Q1 2024 Research Frontiers Inc Earnings Call
In recent developments during today's presentation, all parties will be in a listen only mode and following the presentation. The conference will be opened for questions by pressing Star then the number one this conference is being recorded today a replay of this conference call will be available starting later today and the inverse.
<unk> section of research Frontiers website at Www Dot smart glass dot com and will be available for replay for the next 90 days.
Please note that some of the comments made today may contain forward looking information. The words expect anticipate plans forecasts and similar expressions are intended to identify forward looking statements statements that are not historical facts are forward looking statements.
<unk> that are made pursuant to the safe Harbor provisions that are part of the Securities Litigation Reform Act of 1095.
These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed significant factors that could cause results to differ from those anticipated are described in our filings with the SEC.
Research Frontiers undertakes no obligation to update or revise these forward looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were emailed to it prior to this conference call either in their presentation or as part of the Q&A session.
At the end in some cases the company has responded directly to email questions. Prior to this call where we will do so afterwards in order to answer more questions of general interest to shareholders on this call if.
If you find that your question has been substantially answered as a courtesy and to allow time for other shareholders to ask their questions. Please remove yourself from the queue by pressing Star then the number one.
Also we ask that you keep your questions brief in the interest of time.
I would now like to turn the conference over to Joe Harare, President and Chief Executive Officer of Research Frontiers. Please go ahead Sir.
Thanks, Morgan and welcome to the team.
Everyone and welcome to our Investor Conference call to discuss the first quarter of 2024.
Just nine weeks since our last call we've already witnessed significant developments in progress, which I'm eager to share with you today.
And in the interest of time and covering as much ground as possible I have taken a number of the questions that we've received by email kind of incorporating them into my presentation today.
We will start with the numbers I am pleased to report that research Frontiers continued its revenue growth momentum in the first quarter of 2024.
Our royalty revenues in Q1 2024 were up over 26% from the same quarter last year to $313378 driven by robust double digit percentage gains in our two largest markets automotive and aircraft.
This revenue growth is on top of strong revenue growth from 2023 <unk>.
<unk> income during 2023 increased by 69% over 2022, and overall revenue last year was up 109% from the prior year.
All of these increases in fee income were primarily the result of higher royalties from the automotive market and this past quarter. We also had increases in the aircraft royalties.
The first quarter of 2023 actually marked the beginning of five consecutive quarters. So far of revenue growth from the prior quarter. Prior year, rather looking ahead, although we're not even halfway through the second quarter, we already expect higher royalty income in the second quarter. In fact, we also expect higher <unk>.
Royalties, primarily in automotive in the third quarter and beyond.
This is based upon revenues already booked and expected revenues yet to be reported how do we know this remember our main market automotive is more predictable than our other markets.
And as a former federal reserve economist I always look for leading indicators of future activity, our best leading indicator of our future royalty revenues as our president SPD film sales.
We expect our growth this year will come from growth in our existing markets and from new product introductions.
We continue to be debt free.
Are in strong financial shape as of March 31, 2024, the company had cash and cash equivalents of approximately $2 1 million and working capital of $2 7 million and no debt.
Inferencing, please wait for the next available operator.
Our cash burn rate is approximately 200 to $250000 per quarter. However, based upon projected revenue growth I still do not think we will need to raise additional capital in the foreseeable future unless there's a strategic reason to do so.
Speaker Change: Operator may have your name please.
Speaker Change: And the company name.
So let's talk about other exciting things happening this year.
Speaker Change: And which color you're calling in for <unk>.
At CES. This past January in addition to the automotive Sun roofs side Windows. So advisors built into the front windshield and other SPD smart glass products. There was a potentially high unit volume specialty vehicle for the construction industry.
Speaker Change: Hello.
Speaker Change: So.
Speaker Change: Alright, one Amit your line is muted 7 million and no debt.
Speaker Change: Our cash burn rate is approximately 200 to $250000 per quarter. However, based upon projected revenue growth I still do not think we will need to raise additional capital in the foreseeable future unless there's a strategic reason to do so.
It had an augmented reality windshield that was made possible because of the combination of SPD film from Galaxy and the transparent OLED technology by LG group.
It was extremely well done you could see the vibrancy that happened with the augmented reality display by using SPD film in the windshield.
Speaker Change: So let's talk about other exciting things happening this year.
Speaker Change: At CES. This past January in addition to the automotive Sun roofs side Windows Sun Visors built into the front windshield and other SPD smart glass products. There was a potentially high unit volume specialty vehicle for the construction industry.
This product got a lot of attention in general and it even made the show newsletter as the what's hard at CES product on day two of the show.
New uses for SPD smart glass, such as this and dynamic headlights and heads up displays are quite exciting.
Speaker Change: It had an augmented reality windshield that was made possible because of the combination of SPD film from Galaxy and the transparent OLED technology by LG group.
Growth in the traditional areas such as Sunrise and Windows is also exciting and to some extent much more predictable.
We are also very excited about the successful movement forward through the development process of another car in Asia that project is very much on track and as I noted in our last conference call was going through its final development stages prior to launch.
Speaker Change: It was extremely well done you can see the vibrancy that happened with the augmented reality display by using SPD film in the windshield.
Speaker Change: This product got a lot of attention in general and in even made the show newsletter as the what's hard at CES product on day two of the show.
What's particularly exciting for all of us for all of us.
Speaker Change: New uses for SPD smart glass, such as this and dynamic headlights and heads up displays are quite exciting.
And also for the automotive industry in general is that the cost to manufacturer of our technology has come down so much as to make it feasible for inclusion in a relatively moderately priced vehicle.
Speaker Change: Growth in the traditional areas such as Sun roofs, and Windows is also exciting and to some extent much more predictable.
And that of course bodes well for the SPD smart technology be incorporated and much higher volumes across middle market cars throughout the world.
Speaker Change: We are also very excited about this successful movement forward through the development process of another car in Asia.
Speaker Change: That project is very much on track and as I noted in our last conference call was going through its final development stages prior to launch.
Okay.
Let's now talk about the architectural smart glass market.
One thing that we're all looking forward to the launch of the retrofit application that I had discussed in some detail on our last conference call in March.
Speaker Change: What's particularly exciting from all of us for all of us.
Speaker Change: And also for the automotive industry in general is that the cost of manufacturer of our technology has come down so much as to make it feasible for inclusion in a relatively moderately priced vehicle.
Galaxy and another licensee of ours are each exhibiting at the AIA architectural glass conference in Washington, DC in early June.
This confidence is important in the architectural world because it is sponsored by the AIA. The American Institute of Architects and it's also being held in the heart of the federal government in Washington D C.
Speaker Change: And that of course bodes well for the SPD smart technology be incorporated and much higher volumes across middle market cars throughout the world.
Speaker Change: Let's now talk about the architectural smart glass market.
The federal GSA is the largest customer in the world for many things, including energy efficient glass and recent mandates and programs to upgrade government buildings for energy efficiency and security are very positive drivers for our business.
Speaker Change: One thing that we're all looking forward to is the launch of the retrofit application that I had discussed in some detail on our last conference call in March.
Speaker Change: Gaussian another licensee of ours are each exhibiting at the AIA architectural glass conference in Washington D. C. In early June.
Apart from the public sector. The dynamic Glass act gives substantial 30% to 50% tax credits to private individuals and businesses for adopting smart glass.
Speaker Change: This conference is important in the architectural world because it is sponsored by the AIA. The American Institute of Architects and it's also being held in the heart of the federal government in Washington D C.
This has a dramatic impact on the economics to encourage adoption of smart glass and all types of buildings and homes.
And we've seen similar benefits from regulation caused.
Speaker Change: The federal GSA is the largest customer in the world for many things, including energy efficient glass and recent mandates and programs to upgrade government buildings for energy efficiency and security are very positive drivers for our business.
The robust adoption of energy efficient glass, starting with low E glass in the 19 seventies.
Which had some initial trouble getting off the ground until government regulation made it a no brainer.
Now a substantial part of all new glass installation is low E glass.
Speaker Change: Apart from the public sector. The dynamic Glass act gives substantial 30% to 50% tax credits to private individuals and businesses for adopting smart glass.
It's pretty much a cost effective and standard feature in all new construction or window replacement.
The volumes that can occur from this typically have been have the effect of driving down the price of new technologies, assuming that inherent in those technologies are cost reductions with volume.
Speaker Change: This has a dramatic impact on the economics to encourage adoption of smart glass and all types of buildings and homes.
Speaker Change: And we've seen similar benefits from inauguration caused the robust adoption of energy efficient glass, starting with low E glass in the 19 seventies.
If you read some of the technical analysis of electrochromic companies. They all promise substantial cost reductions if only.
Speaker Change: Which had some initial trouble getting off the ground until government regulation made it a no brainer.
If only they could have a bigger factory if only they can invest in new equipment, if only if only if only.
Speaker Change: Now a substantial part of all new glass installation is Louie glass.
All of these companies over the many decades that have tried.
Speaker Change: It's pretty much a cost effective and standard feature in all new construction or window replacement.
Have not begun to see these economies of scale and production efficiencies.
Speaker Change: The volumes that can occur from this typically have been have the effect of driving down the price of new technologies, assuming that inherent in those technologies are cost reductions with volume.
Half.
Let me highlight how we were able to achieve these things.
One of the strategies early on at research Frontiers.
Was to focus on businesses with predictable volumes that could support substantial usage of SPD film.
Speaker Change: If you read some of the technical analysis of electrochromic companies. They all promise substantial cost reductions if only.
Everything else in our supply chain is basically already mass produced whether it'd be the glass or the inter layers or the edge seals or the aluminum framing or the electronics.
Speaker Change: If only they could have a bigger factory if only they can invest in new equipment, if only if only if only.
Albert Miranda: All of these companies over the many decades that have tried have not begun to see these economies of scale and production efficiencies.
So the missing element in cost reduction could we get the cost down for the SPD film we.
We did.
Albert Miranda: We have.
It is progressing on markets, such as automotive with very predictable volumes and large usage in terms of surface area of SPD film that allowed all of our licensees to plan to build and to supply their customers.
Speaker Change: Let me highlight how we were able to achieve these things.
Speaker Change: One of the strategies early on at research Frontiers.
Albert Miranda: Was to focus on businesses with predictable volumes that could support substantial usage of SPD film.
Over time as you would imagine they got better and better at this and the customers became more and more comfortable.
Speaker Change: Everything else in our supply chain is basically already mass produced whether it be the glass or the inter layers or the edge seals or the aluminum framing or the electronics.
Another early strategy was to focus on our launch customer Mercedes.
Their reputation for quality assurance, and innovation and reliability with respected and solid quickly not only in the automotive industry, but also in the aircraft industry the design industry and many other places.
Speaker Change: So the missing element in cost reduction could we get the cost down for the SPD film we.
Speaker Change: We did.
Speaker Change: This came progressing on markets such as automotive with very predictable volumes and large usage in terms of surface area of SPD film that allowed all of our licensees to plan to build and to supply their customers.
Our job was to make Mercedes happy.
And we did.
Theres still has not been one reported problem with our SPD smart glass since interim it's <unk>.
Speaker Change: Over time as you would imagine they got better and better at this and the customers became more and more comfortable.
Introduction by Mercedes in 2011, and the first S. Okay roadster.
Since then tens of thousands of cars are on the road with our glass some for over a dozen years.
Speaker Change: Another early strategy was to focus on our launch customer Mercedes.
Speaker Change: Their reputation for quality assurance and innovation and reliability with respected and followed quickly not only in the automotive industry, but also in the aircraft industry the design industry and many other places.
Once introduction by Mercedes was announced we saw an uptick in aircraft in the industry interest, which is part of the follow on strategy and also automakers following Mercedes lead and also adopting SPD smart glass.
Speaker Change: Our job was to make Mercedes happy.
Mclaren has very very high take rates for Ari also has very very high take rates. We saw Mclaren migrates from one initial low relatively low volume model to many more models. There is talk of the same thing happening at Ferrari.
Speaker Change: And we did.
Speaker Change: Theres still has not been one reported problem with our SPD smart glass since ensure its introduction by Mercedes in 2011, and the first S. Okay roadster.
Speaker Change: Since then tens of thousands of cars are on the road with our glass some for over a dozen years.
We also have Cadillac with their <unk> flagship, which is just starting production now.
Speaker Change: Once introduction by Mercedes was announced we saw an uptick in aircraft image industry interest, which is part of the follow on strategy and also automakers following Mercedes lead and also adopting SPD smart glass.
I look forward to SPD smart glass following a similar migration pattern within general Motors and of course, we have other carmakers that have not yet announced that should have the same results that is where it starts in one car model and quickly migrates to other models within that automaker.
Speaker Change: Mclaren has very very high take rates for Ari also has very very high take rates. We saw Mclaren migrate from one initial low relatively low volume model to many more models. There is talk of the same thing happening at Ferrari.
Another nice thing about our business in automotive is that they tend to be very long term contracts. The same aircraft. Once you expect in you're in for years and of course Thats, assuming we do have a good product we do.
Speaker Change: We also have Cadillac with their celestica flagship, which is just starting production now.
With the background and context of galaxies pending IPO growing revenues in the automotive and aircraft.
Speaker Change: I look forward to SPD smart glass following a similar migration pattern within general Motors and of course, we have other car makers that have not yet announced that should have the same results that is where it starts in one car model and quickly migrates to other models within that automaker.
Industry, this past quarter and with the new markets, such as augmented reality windshields and other displays as well as non traditional uses besides sun roofs and vehicles.
And homes and retail environments and other buildings and the introduction of retrofit solutions.
Speaker Change: Another nice thing about our business in automotive is that they tend to be very long term contracts. The same aircraft once you're specced in you're in for years and of course, that's assuming we do have a good product we do.
I'd like to now open the conference call up to questions first I'll read and answer some of the questions. We received by E Mail and I encourage people to email in their questions before each conference call. So we can tailor our presentation to cover the most ground for the benefit of all shareholders.
Speaker Change: With the background and context of galaxies pending IPO growing revenues in the automotive and aircraft.
Here's some of the additional questions that were emailed to us and in some cases I'm going to be combining several related questions into one.
Speaker Change: Industry, this past quarter and with the new markets, such as augmented reality windshields and other displays as well as non traditional uses besides sun roofs and vehicles.
Okay.
Yeah.
During only the past two months since our last conference call in March.
Speaker Change: And homes and retail environments and other buildings and the introduction of retrofit solutions.
Fairly substantial developments in the smart glass industry.
Speaker Change: I'd like to now open the conference call up to questions first I'll read and answer some of the questions. We received by email and I encourage people to email in their questions before each conference call. So we can tailor our presentation to cover the most ground for the benefit of all shareholders.
Our largest competitor view filed for bankruptcy and they were also delisted from trading on NASDAQ.
Hardly spent any time on them. This was probably not a surprise to anyone who has listened to our calls over the last couple of years as they have had substantial cash burn problems and limited access to new capital.
Speaker Change: Here's some of the additional questions that were emailed to us and in some cases I'm gonna be combining several related questions into one.
Other public competitor after years of prominent promises of imminent production has not produced even their first commercial switchable tint product and has a resorting to digging ditches and laying cable to pay their bills.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: During only the past two months since our last conference call in March some fairly substantial development in the smart glass industry.
These developments and companies are in my opinion and significant there is another much more positive development for us in our industry. This is something we've got a lot of questions about our SPD film producing licensee Galaxy filed for their initial public offering.
Speaker Change: Our largest competitor view filed for bankruptcy and they were also de listed from trading on NASDAQ.
Speaker Change: I will hardly spent any time on them. This was probably not a surprise to anyone who has listened to our calls over the last couple of years as they have had substantial cash burn problems and limited access to new capital.
Many people have carefully reviewed their F. One registration statement, which gives a lot more detail to many of the things we've been talking about on these conference calls over the past 18 to 24 months.
Speaker Change: Another public competitor after years of prominent promises of imminent production has not produced even their first commercial switchable tint product and is resorting to digging ditches and laying cable to pay their bills.
To answer another shareholder question that I received we believe that galaxies IPO filing will greatly benefit our SPD smart glass industry, and RFID and our shareholders and our shareholders. Incidentally includes <unk> is there a strategic investor in us.
Speaker Change: These developments and companies are in my opinion insignificant.
Speaker Change: There is another much more positive development for us in our industry. This is something we've got a lot of questions about our SPD film producing licensee Galaxy filed for their initial public offering.
Okay.
Yeah.
First.
Speaker Change: Many people have carefully reviewed their F. One registration statement, which gives a lot more detail to many of the things we've been talking about on these conference calls over the past 18 to 24 months.
You should know that an IPO is something that I have been encouraging IP <unk> to do since we first met.
To do the smart glass industry correctly, if you're a manufacturer or a marketer and <unk> both immediate production capacity factories people and a diverse geographic footprint to cover the world and the industries that SPD Smart glass serves.
Speaker Change: To answer another shareholder question that I received we believe that galaxies IPO filing will greatly benefit our SPD smart glass industry, and RFID and our shareholders and our shareholders and incidentally includes <unk> is there a strategic investor in us.
They do a great job with this.
This takes financial resources and they also have great access to capital.
I am told that one other directors.
Speaker Change: Yeah.
Speaker Change: First.
Good and successful businessman, who I've had lunch with recently committed $60 million of his personal funds to galaxy.
Speaker Change: You should know that an IPO is something that I've been encouraging IP <unk> to do since we first met.
Speaker Change: To do the smart glass industry correctly, if you're a manufacturer or a marketer and gals use both you need production capacity factories people and a diverse geographic footprint to cover the world and the industries that SPD Smart glass serves.
Our strong galaxy is good for our industry and it is good for research frontiers.
You could see that.
<unk> has deployed their resources to substantially grow their businesses around SPD have hired people around the world to manage and implement the various projects. They have for SPD have built factories have expanded production capacity and have large marketing and business development teams throughout the world.
Speaker Change: They do a great job with this.
Speaker Change: This takes financial resources and they also have great access to capital.
Speaker Change: Told that one of their directors.
Speaker Change: Our good and successful businessman, who I've had lunch with recently committed $60 million of his personal funds to galaxy.
There is also a unique openness and candor in a relationship that allows us to collaborate well in all of these areas.
Youre seeing a company that has grown from 55 people when he outpaced sell in I first met to more than 600 people worldwide and they are growing in all areas.
Speaker Change: Our strong galaxy is good for our industry and it is good for research frontiers.
Speaker Change: You could see that.
Speaker Change: Gaseous deployed their resources to substantially grow their businesses around S. P. D have hired people around the world to manage and implement the various projects. They had for S. P. D have built factories have expanded production capacity and have large marketing and business development teams throughout the world.
I have not encountered after this growth in area of the world, where our two companies cannot arrange an in person meeting or product demonstration with the customer no matter where that customer is <unk>.
Having a diversified and local presence is key to winning the business because it allows for a much more thorough education of the customer has to the benefits of SPD Smart glass matter of fact in about two hours, we're having a meeting with a customer in southeast Asia.
Speaker Change: There is also a unique openness and candor in a relationship that allows us to collaborate well in all of these areas.
Speaker Change: Youre seeing a company that has grown from 55 people when he outpaced sell in I first met to more than 600 people worldwide and they are growing in all areas.
And with the data and education Theres just no comparison in terms of performance proven reliability and now we're also beginning to see price.
Speaker Change: I have not encountered after this growth in area of the world, where our two companies cannot arrange an in person meeting or product demonstration with a customer no matter where that customer is.
And if you wanted to invest in the top two companies in the smart glass industry, you would invest in research frontiers and you'd invest in Calgary.
Speaker Change: Having a diversified and local presence is key to winning the business because it allows for a much more thorough education of the customer has to the benefits of SPD smart glass a matter of fact in about two hours, we're having a meeting with a customer in southeast Asia.
Also I think for the first time actually youre beginning to see how a vertically integrated company in the smart glass industry implements best practices and are focused and sensible business approach.
We have had positive gross margins in our industry consistently.
Speaker Change: And with the data and education Theres just no comparison in terms of performance proven reliability and now we're also beginning to see price.
Not having this and trying to buy market share has really hurt our competitors view an.
And now we see the end results with the bankruptcy.
Speaker Change: And if you wanted to invest in the top two companies in the smart glass industry, you would invest in research frontiers and you'd invest in Calgary.
But one example.
<unk> IPO also creates better transparency in the industry because now there are two public companies focused on SPD and more disclosure of our collective activities.
Speaker Change: Also I think for the first time actually you're beginning to see how a vertically integrated company in the smart glass industry implements best practices and are focused and sensible business approach.
This should give everyone on our call a better insight in more details into your investment in research frontiers.
Speaker Change: We have had positive gross margins in our industry consistently.
Okay.
We also believe that the market valuation that galaxy is expected to go public at along with the fact that they are a sensible sensibly and well run company and they are strategically deploy our resources to achieve results will better demonstrate the value of SPD smart glass in the world economy.
Speaker Change: Not having this and trying to quote buy market share has really hurt our competitors view and you know and how we see the end results with their bankruptcy.
Speaker Change: Is but one example.
Speaker Change: <unk> IPO also creates better transparency in the industry because now there are two public companies focused on SPD and more disclosure of our collective activities.
So that answers the comments I've had about asking me to reflect on <unk>, IPO and El peso and his entire team are working quite hard on the IPO and roadshows relating to it and.
Speaker Change: This should give everyone on our call a better insight in more details into your investment in research frontiers.
And I hope after things settle down for them and they're out of their quiet period. We can have you all join us on a future call.
Speaker Change: Yeah.
Speaker Change: We also believe that the market valuation that galaxy is expected to go public at along with the fact that they are a sensible sensibly and well run company and a strategically deploy their resources to achieve results will better demonstrate the value of SPD smart glass in the world economy.
I received the related shareholder question about the SEC filing process.
Since <unk> had originally filed their F. One registration statements on a confidential basis. These registration statements only became publicly available to all of us in April.
Speaker Change: So that answers the comments I've had about asking me to reflect on galaxy's IPO and El peso and his entire team are working quite hard on the IPO and roadshows relating to it and I hope after things settle down for them and they're out of their quiet period. We can have you all join us on our <unk>.
After which Jared another shareholder asked me are there any non obvious parts of the F. One that you would like to point RF, our shareholders' attention too.
These are great questions, all around and with <unk> initial public offering and the process you can go back and see how the registration statement has evolved over time.
Speaker Change: Call.
Speaker Change: I received a related shareholder question about the SEC filing process.
And many of the things you see reflected in our raised this registration statement are things we've touched upon in past conference calls.
Speaker Change: Since gals. He had originally filed their F. One registration statements on a confidential basis. These registration statements only became publicly available to all of us in April.
And if you think about it.
It's obvious there is such a very strong correlation between their business activities and ours.
Speaker Change: After which Jared another shareholder asked me are there any non obvious parts of the F. One that you would like to point RF, our shareholders' attention too.
Their business is basically built on ours.
This is not a surprise to us because we work very closely with them on a daily or weekly basis on various projects throughout the world sharing information and ideas and business development opportunities makes both of our companies much stronger.
Speaker Change: Well these are great questions, all around and with <unk> initial public offering and the process you can go back and see how the registration statement has evolved over time.
Okay.
Speaker Change: And many of the things you see reflected in their ranges registration statement or things we've touched upon in past conference calls.
Okay.
Also please keep in mind that as a public company most of the detailed communications with shareholders occurs in our quarterly reports and our quarterly conference calls.
Speaker Change: And if you think about it.
Speaker Change: It's obvious there is such a very strong correlation between their business activities and ours.
Now going to see the same thing happened with <unk> emerge as a public company.
Speaker Change: Their business is basically built on ours.
Speaker Change: This is not a surprise to us because we work very closely with them on a daily or weekly basis on various projects throughout the world sharing information and ideas and business development opportunities makes both of our companies much stronger.
There'll be a lot more good and meaningful information to digest and I believe you'll really like what you see from both of our companies.
<unk> and research frontiers are both well diversified and well managed companies.
Speaker Change: Okay.
<unk> is diversified across two types of smart glass PD LC for privacy and SPD for everything else.
Speaker Change: Okay.
Speaker Change: Also please keep in mind that as a public company most of the detailed communications with shareholders occurs in our quarterly reports and our quarterly conference calls.
To even combine the two as well as give the benefits of both.
To customers.
<unk> also has other business units such as safety Tech with various driver assistance technologies.
Speaker Change: Now going to see the same thing happened with galaxy to emerge as a public company.
Sometimes these are quite separate offerings, but also only takes a little imagination to figure out that theyre synergistic and complementary to each other for example, the ability to detect things happening outside the vehicle from the safety Tech division products can be fed to make the glass even smarter inside the vehicle.
Speaker Change: There'll be a lot more good and meaningful information to digest and I believe you'll really like what you see from both of our companies.
Speaker Change: <unk> and research frontiers are both well diversified and well managed companies.
Speaker Change: <unk> is diversified across two types of smart glass PD L C for privacy and SPD for everything else.
Also there is synergistic relationships because the customers for both are often the same.
Speaker Change: To even combine the two as well as give the benefits of both to cover.
Speaker Change: Customers.
Here are some more questions or email to us.
Speaker Change: <unk> also has other business units such as safety check with various driver assistance technologies.
Alan <unk>.
Yakubov sorry.
At which revenue run rate would the company be EPS profitable in what would be your best guess estimate when that can be achieved.
Speaker Change: Sometimes these are quite separate offerings, but also only takes a little imagination to figure out that they're synergistic and complementary to each other for example, the ability to detect things happening outside the vehicle from the safety Tech division products can be fed to make the glass even smarter inside the vehicle.
Well with stable to lower expenses.
And now are entering our fifth consecutive quarterly growth on a year over year basis, we're well on our way and can be quite close to becoming cash flow positive and profitable.
Speaker Change: Also theres synergistic relationships because the customers for both are often the same.
Jared Albert how concerned should research frontiers shareholders be that galaxies SPD black development leads to a product not subject to our FRE royalty contracts well I think jarrett is picking up on something in the F. One where they mentioned their SPD Black program.
Speaker Change: Here's some more questions or email to us.
Speaker Change: Alan you because yakubov sorry.
Speaker Change: At which revenue run rate would the company be EPS profitable in what would be your best guess estimate when that can be achieved.
Where they are trying to develop a black or color neutral.
Speaker Change: Violent with stable to lower expenses.
Particle.
Speaker Change: And now are entering our fifth consecutive quarterly growth on a year over year basis, we're well on our way and it can be quite close to becoming cash flow positive and profitable.
<unk>.
First understand that both of our companies are working on a black are colored neutral particle and of course, we're going to share what we developed with <unk> Z because we want them to put it into a film.
Speaker Change: Jared Albert how concerned should research frontiers shareholders be that galaxies SPD black development leads to a product not subject to our FRE royalty contracts well I think Jared is picking up on something in the F. One where they mentioned their SPD Black program.
It is not necessary for our success, but it would in my opinion greatly expand the potential for some markets outside of Sun roofs that are directly answer your question about.
About whether we should be concerned or license agreements, including the Mt. <unk> are set up to prevent workarounds of our IP without us getting paid.
Speaker Change: Where they are trying to develop a black or color neutral.
Speaker Change: Particle.
Also as the Florida Federal Court and the <unk> litigation confirms we also actually get the IP of our licensees if their license agreements expire or terminate.
Speaker Change: And.
Speaker Change: First I understand that both of our companies are working on a black or colored neutral particle and of course, we're going to share what we developed with <unk>, because we want them to put it into a film.
Yeah.
David asks would you provide an update during thursday's call on the current status of <unk> poison pill.
Speaker Change: It's not necessary for our success, but would in my opinion greatly expand the potential for some markets outside of Sun roofs.
David is referring to the rights plan, which was re adopted an extended in December 'twenty two.
Speaker Change: Now to directly answer your question about.
Speaker Change: About whether we should be concerned or license agreements, including the Mt. Galaxy are setup to prevent workarounds of our IP without us getting paid.
Until February 11, 2033, so we have plenty of time on that and it's triggered if any unwanted hostile takeover. It started by someone acquiring 15% or more of our stock.
Speaker Change: Also as the Florida Federal Court and the G. G. T litigation confirmed we also actually get the IP of our licensees if their license agreements expire or terminate.
Everyone should understand though that under Delaware law, our directors have a fiduciary duty to redeem the poison pill. If our shareholders are offered for sale fair value for their shares. So it is meant to prevent abuse of tactics and takeovers that are often used to pressure shareholders, but it's not designed to totally prevent the takeover.
Speaker Change: Okay.
Speaker Change: David asks would you provide an update during thursday's call on the current status of <unk> poison pill.
Speaker Change: David is referring to the rights plan, which was re adopted an extended in December 'twenty two.
Yeah.
Jay Moskovitz asked.
Speaker Change: Until February 11th 2033, so we have plenty of time on that and it's triggered if any unwanted hostile takeover is started by someone acquiring 15% or more of our stock.
<unk> competitors have all focused on the architectural market architectural glass is perhaps 70% of the market, whereas automotive glass is around 30% what are the major licensees doing to have a showcase architectural project to show against all of the existing competitors smart glass projects.
Speaker Change: Everyone should understand though that under Delaware law, our directors have a fiduciary duty to redeem the poison pill. If our shareholders are offered fail the fair value for their shares. So it is meant to prevent abuse of tactics and takeovers that are often used to pressure shareholders, but it's not designed to totally prevent a takeover.
Well, thanks, Jay Theyre working on commercial and government projects in this area and we've touched on some of this earlier today and on prior conference calls I think the main difference between what we are doing we had our licensees are doing and is that all the projects.
Speaker Change: Yeah.
Speaker Change: Jay Moskovitz assets.
Speaker Change: <unk> competitors have all focused on the architectural market architectural glass is perhaps 70% of the market, whereas automotive glass is around 30% what are the major licensees doing to have a showcase architectural project to show against all of the existing competitors smart glass projects.
We're working on have positive gross margins, we're all in business to make money and not just by market share.
I'd say, it's other question does <unk> have a control system that is capable of operating a large commercial building or a skyscraper of SPD windows or are they thinking of implying a lutron or GE lighting control system to operate such buildings as was done in Milan, Italy in the 2015 at the world's fair.
Speaker Change: Well, thanks, Jay Theyre working on commercial and government projects in this area and we touched on some of this earlier today and on prior conference calls I think the main difference between what we are doing we and our licensees are doing and is that all of the projects.
Thanks Jay.
Electronics, it's something if something quite a bit about yes, all of our licensees have access to the extensive IP in this area also I point out that <unk> itself not only make smart.
Speaker Change: We're working on have positive gross margins.
Speaker Change: We're all in business to make money and not just by market share.
But also the electronics to control it in fact, the founders of <unk> came out of one of Israels, leading telecom companies and galaxies first Calgary first started as a company has to make electronics for the PD LC smart glass industry. So their roots are in the electronics.
Chase: Chase other question does <unk> have a control system that is capable of operating a large commercial building or a skyscraper of SPD windows or are they thinking of employing a lutron or G lighting control system to operate such buildings as was done in Milan, Italy in the 2015 at the world's fair.
Okay.
<unk>.
Chuck I think I've answered your questions, but if not feel free to email me.
Chase: Thanks, Jay and electronics, it's something you know if something quite a bit about yes, all of our licensees have access to the extensive IP in this area.
Especially if you need more detail.
I answered Steve's question about that.
Speaker Change: So I point out that galaxy itself, not only make smart Phil.
Do we expect gals going public to be beneficial to <unk>.
electronics: Film, but also the electronics to control it in fact, the founders of <unk> came out of one of Israels, leading telecom companies and galaxies first Ghazi first started as a company as to make electronics for the PD L. C smart glass industry. So their roots are in electronics.
And if so what are the positives.
Steve's other question also the annual shareholders meeting in June will this be an intent and attending event and if not why.
All shareholders are welcome to attend.
These meetings are now mostly administrative corporate housekeeping.
In the past we used to have one big report on operations of our annual meetings now we have moved these detailed reports to be more frequent four times per year. Instead of just once of course is a long term shareholder you are welcome to attend.
electronics:
Speaker Change: Chuck I think I've answered your questions, but if not feel free to email me, especially.
Speaker Change: Especially if you need more detail.
Speaker Change: I answered Steve's question about do we expect ghazi going public to be beneficial to our AFR.
I'll be at 11, a M. At June 13th here at our corporate headquarters in Woodbury Long Island, but if last year is any guide it would be simply administrative.
Speaker Change: And if so what are the positives Steve.
Speaker Change: Steve's other question also the annual shareholders meeting in June will this be an attempt and attending event and if not why.
Reelection of directors ratification of accountants et cetera.
Alright.
Speaker Change: All shareholders are welcome to attend.
John Nelson rights Hopewell at Galleria are well and safe.
Speaker Change: These meetings are now mostly administrative corporate housekeeping.
They are John and thanks for asking both of our companies really appreciate the question.
Speaker Change: In the past we used to have one big report on operations of our annual meetings now we have moved these detailed reports to be more frequent four times per year. Instead of just once of course as a longtime shareholder you are welcome to attend.
His next question any significant changes in the competitive landscape for SPD products.
Well, yes.
Okay.
We are a stronger and stronger and stronger as we move forward costs are coming down performance is getting moving up and new uses are being developed for our technology.
Speaker Change: B at 11, a M. A June 13th here at our corporate headquarters in Woodbury Long Island.
Speaker Change: But if last year is any guide it would be simply administrative.
Speaker Change: Reelection of directors ratification of accountants et cetera.
On the competition side, there continues to be a lot of wannabes is SPD as SPD has really become a badge of honor there have been companies trying to use either decades old versions of the technology that are off patent.
Speaker Change: All right.
Speaker Change: John Nelson rights Hopewell at Galleria are well and safe.
John Nelson: They are John and thanks for asking both of our companies really appreciate the question.
And those have high hedge levels and limited range of light transmission variability and some are even calling things SPD that are not SPD.
Speaker Change: His next question any significant changes in the competitive landscape for SPD products.
Speaker Change: Well, yes.
Speaker Change: Yeah.
Don't worry about these one of these because the customer usually will discover the difference.
Speaker Change: We are a stronger and stronger and stronger as we move forward costs are coming down performance is getting moving up and new uses are being developed for our technology.
Some even put SPD on their website with no ability to sell it just to attract customers or give them the impression about having cutting edge technology.
Speaker Change: On the competition side, there continues to be a lot of wannabes is SPD SPD has really become a badge of honor there have been companies trying to use either decades old versions of the technology that are off patent.
John's other question what are the implications of <unk> buying resin acts.
Formerly Hitachi chemicals full SPD intellectual property portfolio.
Speaker Change: And those have I haze levels and limited range of light transmission variability and some are even calling things SPD that are not SPD.
And anything related to manufacturing facilities and capacity potential for SPD film production.
Without going into the details John these are somewhat related questions.
Speaker Change: Don't worry about these wannabees because the customer usually will discover the difference.
This was a substantial multimillion dollar investment by gout, which we encouraged for the good at and we encourage them really for the good of the industry and our licensees and their customers to make that investment.
Speaker Change: Some even put SPD on their website with no ability to sell it just to attract customers or give them the impression about having cutting edge technology.
It is up to <unk> to discuss and disclose more details there deal.
Speaker Change:
Speaker Change: One other question what are the implications of <unk> buying resin acts, formerly Hitachi chemicals full SPD intellectual property portfolio.
But it is mentioned in their F. One registration statement.
John's other question any progress on Black SPD program that you can discuss.
Speaker Change: And anything related to manufacturing facilities and capacity potential for SPD film production.
RFG.
Rsi has made tremendous progress here and as a sustained and focus development effort.
Speaker Change: Without going into the details John these are somewhat related questions.
And this has been the Holy Grail for decades in our industry and I think we're going to achieve it.
Speaker Change: This was a substantial multimillion dollar investment by gallons, which we encouraged for the good at and we encourage that really for the go to the industry and our licensees and their customers to make that investment.
Okay.
Well, we've discussed a lot of exciting topics, so far today and I'll now ask our operator Morgan to open up the conference to additional questions people participating today might have that we have not already covered.
Speaker Change: It is up to <unk> to discuss and disclose more details there deal.
Speaker Change: But it is mentioned in their F. One registration statement.
Our largest shareholders, though several of them have suggested that we also try to keep our conference calls shorter so I ask your assistance with this if your question was substantially answered on this call or can be answered by direct E mail or call. Please.
Speaker Change: John's other question any progress on Black SPD program that you can discuss.
Speaker Change: Well RFA.
Speaker Change: Rsi has made tremendous progress here and as a sustained and focus development effort.
Speaker Change: And this has been the Holy Grail for decades in our industry and I think we're going to achieve it.
<unk>.
Feel free to E mail or call us and many of you have done this in the past and we've had a very productive conversation as a result, and remember please keep your questions short and focused and tried to limit them to matters of general shareholder interest specific questions such as.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Well, we've discussed a lot of exciting topics, so far today and I'll now ask our operator Morgan to open up the conference to additional questions people participating today might have that we have not already covered.
SPD smart glass available in Cleveland.
Morgan: Our largest shareholders, though several of them have suggested that we also try to keep our conference called shorter So I ask your assistance with this if your question was substantially answered on this call or it can be answered by direct email or call. Please.
Cleveland, Ohio.
You could do that by email anyway.
Let's open up the call for questions.
Thank you.
I would like to ask a question. Please press Star then the number one on your telephone keypad now you will be placed in the queue in the order received.
Morgan: Do.
Morgan: Feel free to E mail or call us and many of you have done this in the past and we've had a very productive conversation as a result, and remember please keep your questions short and focused and tried to limit them to matters of general shareholder interest specific questions. Such as you know is SPD smart glass available in Cleveland, Ohio.
These be prepared to ask your question when prompted.
Once again, if you wish to ask a question. Please press Star then the number one on your telephone keypad now.
Okay.
Your first question comes from Michael Kay of Kay Associates. Your line is open.
Morgan: Oh, you know you could do that by email anyway.
Speaker Change: Let's open up the call for questions.
Hello, Joe how are you.
Speaker Change: Thank you if you would like to ask a question. Please press Star then the number one on your telephone keypad now you won't be placed in the queue. In the order received please be prepared to ask your question when prompted.
Hi, Professor de how are you.
I was just wondering given the.
Synergies an excellent relationship you Abu Ganzi.
Has it ever crossed your mind probably has.
Some type of.
Speaker Change: Once again, if you wish to ask a question. Please press Star then the number one on your telephone keypad now.
Our acquisition by research.
Research frontiers.
That could be beneficial to the.
Research frontiers shareholders.
Speaker Change: Okay.
Many of them.
Speaker Change: Your first question comes from Michael Kay of Kay Associates. Your line is open.
Holding the stock for all of the 2025 years.
Thanks very much.
Our average price.
Michael Forrester: Hello, Joe how are you.
Much higher.
Michael Forrester: Hi, Professor Kay how are you.
Sure.
Michael Forrester: I was just wondering given the.
Potentially.
We've discussed it and I'm not sure.
Speaker Change: Synergies an excellent relationship.
Speaker Change: Has.
Who would be acquiring who or what that transaction will look like specifically, but.
Speaker Change: Has it ever crossed your mind probably has.
Speaker Change: Thanks.
Speaker Change: Our acquisition by research.
There are synergies clearly between our companies and we could benefit but we're also benefiting because in essence.
Speaker Change: Research frontiers.
Speaker Change: That could be beneficial.
Speaker Change: Research frontiers shareholders.
Our minds are merged together.
Have the same view of the smart glass industry, and how to do smart glass correctly and.
Speaker Change: Many of them.
Speaker Change: The stock for all of 2025 years.
Speaker Change: Thanks Barry.
Speaker Change: Average prices.
And I think that.
Speaker Change: Hi.
Our fortunes are aligned there.
Speaker Change: Sure.
Speaker Change: Thanks.
And owner or where an owner.
Speaker Change: We've discussed it and I'm not sure.
Their success will be our success and vice versa.
Speaker Change: Who would be acquiring who or what that transaction will look like specifically, but you know there.
And also with the specified Gassy will go public.
Speaker Change: There are synergies clearly between our companies and we could benefit but we're also benefiting because in essence.
Thanks, Phil.
So the way the way the process works is you file a registration statement with the SEC U S companies, it's called an S. One.
Speaker Change: Our minds are merged together.
Speaker Change: Have the same view of the smart glass industry, and how to do smart glass correctly and.
Foreign company, that's called an F. One.
And it has very detailed disclosure very similar to what you've seen in our 10-K.
Speaker Change: And I think that.
Speaker Change: Our fortunes are aligned there.
Speaker Change: Now, an owner or where an owner.
Over the years and in our registration statements the SEC comments on that.
Speaker Change: You know their success will be our success and vice versa.
And you respond to those comments.
Speaker Change: And also with the specified.
And when you have adequately responded to those comments.
Speaker Change: I'll go public.
Speaker Change: Thanks.
You can ask the SEC to what's called accelerate the effectiveness of your registration statement, which means you could go public start roadshows and start talking.
Speaker Change: So the way the way the process works is you file a registration statement with the SEC of U S companies, it's called an S. One.
And taking orders for the stock.
Speaker Change: Foreign company, that's called an F. One.
So that process has been going on.
Speaker Change: And it has very detailed disclosure very similar to what you've seen in our 10-K M over the years and in our registration statements. The SEC comments on that.
You go on the Sec's Edgar website and did a red line you can see maybe some of the changes that were requested by the SEC I must say that were relatively modest.
Speaker Change: And you respond to those comments.
Changes requested because <unk> is a company that.
Speaker Change: And when you've adequately responded to those comments.
Has good accounting systems and it is in good shape.
Speaker Change: You can ask the SEC to what's called accelerate the effectiveness of your registration statement, which means you could go public start roadshows and start talking.
They are ready to go so.
I look forward to that happening soon.
Okay. Thank you very much Joe.
Speaker Change: And taking orders for the stock.
Thanks I appreciate it.
Speaker Change: So that process has been going on if.
Yeah.
Once again to ask a question press Star then the number one on your telephone keypad.
Speaker Change: If you go on the Sec's Edgar website and did a red line you can see maybe some of the changes that were requested by the SEC I must say that were relatively modest.
Your next question comes from Leonard <unk> with wealth planning and design. Your line is open.
Speaker Change: Changes requested because <unk> is a company that.
Hey, Joe.
Hey, Ron how are you.
Speaker Change: It has good accounting systems and it is in good shape and.
Doing fine thank you.
Right.
We have noticed some activity in the stock finally in the last few days a week.
Speaker Change: You know they are ready to go so.
Speaker Change: I look forward to that happening soon.
Speaker Change: Okay. Thank you very much.
Did something happen.
Yes.
Speaker Change: Thanks I appreciate it.
Yeah.
It's still way undervalued. So thats good I just wondered are you.
Speaker Change: Once again to ask a question press Star then the number one on your telephone keypad.
Gideon any contacts from institutional.
Speaker Change: Your next question comes from Leonard <unk> with wealth planning and design. Your line is open.
Buyers.
Yeah, and I think thats kind of a natural result.
If you.
Leonard: Good afternoon, Joe.
Consider the <unk>.
Leonard: Hey, Ryan how are you.
Much larger market valuation that galaxy is probably going to get them their IPO.
Leonard: I'm doing fine thank you.
Leonard: Great.
Leonard: We have noticed some activity in the stock finally in the last few days a week.
And there are underwriters or some of the finest in the world and I've spoken to them directly.
Speaker Change: Did something happen.
That kind of attention is also going to attract attention to research frontiers by those same institutional owners because.
Speaker Change: Yeah.
Speaker Change: Oh, Yeah, sorry, yeah.
Speaker Change: It's still way undervalued. So that's good I just wondered are you getting any contacts from institutional.
To some extent.
<unk> investment in <unk>, as an investment and a diversified business in some respects and investment and research Frontiers is also an investment in a diversified business because of the many industries that we cover and.
Leonard: Buyers.
Leonard: Yeah, and I think that's kind of a natural result.
Leonard: If you.
Leonard: Consider the much larger.
Leonard: Your market valuation that galaxy is probably going to get it in their I P O.
We're more of a.
Pure.
Leonard:
Asset light IP play with higher valuation so.
Leonard: Our underwriters are some of the finest in the world and I've spoken to them directly.
If you consider for example that.
Leonard: That kind of attention is also going to attract attention to research frontiers by those same institutional owners because to.
A $1 million increase in revenue for us is.
As a $20 million increase in revenue for Galaxy.
Leonard: To some extent.
And your traded on a multiple of revenue growth and earnings growth.
Leonard: <unk> investment in <unk>, as an investment and a diversified business and in some respects and investment and research Frontiers is also an investment in a diversified business because of the many industries that we cover.
Leverage could be much higher with research frontiers, but you also have different diversified business with very stable and predictable earnings within galaxy. So they are both great companies to invest in and I think what youre going to see is what we've been seeing which is.
Leonard: And where more of a pure.
Leonard: Asset light IP play with higher valuation. So you know if you consider for example that.
The work that <unk> is doing in connection with our IPO.
Leonard: A million dollar increase in revenue for us.
Having a favorable effect on us as well and people are okay.
Leonard: Is it $20 million increase in revenue for Galaxy.
Paying attention.
I don't know if people are paying attention also because.
Leonard: And your traded on a multiple of revenue growth and earnings growth you know the leverage can be much higher with research frontiers, but you also have different diversified business with very stable and predictable earnings within galaxy. So they are both great companies to invest in and I think what youre going to see is what we've been.
The other public smart glass companies are no longer.
Available.
Yes, it nicely.
But.
But I think that it's really more of the former it's the attention that gal.
<unk> is bringing to the smart glass industry is favorable because they have a lot of good things that are underneath the hood there.
Leonard: Seeing which is the work that <unk> is doing in connection with their IPO.
Yes sort of in response to that previous question of yours.
Leonard: Having a favorable effect on us as well and people are paying attention.
I think it's premature to do something with our ESR were just getting to the point.
Speaker Change: I don't know if people are paying attention also because the.
Where the royalty income will start to get better and as that happened as dividends will be paid in light of all of that up at the beginning of the explosion.
Speaker Change: The other public smart glass companies are no longer.
Speaker Change: Available.
Speaker Change: Yeah it nicely.
Speaker Change: But but you know I think that it's really more of the former it's the attention that gal.
Right.
Right.
Yes, I agree.
Speaker Change: <unk> is bringing to the smart glass industry is favorable because they have a lot of good things that are underneath the hood there.
I don't think anybody on our board would.
Even remotely consider something that the current valuation so.
Speaker Change: Yes sort of in response to that previous question of yours.
Okay great.
Yeah.
Thank you.
Speaker Change: I think it's premature to do something with our ESR were just getting to the point.
Thanks, Phil outlined.
Your next question comes from Investor Alan Ginsberg. Your line is open.
Speaker Change: Where the royalty income will start to get better and as that happens dividends will be paid and why give all of that up at the beginning of the explosion.
Yes, Hi, Joe how are you hi, Alan how are you. Okay. Thank you well just kind of a follow up to some of the other things that were being talked about with <unk>.
Speaker Change: Right.
Speaker Change: Right.
Speaker Change: Yeah, I agree and you know I don't think anybody on our board would.
Now that hopefully, they're going to become public and it's going to be more visibility for research frontiers.
Speaker Change: Even remotely consider something at the current valuation so.
And maybe hopefully new investors joining some of us that have been in the stock for a long long time.
Speaker Change: Okay great.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Thanks for the island.
Speaker Change: Your next question comes from the Investor Alan Ginsberg. Your line is open.
Do you think it would be a good thing to go over.
Alan Ginsberg: Yes, Hi, Joe how are you hi, Alan how are you. Okay. Thank you well just kind of a follow up to some of the other things that were being talked about with <unk>.
The benefits of the royalty agreements that research frontiers.
Is able to get.
From their intellectual property as you have in the past, but now youre going to have new investors. It would be I think a smart thing to <unk>.
Alan Ginsberg: Now that hopefully, they're going to become public and it's going to be more visibility for research frontiers.
<unk> focus on right.
I think in.
Alan Ginsberg: And maybe hopefully new investors joining some of us that have been in the stock for a long long time.
Well, thank you and if there are new investors on the call we license our.
Hundreds of patents two licensees in different industries, and we get a royalty of between 10 and 15% of their revenue.
Alan Ginsberg: Do you think it would be a good thing to go over the benefits of the royalty agreements that research frontiers.
And we get minimum royalties from many of those companies. So they are guaranteed minimums.
Alan Ginsberg: To get.
As companies get establish those minimums become irrelevant because the earned royalties are quickly surpassing them.
Alan Ginsberg: From their intellectual property.
Alan Ginsberg: As you have in the past, but now youre going to have new investors. It would be I think a smart thing to.
And.
Because of that we don't have to build factories.
Speaker Change: Focus on right what do you think.
We can focus on what we do best the R&D the development the improvement.
Speaker Change: I think and.
Speaker Change: Well, thank you and if there are new investors on the call we license our.
The care and feeding of the industry.
Speaker Change: Hundreds of patents two licensees in different industries, and we get a royalty of between 10 and 15% of their revenue.
And things like that and <unk>.
Basically our expenses are essentially fixed.
For all practical purposes. So.
Speaker Change: And we get minimum royalties from many of those companies. So they are guaranteed minimums.
It becomes all profit so we're talking about kind of gross margins approaching 100%.
Speaker Change: As companies get establish those minimums become irrelevant because the earned royalties are quickly surpassing them.
In the in our business. So it's a very good business once they get started and I think if you look at the last.
Speaker Change: And.
Year, you're starting to see it really get started.
Speaker Change: Because of that we don't have to build factories.
Speaker Change: We could focus on what we do best the R&D the development the improvement.
Five consecutive quarters of.
Of growth over the prior quarter prior years.
Speaker Change: The care and feeding of the industry.
So.
Speaker Change: And things like that and <unk>.
We'll keep plugging away and as new products come out as existing customers expand their use of SPD.
Speaker Change: Basically our expenses are essentially fixed for.
Speaker Change: For all practical purposes. So you know it becomes all profit so we're talking about.
Like you are seeing for example, within Ferrari where they've had.
Very nice growth quarter over quarter in terms of the number of units using our technology, it's a very popular.
Speaker Change: Gross margins approaching 100% and in the in our business. So it's a very good business once they get started and I think if you look at the last.
Item in the car.
You start to see that happen and then as I mentioned earlier migrating from one car within an automaker to more than one car like what happened with Mercedes and then what happened with Mclaren.
Speaker Change: Year, you're starting to see it really got started with five consecutive quarters of.
Speaker Change: Of growth over the prior quarter prior years.
Speaker Change: So where.
No.
Being a.
Speaker Change: We're keep plugging away and as new products come out as existing customers expand their use of SPD like Youre seeing for example, within Ferrari where they've had.
Licensing company and not having to change your cost structure, but having a revenue change is very.
Very very significant I think.
Thanks for suggesting that Alan.
Speaker Change: Very nice growth quarter over quarter in terms of the number of units using our technology, it's a very popular.
Welcome. Thank you.
Yeah.
Your next question comes from Investor Thomas Mccarthy Your line is open.
Speaker Change: Item in the car you know.
Speaker Change: You'll start to see that happen and then as I mentioned earlier migrating from one car within an automaker to more than one car like what happened with Mercedes and then what happened with Mclaren So being a.
Hi, there Joe.
Hey, Tom.
A retired financial adviser now but.
Committed to research frontiers, even more than before.
Great.
Question about <unk>.
Speaker Change: Licensing company and not having to change your cost structure, but having your revenue change as you know, it's a very very significant I think.
By the way, we're noticing that that.
Many of our longtime shareholders have substantially increase their positions over time and it must be that.
Speaker Change: Thanks for suggesting that Alan.
Alan: Welcome. Thank you.
We're doing a better job than we have in the past of communicating some of the successes and the growth and where it's coming from so thank you for.
Speaker Change: Yeah.
Thomas Mccarthy: Your next question comes from Investor Thomas Mccarthy Your line is open.
Thomas Mccarthy: Hi, there Joe.
The increased.
Speaker Change: Tom.
Our participation there.
Thomas Mccarthy: Retired financial adviser now, but are committed to research frontiers, even more than before.
And I.
I believe all my old clients for.
Adding to their positions.
Speaker Change: Great.
Sure.
Thomas Mccarthy: Question about cash.
Question about gosh.
Speaker Change: By the way, we're noticing that that.
Do they plan on being listed in Israeli and European stock exchanges.
Speaker Change: Many of our long time shareholders have substantially increase their positions over time and it must be that.
I don't know the details of that right now our discussions I've really focused on the U S.
Speaker Change: You know, we're doing a better job than we have in the past of communicating some of the successes and the growth and where it's coming from so thank you for.
And they were considering the NASDAQ and the New York stock exchange in.
I think theyre focusing on NASDAQ like most tech companies in materials science companies should.
Speaker Change: The increased.
Speaker Change: Our participation there.
Speaker Change: And.
Speaker Change: I believe all my old clients for also adding to their positions.
Okay.
Alright, Thanks, Joe They do have Israeli they do have they do have investors throughout the world. So I wouldn't be surprised if they had co listings on some of the other exchanges.
Speaker Change: Question about gosh.
Speaker Change: Do they plan on being listed in Israeli and European stock exchanges.
Yeah, great keep up the good work Joe.
Speaker Change: I don't know the details of that right now our discussions I've really focused on the U S and they were considering the NASDAQ and the New York stock Exchange and Yeah, I think they're focusing on NASDAQ like most tech companies in materials science companies should.
Thanks, a lot of time talking to you.
At this time there are no further questions.
Well it looks like.
Yes.
I guess for Marc Your line is open.
Speaker Change: Okay.
Speaker Change: Alright, Thanks, guys. They do have Israeli they do have it and they do have investors throughout the world. So I wouldn't be surprised if they had you know co listings on some of the other exchanges is oh, yeah, great keep up the good work Joe.
Oh, Hello August your line, Okay, Hi.
Hi, Andy.
Now how you doin' Dr Berman.
Dr <unk>.
Good good.
Hey couple of questions for me.
And I might have missed it the initial comments.
Speaker Change: Thanks, a lot of time talking to you.
I mentioned that we're expecting some increase in revenues in Q2 was great CTO in Q3.
Speaker Change: At this time there are no further questions.
Speaker Change: It looks like we I think we've got.
Yes, I did so Q1 was up over Q4 Q4 was.
August Berman: One more just yet from August Vermont. Your line is open.
Every quarter so far in the last five quarters have been up compared to the prior quarter the same quarter of the prior year and.
August Berman: Oh Hello August your line.
And what I did say is even though we're not even halfway through the first set.
August Berman: Hi, Jeremy.
August Berman: Mary how are you doing Dr Lieberman.
August Berman: Hey, doing Dr. Berman I'm good good.
Quarter, we already know that.
Royalty income in automotive income is going to be higher.
August Berman: Hey couple of questions for me.
August Berman: I might have missed it the initial comments.
Are you able to say if that OEM or not.
August Berman: You mentioned that you were expecting some increase in revenues.
I'm not about im not allowed to say, where it's coming from.
August Berman: GTO in Q3.
August Berman: Yes, I did so Q1 was up over Q4 Q4 was.
One of the one of the things is that we.
The motive industry is somewhat predictable.
August Berman: Every quarter so far in the last five quarters have been up compared to the prior quarter.
We've got production call outs and things like that so we know what.
August Berman: Same quarter, the prior year and and what I did say is even though we're not even halfway through the first the second quarter.
Is going to happen, but also the leading indicator usually is film sales and we've seen some dramatic increases in film purchases by our licensees and they don't do that to keep it in the garage or the basement.
August Berman: Already know that.
August Berman: Royalty income and automotive income is going to be higher.
Perfect.
Speaker Change: Are you able to say if that OEM or not.
Okay, and then just two other real quick.
<unk> added up you are on that.
Speaker Change: I'm not about I'm not allowed to say, where it's coming from.
I'm, sorry that maybe indirectly answer your question I did mentioned that.
Speaker Change: One of the one of the things is that we do.
<unk>.
With the Asian automaker.
Speaker Change: The automotive industry is somewhat predictable.
Successfully pass through the product development.
August Berman: You know, we got production call outs and things like that so we know what.
Process with them. So we expect good things start happening there.
August Berman: It's going to happen, but also the leading indicator usually is film sales and we've seen some dramatic increases in film purchases by our licensees and they don't do that to keep it in the in the garage or the basement.
Great.
Okay, and then a while back backman need the vision systems.
With the merger occurred there was talk of.
August Berman: Perfect.
Some sort of implementation with there.
Speaker Change: Okay, and then just two other real quick.
They are aaas, and Aas and our smart glass.
Speaker Change: I think I don't know if you are on that.
Speaker Change: I'm, sorry that maybe that indirectly answer your question I did mentioned that.
Is it work still being done on that or is that is that sure sure.
August Berman:
Yeah sure sure I mean, one of the things I said earlier, which maybe was an indirect way of answering the question was that some people think of these as distinct markets cameras for example on the outside of vehicles.
August Berman: With the Asian automaker.
August Berman: We've successfully pass through the product development.
August Berman: Process with them. So we expect good things started happening there yeah.
But they are providing data for the.
August Berman: Yes.
August Berman: Okay, and then a while back backman need the vision systems.
For the smart glass as well so it makes the glass system much more intelligent if you could combine that and also it's just a great way to hone your skills in the electronics and controller area. So.
August Berman: The merger occurred there was talk.
August Berman: Some sort of implementation with.
August Berman: They are aaas, and Aas and our smart glass.
So there is a synergy there and then usually the companies that are doing very high end Adas systems and things like that.
Speaker Change: Is it work still being done on that or is that is that sure sure.
Speaker Change: Yeah sure sure I mean, one of the things I said earlier, which maybe was an indirect way of answering the question was that some people think of these as distinct markets cameras for example on the outside of vehicles.
We are also the prime candidates for <unk>.
Energy efficient switchable glass like ours.
The good stuff not the white stuff.
Speaker Change: But they are providing data for the.
Yes.
It sounds like you have a pretty large installed base.
Speaker Change: For the smart glass as well so it makes the glass system much more intelligent if you can combine that and also it's just a great way to hone your skills in the electronics and controller area. So.
Looking at all.
They've been installed on so that's really exciting to see.
Yeah, Okay, and then just.
Last thing here.
I know, we didn't we're not talking much about view, but.
Speaker Change: So there is a synergy there and then usually the companies that are doing very high end Adas systems and things like that.
Denies to an extent are we still talking to their customers about.
Potentially.
Yes, taking on new projects or replace their products I know that was something that they had you had mentioned a while back.
Speaker Change: We are also the prime candidates for energy.
August Berman: Energy efficient switchable glass like ours, that's you know the good stuff not the the white stuff.
Going to you are reaching out to our licenses.
Yes, yes.
Yes, yes.
August Berman: Yeah.
And also what it does also as it creates I think a more rational.
August Berman: It sounds like you have a pretty large installed base.
August Berman: Looking at all.
Bidding process for projects.
August Berman: They've been installed on so that's really exciting to see and yeah. Okay. And then this is.
Thats subsidizing.
August Berman: Last thing here.
780, <unk> of the cost of a project.
August Berman: I know, we didn't we're not talking much about new bank.
It's very hard to compete against that.
August Berman: Denies to an extent, we start talking to their customers about.
Until they run out of money, while they did so.
August Berman: Potentially.
Now you're going to get actual economics happening and at the same time it is happening it when two other very important developments are happening number one the cost of the SPD technology is coming down considerably.
August Berman: Yeah, I'm, taking on new projects or replace their products I know that was something that you had mentioned a while back that they're talking to you are reaching out to our licenses.
August Berman: Yeah Yeah.
August Berman: Yeah, Yeah and also what it does also as it creates I think a more rational bidding process for projects.
You can see from the fact that we are.
Working with our mid mid level car.
On this but also you have the economic drivers of the dynamic Glass Act, which gives a 30% to 50% tax credit. So you have.
August Berman: That's subsidizing.
August Berman:
August Berman: 780, <unk> of the cost of a project.
August Berman: It's very hard to compete against that.
Costs coming down in general you have tax credits.
August Berman: Until they run out of money well they did so.
Summing up to subsidize it and then you have also the cost of installation and the ancillary costs.
August Berman: Now you're going to get actual economics happening and at the same time, it's happening it when two other very important developments are happening number one the cost of the SPD technology is coming down considerably.
Plummeting because of the retrofit ability so.
A lot of good things are converging at the same time this year.
August Berman: You can see from the fact that we're you know.
Okay.
All good all good news when you get to see could you see a little bit at <unk>.
August Berman: Working with our mid mid level car.
Turning to our stock as well so that's exciting that's all I had thank you.
August Berman: On this but also you have the economic drivers of the dynamic Glass Act, which gives a 30% to 50% tax credit. So you have costs coming down in general you have tax credits.
Thanks, a lot Dr Lieberman.
Your next question comes from Investor days parody. So your line is open.
August Berman: Coming up to subsidize it and then you have also the cost of installation and the ancillary costs.
Hi, Joe.
Hey, Dave how are you.
Im doing good.
I have a question have you ever considered using artificial intelligence to see if you can.
August Berman: Plummeting because of the retrofit ability so.
August Berman: A lot of good things are converging at the same time this year.
Better maximize the SPD technology like Oh, yes.
August Berman: Okay.
August Berman: All good all good news when you get to see could you see a little bit at <unk>.
Yes.
Speaker Change: Turning to our stock as well so that's a study that's all I had thank you.
We use AI in different aspects of our business both internally and also how we interact with the glass so.
Speaker Change: Thanks, a lot people Doctor Berman.
Speaker Change: Okay.
Yes, it's something that it works.
Unknown Attendee: Your next question comes from Investor Dave <unk>. Your line is open.
Yeah.
But it's pretty good so yeah, yes, yes, you just have to know how to talk to it.
Dave: Hi, Joe.
Investor Dave: Hey, Dave how are you.
Prompt engineer alright, thank you.
Dave: I'm doing good.
Dave: I have a question have you ever considered using artificial intelligence to see if you can.
Thanks, a lot.
Your next question comes from private Investor Sam into your line is open.
Dave: Better maximize the SPD technology.
Dave: Oh, Yeah, Oh, yeah.
Hello, So I think that's the first time I'm, calling in on our conference call I usually.
Dave: Oh, Yeah, we we use AI in different aspects of our business both internally and also how we interact with the glass so.
I think it is.
Yeah.
I have two questions in the past you mentioned a range of what we call Act.
Dave: Yes, it's something that that works.
Dave: Yeah.
Dave: But it's pretty good so yeah, yes, yeah, you just have to know how to talk to it.
<unk> per vehicle.
<unk> royalty, so with the cost coming down.
Prompt engineer: Prompt engineer alright, thank you.
Speaker Change: Thanks, a lot.
Has that range been lowered or because of increased glass used for the larger roofs et cetera et cetera, we're still around the same range can you give any color on that.
Speaker Change: Your next question comes from private Investor San Sinter. Your line is open.
San Sinter: Hello, and so I think that's the first time I'm, calling in on our conference call I usually.
Yes in some cases, it's actually gone up.
San Sinter: I think it is him.
Because.
The effect mentioned, Sam So the fact that we're using.
San Sinter: I have two questions in the past you mentioned a range of what we call Act.
Larger areas of glass.
<unk>.
Has has increased obviously the selling price per vehicle the unit price.
San Sinter: <unk> per vehicle as far as royalty, so with the cost coming down.
The movement towards panoramic roofs or are these.
Speaker Change: Has that range been lowered or because of increased glass used for the larger roofs et cetera et cetera, we're still around the same range can you give any color on that.
All glass roofs that you see now like on the Ferrari.
Very large pieces of glass.
And.
And they are also a lot of functionality added to the glass as well so we get paid a nice royalty on that.
Speaker Change: Yeah in some cases, it's actually gone up.
Speaker Change: Because.
We've invested a $125 million to develop SPD technology over the years.
Speaker Change: The effect mentioned, Sam So the fact that we're using.
Speaker Change: Larger areas of glass.
We're getting paid back.
Speaker Change: As has increased obviously the selling price per vehicle unit, the unit price and the movement towards panoramic roofs or these.
Right right.
And then my.
Second question was.
Bob The Asian Automaker, you made some comments about it a few minutes ago.
Speaker Change: All glass roofs that you see now like on the Ferrari.
Development has.
As we pass through the development so in our prior call.
Speaker Change: They're very large pieces of glass and.
You mentioned that this year.
Speaker Change: And there are also a lot of functionality added to the that glass as well. So you know we get paid a nice royalty on that you know we've invested $125 million to develop SPD technology over the years and we're getting paid back.
Can you do you have any more visibility on that could we see that before the fourth quarter or could that be at the end of the era.
I don't.
The truth of the matter is.
Speaker Change: Right right.
No.
Speaker Change: And then my second question was about the Asian Automaker you made some comments about it a few minutes ago.
I don't know its up to the automaker, but it could be the third quarter to be the fourth quarter. It could be the first quarter of next year I am probably guessing that.
They're going to want to say something about it earlier in the process than later so.
Speaker Change: Development has as we pass through the development so in our prior call.
Right, Okay, well thank you.
Speaker Change: You mentioned this year.
Yes, yes.
Everyone will get the confirmation I think we've all.
Speaker Change: Can you do you have any more visibility on that could we see that before the fourth quarter or could that be at the end after here.
We are expecting.
Great great. Thank you very much.
Thanks Sam.
Speaker Change: Yeah.
Other thing we are working on the website.
Speaker Change: I don't.
Speaker Change: The truth of the matter is.
Oh.
Speaker Change: On it.
[laughter].
Speaker Change: No I don't know its up to the automaker, but it could be the third quarter. It could be the fourth quarter. It could be the first quarter of next year I'm, probably guessing that.
Great great because okay.
CFS, especially as we saw today the stock sets the new 52 week high. So there were 56 stocks on the NASDAQ todays setting, particularly Cai that brings attention to the company and they don't even know what that first so the first thing they're going to go with Scott to the website.
Speaker Change: They're going to want to say something about it earlier in the process than later so.
Speaker Change: Okay, well, thank you everyone.
Speaker Change: Yeah Yeah.
Speaker Change: Everyone will get the confirmation I think we've all.
Speaker Change: Are expecting.
Speaker Change: Great great. Thank you very much.
I appreciate you, it's our director, it's our director of first impression I get it.
Speaker Change: Thanks, Sam Oh, and one other thing we are working on the website.
Speaker Change: Oh [laughter].
Great and I'll wait patiently I'll I'll stop.
Speaker Change: [laughter] Oh.
Speaker Change: Great great because.
And Thats Trump it on that.
You could always be outbid at sometimes we do listen we do listen okay. Thanks, Okay, great. Thank you.
Speaker Change: Yeah, I see it as especially as we saw today plus Fox sets, a new 52 week high. So there were 56 stocks on the NASDAQ todays setting, particularly Cai that brings attention to the company and they don't even know what that first so the first thing they're going to go let's go to the website.
Okay.
At this time I would like to turn the call back to Mr. Ferrari for any further remarks.
Okay. Thanks, I'm going to make a few closing remarks.
The outlook for the smart glass industry remains extremely positive bolstered by growing revenues in automotive and aircraft and increasing regulatory support like the dynamic glass act, providing substantial tax credits for adoption.
Speaker Change: So I appreciate you, it's our director, it's our director of first impression I get it.
Speaker Change: Okay, Great and I'll wait patiently I'll I'll stop all along.
Speaker Change: Along that Trump it on that.
Speaker Change: You could always place, but sometimes we do listen we do listen okay. Thanks, Okay, great. Thank you.
The foundations are firmly in place for research frontiers to capitalize on the multibillion dollar smart glass opportunity emerging globally.
Speaker Change: Yeah.
We are the proven leader with an innovative high performing and reliable solution and.
Mr. Ferrari: At this time I would like to turn the call back to Mr. Ferrari for any further remarks.
And are seeing increasing demand from respected iconic brands worldwide.
Ferrari: Okay. Thanks, I'm going to make a few closing remarks.
Mr. Ferrari: The outlook for the smart glass industry remains extremely positive bolstered by growing revenues in automotive and aircraft and increasing regulatory support like the dynamic glass act, providing substantial tax credits for adoption.
Our close strategic relationship with Galaxy continues to create opportunities in multiple sectors as we work together on business development and product innovation.
Gaseous upcoming IPO will bring greater transparency and resources to the industry and their marketing will further highlight the immense potential of SPD technology.
Ferrari: The foundations are firmly in place for research frontiers to capitalize on the multibillion dollar smart glass opportunity emerging globally.
In Q1, 2024, we continued our strong growth trajectory, increasing royalty revenues by 26% over Q1, 2023, driven by significant gains in the automotive and aircraft sectors.
Mr. Ferrari: We are the proven leader with an innovative high performing and reliable solution and.
Mr. Ferrari: And are seeing increasing demand from respected iconic brands worldwide.
Speaker Change: Our close strategic relationship with Galaxy continues to create opportunities in multiple sectors. As we worked together on business development and product innovation.
This builds on a robust performance for full year, 2023, where total revenue surged by 109% and royalty income jumped 69% over the prior year.
Speaker Change: Gaseous upcoming IPO will bring greater transparency and resources to the industry and their marketing will further highlight the immense potential of SPD technology.
This past quarter marked the fifth consecutive quarter, where revenues were higher than the same quarter of the prior year.
Looking ahead, we expect automotive and aircraft revenues to continue rising in the coming quarters, driven by new product introductions. The introduction of new automakers offering SPD smart glass on their new car models and increasing penetration at existing customers.
Speaker Change: In Q1, 2024, we continued our strong growth trajectory, increasing royalty revenues by 26% over Q1, 2023, driven by significant gains in the automotive and aircraft sectors.
The retrofit market for buildings also represents a significant new growth catalyst as we work to enable smarter more sustainable infrastructure worldwide.
Speaker Change: This builds on a robust performance for full year, 2023, where total revenue surged by 109% and royalty income jumped 69% over the prior year.
This coming year, we expect you to see even better results.
Speaker Change: This past quarter marked the fifth consecutive quarter, where revenues were higher than the same quarter of the prior year.
In the coming year, you'll also begin to see more and more details becoming public about what is happening in our industry.
Speaker Change: Looking ahead, we expect automotive and aircraft revenues to continue rising in the coming quarters, driven by new product introductions. The introduction of new automakers offering SPD smart glass on their new car models and increasing penetration at existing customers.
These are achievements, we are quite proud of we're happy to share them with you and as always appreciate your trust and support.
As we look ahead at research frontiers stands at the forefront, leading the smart glass industry, driven by a great and reliable technology regulatory support and innovative breakthroughs.
Speaker Change: The retrofit market for buildings also represents a significant new growth catalyst as we work to enable smarter more sustainable infrastructure worldwide.
We and our licensees take immense pride in our achievements, thus far and remain steadfast in our commitment to driving innovation and growth within the smart glass industry.
Speaker Change: This coming year, we expect you to see even better results.
Speaker Change: In the coming year, you'll also begin to see more and more details becoming public about what is happening in our industry.
We're grateful for your unwavering trust and support and we look forward to sharing our continued success as we usher in a new era of intelligent glass solutions.
Speaker Change: These are achievements that we're quite proud of we're happy to share them with you and as always appreciate your trust and support.
As I walked through my office here at research Frontiers.
Speaker Change: As we look ahead research frontiers stands at the forefront, leading the smart glass industry, driven by a great and reliable technology regulatory support and innovative breakthroughs.
A motion detector automatically switched my window from energy saving dark to clear <unk>.
If you read my mind that as I approach the window that I wanted to look at the view outside.
Speaker Change: We and our licensees take immense pride in our achievements, thus far and remain steadfast in our commitment to driving innovation and growth within the smart glass industry.
A key Fob on my desk allowed me to instantly turn the bank of Windows in my office into a wall for privacy.
And just outside my office I spoke to Alexa and asked us to turn on another large window.
Speaker Change: We're grateful for your unwavering trust and support and we look forward to sharing our continued success as we usher in a new era of intelligent glass solutions.
Curved glass sunroof and aircraft and yacht windows instantly switch from dark to clear.
Speaker Change: As I walked through my office here at research Frontiers.
But none of this technology.
Speaker Change: A motion detector automatically switched my window from energy saving dark to clear it.
It is only available just to me anyone on this call can have it and no other smart glass company in the world other than our licensees can provide it.
Speaker Change: If you read my mind that as I approached the window that I wanted to look at the view outside.
We are not just anticipating the future we have created it.
Speaker Change: A key Fob on my desk allowed me to instantly turn the bank of Windows in my office into a wall for privacy.
Thank you all for being part of this.
This concludes todays research frontiers investment call.
Speaker Change: And just outside my office I spoke to Alexa and asked at the turn on another large window.
Thank you for attending have a wonderful rest of your day.
Speaker Change: Curved glass sunroof and aircraft and yacht windows instantly switch from dark to clear.
Speaker Change: But none of this technology.
Speaker Change: It is only available just to me anyone on this call can have it and no other smart glass company in the world other than our licensees can provide it.
Speaker Change: We are not just anticipate in the future we have created it and thank you all for being part of this.
Speaker Change: Okay.
Speaker Change: This concludes todays research frontiers investment call.
Speaker Change: Thank you for attending have a wonderful rest of your day.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: The host has ended this call goodbye.