Research Frontiers (NASDAQ:REFR) Q3 2026 Earnings Call

0:00 Good afternoon and welcome to Research Frontier's investor conference call to discuss the third quarter of 2026 results of operations and recent developments. The company will be answering many of the questions that were emailed to it prior to this conference call in their presentation. In some cases, the company has responded directly to email questions prior to this call or will do so afterwards. There will be a live question and answer session after the company's presentation. Some statements today may contain forward-looking information identified by words such as expect, anticipate, and forecast.

0:45 These reflect current beliefs and actual results may differ materially from those expressed due to various risk factors, including those detailed in our SEC filings. Research Frontiers assumes no obligation to update or revise these statements. The call is being recorded and will be available for replay on Research Frontiers' website at smartglass.com for the next 90 days. I would now like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir. Thank you, Paul, and good afternoon, everyone, and welcome to Research Frontier's third quarter 2026 investor conference call. I appreciate you taking the time to join us, and I particularly appreciate the thoughtful questions many of you sent by email in advance.

1:43 In August, much of our discussion concerned the disruption at Gauzy and the alternatives available to restore SPD film supply. Today I want to have a different conversation because we have concrete progress to report. Gauzy's court-approved Israeli settlement became effective in September. Additional financings closed in October. And as Gauzy announced in October, payments have begun flowing to support the restart of SPD emulsion manufacturing in Israel and SPD film manufacturing in Germany. These are important steps that move us along in resuming production and dependable deliveries. To appreciate the significance of these developments, Let's go back to our November 6, 2025 investor call just one year ago. We were reporting increased automotive royalties and growing royalties overall. Research frontiers had more than $1.1 million in cash, no debt, and an expanding pipeline in automotive, aerospace, architecture, and other markets.

2:49 We were not discussing a technology in search of a market. We were discussing a technology already selected by leading automakers, proven in aircraft, and attracting interest in new applications. Our focus was on converting development programs into production and expanding royalties. That same week, our architectural retrofit system debuted at Glass Build in Orlando to strong interest from architects, building owners, and glazing professionals, and we were preparing for major automotive glazing discussions in Detroit. I also was asked to chair the conference and deliver the keynote address at the Detroit Automotive Glazing Summit that month as well. There was genuine commercial momentum.

3:37 Then, on November 13, 2025, just seven days after our conference call, and just as Gauzy was preparing to give their third quarter 2025 investor conference call, Vision Systems was involuntarily placed into a court-supervised rehabilitation proceeding in France, and the disruption that followed across the Gauzy Group struck a critical link in our SPD manufacturing supply chain. That triggered a technical event of default on Gauzy's credit line, which in turn prevented the refinancing to a lower interest debt facility and choked off Gauzy's liquidity and capital resources. In the space of a week, our conversation changed from how quickly we could build on our momentum to how we could preserve the manufacturing capacity needed to serve our customers. Gauzy hit a brick wall, but it was a financing and manufacturing brick wall, not a rejection of SPD technology by the marketplace.

4:37 The engineering qualifications, customer relationships, and opportunities that took years to develop did not vanish. What was interrupted was our ability to supply them. that is why restoring production matters so much today. That was then and now the recent debt settlement, financing and initial payments give us a critical path to rebuild the supply channel and fill existing customer orders and generate new business. You will later on hear that we are in fact doing that and we will be talking about several new projects for SPD in different markets. I will cover GALSI, our financial position, progress in our principal markets, and priorities ahead, and then we will open the line for your questions.

5:28 So what changed at GALSI? The financial projections and proceedings involving GALSI and its subsidiaries sharply constrained SPD material production, customer deliveries, and our royalties during the past year. The debt settlement and financing are now completed milestones rather than hoped-for outcomes. Gauzy has reported that its Israeli settlement addresses approximately $61 million of pre-petition liabilities. Its October financing was led by CEO Eyal Peso and other investors. Management's willingness to invest its own money demonstrates tangibly an encouraging sign of commitments. The payments have begun to support restarting the two linked stages of our supply chain, SPD emulsion production in Israel and SPD film manufacturing in Germany.

6:19 The emulsion is the critical light control material. It must then be converted into high quality film that our licensees and their customers incorporate into finished products. Both stages are essential and neither alone can supply our licensees. Our operational priorities are clear and practical ones. Bring people and equipment back into production operation, meet quality specifications and customer demand, establish consistent output, fill back orders, and restore dependable delivery schedules. The proceedings in France involving Gauzy subsidiaries, including matters described in Gauzy's filings, but those are not the same as what affects the German film coding and Israeli emulsion operations.

7:14 They're part of the larger Gauzy situation and warrant continued attention. Basically, Germany and Israel were liquidity based and France was the legal proceedings. We're not going to speculate about the outcome of those proceedings. The French appellate court is expected to rule on two appeals by Gauzy. Some say it was expected today, although I have not gotten word that the decision was handed down yet, but I don't think that means anything other than perhaps they have a different method of distribution in France of legal opinions. But the two appeals really focused on, one, whether they should be forced, Gauzy should be forced to sell their vision systems division to a Leon-based company called Kleins, and whether putting them into an involuntary rehabilitation proceeding was even proper or called for in the first place.

8:11 While the outcome of either of these appeals does not impact production of emulsion in Israel or SPD film in Germany, and we are expected to get paid our royalties either way, a success by Gauzy on either of these appeals can bring substantial capital into Gauzy and even allow them to pay off all of their debt worldwide. We are of course rooting for Gauzy to win one or both of these appeals. A successful win on either of them will make Gauzy a substantially stronger manufacturing and marketing partner. We also consider to consider longer-term supply resilience and alternative manufacturing options. Our immediate priority, however, is the most direct route to dependable supply, which is through the existing manufacturing channel with an SPD film from Gauzy that has already been used and validated by customers in all industries.

9:11 Now let me address our financial results because they show why restoring production is so important. Fee income in the third quarter was approximately $77,000 compared to approximately $359,000 in the third quarter of 2025. The year earlier quarter included government contract royalty revenue that did not recur and the current period also reflects the significant effect of constrained SPD material supply. The net loss for the quarter was approximately $510,000 compared to just under $300,000 a year earlier. As September 30th, we had approximately $645,000 in cash and cash equivalents and approximately $538,000 in working capital. Our forum 10Q discusses the importance of collections, operating cash flow, and potential additional financing. Gauzy's $7 million financing was not financing for Research Frontiers. It may, however, help restart production and provide a path towards collecting amounts owed to us by Gauzy-related entities, as well as generating new royalties from sales of SPD products by our licensees and filling the backlog of existing orders.

10:26 Our licensing model means royalties follow the scale of products incorporating SPD technology. Even after film production restarts, royalties follow only after end product licensees receive and incorporate the film into finished products and sell them to their customers. We do not expect a restart to produce a material royalty recovery until after the fourth quarter of 2026. At the same time, Research Frontiers does not need to build a factory every time an automaker, aircraft manufacturer, or architectural customer adds a program. Our licensees invest in manufacturing, engineering, marketing, and product development, giving us the potential for substantial operating leverage as their production and sales grow without proportional capital expenditures of our own.

11:18 that's an essential part of our business plan, but the trade-off is that we have dependence on those partners, and this year we experienced that downside directly. We are focused on restoring supply while evaluating how to strengthen resilience over time. We have continued to control expenditures and work on amounts owed to us. Some receivables involve parties subject to court supervised proceedings, namely GAUSI and Vision Systems. and is subject to the timetable set by those court tribunals. We believe that these should all be collected this month or next month. Our recent results reflect the supply disruption, not the full potential of our technology of our markets. We're optimistic that through execution, we will show much stronger royalty results. That is the standard that we're applying to ourselves.

12:11 So let me tell you now about where those royalties will be coming from. In automotives, the advantages of SPD are easy to experience. Drivers and passengers want light when it is desirable and protection from heat and glare when it's not. And SPD makes that adjustment rapidly, precisely, and uniformly. It's the best performing smart glass in the world. As automakers use ever larger panoramic glass services, active light control becomes even more useful. Now consider the significance of our automotive record. Four premier automakers have already selected SPD, Mercedes, Ferrari, Cadillac, and McLaren. Each selection reflects years of engineering, testing, and qualification against demanding standards for optical performance, appearance, durability, and integration into differing and unique procurement processes of four different companies. To our knowledge, no other electronically dimmable glazing technology can point to that breadth of real-world automotive validation.

13:20 Importantly, our existing automotive programs and relationships have remained intact throughout the Gauzy's supply interruption. Vehicle models and production schedules evolve, but the technical credibility, supply relationships, and customer knowledge built across those four automakers endure with research frontiers. Our opportunity is to use those qualifications to serve continuing requirements and to compete for follow-on programs within these automakers and establish or expand new or existing development programs at other OEMs once reliable film supply is restored. We continue to see an attractive long-term role for electronically dimmable glazing as automakers place more emphasis on comfort, design, and the passenger experience.

14:12 and automakers need confidence that a selected technology can be supplied consistently over the life of a vehicle program and that confidence matters as much to future platform decisions as existing ones. Our technology has been proven and key elements of our supply chain to the automotive industry have also been proven. What remains is to prove again the SPD film side of that supply chain, which is what is in the progress right now. Now moving from automotive to aerospace, there is real momentum here. There are three aircraft in this recent group, two production business jets and a new light jet that was unveiled in late October, just a few weeks ago at the NBAA. The two production business jets use SPD smart glass electronically dimmable windows and are an important part of established reference points for the technology and the demanding cabin environment. I personally met with this manufacturer in North America and they're quite enthusiastic about what SPD-EDWs offer to their cabin interiors and designs.

15:19 The newly unveiled light jet is a developing opportunity and an encouraging one. Recent direct correspondence makes clear that the manufacturer has publicly shown and most importantly prefers our SPD smart electronically dimmable windows. As with automotive OEMs, every aircraft manufacturer needs two kinds of confidence, confidence in the technology and confidence in the supply chain. On the first, SPD has the longest in-service history of any electronically dimmable window technology in aviation, delivering the rapid uniform dimming, glare, and heat control and cabin integration that manufacturers desire. We are now working to restore the same confidence in the other factor, the supply chain for SPD film.

16:08 Aircraft manufacturers determine program announcements, production schedules, and supplier disclosures, and we respect those relationships. We will identify additional programs and details when we're permitted to do so. For now, the most important point is that aerospace industry and activity continued even while the industry's principal SPD film source was constrained. that is a strong signal about the long-term relevance of our SPD technology. And we're also seeing, by the way, now that we're emerging from the supply chain issues, even more interest. And just yesterday, we started a new program with a North American aircraft manufacturer that's quite well known. So I think word is getting out that not only are we the performance champion, but also that we have the reliability to support the aircraft market.

17:04 Of all of our emerging applications, architectural retrofit may be the most transformative, both in terms of near-term royalty revenue and visibility. Automotive and aircraft opportunities depend on new vehicles and aircraft being built. Retrofit starts with the vastly larger installed base of windows already in offices, hotels, homes, apartments, government buildings, and corporate headquarters. In principle, said, every suitable existing window becomes a potential candidate for an upgrade. That is a fundamentally different scale of opportunity and is not limited by the annual rate of new construction in the architectural market. We saw the appeal firsthand when our licensee introduced its retrofit system at Glass Build in Orlando in November 2025.

17:54 Architects, building owners, and glazing professionals responded to the prospect of upgrading existing windows without tearing out and replacing the original glazing. That is a practical value proposition. Better occupant comfort, glare management, solar heat control, and energy savings with less construction and tenant disruption and potentially lower total project costs. This is not simply a new use for smart glass, it is a different delivery system for a a customer who already owns the building and wants to upgrade its windows to make them SPD smart. As we noted on prior calls, we and our licensee were already pursuing government and commercial projects when the SPD film supply disruption intervened.

18:42 There is also an important difference in how these products are sold. New construction projects can take 18 months or more between ordering the windows and installation. and optional features are often the first to be cut when the budgets tighten late in the process. Now with the retrofit solution, owners can decide to retrofit an existing property with a shorter path from purchase decision to installation and therefore with less risk that the feature is designed out for budgetary reasons. That does not eliminate the need for attractive economics, train installation partners, reliable film supply and successful installations. but it makes retrofit a distinctly compelling commercial opportunity with some real cost and other benefits.

19:29 We and our licensee in this area continue to engage existing and prospective projects. As qualified film becomes available, our goal is to move to retrofit product installations and a full commercial launch. That was delayed because of the supply chain issues over the past year, but now we're all ready to restart it in force. Our licensee in this area has already established substantial manufacturing facilities for the retrofit, and there are even plans to expand these facilities further. I believe retrofit has the potential to be transformative for our company, both in revenue and in visibility, as an elegant, high-performance, and energy-saving solution. In my view, the size of the existing building market creates the possibility that architectural retrofit could surpass our other markets combined.

20:20 Now let me talk about the black SPD. Black SPD is more than a different color. It can broaden the range of products in which designers are willing to specify our technology. The familiar sapphire blue appearance has served SPD very well in roofs and overhead glazing, but some applications, particularly automotive side windows, certain aircraft and architectural installations and premium consumer products, called for a more neutral dark appearance. Black and other color neutral SPD could remove that aesthetic barrier while retaining the light control performance for which SPD is known, allowing our licensees to win projects from customers. Those aesthetic requirements previously made conventional sapphire blue SPD less attractive.

21:12 We discussed black SPD on our November 25 call and have seen promising development samples during 2026. Gauzy's disruption constrained the resources needed to complete manufacturing development and qualification. But as the resources returned back towards production, advancing this next generation product is one of the initiatives we want to accelerate as a priority. Remaining milestones for full commercialization of the black SPD are now more clear and include repeatable material performance, scalable film production, Optical and Durability Testing, and Customer Qualification. These are all ongoing, and we are enthusiastic about Black SPD's prospects.

21:58 But you should understand that Black SPD is not necessary to our success, but it certainly is desirable. What it can do is extend the value of an already proven technology into applications where appearance has been a limiting factor. That is why I view it as a product platform opportunity, not simply another tent choice. However, even though this is a platform extension, it can represent massive additional revenues across all application areas. Marine is another market where SPD's active light and heat control can improve the experience of large glazed spaces. Our conversations here are with people who are actually designing and building vessels.

22:49 We have devoted less time to marine on recent conference calls, yet it remains an active area of our business. You can see wonderful yachts and other marine glass examples on our website. These are real-world examples. One example that illustrated the benefits of SPD here, we were recently contacted by a builder of a production luxury yacht series that is evaluating SPD for curved side windows, the windshield, and overhead glazing. The value of SPD's ability to eliminate curtains and blinds in a marine environment with SPD has been emphasized to me by a number of naval architects and designers. You get rid of the blinds that rattle, and you can put them on curved windows, which is prevalent on yachts and cruise ships, and it totally transforms how easy it is to control heat, light, and glare on a boat.

23:44 We've also been recently approached by a high-performance sailing vessel with an enclosed cockpit another compelling use case for active light and heat control. And these are but a few of the floating white papers demonstrating the benefits of SPD smart glass in the yacht and cruise ship areas. I also want to mention applications that can sometimes receive less attention than automobiles and aircraft. In August, we discussed our license agreement with Klein, which is part of the New York Stock Exchange Company Polaris, including motorcycle helmet visors and sports goggles. the attraction is straightforward. The ability to adjust shading instantly in response to changing light conditions can be useful in activities where visibility and comfort matter gratefully.

24:33 That agreement is notable because it reflects yet another company choosing to invest development effort in SPD applications during a period when our supply chain was under stress. It demonstrates continued interest in the technology and how SPD smart light control technology provides a high-performance solution to the age-old problem of blinding glare and changing light conditions. Our opportunity is diversified across markets with different product cycles. Growth need not depend on one vehicle, one aircraft, or one building product. Now let's talk about some of the milestones ahead. As noted in our October announcement, Research Frontiers has invested more than $125 million over time in developing SPD technology, its intellectual property, and our business platform. Our licensees have separately committed substantial resources to manufacturing and commercialization.

25:35 Together, those efforts have produced qualified technology, real products, and established customer relationships. The milestones ahead are straightforward. Dependable emulsion and film production, consistent quality and delivery, progress in automotive and aerospace programs, advancement of black SPD, and the first meaningful commercial installations of architectural retrofit products. We will measure our progress by those milestones and by the royalty revenue that ultimately follows. The long-term strength of Research Frontiers is the combination of proven SPD technology, and a capital efficient licensing model. Long duration aerospace programs, serial automotive production and potentially much larger installed retrofit markets gives us several paths to growth. Gauzy's September restructuring of their debt and their subsequent October financing have created a path towards renewed supply.

26:35 Our objective is to convert the investments already made across our licensing ecosystem into growing royalties without the proportionate increases of our own capital expenditures. I'm going to turn to some of the questions we got now. I also want to address our NASDAQ listing status. As we've discussed in our filings, we have received notices relating to continued listing requirements including the minimum bid price and market value of listed securities requirements of NASDAQ. Our board and management are monitoring the deadlines and available alternatives. We understand the importance of maintaining access to the public markets and of addressing these matters responsibly. We believe improved business performance and valuation are the best long-term responses.

27:23 We're also reviewing the applicable NASDAQ requirements, deadlines, and available alternatives and have a discussion with NASDAQ and others with the objective of preserving an orderly and liquid market for our shares. and we will disclose any developments as appropriate. Before taking other questions, let me step back. Over the past year, we have spent an extraordinary amount of time discussing the financial restructuring of our supplier, Gauzy. That was necessary to recover the momentum we had last November and move our business forward. Research frontiers develop a technology that lets people control light and heat in ways conventional glazing cannot across a very wide range of products. The technical, IP, and commercial foundations we built still remain.

28:12 And let me summarize before I take questions why I'm encouraged. First, SPD is a proven and reliable technology. Four automotive OEMs have selected it. In aerospace, it is the longest in service history of any electronically dimmable window technology. Those are hard-earned credentials. Second, our existing automotive programs remain intact and our pipeline kept growing through the supply chain disruption. A new licensee for motorcycle helmet visors and sports goggles, two production business jets using SPD and a new light jet in Vail just a few weeks ago whose manufacturer prefers our technology. And as I mentioned, actually just yesterday we started a project and signed the preliminary agreements to start working with the major well-known and new US-based aircraft manufacturer on the development of SPD EDWs for one of their aircraft models. So that means two aircraft models from earlier in the year and two additional OEMs in the last few weeks.

29:15 Third, we have the opportunity to advance Black SPD, which could make our technology suitable for an even broader range of designs. And the fourth reason I'm optimistic is we have an emerging architectural retrofit market whose potential size, in my view, could surpass our other markets combined. Just as importantly, we have an asset-light business model that can scale with the success of our licensees without proportionate investment by research frontiers in factory and equipment. The challenge, and we certainly have felt it this year, is that our business depends on capable, well-funded manufacturing partners. Our key supplier hit a financial wall. The debt settlement, financing, and payments supporting production restarts are significant steps towards getting past that wall.

30:06 We have meaningful work ahead, reliable production, disciplined cash management, successful product introductions, and ultimately higher royalties. I believe we are well positioned for those achievements with exciting new and existing projects and programs for SBD smart glass. And Paul, with that, let's open the line for questions. And as always, please try to keep your questions focused on matters of general interest so we can hear from as many shareholders as possible. And while the questions are being queued, let me address three subjects raised repeatedly by our shareholders in advance of the call. First, when will royalties recover? Well, production must restart and stabilize, film must reach our licensees, and finished products must be delivered and reported. And as I said, we do not expect a material recovery in royalties until after the fourth quarter of 2026.

30:57 Another question I got is, why not simply switch film manufacturers? Well, we've always had one film manufacturer going back to the days of Han Cook and then Hitachi and then Gauzy. Producing consistently qualified SPD film requires specialized expertise and customer validation. And we continue to consider long-term supply resilience and realistically creating a new manufacturing channel is not instantaneous and needs to be evaluated against the progress of the existing restart and the capital needs for establishing and training a second supplier. But I also wanted to add something. In the past, we talked about different plans and alternatives.

31:44 There's also a hybrid approach as well, which can be compelling. Since synthesizing the emulsion is highly specialized, but coding it into film could be much easier for a number of companies. We may have, if they have the existing equipment and capabilities to do so. And I could tell you today that we've had also had such hybrid discussions. So it could be that you'll have a situation where a company like Gauzy makes the emulsion, which is a much more limited endeavor in terms of equipment and people, and that emulsion is coded into film by any number of companies across the world. Third question I got. is, why am I focused on the architectural retrofit?

32:34 We talked about it, but I'd like to repeat it. It addresses the existing stock of buildings rather than only new construction. And project decisions can occur on a much shorter cycle than major automotive programs or even traditional architectural programs, to be measured in a matter of weeks rather than months or years. And once qualified film is flowing, it is one of our most attractive commercial opportunities and can generate near-term royalties for us. Related question, can the retrofit be applied to other areas besides architectural? Yes, in some cases. It's not well-suited for retrofitting cars unless someone was doing a major upgrade such as adding bullet-resistant glass.

33:19 And there are companies that are converters that will have a customer spend 20 to 50 or 1,000 or more on upgrading a car. So those certainly are areas where you can retrofit. And we receive a steady stream of inquiries from vehicle owners asking whether SPD can be applied to an existing car window or sunroof. And while we appreciate that interest, we should not confuse an aftermarket inquiry with a vehicle program or commercial product. In automotive, our focus remains OEMs and their glass suppliers and also the converters of high-end upgrades, and the meaningful milestones are supplier qualification, automaker selection, production, and sustained deliveries. Once we have that, you'll start to see it grow again. Also, the existing programs that are in the pipeline will create growth even before that happens.

34:15 Getting back to the retrofit, in architecture, our retrofit work is aimed first at commercial and institutional buildings with the right system design, economics, and installation partners. Some homes may also get it initially, but the focus more is on larger scale installations for commercial and government building markets. And also another area of retrofit is aircraft windows can be retrofitted. When an aircraft comes in for a maintenance check, HPD windows can be added over the weekend, and our licensees have solutions for that. Paul, let's queue up the questions now, the live questions. If you would like to ask a question, please press star one on your telephone keypad and you'll be placed into the queue in the order received.

35:04 Please be prepared to ask your question when prompted. Once again, if you would like to ask a question, please press star one on your phone now. And our first question comes from Leonard Lietzow, an investor. Good afternoon, Joe. Hi, Len. Yes. Okay, with all of the movement that's going to autonomous cars and trucks, and it's not going to be in the future, it's here now, are any of the autonomous vehicles coming to you for SPD? Yeah, that's a very interesting question, and the answer is yes.

35:50 It really depends. I mean, if it's an autonomous truck, that's driving itself completely, you don't really need glare control in that and you could basically have a windowless truck with some cameras maybe just for providing road data and things like that. But in the car market, there's a number of reasons why. One of the concept cars that BMW introduced at CES with SPD, I think it was two CESs ago, the chairman of BMW launched this vehicle, the new class. What it illustrated is what happens when you go to autonomous vehicles. I think it's quite interesting.

36:37 Cars have different modes, fully driver-driven cars and then different levels of autonomous driving from driver-assisted, things that keep you in your lane and will steer the car around curves and brake and accelerate to fully autonomous cars that you can just punch in an address and have it drive itself. And as you progress up that spectrum of more and more car control and less and less driver control, what the BMW concept showed was you can have more things going on inside the car. When you're driving the car, you're not going to show a movie. That's going to distract the driver. but you may allow him to check texts and things on a small computer screen or something like that.

37:25 As you go into more control by the car, maybe bring in elements of infotainment and social media. And if you go to full autonomous control, you could turn the whole car into an entertainment room. So the SPD becomes a very integral part of that because it allows you to control the lighting conditions for all of those, and also selectively control it. You could have certain areas of the car be darkened and certain ones be lightened. So that's one area where autonomous cars, I think, can really use the SPD. And this is less obvious, but there are two elements of autonomous vehicles, and I don't want to scare anyone, but in aircraft, the most dangerous part of a flight is when the autopilot hands itself over to the human pilot because the pilot's been sitting around for an hour or two. He's been having his lunch or dinner, been chatting, and he may not be as sharp as when he got on the plane and did the detailed pre-flight checklist.

38:32 So the aircraft industry has developed a number of ways to kind of transition that pilot back into full alertness before the autopilot turns over control to the pilot. in autonomous cars, the same thing will happen. And one really compelling way, and we've discussed this at conferences with a lot of the autonomous car makers, is using daylighting to do that. Bring in daylighting into the vehicle as part of the visual clues to prepare the human driver for taking over control as it gets closer to its destination. And then the third element, certainly not something that I would expect anyone in the call to have thought about is the SPD smart glass can actually reduce motion sickness in the car.

39:24 If you've ever been on a boat and you get a little bit seasick, you're supposed to stare at the horizon and not anything close. Well, you don't really have a horizon if the windows aren't visible. So this allows you to also manage motion sickness, believe it or not. So there's a lot of different things that come in when you move from a a fully human-driven car to a semi-autonomous car to a fully autonomous car. With the autonomous cars now that are fully autonomous, the accident rate has gone down 90%, which means the cost goes down. The amount of human error creates a lot of fatalities on the road.

40:11 While the autonomous cars have a lot of publicity when there is an accident. If you look at the numbers, they're saving lives. Very few, right. I just wondered if somebody was looking forward to putting it in their cars because I think that's going to be a bigger and bigger thing. With AI, automakers are going to have a very difficult road ahead. Yes. Retrofit is extremely important to Absolutely. And what I was encouraged by is the fact that the licensee that has that application was talking to me about two weeks ago about a completely new, dramatically expanded facility. I mean, you know, we all see that is the opportunity here and that's their main focus. So, you know, their focus is the same as mine.

41:11 Get film flowing and delivered, and the money will follow very quickly. I think so. That's exciting. I'm glad to hear you're looking at other alternatives for manufacturing as well. Right. They're not overnight solutions, but obviously if we can do it, we definitely would like to have that. We had a wake-up call. Oh, certainly. We got jolted out of bed. Okay. Thanks, Joe. Thank you. Thanks, Len. And our next question comes from Jeff Harvey, an investor. Hi, Joe. I guess several things here. First, I'm not very confident in Gauzy's financial condition or future.

42:02 As you know, part of this offering, they may not get all the $7 million. It depends upon what partly what the French courts end up doing. They certainly, in my opinion, have not done a good job since that IPO. So the sooner you can whittle down their participation to making the emulsions, the better for us. And again, I guess I think, as you stated, you probably won't get any... said, we don't have royalties until after the fourth quarter. That would say to me that you're going to need to raise additional funds. Do you want to address that? Sure. We're owed substantial amounts which look like they're going to be paid in November and December. That would alleviate or almost completely eliminate our need to raise additional funds.

42:54 If we do something, it may be small. I don't like to wait for the last minute for things. When you're dealing with a French Tribunal to get paid. You have expectations, but they go at their pace and we go at ours and they're not the same. You're not going to get paid on time, that's for sure. That would be my guess. That would be the reasoning behind a small French family offering. I don't see them being able to really ramp up the production process is the right rate that we need in order to be able to handle all the potential customers that you're going to have. No, the capacity is certainly there.

43:43 What you need is the liquidity to fill it. But remember, the liquidity drain on Gauzy that really kind of created this whole mess didn't come from the SPD business. They have high-capacity machines, and you could run the emulsion facility with a relatively small number of people, film coders in Germany, you know, also, you know, need some operators, but not a lot of people. It's certainly not, you know, the 750 people that Gauzy was at at its peak. Most of that was in France. So a leaner, meaner, and more focused Gauzy, I think, you know, brings them back to their roots in light control and also is a manageable product.

44:28 process for that. We don't know the outcome of that. They may end up taking back that division. Well, that division is not related to us. I understand that. That would put additional financial stress on them. That's all I'm saying. They actually disclosed in their press release that out of the $7 million, $1.638 million... would go back. But the other thing, Jeff, you should know, I hear what you're saying. The other thing is clearing up a lot of the legal baggage that they've had has allowed them actually to attract new investors beyond the $7 million that we talked about.

45:21 They're merging also with a renewed access maybe to additional capital. But I hear what you're saying and, you know, biting off more than you could chew and sometimes growth alone can create liquidity issues and having that liquidity choked off. So I just encourage you to whittle down their participation as fast as you can so that we can get this company growing again. Right. Okay. Well, thank you and, you know, I do appreciate your comments and understand them and, you know, I'm Very cognizant of what you're saying. Thanks. And our next question comes from Bruce Denny, an investor.

46:07 Hello? Hi, Joe. Hey, Dr. Denny. How are you? Very well, thanks. Hey, Cadillac has their new ultra-exclusive car out, and they've become very familiar with our technology. Any feedback from them about future use and the rest of their model line? Yes. It's about on a much larger scale. And I think the Celestic was a great proving ground because it allowed them to do things in a bespoke manner and really understand the technology and put in a lot of bells and whistles to see customer reaction.

46:56 I think they have a much better understanding of SPD and what the consumers that are buying less expensive cars than the Celestic are going to want, but certainly they're going to want SPD. These SUVs especially have very large glass areas that are almost impossible to shade with traditional means. they understand the thermal benefits of doing this and the practical benefits too. So we're very encouraged by the volumes that they've quoted to us and we're just working to bring those online. Terrific. Okay, that's very good news.

47:43 Thank you. That's all for me. Thank you. and success breeds more success. So the more that they can do, the more that they will do. And once again, to ask a question, please press star one on your phone now. And our next question comes from John Nelson, an investor. Hi, Joe. Hey, John. By the way, thank you for your nice email and for your renewed interest. position in Research Frontiers. I appreciate the trust you've placed in all of us. I've steadily increased my position as the stock price has moved lower and I'm confident in your ability to get this company into a bright future.

48:37 Thank you. I also appreciate all your efforts because this is, I know it's been a very trying year because of what's happened to Gauzy on the finance side. So thanks for your efforts. Just before your question, I want to take the opportunity to also mention that while I may be getting five or six hours of sleep a night. El Peso was probably getting two or three for the last year. He's been working very hard to help Gauzy come out of this situation.

49:25 It's something that he's been really, really focused on and I think he's going to be successful and have a lot to show for it as a result. Anyway, I didn't mean to interrupt your question, but I did want to mention that. I appreciate it. I was curious, has there been anything more with the auto advisor development ideas? And have any of your other licensees maybe expressed interest in picking up that ball and running with it? Most of the time, though, the visor interest is coming from the OEM side of the market, not the aftermarket. You would think that it's an easy product to make into the aftermarket, and I think it is.

50:21 If I had a couple more hours in the day, I'd probably do this myself. I think it's relatively straightforward for the aftermarket. But what we see is when an OEM is looking at a vehicle, they're looking at all the glare points that come in and the windshield and the upper shade band especially above the AS line is the area where a number of companies have done this in concept where you have the shade band itself become the visor. So I think that's probably going to be the first way it's introduced at the OEM level and we'll still work on getting it into the aftermarket. But remember, this year we've been focusing on the triage that we needed to do here.

51:10 But we're going to turn to that because I think it's a great opportunity. Okay. And then just on your, I know you've got a lot on the bingo card, but one area you didn't mention... Not enough of good things. As you can see lately, there's been an accelerated interest in projects that use our technology. We're very, very, very encouraged by that. I was curious if there has been anything going on with... Because at least I remember in the past you... some of the SPD was used in cruise ships?

51:59 Yes. There's been validation in the cruise ship market. It's a lot like the architectural market. You're talking about very large pieces of glass, which is not a problem for SPD, but it requires large areas of film production. We have to get the large area film production restarted to address that. The validation was successful. The customers in the cruise ship industry like it. They keep asking me to come to the conferences and speak and exhibit and I will. Okay. Another market that I'm just curious if the federal government has ever expressed any interest in the The use of SPD in military vehicles?

52:56 There has been interest expressed in that. But most of it is coming in the guise of bullet-resistant glass. Because often you can't open a bullet-resistant window on a vehicle. And because of that, the inside can get very, very hot. and when it gets very, very hot, you need a way to control it. So if you look at what they do to conventional cars when they upgrade them to bullet resistance, they put in stronger brakes because the car is heavier and stronger suspensions and stronger air conditioning systems and more metal to prevent projectiles from intruding. And an interesting thing, and once again, something I never thought I'd know about, but I kind of learned these things on the job, is...

53:47 When you cross a border point or a security checkpoint, often the guard there will make you open your window to make sure there's no bad guy in the backseat. And if your window doesn't open, you have to open the door. Well, when you open the door, what you've done, or if you open your window, is you've now lowered your shields. So the ability to flip a switch and turn a window from dark to clear has tremendous security benefits because you don't have to open your door. A well-placed sniper can station himself near a checkpoint and take out someone, unfortunately, if they have to open the door or the window. Also, not knowing who's in the car and exactly where they are also limits the ability to take someone out. There's a lot of benefits there.

54:41 I think if I had to categorize most of the military applications. It was in bullet resistant glass applications like that. Navy ships and other things could be useful. We're even talking about space. A couple years ago, people would have laughed and said, well, that's a low volume market. You know how much stuff is flying around up there? Thanks to SpaceX and everybody else, there's a lot of launches. We may have to relocate near Galsey and Melbourne because that's the Space Coast. The other thing, the other market that I was just curious about, once you get up and running on the restored film production and emulsion and film production, it would seem like a perfect use of SPD for robo-taxis.

55:45 Yeah, I mean, like any of these autonomous driven cars, I think is great. And you know, not only does it add to comfort, you know, imagine if you are getting into a robo taxi, you want to make sure there's no bad guy in there, too. I mean, you don't know what's driving up. And also, so you clear up the windows, you can look in and make sure there's nothing, nothing that shouldn't be in the car there. And also, it's a great way to attract the passenger, you know, You flash the windows and they know it's your car. Okay, good. That's it for me. Look forward to the progress. Thank you. Thank you. And we have a question from Randy Lombardo, an investor.

56:34 Hello, Joe. Hi. Hey, Joe. I kind of just jumped in on this conversation. I think you talked a little bit about the listing problems that we have because we're sitting at $0.35, $0.37 a share. Right. We don't meet the bid price test. If we met that, we would also meet the market value test. Sure. Now, was it something that you were going to file for the 180-day deadline extension? Is that something you're going to do or you don't need to do it? Well, the 180-day automatic extension is not available to us because you have to meet the, not only the, you know, you could use it to cure the bid price deficiency if you meet the other requirements, which is either a market value requirement or a shareholder's equity requirement. And because we don't meet that, what we would have to do, and we don't have to decide this until December, is we'd have to apply for a hearing if we wanted to stay on the NASDAQ and present a plan for coming into compliance.

57:50 But that would happen in December. And our board is looking into that and other options as well. Obviously, and I said this earlier, but I just want to repeat it. The thing that we want to make sure of is that there's always a liquid market for our stock. and that shareholders will have an efficient trading market. And so far, all of our discussions with NASDAQ indicate that no matter what we decide, that's not going to change. We're going to still have a liquid market. There won't be too big of a spread between the bid and the ask and a lot of things like that. But of course, we would love to stay on NASDAQ. They've been very good to us. First of all, we're probably one of the oldest issuers on NASDAQ. We were listed in 1986 and also they've been very good to us. I mean, every time we've had a major event, whether it's the launch of the SLK by Mercedes or the establishment of a factory or being in the World's Fair, they've helped us put an exclamation point next to that by allowing us to ring the opening or closing bell and really been very supportive of our business.

58:59 So I can't say enough nice things about NASDAQ and we have a good relationship with them. but they have their listing standards and we have to show that we're going to come into compliance with it. Like I said, that's a decision we can make in December if we needed to. Is it still your goal to avoid a reverse stock split for the shareholders? It's my goal to do that, yes. I think that so far in our history, the only thing we've done is forward stock splits, not reverse stock splits. I think that When a lot of the uncertainty behind Gauzy is lifted, that'll lift kind of the infection that we've had from their problems.

59:47 Sure. Okay. Okay, Joe. Thank you very much. Thanks a lot. Good talking to you. Okay. And we have no further questions in the queue. I'll turn the call back over to Mr. Harary for some closing remarks. Thank you, Paul, and thanks to everyone who participated today. And please share the replay with your friends. I think when you listen to some of the things I've said today, you're going to be quite excited about some of the future projects and near-term projects that we have. And I appreciate both the supportive comments and also the thoughtful questions. And shareholders should expect us to discuss the challenges as openly as we discuss the opportunities. And if we didn't get fully to your question, just call or email us.

1:00:33 We're pretty good at responding. I hope today's discussion has made clear why the developments since August matter. On November 6th of last year, we described rising established automotive and aircraft programs and a new architectural retrofit initiative that was generating strong interest. Seven days later, involuntary proceedings filed against Gauzy's French subsidiary began a series, a period of of a supply disruption, and that disruption delayed our ability to serve customers. We don't like that. But it didn't erase the technology. It didn't erase the qualifications of our technology across a very wide customer base or the customer relationships that we've built over decades. And today the Gauzy Debt Settlement and Financing offer a constructive path forward to restore production and delivery on their end. and what excites me is what a reliable supply chain will allow us to do next. Support programs like the four we have with the automakers.

1:01:37 Build on our aerospace position including the two production jets and the new light jet and yesterday's start of yet another aircraft project. Advance the black SPD and move our architectural retrofit initiative forward to full commercialization at full speed in a market I believe that could ultimately be larger than all of our other markets combined. And through our capital-efficient licensing model, success in these markets can translate into royalties without proportionate investment or capital expenditure by research frontiers and factories. Our immediate focus is to restore dependable film supply, fill the customer backlog for SPD smart products, re-engage OEM programs, and fully launch the retrofit.

1:02:25 We're focused on SPD film production, dependable deliveries, customer adoption, and stronger royalty results. And those are the tangible milestones against which we judge ourselves and by which our shareholders should also judge our progress. I know this past year has been painful for shareholders. It certainly has for me. And our stock prices reflected that. And I would ask you to look ahead rather than judge this business solely by the results of an unprecedented year in which our supply chain was constrained. We in GALSI are focused on reconnecting our proven SPD technology and customer programs and filling customer backlog with reliable manufacturing and converting that works into results. So thank you for your continued support and I look forward to sharing future updates with everybody.

1:03:14 This concludes today's conference call. Thank you for attending.