REFR Q3 2019 Earnings Call

Operator: Good afternoon, ladies and gentlemen. Welcome to Research Frontiers’ Investor Conference Call to Discuss the Third Quarter of 2019 Results and Recent Developments. During today's presentation, all parties will be in a listen-only mode. [Operator Instructions] This conference is being recorded today. A replay of this conference call will be available starting later today in the Investor section of Research Frontiers’ websites at www.smartglass.com and will be available 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. similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions that are part of the Security Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed. 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 e-mailed 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 e-mail questions prior to this call, or will do so afterwards, in order to answer more questions of general interest to shareholders on this call.If you find that your question has been substantially answered, as a courtesy and to allow time for other shareholders to ask their questions, please remove yourself from the queue by pressing pound one. Also, we ask that you keep your questions brief in the interest of time.I would now like to hand the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Joe Harary: Thank you, Erica [ph], and good afternoon, everyone, and thanks for being here. Joining me today is Seth Van Voorhees, our CFO.To summarize our third quarter 2019 results, fee income was up 29% from the third quarter of last year. When we compare the operations in our top two major markets, the fee income in automotive was up 49% in the third quarter of this year, as compared to last year. In aircraft, fee income was up 28%, as compared to last year.Moving to sequential quarterly revenue growth, if we compare the third quarter of this year to the previous second quarter of this year, the revenue growth is even larger. Overall, fee income in the third quarter of 2019 was up 54% from the second quarter of this year. Fee income from automotive was up 73% in the third quarter, compared to the previous quarter. All of this came from increases from both Mercedes and McLaren. Fee income from aircraft was up 27% in the third quarter.We judge our performance in three main areas: (1) financial stability (2) operational efficiency, and (3) business growth.We achieved positive results in all three of these areas this year. Let's start with financial stability. As of the end of the second quarter we had $7.0 million in cash, no debt, and working capital of $7.6 million.We have very steady and predictable expenses at Research Frontiers, and our cash burn is about $450,000 to $550,000 per quarter. That means, we have plenty of cash that will last us at least for the next three years.Now, let's move from financial stability to the second cornerstone: operational efficiency.As I noted, we have low and predictable expenses, and our expenses have continuously come down.2018 represented the fourth consecutive year that expenses at Research Frontiers have decreased and the fifth consecutive year of lower operating losses for your company compared to the prior year. We are on track to continue this trend of lower expenses and lower losses this year. In fact, our net loss for the third quarter of this year is approaching break even as it narrowed to a loss of just one penny per share.During the first nine months of this year, when non-cash charges relating to the issuance of options and valuation of warrants are backed out, expenses this year were also lower and our net loss would have been about $152,000 lower this year compared to the same period last year.Lowering expenses keeps us flexible, frees up resources to be deployed more effectively where needed, and also helps us become profitable faster. It increases our effectiveness as a business.We continue to spend a fraction of what others do in the smart window industry, and Research Frontiers has better results of operations. Our licensees typically make the large capital expenditures, as evidenced by Gauzy's new SPD film factory line Stuttgart.Let's turn to an update on that. Gauzy's facility in Tel Aviv, makes the emulsion that is then coated in Germany and shipped to customers worldwide. More film went out this week and let me tell you what a treat it was to see 1.8-meter beautiful SPD film coming off of their production equipment in Germany. Yes, Gauzy's equipment in Germany can now coat SPD film 1.8 meters wide and most importantly, customer reaction has been quite enthusiastic in our major markets, automotive and aircraft and now enthusiastic even in the architectural market.A few shareholders have asked me when will the Gauzy factory opening ceremony occur? Gauzy originally planned to have it around now, but the scheduling of invitations to some of the dignitaries that are being invited caused Gauzy to schedule this for four weeks from today.This new capability for our licensees to receive wider SPD film 1.8 meters wide has resulted in an excellent response from the architectural glass industry, which brings me to our next and most important topic behind our success, business growth.In past conference calls, I outlined our initiatives for Research Frontiers. These all centered around our growth strategy. First, reducing the cost of our SPD-Smart Glass technology to the customer. Simply put, lower costs for our technology opens up wider market penetration. It also allows our technology be used in new markets. For example, Panasonic and others have shown what the next-generation televisions will look like, as well as display advertising and we're very much a part of that.SPD film sales are one of the best near-term leading indicators of future revenues for us, since this film gets put into products in subsequent quarters that generate royalty income for us. For example, on our last conference call, I noted increased sales of SPD film and this quarter, you're seeing higher revenues.Sales of SPD film through the end of the third quarter already exceeded all film sales for the entire last year. Let me repeat that. Sales of SPD film through the end of the third quarter already exceeded all film sales for the entire last year. Within these numbers we also see growth not only in automotive and aircraft, but some of the other emerging markets such as consumer electronic products.We expect the main part of our business growth to come from core businesses: primarily automotive and architectural.As noted earlier, fee income from the automotive and aircraft industry was up substantially this quarter, as well as year-to-date. This is quite an accomplishment, because it is based upon increased use of SPD-Smart Glass by both Mercedes and McLaren.As I noted in the past, as cars get further and further away from their initial introduction date, the total number of cars produced each year from that model declines. So, to maintain steady royalties under that environment requires higher and higher take rates for options, or that new car models be introduced using our technology.We spoke about the drivers in these two markets before. In automotive, we make cars more energy-efficient, reduce CO2 emissions by four grams per kilometer, and increase the driving range of electric vehicles by up to 5.5%. We also make people more comfortable and safer and protect the interiors of cars. And the auto industry is certainly hearing our message.If you remember, on our conference call in May, we noted that there were 19 vehicles that we and our licensees are working on for SPD that are being built in the United States, Europe, and Asia. On our last conference call in August, we announced that this number increased to 23 vehicles, and an interview a few weeks later in early September for the Detroit Free Press, I had indicated that this number had risen to 25 vehicles.Since our last conference call, some people in the automotive industry asked that I give less information about what is in our pipeline. So for now I can say that the 25 vehicle number I gave was not reduced by companies such as Dyson abandoning their electric vehicle project. And, in fact, in my closing remarks, you will learn that there was further growth in this number.I expect automotive to continue to grow for us. This growth will come from three main drivers in automotive: the accelerated move towards electric vehicles, remember, we increased the driving range significantly by up to 5.5%; the drive to reduced CO2 emissions; and we reduced CO2 emissions in internal combustion engines by up to four grams per kilometer.And with the new regulations coming in Europe, where carmakers are going to be penalized €95 per gram per kilometer that they don't meet the emission standards, that could be a very significant penalty savings for them. And also, the driver is going to come from lower costs growth from spreading the comfort fuel efficiency and safety benefits of SPD to a wider number of vehicles.And sheer numbers will contribute to our growth in automotive. There are 100 million vehicles produced every year. We only need to be on a small percentage of them to be very, very profitable.We received by e-mail before this call questions from investors and I try to address many of them of the general topics in our presentation today. There's some additional questions that were e-mailed to us. One of our longstanding shareholders asks: Mr. Harary’s interview on proactive research, you mentioned that there are some architectural uses of SPD built – being built. Could you provide more detail on a couple of those projects, for example, where are they located, size of the project and when the projects will be completed?Well, most of the projects are in Europe, somewhere in the Middle East and we're starting to focus on the U.S. now. Some of these can use fairly large amounts of SPD-Smart Glass talking about the entire building skin. So, we're talking about fairly widespread use.Another shareholder had asked: many have noticed a lot of activity by some licensees, especially AGP Glass. They have announced their new plan is being open a few weeks ago, a rather impressive plant. On their website, it is clear, says – it clearly says SPD Vario Plus and Invisolines lines will be manufactured there. Obviously, Invisolines is SPD, but some investors don't realize this. I also noticed they mentioned architectural glass and this is something new to them. I assume this could be related to SPD as well. Could you comment on that? What do you think of the impressive plant they've built?AGP is an incredibly sophisticated company. They went from being a very specialized farmer glass company, to being one that can produce vast quantities of materials, I believe, Goldman Sachs also invested in them. And their factory in in Ghent is indeed impressive. It's highly, highly automated, which not only reduces costs, but increases quality assurance. And we're very excited about the fact that they have those capabilities.Another question from the same shareholder, Tesla has filed patents and they do mention SPD in it. Their patents incorporate SPD that was made public a few months ago. Can you comment on this? It seems SPD solves numerous issues. I see people complaining about online for Tesla, they have dark in the glass so much. They really don't have a view and the model why they show it being completely clear, which is – which has people concerned? Why not – why don't they both have SPD?Well, first of all, we're honored that carmakers are starting to include SPD in their patent applications. And certainly, companies like Tesla can benefit from SPD, because just putting it in the roof alone can reduce the temperature inside the vehicle by 18 degrees, which is significant and allows the electric battery to power the driving range of the car and not waste itself on cooling it.Another shareholder asks, does Research Frontiers have a licensee that can move sales to retail such as Best Buy, Home Depot, Fox's Lowe's?Well, just to set expectations, Bruce, the architectural market initially will be custom and most probably the large uses will be commercial. It doesn't mean that you can’t order this for your home or your apartment. But if we're going to be talking about predictable larger numbers in the near-term, we're talking about commercial. So, that kind of deflects away from some of the big box retail stores like Home Depot’s and Lowe's and also the economics there are much different.I think that the path in architectural initially will be – at least in architectural will be through the high-end glass providers and the facade manufacturers of the world, but that's a different case in the terms of some of the consumer electronics that are emerging using our technology.I imagine that a lot of people on the call have seen Panasonic's transparent screen TV, which takes an ordinary piece of glass that's fully transparent and turns it into to a high definition TV, using OLED displays. Those kinds of things certainly are candidates for the big box stores and probably that'll be the distribution method there. And that market is now gearing up.Another shareholder, Bob, had said: during your last conference call, you stated that SPD film sales increased by 36% over the last quarter. I think this information gives us good indication that Research Frontiers is on the sound path to profitability and should be included in your quarterly update?Well, as we saw this quarter, SPD film sales are indeed a very good leading indicator of future success. And as I mentioned in the current quarter, SPD film sales through the third quarter of this year exceeded the entire sales for the prior year. So, we're doing well.Another shareholder had asked, with auto sales falling for many of the manufacturers, are they pulling back on estimated production runs for 2020?Not that I'm aware of Len. It's – everything is on the same course it was before.And then the next question relates to what kind of lag times are needed for the architectural market? And then is Hitachi going to address that market as well? And if so, how soon? And are other suppliers going to make wide film?So, let me answer those three questions about the architectural market. Getting SPD-SmartGlass introduced into the architecture market can be relatively quick. I've seen lead times as short as a few weeks, because the film is available and it's simply laminated and shipped to the job site, where glazers install it. That doesn't mean, every project will call us three weeks before they need the glass.For the most part, there's a lot of other design systems that are going to integrate with our glass and that's kind of the benefit of this. You can integrate this into the building control systems and give users incredible amounts of control over their home or office environment. So, I imagine that we’ll get specked in early on in the process because of the versatility.The second question you asked is, is Hitachi going to address that market as well? That's up to them. We certainly have encouraged them to do that. And there is a very large market out there.Another shareholder asked, there has been some discussion about the more recent images of tinting for SPD. The latest photo showed a gray or blue gray tint as opposed to the monochromatic blue tint> how has this 10 been achieved? Is it simply done by adding a great film, or is it a combination of some other technology like PDLC?It actually runs the gambit, depending on what you're looking at. And there are many different places in the configuration from the film to the inter layers to the glass, that you can actually achieve those different colors. And for some of the projects that we've worked on directly with some of the automakers, a lot of times you want to match the outside of the car to a particular color scheme and we've been able to do that.Okay. Another shareholder said, he works at a major company as a fairly substantial position of Research Frontiers:. Reading through the last earnings call, I keep coming up with the same question that I cannot wrap my head around, and I was hoping you could bring more clarity during the third quarter conference call. I've built a financial model using key assumptions from past earning callss and current market trends to assume that the Gauzy coming online this year, Research Frontiers would start turning profitable at some point in 2020. Having said that, my real question is, when the company becomes profitable, why would additional shares be issued for strategic reasons, when the company will have positive cash flow that could be used for that?Well, thank you for the question. In the past, I said that we didn't need cash, but if we ever did raise cash, it would be for strategic reasons. Just kind of going through what those reasons might be, and we're beginning to see some of this throughout our supply chain, not directly, necessarily directly with Research Frontiers., but if a large company that has a strategic, complementary product or a large manufacturer who wants to incorporate this into a vehicle, for example, they may want to make an investment in the SPD industry, whether it's through us or one of our licensees in order to secure that supply chain and make it stronger. And I wouldn't rule out that, if a large auto manufacturer, for example, wanted to make an investment in us, we would seriously consider it, because it certainly increases the ultimate success of the project and the amount of smart glass used when they do that.Next question comes from another longstanding shareholder. Regarding the SER opportunity, that's our newest licensee in Brazil. How many armored cars does SER produce per year? And is SPD targeted for a specific car model?I'm not sure I'm allowed to give the specific number of vehicles that SER upgrades every month, but I can answer your question perhaps a little differently. SER is one of the market leaders in Brazil. I think they're tied for number one in that market. And the overall market for armored glass in vehicles in Brazil, is 1,500 cars per month SER tells me. In Mexico, just by comparison, it's 500 cars per month. So, Brazil is three times larger than that.And the next question you asked is, is SPD targeted for a specific car model? Well, with the armored glass market, generally, these are upgrades of existing vehicles. And there's usually about a dozen or so vehicles that are targeted for the most frequent upgrades and that's fairly consistent worldwide. There is some discussions between our licensees and automakers about direct production of armored glass for those vehicle makers. And actually, it spans several licensees in that field. So, we're talking about multiple OEMs and multiple licensees supplying them.So, since SPD would be on the windows and possibly sunroof, what would a per car revenue be for Research Frontiers?Let's take our baseline. We've said we get between $100 and $150 in royalties per car for, let's say, the S-Class or the Roadsters. I'm expecting that we would probably get at least three times that royalty, maybe more, in the armored glass market, depending on how much glass is put in each car. Some of these cars don't have sunroofs, because they want them to be armored. And somebody would ask either install a new sunroof, cut a hole in the roof and put armored glass in there or they may just outfit the side glass. And a lot of the premium cars already have sunroofs, so there you would just upgrade it with a – with an SPD.And the next question you would ask was, when will they start making these armored cars? Well they can upgrade them now. I mean, the way that their operations are geared, what they do is, they make these sets of glass for each car and they ship them to the installers throughout Brazil. So, it's not even limited by the labor involved in installing these, because basically these kits, if you will, are sent to the blindadores which are the upgrading companies.We talked about your other question about progress in the Television market. Another shareholder says: When will Gauzy open their new factory in Germany?We already answered that, it's producing 1.8-meter wide film right now. Will the delay in opening effect expected revenue over the next two years? There hasn't been a delay in opening. And to the extent that there's pent-up demand. They're doing their best, including running their facility in Tel Aviv that produces the chemistry for this 24/7 to make enough emulsion for coating.Another question is about Gauzy’s factory. Is Gauzy’s factory, I assume you're talking about the one in Stuttgart, I dedicated solely to the production of SPD film, or will they also produce PDLC?The Gauzy factory in Stuttgart is solely devoted to SPD. Then the second part of the question is, does SPD get produced in Gauzy is really factory as well? Was that site dedicated to PDLC-only? So, the way Gauzy decided to – once they built the second factory, to divide up the production is to have the PDLC and the chemistry, all done in Israel, and have the SPD done in Germany. And you could probably guess that some of those reasons are that some of the major auto companies are all headquartered within a couple hour drive or a couple minute drive from their factory. And in the architectural market, some of the biggest building facade players are located in Germany, too. So, it's very strategic to have SPD being produced in Germany right now.Another question from the same shareholder. I was surprised and disappointed to see that Aston Martin did not indicate implementation of our glass in their latest DBX model?Yes, it was a little bit of a surprise that they didn't put it in that model. But there are a number of different models, both within Aston Martin and elsewhere that we have been implemented on for limited high engineered production of – for specialty cars. So, I think that it hasn't happened now. It doesn't mean it's not going to happen later.And then the last question that this shareholder had asked is, is Gentex talking to the same 25 OEMs that Research Frontiers is for smart glass contracts?Well, I don't know exactly who Gentex was talking to, but I could probably assume that they're not talking to any of the OEMs about smart windows. Their main business in automotive is in the rearview mirror market, and not in things like sun roofs, inside windows and rear windows and sun visors for vehicles. And the biggest they've got is an aircraft-size window. So, I think when you get into the larger areas, they realize that there's some inherent limitations with electrochromic technology.Another shareholder John, had asked: Any expectations as to when Gauzy’s Israeli and German plants will be operating at or near full capacity?So, the production in the chemistry for SPD is running at full capacity right now. And the factory that coats it is just starting up. So, they haven't reached full capacity yet, but some of the projects that we've been talking about would very, very quickly fill up the capacity of that facility. So, we keep our fingers and toes crossed that those projects will happen sooner rather than later. And that – that'll hit full capacity, because once it does, you're talking about substantially reduced prices for the SPD film as well.And the other question the shareholder asked: Iis the percentage royalty charged to licensee is significantly different for the various applications, such as autos, planes, trains, yachts, cruise ships, and architecture? And the other question is: how is that price determined?So, basically, in the automotive market, we get a 10% royalty, and in every other market that you mentioned, we get a 15% royalty and it's based on the price that is sold to the customer. So, in automotive, it's what the automakers pay for the glass. In aircraft, it's what the aircraft makers pay for the glass. So that's how it's determined there.And then the last question the shareholder asked is: why don't more of your end product users cite Research Frontiers when advertising or highlighting smart glass uses and benefits?Well, we certainly encourage them and we actually have the legal right in all of our agreements to do it. But we also have to respect the branding strategy that these companies have. So, we do that as well. And you'll probably see more and more of them proudly mention Research Frontiers and SPD technology. You've seen this in some of the videos and things, where SPD is mentioned by name, whereas in the past a lot of the licenses were just using a generic electrochromatic term to describe it.We were also asked about our public relations and social media and Investor Relations efforts. And this quarter we also expanded our activities in all of these areas and you’re beginning to see those results.Regarding our public relations efforts, key articles in auto industry publications, such as Car and Driver, the Detroit Free Press, USA Today, the Chicago Tribune; and tech publications such as Mashable, about us have certainly brought in the awareness about our – us and our technology and what it can do. And we've also put more resources towards Investor Relations, as well as social media, because this is a very inexpensive way to leverage everything we're doing in these other areas.So, we discussed a lot of exciting topics so far today. And I will ask our operator, Erica, to open up the conference to any additional questions people participating today might have that we haven't already covered.

Operator: [Operator Instructions] Our first question comes from Michael Kay. Please state your question.

Michael Kay: Hello, Joe, congratulations on some very decent numbers. May they continue and ever upward. My question is: what's the status of the Vision Systems’ marketing their sun visors? It seems to me that would be a very good market. And also, as a result of the cost of SPD film getting to the sweet spot, have you – had they been increased interest among OEMs that previously were put up by the costs?

Joe Harary: Yes. So, to answer your first question, Vision Systems is still working on the sun visor project. They’re still targeting it for trucks, for aircraft and for trains. And what's interesting in the commercial market for aircraft, there's a big problem inside the cockpit. So, there has been a number of those projects as well. And just about two weeks ago, I referred one of those over to them because of their expertise in that area.Your second question was:Are we getting more interest now that the costs are coming down? Absolutely. Some of the really high-volume car users – usages over the next couple of years is only made possible by the fact that we now have some much-needed competition among the filmmakers in the pricing. And it's just the quote Hitachi invigorated the industry nicely. So, we certainly are seeing a big uptick in interest.And what's also nice to see is that, it's not just us and our licensees pitching to the potential users. The potential users are coming to us. They're finding us. They're doing the research. We're becoming much more well-known, and that makes everyone's job a lot easier.

Michael Kay: Thank you very much.

Operator: Our next question comes from Art Brady. Please state your question.

Unidentified Analyst: Hi, Joe. I'm wondering if you're receiving any revenues at this point in time from Panasonic? And then number two is, where does Continental and their controller come into play? Has there been any sales as a result of Continental putting their controller factory?

Joe Harary: Yes, okay. So, let me answer that one, Art. First – the first part of your question was, are we getting revenues from Panasonic? Not directly, we get it from the licensee that supplies them with the SPD glass laminated together and we are getting revenues there. And we expect based on – and you can see this on the Internet. There has been really glowing recommendations about how good this is, because the challenge has always been how do you get the black blacks in an OLED that doesn't have a back plane that's, opaque. And what we do is, we provide an opaque on-demand back plane.So, when you're not a piece of glass, you're a high definition TV. And what's interesting also is in that market, it's not just Panasonic now, it’s other consumer electronic manufacturers in that space that have also become much more active in this. So, they're all beginning to realize that the solution to getting a dark back plane in a high vibrant video is to use SPD.And as far as Continental, I can't comment on specifics of their sales, because we don't get a royalty from them. So, I don't have direct knowledge of what their sales are. They don't have to report that. We get the royalty reports from Daimler, when they incorporate the electronics into a car and we get the reports from Pilkington or Asahi, when they apply the glass. And that's where we have the direct knowledge. But I'm happy that we have someone like Continental and their videos that they've been using to promote this are quite remarkable.

Operator: Our next question comes from Francis Scott Weber. Please state your question.

Unidentified Analyst: Oh, yes, Joe, how you doing?

Joe Harary: Good. How are you?

Unidentified Analyst: Pretty good. Several years ago, at a shareholders meeting, you had mentioned that there were signed contracts by airlines. Can you give an update on that?

Joe Harary: I don't think I've ever said there was signed contracts by airlines. The licensees have contracts with suppliers to the airlines, for example, one of the Airbus A380 in the lavoratories and that's not directly between Inspectech and Airbus, it's indirectly through the cabin integrators and things like that. But that's what goes on in that market.

Unidentified Analyst: So, you never said [Multiple Speakers] ….

Joe Harary: And we do have – and they do have direct contact with general aviation, because they're the – supply chain is a little more direct to the manufacturer. So, for example, Inspectech directly to Textron and Vision System sells directly to HondaJet, and those are actual direct contracts. But in the airline market, it tends to go through the Tier 1 system integrators

Unidentified Analyst: Thank you, Joe.

Joe Harary: Thanks.

Operator: Our next question comes from Len Lenzow]. So, please state your question.

Unidentified Analyst: Hey, Joe, it’s Lane [indiscernible].

Joe Harary: Hi.

Unidentified Analyst: Just quick question. I was on another call when you started. I didn't hear what the revenues were for the quarter. If you can repeat that, I'd appreciate it? And then the other question I have is, then we're getting royalty of 15% on the architectural side, is that correct?

Joe Harary: That's correct. That's correct. We talked about our revenue increases, basically, overall revenue was up 29% in the third quarter. Fee income, I guess, in the interest of time, I don't want to really repeat, but if you just go to the press release Lenthat was issued, it'll give you the breakdown, but…

Unidentified Analyst: Okay.

Joe Harary: To summarize, it was up fairly substantially, both between this quarter, the third quarter of this year and the third quarter of last year, and also between the third quarter of this year and the second quarter this year. And I think the biggest and dramatic increase came from automotive and aircraft. So, all good news, but take a look at that.

Unidentified Analyst: Okay.

Operator: Our next question comes from Alan Ginsberg. Please state your question.

Unidentified Analyst: Yes. Hi, Joe.

Joe Harary: Hi, Alan.

Unidentified Analyst: Hi. In the last conference call, you mentioned, I believe at the annual meeting, you mentioned there was three automakers that would comprise, I think, you said 30 times what was done in the whole industry and you haven’t mentioned that today. So, I was curious whether you can give me an update on that?

Joe Harary: Nothing has changed. That statement is still true that I made in the last conference call. I've been asked to say less and less about specifics by the automakers themselves. So, I'm being a little bit more cautious on this call than I was on others. And – but yes, the projections we've been getting from the automakers for use of our glass just taking three of them, yes, could be 30 times what the whole industry did last year.

Unidentified Analyst: Okay, thank you.

Joe Harary: Thank you.

Operator: [Operator Instructions] At this time, we have no further questions.

Joe Harary: I'd like to now make some closing remarks, which hopefully will be helpful in putting the last couple of years in context, but also give you an indication of where we're going.For those of you who have listened to our conference calls over the past several years, we identified what we needed to do.We needed to have multiple producers of SPD film-this has been done.We needed to have wider SPD film so we can pursue the architectural glass market-this has been done.We needed to have SPD technology available at lower cost to the customer-this has been done.We needed greater awareness in the various industries as to what SPD-Smart technology could do for them--This has been done and indeed, customers with new uses for our technology, as well as the traditional ones, are all coming to us and our licensees.We needed a stronger balance sheet-this has been done. We have over three years’ worth of cash and remain debt free. We wanted to reduce internal expenses. This has been done in each of the past four years and for the first three quarters of this year. Ultimately, we want to be cash flow positive and profitable. This has almost been done. This past quarter our net loss was 1 penny per share.Royalty income was up this quarter vs the same quarter last year, and even more substantially between the second quarter and the third quarter.Costs have come down, both internally as we approach break even, and externally in terms of the cost of our technology to the customer. And simply put, lower costs lead to expanded market applications.Awareness continues to spread, and articles in major automotive, tech and general publications have helped.Our pipeline in automotive is now covering more automakers and just this week, yet another car model joined the fold and several more last month.New applications for SPD are springing up that should make it into many homes. We have become a useful, reliable and versatile smart material for uses beyond just our core markets of automotive, aircraft, trains and architectural.In the early years, we had the freedom to speak about more things such as new licensees, appearances of our technology at trade shows, and participation at industry conferences. Now that the product is becoming more widespread and commercial, paradoxically, we can say even less than before because of the nature of the industries we're in and the multiple players competing with each other in those industries.Today you got a glimpse of what ultimately will be the best indicators of our success: revenue growth, new products and applications, and more widespread use of our SPD light-control technology. Leading indicators will continue to be SPD film sales by our licensees, Hitachi Chemical and Gauzy.As noted by the third quarter of this year, we had already surpassed SPD film sales for the entire year last year.And you can be sure that the main ingredients that to date have contributed to our success will continue: (1) a world class, high performing and reliable technology, (2) hard and focused work by us and our licensees and their customers, and (3) determination.We said what we needed to do, and we did it.And we will also do our best to keep shareholders informed as best as we are able regarding new and exciting developments.I look forward to sharing those with you all, and thank you for your investment in Research Frontiers, for participating in today's conference call and for your support and your encouragement.

Operator: This concludes today's conference call. Thank you for attending.[Author ID1: at Tue Nov 12 07:50:00 2019]