the fully powered state transparent state is very low.
At 396 kilowatt hours per year per square meter think about that.
Four kilowatt hours per year per square meter divide by $10 seven nine and you get square footage.
When compared to the total energy consumption is very low.
Another conclusion net energy savings associated with integrating an SPD smart window with all states would reduce the overall energy consumption, making this type of glazing and energy efficient product. The SPD smart windows offered a significant reduction in daylight glare probability and solutions using automated controlled SPD.
Smart Windows would offer an excellent balance of energy performance the elimination of discomfort due to glare issues and the provision of sufficient daylight for office buildings.
And then the final conclusion, thus controlled switchable SPD glazing can be a good alternative to standard glazing and a hot desert climate in terms of reducing energy use and providing visual comfort.
So to answer your question in a nutshell, yes, I'm very happy with the results of that study and.
As I mentioned this would be a great.
Resource for architects architects and a very good business development tool.
We discussed a lot of exciting topic, so far and today I'd like to ask our operator, Paul to open up the conference to any additional questions people participating today might have that we haven't already covered so Paul if you wouldn't mind opening up the Q&A queue.
If you'd like to ask a question. Please press star one on your telephone keypad now.
You will 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 Chuck Michaels.
Your line is open.
Yes, Hi, Joe.
Yes.
I wasn't aware of that.
In your press release.
New aircraft model that debuted in early April .
Good luck Mike.
And on that.
Yes.
Somewhat limited to what I could say, but.
This was debuting at the.
And at the Florida Air show.
Earlier on in the call I congratulated vision systems on this.
Another win that they had.
Really interesting its a high speed turboprop Doherty TBM 960.
Just like the King Air Turboprops. This is a.
Nice looking playing I don't know if you've seen pictures of it but.
And.
I think it's going to be a very popular product in that.
Okay. Thank you.
Thanks, a lot.
Thank you.
And we have a question from Clara Houghton.
Your line is open.
Hi, Joe.
Hey, Carter.
I was wondering.
You know at one time you.
Said that.
Research frontiers was being covered by more.
No.
<unk> and that type of thing.
Yes.
The volume.
Our stock on Reefer.
Research Frontiers is around 29000.
Shares a day.
And you compare that with view.
Which is.
Right.
He was an inferior product.
Getting over 800000 shares a day.
Is there.
Any explanation for that.
Yeah.
Have you started out as a $4 billion market value company.
And it has a very very large number of shares outstanding.
Having said all of that and having started with a very high valuation.
They have lost a year to date.
61% of their value.
And that's year to date. So they went from $4 billion before they went public to about $345 million right now in market value.
So it's just the number of shares that they have and unfortunately.
For them the volume has been down volume.
Okay Alright.
Alright, thank you.
Thanks, a lot.
As a reminder, if you do have a question. Please press star one on your telephone keypad now.
We have no further questions in queue at this time.
Yes, we got one emailed question.
One of our shareholders, David asked and some a couple of other shareholders said emailed into question.
The other public smart window companies view and crown.
So.
Basically the quite the question just to kind of.
Combine them where.
What can I say about their businesses, how do they compare to research frontiers.
And what about their recent performance.
<unk>.
I'm going to go into some detail I guess because first of all it's broadly ask question.
But it's also one that I receive quite often especially this year.
And I'm also going to combine this with another question I get and.
And spend some time at this too because.
As Youll see these companies that's actually helped research frontiers, and our licensees in multiple ways beyond just bringing awareness that smart windows to customers.
I'm going to start though by kind of putting this in context last year, we showed our lowest loss in 27 years and we even had one profitable quarter, which is something that no. Other smart window company to my knowledge has ever achieved.
This quarter, we reported even lower expenses than last year. So I have been asked.
Why have we mentioned not only revenue, but also lower cost and financial stability and our calls together and I think when we talk about viewing crown youre going to maybe get a little bit more appreciation for why that's important of course higher revenues and lower costs makes profitability closer.
And it's also just a great indication that your company is managing its affairs as efficiently as possible.
But there is another reason that this directly relates to operational success.
And thats confidence by smart glass customers and the stability of their suppliers.
So now let me answer the question, we got about UN Crown.
Crown has not reported their first quarter numbers, yet, but based on all public indications. They continue to have no sales.
They have once again pushed back.
The anticipated date of their product launch from last quarter.
To now being this summer.
And today, they announced that they are co president and Chief marketing Officer resigned domestic company.
Their stocks.
Trading a little over a dollar.
As of the close today.
Also in their last conference call was that while they were.
Somewhat optimistic that they would be able to make their inserts wider than six inches. They have not achieved this yet and there are immediate goal is to do six inches and then achieve 12 inch wide inserts and eventually go up to with that are comparable to what the industry needs to cover a typical commercial window.
And we know from our experience over 20 years ago that it is a great distance from a commercialization standpoint going from six inches to one eight meter width.
And that's the way that our licensee <unk> Z can achieve in their factory in Germany, that's dedicated to Nebraska production of SPD Smart light control film.
<unk> would have to be times wider than they can achieve.
Now to reach that goal.
And I hope they do achieved its because side by side comparisons of SPD smart glass to their inserts would be quite favorable the research frontiers and our licensees.
That's crown.
Other public smart window company his view and view does have sales, but view has not filed their financials in quite a while and this has certainly been a terrible year for them and their investors.
View originally indicated in early January that they expect to file the restated financials for 2019 and 2020, so going back away as well as to 2021 financials by this past March and then reaffirm this in late February .
And then about two days later two of their directors resigned including the one that has their board chairman that was appointed to fix.
Their accounting issues and they stated in their resignation that theyre designed because apparently didn't they did not think that view did what they were supposed to do to adequately fix the accounting mess.
In March there head of R&D will also develop their views manufacturing process abruptly resigns.
He had been with view almost since the beginning and in early March view withdrew the registration statement with the SEC that they had and when the end of March rolled around and view missed their stated March target date for filing they're corrected and new financials. They would they said they would now filed them sometime in may.
And if they do in fact filed them later this month it will be interesting to see if their cost of revenue is still three $3 75 to about $4 for every dollar of revenue they generate so they're basically <unk>.
For every dollar are paying almost $4 in costs of goods sold so not a very good economic model.
But.
Just going a little further and I think this will make a lot of sense as to why this is a positive for us it's not just.
Bad luck by a competitor because I do wish them well, but.
Given the nature of the accounting issue that they claim they had regarding warranty reserves from defective products.
And they are more recent claim that there were no other accounting issues that they had uncovered.
It seems to me that.
They should have been in a position to file the restated financials, a while ago, but for some reason they didn't.
And what I believe is really behind this other than.
Other than the accounting problem and a defective product.
From the warranty claims as that view is quickly running out of cash.
Filing their financials in March would have resulted in them, having a dreaded going concern opinion about their ability to remain in business.
So my educated opinion for whatever it's worth that view is currently trying to quickly raise money so that when they eventually do filed their financials. It will not have a going concern opinion in them.
But apart from kind of the direct reason for this question about our public smart window of competitors.
There's been a.
More direct impact on our business.
And it's positive for US we recently learned from industry sources that views customers are concerned about the continuing viability of view moving forward.
Given.
Their lack of financials and they're very large losses that I think last year were about $260 million a year.
I guess they were also able to piece together the situation that I outlined above and were concerned about it as well and because of this our licensees have been approached by views existing and prospective customers who are looking for a more financially stable and reliable supplier of smart windows.
And these customers will find not only that our licensees are well capitalized and have a very stable businesses and supply some of the largest and most demanding customers in the world.
But they'll also see firsthand the superior performance and reliability of SPD Smart glass.
And it seems now that.
The.
Additional factors not just the cost of the product, but whether the company supplying it will be in business and customers are beginning to take that into effect and don't get me wrong, I really wish viewing crowd, well I actually wanted them to do well because viewing Crown actually act as a great reference point for customers of ours.
SPD Smart technology.
<unk> superior performance and.
Has proven durability and tens of thousands of cars boats aircraft and architectural application. So it was always good to have that reference point, you know window that switches in 40 minutes versus ours that switches in two seconds or if you see pictures of competitive technologies.
You very rarely see videos, because they take so long to switch, but if you see pictures, you'll see that they don't get very dark also in and Thats a problem.
I do wish them well.
Im not sure if we have any other questions in the queue I think I see one actually.
Yes, we have a question from.
<unk>.
Hey, good afternoon Gil.
Hey, Ryan how are you.
I'm fine thank you.
I wasn't aware of that Saudi report, which I think is absolutely one gets only as you know.
I live down here in Florida, where there's a lot of heat and we're.
We're looking forward to getting.
Windows for residential.
And I guess wondering if you've had any <unk>.
When you get success with P. J T or some supplier of windows down here in Florida, where that might be.
A likely event anytime soon.
We have an Len thanks for mentioning P. G. T. P. G. T is one of the Premier.
Impact resistant hurricane resistant windows suppliers in Florida.
They make a great product.
A lot of the buildings down here that you know they.
They have to comply with the Dade County Hurricane standards in P. G. T is often the preferred.
Supplier of that here.
And Florida, where you are.
And.
We do have a good relationship with P. G. T. We also have.
Other very well respected high impact resistant window manufacturers some have considerable experience with our technology and also with.
Just impact resistant windows in general and even retrofit application so that.
And large cities like New York, where when you want to replace the Windows you have to put up scaffolding and you have to get either co op or condo board approval and.
Department of the building department approvals and things like that with a retrofit done from the inside you don't have to do that so it really changes.
The game in terms of how smart windows can be introduced into those buildings and as you know I believe you're on the west coast of Florida.
There's a lot of.
Economic activity in construction going on in Fort Myers, and Naples, I mean, just a lot of.
Beautiful buildings going up.
On the East Coast of Florida, Miami Aventura Sunny Isles.
Have magnificent buildings and.
Our licensee gals, he actually has an office in aventura.
That puts them very strategically located in.
They've been working on some projects for SPD that I think are going to be highly visible when they when they come out.
That sounds exciting.
It is you'll be able to drive to some of these projects and see them.
Yes.
I don't know anybody that's building more than they are in Sarasota debate Friday and everything there is lots of projects going on here as well. So yes, I think it would be a very welcome addition.
If we can get it get it operating here with some local manufacturers. So I just wondered if that was correct.
And we look forward to in the next year or so or is it going to be longer.
Yeah in the last month or two I've been in your area at least three or four times.
And I apologize for not stop again, but.
They're in and out for project discussions.
Okay No problem when you get a chance you can let me know.
Well kind of well.
Thank you.
And as a reminder, if you do have a question. Please press star one on your Touchtone keypad.
And we have a question from August Berman.
Your line is open.
Hey, Joe how are you.
Hey, Dr. Lieberman how are you.
Well thank you.
Just a couple of questions for me.
First.
Yeah.
I'm not sure. This has been asking the past is there.
With the with the with the Hyundai investment in Galaxy two.
How do they have any say in terms of yes, we.
We don't want you to.
Make any any any kind of.
Big time deal with any other Oems Intel Hi, Nick.
First or is there or is there not a restriction.
My thinking is that maybe Hyundai asking first before the doors open to other OEM customers.
Yeah.
That's an excellent question and.
Hi.
Well I'll answer it first by saying I don't believe theres any restrictions because I know that there's multiple projects going on in the automotive industry. So.
And some may actually.
Come out ahead of Hyundai.
So I don't think theres any restrictions, but one of the things to understand about Hyundai in and we had this experience with.
With Mercedes.
I felt like.
I was asking them if I could date other women in the beginning because they were a launch customer and <unk>.
<unk>.
I had a number of car companies that wanted to adopt this.
And I approached M&A first delicately ask the question. They said Joe of course, we want you to work with other companies because.
The higher the volume the lower the cost to lower the cost the more cars. We can put this in the more clients. We could put this in the more our customers are going to like it very.
Very simple approach and I, even learned that.
Car companies will also license.
Key innovations to their competitors so.
For that very reason they want to get the volumes up they want to you know.
Strength in the supply base, they want to get the cost down so I don't believe theres any restrictions in there.
Of course, you want to be as nice as possible to your best customers, but I don't think that means.
Turning down others.
Okay that's perfect.
Thank you.
My second question is.
Pardon me.
But in terms of what I think is going to happen in the future and other Oems.
<unk> three looks better than 'twenty two in terms of more adoption, where we're talking about ceilings 22.
Do we see it can be seen in an inflection point at that point, where we say okay.
And we're going to get.
More of the following year.
Guidance in that area.
Yeah, well I think it's always going to get better and one of the reasons is that.
In terms of our revenues.
Think about a typical car project.
Our car program last about eight years. So for eight years you are in the car.
And.
So in year, one year and let's say, there's two cars that are introduced this year. So there's two new cars that come out this year with our technology next year. Those two cars are still there plus you have the Cadillac coming out in 2023, you have other car companies coming out so it becomes accretive you're adding layers of revenue on top of existing programs.
And then.
Superimposed on that you know the Grand scheme, which we'll talk about which is almost every car company in the world has accelerated their electric vehicle program and remember we can increase the driving range of electric vehicles by five 5% so strategically.
Strategically important is as the quicker the adoption of electric vehicles, the better we're going to do.
So all of those are very positive trends.
And then.
Oh and one other one other point just as long as just to give you a more complete answer.
Typically you know in the first year.
The card programs are starting up and things like that by year, two they start to market it more and people get more comfortable with the new car models and things like that so you could also expect kind of a natural.
Increase in volumes.
For the first several years of a car because of that okay.
Perfect.
And then lastly.
No sorry question any talks with Mercedes or they start going are they still ongoing it feels like yes.
Yes.
The DLC, so SPD still has to be out there.
Yeah, Yeah yeah.
Well.
If you remember Mercedes first use PD L C. Before they used SPD they had it in the buyback and it was not very good of a product.
It actually created a greenhouse effect inside the car.
Were he would be trapped and not be able to get out so instead of blocking heater, what's actually trapping into making it worse.
As smart as Mercedes was back then I remember also when they did do that we werent in existence in commercial production yet so it's not like they had a choice but once they did have a choice. They went with SPD and we have very good relations with everyone at Mercedes all the way up to the chairman level.
I remember all the Colonias win.
He was an up and comer, but wasn't in the top four executives and you know our our consultants who.
So keep an eye on this guy he's going somewhere in there right.
But yes, we have a good relationship with everyone at Mercedes and.
I expect that.
When.
When they are ready.
Ready to introduce the car they have targeted you will see SPD in it.
Very good thank you Joe.
Thanks.
Thank you.
And we have a question from William Brazel.
Your line is now.
Yes, good afternoon.
Hi.
Yes.
I've been on.
Separately Congress call I've been an investor for three years.
I've noticed your stock prices range from.
Dollar 36 to $5 over those three years that ive been an investor in and right now it's near the low end of $1 70.
Can you comment on why we have that stock price besides a lack of revenue.
I don't know I don't think.
You keep talking to them I don't think that's as.
We had some significant revenue and otherwise.
The investment environment, if they don't show a profit stocks I don't think the stock's going to go anywhere.
Right well.
Of course, our goal is to have higher revenue.
And you know every good company should have that as it's called.
If we look at.
Two two factors I think that really would go into our stock price you know one is supply and demand.
Our demand hasn't changed I mean, our supply hasn't change we've had.
Just under 32 million shares outstanding for the last couple of years. So we're very careful about not diluting shareholders with stock offerings, which tend to weaken our stock, but we're also in a market cap that.
Wasn't one that was attracting a lot of money.
Most of them flowing into the Fang stocks and.
That's the supply and demand are small caps, we're really not participating in most of the market.
If you look at our current price today.
To date, we're about flat.
Year to date, the Russell 2000, which is I guess, the most comparable index is down almost 18%. The NASDAQ is down almost 23% I'd have to tell you you know.
Oh I understand.
Got it.
You don't have the increased revenues.
Right absolutely.
<unk>.
There is no confidence illustrated on this company because youre not it.
You don't have you don't have the ability to bring us all to home plate and increased these revenues significantly.
Oh I disagree I think if you've been listening to the calls you see that there's a lot of things that are.
In the works and because of the nature of our business is not too.
Our primary business in revenues right now are not selling buildings, okay. It's automotive piece cars come online.
The day before start of production, there's no revenues that they have started production the revenue start and that's the way it works.
If you have I'll answer.
I think last quarter, you still don't have the revenues to report.
I keep hearing quarter after quarter. Thanks.
We're going to get better, but I'm still waiting for the day when you are profitable okay.
Okay.
<unk> two unit volumes in the automotive industry in the last year.
And things like that I mean, if you're dependent on the automotive industry, which is where our primary market is.
That's also you are going to rise and fall somewhat with that tide.
And if you follow those industries, you know that it's been a very disrupted year between.
I understood I understand that but is that just one second one I thought the big industry that you could really hit a homerun and as in the architectural side sure.
Right exactly and that's the one that we said is just coming out now, but if you look at our bread and butter, where the revenues have been coming from they're mostly coming from automotive and that's been true for the last 10 years, but look we always wanted to do better.
I'm a shareholder like you I've been a shareholder that paid.
In some cases and twenties for the stock so.
There's probably nobody on this call.
As motivated desire to show positive revenues and things like that and what I'm trying to do right. Now is at least show you where those revenues are likely to come from.
What we have in the works and what the path to that profitability is and I start to see it but we'll talk about that in a little while but I think you guys sharing.
Share your frustration.
One point that I have is.
For this company to get into the hundreds.
50 to 100 million or more in revenues.
It would have to be mainly come on the architectural side and whatnot.
Not necessarily if you look at that.
Yeah. If you look if you look at the if you look at the market for just premium auto automobile so cars above let's say $60000 in MSRP.
Hello, Nowadays, it's probably higher because of the the inflationary aspects that are going on in all card segments, but if you just look at that and you look at that being about 3% of the unit volumes.
You're talking about.
You know 100% of that market would be about $200 million in revenue to research frontiers and of course, we're not going to get 100% of the market, but you could see a big chunk of that.
Can come in a big significant increase in our revenues could come from just being an automotive sun roofs, and you know if you've been following some of the developments in our industry carmakers are not only looking at us for sudden routes, but other things as well so you know I.
I expect this to be a good market, but the good news about being our company is we can be in five different markets, we can be diversified without having to.
Spend money building factories are licensees do that and they happened and that should tell you something else. So that's one reason why I invested in the company because I know you have such a low overhead.
On the royalty.
Just take a fee for Amir.
The double double check on your stock and if you could just start.
Start getting a one or two quarters, what you're profitable and then I think that would really open up doors open up and I'm going to talk a little bit about that in my closing remarks, but I, but I I I agree with you 100 per cent right now no I agree with you 100 per cent, though thank you. Thank.
Okay.
And we have a question from Johns trouble.
Your line is open.
Hi, Joe I asked this question on it the last a conference call and I'm kind of looking for an update on your thoughts because the the world has changed dramatically in these last two months.
It looks like Russia is unlikely to be a customer of a N E. S. B D products for years, they're essentially.
Out of the business of trade.
And in China, which has created catastrophic.
Backups to a supply chains worldwide with they're shutting down various cities with Covid.
Do we have enough materials to.
Reach our goals yes.
Yes, that's an excellent question and then let me also take the other part of that question. The too Big of you know two big markets for automotive is China. The largest one in the world and in Russia used to be a big market.
For you know premium cars and specially you know so it.
It certainly.
Yeah. It is not good that you know.
The major markets for automotive you know have basically you know dried up.
They will come back these things happen in cycles, and you know and maybe China before Russia, but whatever I'm not I don't have a crystal ball and in world politics, I I focused more on the economics, but but the other part of your question is is actually an excellent one two and I'm happy to say that we don't really have a very high.
[noise] dependency on.
Components from China or anywhere else really you know.
So it's most of it most of the items are are manufactured in Europe , or the United States and you know the key components of this and that were in in Israel. So you know all very stable places for these things and I don't foresee yet.
Ah supply chain issue with any of this stuff, but it's an excellent question you know I focus a little bit more on you know what can we do to you know maybe focus more on North America, Europe , and the middle East in terms of their car markets first until you know maybe try and it comes back online because that was a very.
Market for.
Every premium car company in the World you know.
Especially Audi Mercedes and B M W.
Okay. Thank you.
Thank you.
And we have a question from Frances.
Called Turbo.
Line is open.
Hey, Joe How're you doing.
For instance, how's it Goin'.
Pretty good with one.
Lemonade or galaxy in Germany.
<unk>.
Only.
Plant that will.
Be producing the laminate.
No. So there's two film producers, there's two film producers Hitachi chemical which you know it was bought by Showa Denko and there's galaxy Galaxy is the only one that can coat fell 1.8 metres wide. The production line at Hitachi was one meter wide, which was perfectly fine for a lot of the application.
Like you know car sunroof and trains and things like that but what we found and this was a condition to doing business with Galaxy. We said, we won't license you you unless you.
Build a facility that can cope film at least 1.5 meters wide, but you know they like.
Like exceed expectations I did 1.8.
And actually can go a little bit wider than that but yeah. So they're the only ones doing let's say architectural with.
Is there is there.
Is there a large difference between the two films if you were to actually look at them between thousand you know.
No I mean, I've I've I've done side by side evaluations of both films are both excellent films.
If I had to.
If I had to give you my qualitative assessment.
And I hope I don't get in trouble with a touchy by doing this.
You know Hitachi as film has been the workhorse of the industry for over a decade.
And it's a great product and they.
You know they they did a beautiful job with that and as a nice range of light transmission you know it it blocks, 99.5% of the light in the dark state. It lasts for about 55 per cent of lighting in the clearest state.
Which gives you 110 to one contrast ratio, which looks really dramatic and you know really does a great job of blocking.
Heat light and glare, so it's a great product.
As great as it is when you put the Galaxy film next to it it looks blacker.
For the same coating thickness in.
And it looks clear.
Maybe it's just my my eyes, maybe it's the area of the spectrum that it's operating in with a slightly different one.
Be just you know something as simple as a better dispersion of the nanoparticles inside the film, but you know they're comparable in terms of they both are using the same materials.
One just looks a little bit different and in my in.
My eyes, maybe a little bit darker and a little bit wider range of light transmission. Now you also you didn't mention anything about T V. 's how's it progressing Oh I would imagine that in my closing I'm going to mention that in my closing remarks, but that's going well.
If you if you will hold your question until I could say something about that I'm I'm happy to talk about it.
Alright, now as far as architecture goes.
To to film.
Sold in southern roots, it's only for vehicles like 60000 in a bus.
<unk> right now.
Right right now, but you know if you look at if you look at.
Some of the entrance might be some maybe premium carmakers and some may be you know higher volume carmakers like Hyundai So yeah, let's see where everything goes.
Together with a prompt will the price point comes down to where it could actually be feasible to use an architecture.
Oh, absolutely absolutely I mean, right now without Subsidising, where I would say where clause comparable to.
You know, what we think of you when they'll really cost.
Actually now you May think we're better that we're better we're we're we're closer to what their subsidized prices.
[laughter] than what their their actual costs are.
But I don't Wanna go with detailed because I don't see that pricing, but yeah, it's definitely feasible for architectural and certainly feasible to get you know the cause of already come down a lot with galaxy entering the scene and you know just having some competition to the show a danko Hitachi film.
That.
That the cost of come down and can make mid market cars, even you know.
Quite feasible.
So now you mentioned subsidies do you expect that.
To happen with.
Possibly the government with green buildings.
Well there there there's a bill in Congress right now the dynamic Glass Act, which would give substantial tax breaks for putting switchable glass like ours in buildings. So that's.
That's clearly a you know a tax expenditure that is subsidizing the market. If it passes but also you know just I don't I never rely on subsidies.
You know what what we've been focusing on from day one.
Making this technology more affordable and you do it through picking the right people in the supply chain designing the technology properly and you know really just you know minding crossing your T. As in down in your eyes, and you know doing things like that and if you look at the history of things you know the class have come down, but then they went down a lot recently.
So.
We may not you know I'll quote one of my licensees, who years ago sauce, Sanga ban had supplied Ferrari with it.
The electric chromic roof for the Super America.
And.
It was a disaster.
It didn't work work well cars became with the glass broken so they couldn't deliver the cars to customer service wasn't a very positive experience. When they were doing this but on top of all that they were losing between 20 $505000 per car.
And one of our licensees who ended up.
Doing high volume business with Mercedes using our technologies said, Joe or not in it for.
A marketing gimmick you know they there's a total of 600 of those for areas that were produced throughout the life of the program. It's a marketing expense for the supplier of that we're in this to make money and all of our licensees or in this to make money. So we're not interested in subsidizing you know, although we certainly welcome that and like I said the dining.
I'm a glass act would.
You know certainly put a lot of wind in our sails there, but I think you're also saying you know if you will and indirect subsidy I mean this is smell the economist in me coming out, but you know if you look at higher energy costs and we are.
Conservation of energy becomes a lot more valuable to people.
So something that wasn't affordable.
When gas was $1.98 a gallon.
Maybe a lot more valuable and viable.
When gas was 450.
And Europe has been living with high energy prices.
For quite a long time, and if you notice they tend to be on the forefront of energy efficient buildings and installations and incentives and things like that so you know you have that going on too of course I.
I wish that.
Energy prices will come down I think that you know our role is not to sit there and ride the wave wave up within it higher energy prices, making our technology relatively more affordable a real job at research renters is to bring the cost down so that no matter what energy prices are this is a good.
A good thing to put into your buildings are into your cars are into your boats.
Mm.
They also mentioned it go and get a lot of electrical vehicles are there any <unk> in into vocal.
<unk> isn't it.
Yes, and one of the drivers there is the fact that we actually reduce C. O two emissions and I I C E vehicles by four grams per kilometer, which is very significant.
Any of those vehicles going to be announced soon.
I think you'll see that yes.
Like the industry is waking up to the to the fact that we could extend the range of electric vehicles and reduce C O two emissions and cars.
It's a good thing you know and we've been working hard with that messaging for the last three or four years to just constantly you.
Get that out to the industry and it it works yeah, they realize it.
Closer to the Sun visors.
I think they're very close.
Very close and I think you'll see Sun visors implemented in a lot of different ways that a car. Let me just leave it at that for now.
Okay. Thanks, Joe.
X a lot good talking to you.
Mmm.
Thank you.
And our final question comes from Alan Daenzer.
Your line is yes.
<unk>, Hey, Helen Helen how are Ya.
Yeah, it's been tough.
Santa I know, it's been tough I I think we've been relatively better than other tough investments, but I'm not satisfied with that I I I would like as a shareholder for our shareholders too. So a very nice return on their investment. So we're working hard for them right right right well Wednesday night, just wanted to follow up on that no one.
It seems to have asked in the last number of conference calls and.
And if you could just tell us what ever happened to the Brazilian Army car contract.
So the S E R. In Brazil has run into a lot of difficulties, Brazil was severely severely severely hit with.
You know COVID-19 shutdowns and perhaps they didn't.
Approach things the right way as a country I don't Wanna Judge anybody on that but they were very very severely hit.
They also had some successes S. P. D was demonstrated on you.
You know cause by major manufacturers and their armored.
But I think you'll also see one come out elsewhere. So I don't think it's a vacuum I mean I don't think it's I think it's I I'm, sorry say that again.
Is it dead that contract.
No there's still a licensee, but you know the company is still climbing up from you know some very difficult times.
As you would expect so.
You expect it to eventually happen or not.
I think so and I think that you know some of their competitors are licensees of ours too. So if they're not the ones supplying the armored glass in Brazil.
We already have licensees with even more experience with our technology doing that.
Feel free to criticize any government you want.
Clothing hours, you're you're still living in a free country, presumably thanks, a lot you have good luck to you.
Thanks, a lot Allen.
Thank you.
And we have no further questions in queue.
Okay in that case I would like to you know first of all if we haven't fully answered anyone's questions you know either.
E mailed to us or during the live Q&A today feel free to email us we'll do our best to answer what we can and I just want to make a few closing remarks.
As I mentioned last year, we showed our lowest loss in 27 years and I explained why that's important and we even showed a small profit one other quarters last year and I think that's significant because.
Something first of all that no other smart window company has ever done to my knowledge and I think even more significant as we expect to do it again.
And as I mentioned in the past as a company approaches profitability and you've seen this with.
Companies, even like Tesla, where they had a profitable quarter and then a couple of quarters of losses and then they became sustainably profitable revenues are often choppy, but then they usually smoothed out.
And we expect consistent profitability once the S. P D smart glass industry has its stride.
And you know today, you heard more about what that path to sustained profitability looks like and the progress that we and our licensees and our customers are made along that path.
2021, and began you have great accomplishments for your company in that area and these continued into 2022.
These accomplishments included new cars announced by Cadillac more cars by Mclaren.
And even a new government contract in the area of specialty vehicles.
Also innovative projects by other automakers, so new uses for SPD, such as B M. W showed at the Munich Auto show.
Prestigious publications with millions of readers each have highlighted the range extending benefits. So that's pretty smart class and internal combustion engine and electric vehicles.
And that highly coveted five and a half per cent increase in driving range. They also noted the significance of the four grams per kilometer reduction in C. O two emissions when it's pretty smart glasses used.
And the industry has also recognized other benefits S. P. D technology makes people more comfortable in safer and it protects the interests of homes and cars it reduces noise.
It strengthens glass and makes it safer Bentley.
<unk> noted that fixed nonbillable panoramic roofing cars can also reduce the weight by using SPT smart glass pipe to 13 pounds and eliminate the need for about 54 components. So this reduces costs and and further increases driving range and reliability, while contributing to the stability of the car on the road.
Hyundai second Sui and others invested in that are heavily involved in the automotive industry. You have made substantial investments in our industry through equity investments in our licensee Gals are you <unk>.
Recently raised even more expansion capital.
And when I was at sea, Yes. This year, the chairman of Hyundai Motors himself, along with a C T O and believe it or not the Korean economic Ministry visited us at <unk>.
Galaxies Booth, where the S. P D Sun roofs were on display.
An aircraft planes manufactured by Airbus Epic and last month's their with their T. B M 960 joined the other aircraft such as the King Air in the Honda jet and a host of helicopters that tomorrow.
From our S. P D technology.
And also now that galiot shipping wider S. P. D film, we saw the beginning of shipments of SPT Smart class for the architectural industry and more trained projects.
And I mentioned, there's activity going on that could even make those windows retrofit a bullet in the architectural market.
You also signed the Street Giants like L. G display of South Korea, combined they're transparent <unk> display technology with S. P. D film to make vibrant you know high definition displays and televisions that turn it cleared window.
Turn into a clear window at the touch of a button.
And these were exhibited at the Munich Auto show and at the January see yes in Las Vegas.
In one recent report indicates that L. G is move forward with their plans for this new T V with a 55 inch transparent all that S. P D screen.
Tended for the home entertainment market slated for release in 2023.
You mentioned two new car models in Q3, and Q4 an additional aircraft such as the epic in the day or.
During the year more and more car companies increase their investment in electric vehicles and accelerated their timetables.
All these are very positive every major card company has announced an electric.
Strategy.
Energy efficiency and reduction of C O two and other emissions is an important topic in this world.
And this year, we also demonstrated.
A new concept in solar protection for a major automotive OEM on one of their new electric vehicles.
And I'm pleased to announce today.
But now a second vehicle also is being targeted by them.
As noted we expect revenues from these new automotive programs to start coming into the started production of these vehicles beginning in Q3 and Q4 of this year and with the Cadillac shall S D and 2023.
Plans by key licensees of ours to further expand production here in the U S and in Europe or in the works.
And the merger between our licensees Galaxy envision systems created a powerhouse in the smart class industry, focusing on our S. P DS technology.
And unlike competitors view stage and crown in the architectural space, we not only have a proven technology and one with demonstrably better performance, but we also have wide coverage and much better economics, and logistics, where a film based technology.
We're excited about all areas of growth for our technology and today, we spoke about more cars more yards more trains architectural projects and new applications, such as consumer electronics and adaptive headlight such as the one that B M W with Sean.
We and our licensees continue to work hard to continue and build upon the successes and have made substantial investments to expand their resources and their production capacity.
I hope to see some of you in person at our upcoming annual meeting of stockholders on June 9th that's being held that our company headquarters in Woodbury.
That meeting will mostly be administrative reelecting directors and improving our accountants, but it's always good to meet in person or shareholders put their trust in their money and their faith behind their efforts. So I want to thank you all for being part of that excitement.
And for your continued support and trust as together, we move our company and our industry forward.
Thank you very much and those celebrating have a great mothers' day this weekend.
This concludes today's conference call.
Thank you for attending.
The house has ended this call.