Research Frontiers Incorporated Stock

Good afternoon, and welcome to Research Frontiers Investor Conference Call to discuss the second quarter of 2026 results of operations and recent developments. The company will be answering many of the questions that were e-mailed to it prior to this conference call in their presentation. In some cases, the company has responded directly to e-mail questions prior to this call or will do so afterwards. [Operator Instructions] Some statements today may contain forward-looking information identified by words such as expect, anticipate, and forecast. 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. I'd like to welcome all of you to our second quarter 2026 investor conference call. And before I begin discussing the current quarter, I'd like to start by talking about our last conference call. Many of you have noticed that unlike virtually every other conference call we've held over the years, we did not have a live question-and-answer session. Some shareholders criticized that decision, and I understand why. The reason wasn't because we were trying to avoid questions. In fact, throughout our history, we've devoted an extraordinary amount of time to answering shareholder questions, not only during our conference calls, but also before and after them by e-mail and telephone. And I estimate we've probably spent more time in open dialogue with shareholders than many companies our size.

But the decision last quarter was driven by timing. At the time of our last conference call, there were significant court proceedings underway involving our principal licensee, Gauzy. We believe it would have been inappropriate and potentially harmful to speculate publicly while those proceedings are still unfolding. Judges generally prefer that important matters be resolved in their courtroom rather than in the court of public opinion, and we believe the responsible course was to allow that legal process to move forward. Today, the situation is much clearer than it was 3 months ago. And so rather than simply reading mostly from a prepared script, I'd like this call to be more of a town hall meeting.

I'll spend a few minutes discussing where we are today, what has happened over the past several quarters, and perhaps more importantly, what has not happened. Then I'd like to devote most of our remaining time to answering your questions. Out of respect to your fellow shareholders, and so we can answer as many live questions as we can on this call, I ask that you try to keep your questions to those that are of general interest to shareholders.

When I step back and look objectively at the past 9 months, I think it's important not to lose sight of the bigger picture. We spent the last several quarters dealing with an extraordinary situation, but let's be clear about what that situation actually was. And understanding this is important because it explains almost everything that has happened over the past 9 months. It was not a technology problem. It was not a product problem. It was not a customer acceptance problem. It was not a competitive problem. It was fundamentally a supply chain disruption resulting from the financial restructuring of our principal SPD film manufacturer and licensee, Gauzy. Everything that followed flowed from that one event. And making that distinction is important because it explains both the challenges we experienced and why we remain optimistic about the future.

Sometimes companies and their investors become so focused on what did happen that they lose sight of what did happen. We did not lose confidence in our technology. We did not lose our intellectual property. We did not lose our automotive qualifications. We did not lose our development pipeline. We did not lose customer interest. And remarkably, we did not lose the major programs already underway. In fact, what impressed me most over the past 9 months was the patience shown by our customers and the hard work by our licensees. These are sophisticated global companies with many alternatives available to them, yet they remain committed to SPD, and that tells me something very important. They understand the unique performance advantages SPD technology provides, and they continue to believe those advantages are worth having and worth waiting for.

I think that patience is perhaps the strongest independent valuation of our technology that we could have asked for. Another proof point came from something that occurred during this very challenging period. We actually entered into a new license agreement with Klim, a division of New York Stock Exchange listed company, Polaris, and a globally recognized leader in premium motorcycle equipment, to develop SPD applications for motorcycle helm visors and sports goggles. Think about what that says. During one of the most difficult periods in our industry's recent history, another company carefully evaluated SPD technology, evaluated our intellectual property, evaluated the markets they wanted to serve, and decided that now is the right time to become a Research Frontiers' licensee. Companies don't make long-term product development decisions based on technologies they don't believe in. They do so because they see opportunity. And that agreement wasn't just another press release. It was another independent validation of where SPD technology is headed.

Many people have asked what has management been doing during these past several quarters? And the answer is simple. We haven't been standing still. While Gauzy worked through its restructuring, we continue to support them as well as moving the business forward. Development of Black SPD technology continued. Another encouraging validation came from the CEO of LTI or AIT, the company that developed our retrofit product for the architectural market. He not only remains enthusiastic about the opportunity for SPD retrofit products, but also personally participated in our February friends and family financing. I believe that's another indication that people who know this technology best and know our industry best continue to have confidence in where it's all headed. Our retrofit product for the architectural market continued to advance and is well-positioned to move forward as film production moves returns to normal.

And we continue supporting automotive OEM programs. We continue supporting aircraft programs. In fact, 2 major new programs were won during this period. We continue working with our licensees and customers around the world. We continue strengthening relationships with existing customers while adding new ones. And we continue managing our expenses carefully while preserving the financial flexibility necessary to position the company for future growth. In other words, we didn't spend 9 months waiting. We spent 9 months preparing. We spent 9 months navigating through the challenges that Gauzy faced and help them and their customers and their industries move forward.

Some investors have asked, "Why don't we simply establish another SPD film manufacturer immediately?" It's a reasonable question. And historically, Research Frontiers has had only one commercial SPD film manufacturer at any given time, first Hitachi, then Gauzy. Producing automotive-grade SPD film is not like purchasing an off-the-shelf commodity. It requires years of development, substantial capital investment, highly specialized manufacturing expertise, and perhaps most importantly, consistent quality that automotive manufacturers demand. Could there be additional film manufacturers in the future? Certainly. But those decisions have to be made thoughtfully because consistency and quality are absolutely critical in the automotive industry.

I'd also like to briefly address 2 accounting matters that a few shareholders had asked us about right before this call. First, the reserve and going concern language relating to receivables associated with Gauzy and Vision Systems. Our accounting treatment reflects uncertainty regarding timing, not uncertainty about our expectation of ultimate collectability. And the test is you have to have auditable proof that you're going to get paid within 12 months to count something. We believe these amounts will ultimately be collected in full. However, because the exact timing depends upon court supervised proceedings outside of our control, our auditors appropriately recommended that we take a conservative accounting approach. We would not have to do that had the court indicated, for example, that on September 17 or 18, distributions will be made to creditors. In any event, this is prudent financial reporting, and it should not be interpreted as a change in management's confidence regarding ultimate collection.

Second, regarding our NASDAQ listing compliance. Our Board and management are actively monitoring the situation. Our objective remains to regain compliance through improved business performance and improve market valuation. We believe that's the appropriate long-term solution rather than something like a reverse stock split. And one thing I've learned over many years in this business is that technology companies are often tested not when everything is going well, but when unexpected events occur. Over the past 9 months, I believe the entire SPD ecosystem has demonstrated remarkable resilience. Mercedes has continued supporting its existing SPD-equipped vehicles. Programs with Ferrari remain intact. Programs with Cadillac remain intact. Programs with McLaren remain intact. Aircraft opportunities continue moving forward. And as I mentioned earlier, 2 new ones from a large OEM were won recently.

Retrofit development and project acquisition continues. New applications continue to emerge. New licensees continue joining us. Customer enthusiasm has remained strong. And when I look at all these facts together, I don't see a technology or a company in retreat. I see a technology whose underlying momentum has continued despite a temporary interruption in its supply chain.

Our business model remains exactly what it's always been. We invent, we innovate, we license, and our licensees manufacture. Our customers incorporate SPD into products that improve the lives of people around the world. That business model has enabled us to build an extraordinary intellectual property portfolio while addressing markets ranging from automotive and aerospace to architecture, marine, transportation, and now premium eye wear.

In addition to what our licensees have invested, Research Frontiers has invested well over $125 million over the years to bring SPD technology from the laboratory and into commercial production. Many companies spend years proving that a technology works in the laboratory but never succeed in commercializing it. Others achieved commercialization but never reached the quality, consistency, reliability, and cost structure demanded by industries like automotive and aerospace. We and our licensees have accomplished all that. SPD today is not an experimental technology. It is a proven, reliable, commercial product that has met the demanding standards of some of the world's leading manufacturers, and we're the only company that has done that across 4 different automotive OEMs.

Many companies never get that far. They never accomplished that. Many spend considerably more and -- before ultimately abandoning their technologies. We did it. SPD is proven and reliable commercial technology. And when I step back today and look at where we are today compared with a year ago, I actually see more reasons for optimism than pessimism. The smart glass market continues to expand. Our intellectual property portfolio is strong. Our application pipeline continues to broaden. We've added a new licensee. We added 2 new aircraft programs, and our customers have remained committed. And the restructuring process that has dominated so much of our recent discussion regarding Gauzy is substantially closer to its conclusion and to its beginning and may be concluded as soon as next month.

Nine months ago, some investors wondered whether SPD technology could survive the disruption created by Gauzy's restructuring. Today, I believe the evidence points to a very different conclusion. SPD didn't simply survive. It continued attracting customers. It continued attracting new licensees. It continued opening new applications, and it continued earning the confidence of companies making long-term commitments to the technology. Our job now is to convert that resilience into renewed growth as production returns to normal. We have a great deal of work ahead of us, and I remain very confident in the long-term opportunities for SPD technology and the dedication of the people who work every day to realize that opportunity.

With that, rather than continue with prepared remarks, I'd like to turn this town hall discussion over. So let's open the floor to questions. And as always, if your questions are of general interest to our shareholders, we'll answer as many as we can during today's call. If we don't get to your question or if it's specific to your individual circumstances, please contact us after the call, and we'll do our best to respond as promptly as possible. We usually respond to e-mail questions within 24 hours. Thank you, and let's begin.

And as we wait for people to join the Q&A queue, let me answer a question received from several shareholders about the status of current production of SPD emulsion and film and possible scenarios that Research Frontiers might be considering. This is probably the most asked question I have received, so I know it's on many people's minds right now. As Gauzy has publicly disclosed, its financial restructuring substantially affected its operations over the past several months. Like many companies undergoing court supervised restructurings, there were periods when liquidity constraints affected its ability to operate at normal production levels. Also, workers were unpaid and some left and some were laid off. As a result, production of SPD emulsion and film slowed significantly and at some point, essentially stopped while those issues were being addressed. Then things start to flow again.

Gauzy has continued supplying customers using existing inventories of SPD emulsion and film while working through the restructuring process. That inventory, together with careful prioritization of customer requirements, had allowed important programs to continue even though production has not yet been at the level any of us would like. You can see this reflected in the lower royalties that we had this quarter.

Looking forward, there are several possible paths by which the supply of SPD film can continue, and they all ultimately support the same long-term objective, restoring and expanding production capacity. The first plan, plan A, is what we believe to be the most likely outcome. Gauzy successfully completes its restructuring and resumes full-scale production of both SPD emulsion and SPD film. This would be the least disruptive to our supply chain and the timing of product deliveries. Another possible outcome, plan B, would be for Gauzy to continue manufacturing SPD emulsion while another qualified company coats that emulsion into finished SPD film. Plan C would be for another qualified manufacturer to produce both SPD emulsion and SPD film under license from us. And finally, depending on circumstances and opportunities that may arise, plan D is that Research Frontiers itself could participate more directly in preserving or acquiring certain SPD manufacturing assets, if doing so, were determined to be in the best interest of our shareholders.

The important point is that none of these scenarios changes the long-term opportunity for SPD technology. They simply represent different paths forward towards restoring and expanding manufacturing capacity. Some may be more disruptive to our supply chain than others, so we are also factoring that in. Variants of these contingency plans are all underway. But once again, our expectation is that Gauzy will successfully emerge from bankruptcy shortly under plan A. And our objective remains exactly what it has always been, to ensure that the market has a reliable, high-quality supply of SPD film capable of supporting the growing demand we continue to see across automotive, aerospace, architectural, and other markets. Paul, if we have any questions in the queue, let's try them.

[Operator Instructions] And our first question comes from [ Jeff Harvey ], an investor.

A couple of questions. First of all, given the financial difficulty that the Gauzy is in, I'm very concerned they're not going to be able to get funding to the level that they would need to really be able to ramp up film production for your customers. The second thing is, as you mentioned to me, it was announced that Clayes bought Vision Systems and then you told me that they never got approval for aerospace applications. I guess I wondered if you could talk a little bit about that. And today, Gauzy traded 230 million shares, which is a highly unusual number.

Yes, it is.

[ And ] ended up at $0.40 and it's now $0.38 after hours. I don't know if we have something today at the French court.

Okay. Great questions, Jeff, and thank you for asking them. Let me start with the first question you had, which is about the financial ability of Gauzy moving forward. And I'm going to throw out some numbers, and it's my best understanding of the situation in France, in Germany, and in Israel.

So in France, there was a bankruptcy proceeding, an involuntary bankruptcy proceeding or what they call a rehabilitation proceeding, filed. And as part of that process, Gauzy presents a plan of continuation, and they're presenting a revised plan on September 7, so coming up. But the plan of continuation that they presented actually had major funding coming from the sale of a division that doesn't involve SPD technology. And my understanding was that it was an American company that was well-capitalized in the industry that offered $125 million.

For some reason -- and that was for a sliver of the Vision Systems company business. For some reason, I'm not sure what it was, the court instead directed that the entire Vision Systems company, including that division that could have been sold for $125 million, be sold to a company called Clayens, which is a local company not too far from where Vision Systems is in France. We may never know what happened there and the lawyer representing France committed to suicide at some point right before the hearing. But it just seems odd that they would reach that result where they would accept EUR 9 million or roughly $10 million for the entire company compared to a signed agreement for EUR 125 million for part of it.

So that's one of the things that I think in September will work itself through. Now what I'm told is one of the rules of tendering, like Clayens did, is that if you lose an appeal, you lose the money you put down. So they put down EUR 9 million as being held in escrow by the court. And regardless of whether Gauzy wins or loses that appeal, that [ EUR 9 ] million is released to pay Vision Systems debt, which pays us in full. If they win the appeal, they still get the EUR 9 million, but they also get EUR 125 million. So that alone can be a substantial benefit to Gauzy, but they're not just relying on that.

In Israel, they've got a court approval on June 18 -- on July 18, rather, so very recently, for a debt restructuring plan. It's not through a bankruptcy proceeding. It's through a negotiated process under Israeli law. And what that process does -- and I'm not an expert in Israeli reorganization law, but what it does basically is it pays all of the employees $100 on the dollar immediately. That's great because we got to get people back to work and making film and emulsion. It also takes some of the institutional creditors like the Israeli equivalent of the IRS and their pension fund -- pension regulatory agency, and it pays them off over 5 years after a 6-month break before they start paying. So 5 years, they get pushed out interest-free and they pay that off.

Larger creditors, we don't qualify for that is my understanding, get paid after a 6-month hiatus over 3 years. And then companies like us owed less amounts of money, and we get paid immediately from that. But in order to do that, Gauzy has to show that they have the money to execute on that plan. So they've arranged for -- and I know 2 of the participants are former directors of Gauzy that have invested substantial amounts of money, and I think they're each billionaires, in Gauzy over the years to supply a $7 million financing. That financing allows them to pay off the employees and the smaller creditors, get production started again in Germany. And I'm told, as of this morning when I spoke to the CEO of Gauzy, that money has started to flow towards Germany now as a result of that financing.

So things are starting to restart because of all this. And I think ultimately, what's going to happen is Gauzy is going to emerge from this as a leaner, better capitalized, and I think, more focused company, and that will be good for us.

Your second question was why would the court sell Clayens to a company that didn't have the necessary operating permits to run an aerospace company? It's very hard to get an answer on that. So I can't opine. But my understanding was that the equivalent of the French FAA actually weighed in to confirm that Clayens did not have the permits necessary to run an aerospace business. So we'll see what happens in September on that. And your third question, I'm trying to remember, I'm sorry.

Well, as I mentioned, the Air stock traded 230 million shares today. So was there something that...

There was no news that either I nor the CEO of Gauzy was aware of that would account for that kind of price movement in volume. I think at one point, it went up to $0.94. It was crazy. We were actually on the phone when it was happening. So around 10:30 this morning, the volume and the stock was going nice.

So how -- and looking back, Joe, what would have been the process of switching to another manufacturer? I mean I'm just concerned this is going to drag on a long time. Your revenue is going to be down for the next few quarters as a result of this. Why not go to what the plan B and switch to somebody else?

Yes. Well, that takes time. And given the fact that there would be 2 entrants in the market sharing a market, it becomes a little more difficult than if there's one entrant in the market. But it's one of the plans that we're pursuing, Jeff, is to talk to a third-party manufacturer that can do everything. But it also takes time for them to gear up. I mean if you look at Hitachi, they had this as the special project of the President with all the resources and best engineers and any money they needed, and they were licensed in 1999, and it wasn't until 2010, that after 5 years of testing at Mercedes, that a commercial product came out. So the situation is different. You have an established market now. You don't have an emerging market with no customers like existed back then. But if you just do the math, it took them 4 or 5 years to get SPD film up to automotive quality. And this is Hitachi Chemical, which has excellent precision coating capabilities.

Now Gauzy took less time to do it. And because the technology is matured and technology is advanced, such as coating and curing technology, it probably is not going to take as long to get a new person up and running. And in our discussions, a lot of the companies already have the necessary equipment and capabilities. So that's kind of the things we're pursuing in parallel here.

Our next question comes from [ John Nelson ], an investor.

Thanks for supplying a lot of useful information on updates for the company and the Gauzy situation and the options provided or available. The questions I have are more related to the product line. You had mentioned the German plant was not producing film, but I'm assuming the Israeli plant is still producing?

Well, it's not really a matter of producing film. A lot of the people weren't allowed to return to work until there was actually a plan in place to pay them. I mean, remember, these are countries that protect workers quite strongly. So once things started flowing back towards Germany and in Israel with the recent developments, including the July 18 court hearing where the court approved the debt restructuring plan, and it still has to go to creditors, but where they approve that, that started the flow of money towards getting people back to work. So we don't have to wait for every T to be crossed and I to be dotted for that to happen. And, in the meantime, I think Gauzy doesn't want to deplete their inventory completely because they need to replenish it for some of the bigger orders that are waiting.

So are you -- or I should say, is Gauzy currently shipping products to your -- some or all of your current customer list?

They have been. And as of today, I don't know if they have to wait to make more film, but everybody has been pretty much kept in the information loop and we're able to plan around this disruption, which is something that Research Frontiers took a very active role in as well in terms of helping these customers as well as Gauzy. So we want to keep the customers happy.

Okay. Good. And do you think you'll be able to name the 2 new major aircraft programs that you said...

This morning, I went on the manufacturer's website. And for whatever reason, they just said smart windows. They didn't name it yet. So -- but I think like everything, with the passage of time, we're able to reveal more and more. So let's let the customer have a little bit of time. And then after that, you may hear their name on the conference call, our future conference call. Similar to what we did with Ferrari, where we announced it a couple of years before we formally -- or Gauzy formally got permission, but we were able to do it.

Okay. And then you mentioned Ferrari. They have a new model that they've introduced. Is there any indications that your product will be offered on the new model as an option?

I don't see on their configurator a lot of information about it. And that doesn't mean that it's not an option or not. But I think at some point, we'll be able to perhaps say something. It's a weird world that these automotive companies live in. And I can understand it. I mean, they want you thinking about their name, not Research Frontiers or anyone else's name. So they're very reluctant to name who the suppliers are.

Understood. And then you had mentioned that the SPD Black development program was still moving, continue...

Moving forward, yes. Yes, yes. So this is -- the idea with the black SPD, obviously, is to get something that's not the sapphire blue, but more of a black. And I've seen samples of the product that looks amazing. I saw it when I was in Israel. I saw it in the back room at CES, a much cruder form than when I saw it in Israel. So basically, it's advanced a lot. And really, it's just a matter of resource and people. You -- they have the emulsion. They need people and the ability to put that through, but there's certainly -- it's an exciting product.

Okay. Good. And then on the retrofit product, is -- has that been officially introduced or marketed? And do you have -- and if not, do you have any sense of when the timing when that product will be available for customers?

Sure. Yes. Let me share with you a conversation, and I think it will probably answer your question indirectly, if I could, John. So the CEO of LTI, he owed money from Gauzy. We had a conversation maybe about a week ago. And I gave them an update as to everything that I knew was going on at Gauzy based on kind of my own analysis and my conversations almost on a daily basis with Gauzy. And he said, "That's all really good, Joe. But the main thing I'm interested in is getting film production to restarted again because there is huge business in the retrofit that dwarfs anything I'm owed." So yes, he's already started and is ready to hit the ground running with that.

Okay.

And what I like about that is the lead -- and what I like about the architectural retrofit is the lead times are much more within everyone's control. It's really a sales and marketing and spec job. You speak to the project, you get it spec-ed in and then you deliver the glass as opposed to automotive where it could take 3 or 4 years. This is a lot quicker. And especially when to retrofit where there's not a lot of prep you have to do, you could just go in over a weekend and upgrade an existing building.

Okay. Good. Looking forward to seeing some product sales out of that category.

And then our next question comes from Bruce Danny, an investor. Mr. Denny, Can you hear us?

Can we come back to him? You may..

[Operator Instructions] And our next question comes from Michael Kay of Kay Associates.

I may have to leave in the middle because someone will be coming if there was a conflict in terms of time. Could you hear me?

Sure. Can we hear you. And by the way, congratulations, Professor, on the award that the university gave you. It's very nice recognition.

Thank you. I appreciate it. Several things during many conference calls, you indicated 2 things -- more than 2, that the SPD was superior to all other types of light control technologies on the market. And also that in terms of cost cutting, the sweet spot had been reached. And given that, I mean, even before the Gauzy fest or whatever you want to call it, it seems that...

I call it hitting a brick wall, which is -- it's true. I mean the performance and the cost were all coming in line nicely and then around that same time. I think that was in September and by November, they hit the brick wall. So...

Well, I wanted to ask that I would think that given those 2 attributes, lower cost and superiority of the technology, that there would be -- would have been many more contracts and deals being made with OEMs. And I would think also that given the price of the shares, I mean, just pennies that some companies simply wouldn't acquire Research Frontiers unless there's a poison pill or something like that, that would make it difficult.

There is a poison pill in place and other sharp repellents to make sure that when we do get an offer, our shareholders are getting a fair offer. But as far as deals, the way this works is you don't see an announcement of a deal between us and, let's say, a car company. You see a supply agreement being granted to a glass company, and that's usually the extent of the visibility. And usually, that happens well after the contract has been awarded. I mean, I remember with Mercedes, I once asked the head of the project that's, I said, [ Hans ], why don't you announce that Pilkington and Asahi haven't won the business. He goes, no, we keep everybody off balance a little bit in our supply chain. So we wait until the last minute.

The other thing is one of the positives, I've been a very, very, very long-time shareholder that you had mentioned several times that it was important to have another company that could do the film and the emulsion and that was extremely prescient, so to speak, because now that would have come in handy to have a backup company that could do it given the mishigas, if you pardon the expression, that happened with Gauzy. So it didn't follow through on your feeling about the importance, maybe even having a company in the United States that could put a film and emulsion and such. So...

Well we -- I addressed it a bit earlier. I'm not sure if you were on the call back then, but we talked about that specific question about why do you have one film supplier and not multiple ones. So anyway...

The other thing, the last one, what I didn't understand, do you have contact to the SEC or something because given the share price of the company, the fact that it did not meet -- it's not profitable, but especially that it's been trading well under $1, how come it's not forced to be -- it's not -- has not been delisted? Now I don't want such to occur, of course, but how...

Well, it's not the SEC -- sure. Well, no, it's not a matter of circumvention. So we received the notice from NASDAQ. It wouldn't be the SEC. The SEC basically deals with the registration of securities and making sure that in that process, there's proper disclosure of everything to investors. That's the extent of what the SEC really does. And they also prosecute insider trading and all this other stuff. But basically, they don't get involved with listing. That's under the umbrella of NASDAQ or the New York Stock Exchange, who sets the listing standards.

We did receive a notice when our stock went below $1 for a certain period of time that we had 180 days, which puts us until the end of November, basically to come back in compliance. And that also puts us in compliance with the market value requirement as well. So what I said earlier was we plan on addressing that by good old-fashioned operational excellence and results of operation. If it doesn't happen, we'll reevaluate that as we get closer to November. And usually, they give you another 180 days, although it's not guaranteed, if you don't meet the first one. So...

So basically, if you have until November or even later to comply with the...

Right. And what I believe is going to happen, Michael, is that once the cloud is lifted over Gauzy -- because all this happened really as a result of Gauzy hitting that brick wall that they did. Once that's lifted...

I apologize but...

Thank you. Good talking to you. We'll catch up after the call if you want.

All right. And at this time, we have no further questions in queue. I'll turn the call back -- actually, sorry, we did just get a question. [Operator Instructions] And our next question comes from Jared Sherman, an investor.

Joe, a question for you on the cash situation. What are we looking at for the next raise? And how do you plan on doing it?

Not sure we're going to have to if we collect what we're owed, and that's kind of part of the balancing. And also, if we go to plan D, okay, which is us maybe acquiring some of the production assets of Gauzy, we would need more than if we did plan A, B, or C. So it's probably too early to figure out if we need to raise money and how much. But if we do need to raise for a plan D, us acquiring the production assets, then it would be more than if it's just for working capital and things like that. And as of the end of the quarter, we had over $1 million. Right.

Yes, that makes sense. But what are our options? I mean do we have any ability to take on debt? Does it always have to be an equity raise? Like do you have more than one option?

All options are available. I mean we've avoided debt since 1986, but under the right circumstances, that may be appropriate. And as a Board, we'll discuss that if it becomes a discussion topic. But if we collect what we're owed and the market restarts the way we think it will, we may not have to raise capital.

And our next question comes from Bruce Denny, an investor.

I wanted to ask about a new contract you're talking about with an airline or manufacturer. When will we start to see revenues from that? And what scale are we talking about? Boeing or...

Well, we already have Boeing and Airbus. So this would be some new programs. This manufacturer was so interested and enthusiastic about SPD that it actually wrote a letter to the French court explaining why SPD is strategically important to it, which was nice to see. I happen to be in Melbourne, Florida at the Vision Systems North America facility when that person was there. So we had an opportunity also to chat about it, and he's very excited about it. So that's all I can say at this point. I do think that it's nice when customers support you like that, and they definitely stepped up to the plate for Gauzy.

Very good. Are the major manufacturers?

Yes, you would have heard of them. You would have heard of them.

RIght. But are they employing the SPD technology in greater numbers? Or is it still very low volume that they're doing? Or what do you see happening?

Well, when you say very low volume, it depends on what you're comparing it to. I mean, for example, the transport category aircraft market is 1/10 of the size of the sunroof market for cars. So -- but it's still $25 million revenue opportunity for Research Frontiers. So relatively speaking, it's not the volume that you would get from architectural or automotive in terms of the dollar values, but it's still very significant. And the good thing about our business is it doesn't cost us anything to be diversified across all these different industries because we don't have the manufacturing costs. We collect our royalty. And the royalty per window is much higher there. I mean one window in aircraft is like 10 windows in, let's say, automotive.

I see. Yes. Are you aware of any...

Actually, it's 15 because we get a higher royalty also in aircraft.

Okay. Well, that's encouraging. And how about General Motors? I know they're getting their toe in the water with the CELESTIQ. But have you been in discussions with them about introducing it in other products?

Yes, we've had multiple discussions. I mean, one is just high-volume cars within GM. And because of, I think, the benefits that SPD has that they're demonstrating in the CELESTIQ, they can -- they could easily translate that experience into other cars. But also, they had a -- they shot them -- well, they didn't shoot themselves in the foot. Their suppliers shot themselves in the foot with the Corvette roof. It was a competitor of ours, and it didn't go well. They weren't able to mass produce it and they had to pull it from production. So that hurt the supplier -- the other supplier, but it helps us because I think it makes the fact that we've been in 4 different car model manufacturers and multiple car models even more remarkable that we were able to operate in the rigors of the automotive environment.

Okay. How about the Asian market, Asian manufacturers interfacing...

And so moving forward on all fronts. Like I said earlier, the most remarkable thing about this process is that the technology is so strong and beneficial that people, I think, understand the value, and it's remarkable, but they stayed with us. So -- it's a tribute to our licensees and to our technology.

And our next question comes from Leonard Litzau, an investor.

I appreciate your call and the information you're giving us. I think with new people...

Leon, I think we lost you for a minute there. Can you repeat that?

Yes, she keeps telling me my line is on hold.

Now I could hear you fine. I think it clicked off.

Okay. Well, I just want to thank you for all that information that came out. It seems like everything is moving forward. My question, it gets a little bit assuming that we get through this thing between now and the end of September, how quick will the volumes start increasing so that we -- I mean nobody is left and the auto manufacturers, you say, are still there and -- with the retrofit of the windows, which would be obviously a very big push, I would assume. So are you seeing the ability of them to make enough film to satisfy what's out there. And will it happen by the end of the year?

Yes, I believe, yes to both questions. There's been a pent-up demand because of the supply issue that needs to be filled, but there's also new product that has to be new projects...

SPD Black, yes.

Right, right. And also just in general, just new products for SPD and new customers that need it. So there's a lot of different things that will be restarted almost immediately when film restarts. And that's why I was so happy to hear this morning that they've started to direct money towards rehiring their people and things like that so that everyone can get back to the job they do so well when they do it.

That was a very important piece of information. I totally agree.

Yes.

So I know you've worked hard, and I know you've had more on your plate than most people would like to have. And I think you've done a good job doing it. So thanks for...

Thank you.

And our next question comes from [ Carrie Chrissy ], an investor.

We've been going back and forth a little bit the last couple of days. Yes. One of the companies that you mentioned in there as competitor is Ambilight and I've been doing the good old-fashion, let's get on AI and see what's going on. And not all of that is accurate. But according to them, BYD and some of their subs as well as Audi are using the Ambilight product, let's say, they're using, I guess, multiple film layers in order to get the various effects they want to get. Do you know what the basic performance difference is between their product and the SPD product.

Sure. So it's an electrochromic product, which means as it gets bigger, it gets slower. I actually sat in at CES in one of their cars with their CTO, and we had a nice chat about everything. The -- it has the same inherent limitations of other electrochromics, the iris effect, it gets slower as it gets bigger, those types of things. They do have one advantage kind of in China at least, and that's why maybe you see BYD there is, as you can imagine, in China, when the CCP says to do something, you do something. So I imagine -- and this is not just imagination. This was directly confirmed by somebody else, not the CTO, but somebody else.

They were directed -- BYD was directed to do business with them and they were directed to do business with BYD and you don't say no when that happens in China. So we don't have that kind of situation where Xi Jinping is going to tell someone to use Research Frontiers' product. But for the rest of the world, we're good.

Yes. The thing that I was -- that caught my attention was the laminating. And obviously, that's something that's been working on or being worked on here.

Yes, all these companies have something that switches. The question is, what are the warts? Years ago, Merck had a thing that looked black, but it was a liquid that had to get poured between 2 pieces of glass. So the wart was you couldn't put it on anything that was curved, remotely curved or not flat, so -- and horizontal or vertical. So it became -- the warts become apparent when you try to move it from an idea into the real world. And it doesn't mean there's not a market for it. I mean even slow switching electrochromic has -- where you don't need speed like on a warehouse glass or something like that, maybe you can get away with it. But for things like homes or offices, electrochromic is not going to cut it. And in automotive, they tend to not want to use electrochromics because the car usually arrives at its destination before the glass switches. So...

They were talking about using PDLC laminate to...

PDLC doesn't have a switching problem, but electrochromic does in terms of...

Yes, they're talking layering them together.

Yes. PDLC really is good for privacy only. And it may look like the glass is switching, but it's not doing any thermal benefit, which is really why you put it on the sunroof. Anyway, I don't want to get into too many specifics about Ambilight. They are a competitor in some markets, and I think they wish they were us in most of them.

Okay. Well, that's good news. Okay. So you think we're going to be up and running this year?

Yes, yes. I think that as soon as -- well, since money is starting to flow to restart Germany, I think that helps a lot. And then also just in general, getting out of the bankruptcy will allow Gauzy management to focus on what they do best. And then we'll go back to normal, and then we'll also do better. So that's where we're at.

And at this time, we have no further questions in queue. I will now turn the call back over to Mr. Harary for any closing remarks.

Okay. Thank you very much. I appreciate it, Paul. And thank you, everybody, for your patience as we kind of went through a lot of detailed information, but I think everyone deserves to know what's going on. And if I haven't fully answered anyone's questions, please feel free to call or e-mail.

But perhaps the most important point I'd like everyone to remember today is this. Nothing has happened over the past 9 months that's changed our view of the long-term opportunity of SPD. If anything, the continued commitment of our customers, our licensees, and now a new licensee like Klim and a direct investment by a licensee, has reinforced that confidence. And we also have 4 contingency plans for moving forward. And the past 9 months have undoubtedly been some of the most challenging periods our company has experienced in recent years, and we've never tried to minimize that. We've just tried to work through it.

Our principal supplier went through a major financial restructuring and certainly, production slowed and stopped for a while and programs were delayed. Our financial statements reflected an appropriate accounting conservatism while these proceedings work their way through the courts. And these are simply the facts, but those facts only tell part of the story. The other part of the story is what didn't happen. Our technology didn't stop working and our patents didn't lose their value and our customers didn't abandon us and our licensees didn't walk away, and the markets we serve didn't -- certainly didn't disappear. They actually expanded.

In fact, despite all the uncertainty, we continue adding new opportunities, continuing advancing new applications, continuing strengthening our intellectual property, and continue earning the confidence of companies willing to make long-term commitments to SPD technology. The new license agreement with Klim is very exciting. It's just one example of that confidence. The volumes can be very, very large. And I like the fact that it's a consumer application because it has visibility to a lot more people and a lot of different people than those that drive McLaren's and Ferrari. The continued commitment we've seen from our automotive, aerospace and other partners is another thing that I take great pride in. And to me, those are the powerful indicators of where the technology is ultimately headed, but you can make your own judgment on this.

And over the long history of Research Frontiers, we've seen economic recessions, financial crises, supply chain disruptions, industry changes, and downturns, and global events that no one could have predicted. And every one of those periods seemed enormously important at the time. Yet through all of them, we continued improving our technology, expanding our intellectual property portfolio, adding new licensees, entering into new markets and moving steadily towards broader commercialization. I believe this period will ultimately be viewed much in the same way, not as a change in the long-term direction of our company, but as a temporary interruption in a much steadier journey upwards.

Today, I believe we're much closer to the end of this difficult chapter than to its beginning. And as Gauzy completes its restructuring and resumes full production, I believe the conversation will shift away from court proceedings and supply constraints and back to what has always driven this company, innovation, commercialization, and growth. And as Gauzy completes its restructuring, I believe it will also emerge as a leaner, more focused and more appropriately capitalized company, and that should ultimately benefit Gauzy and their customers, Research Frontiers, and the entire SPD Smart Glass ecosystem. And we're ready. Our technology is ready. Our customers are ready, our licensees are ready, new applications are ready, and our management teams are ready.

And to our long-term shareholders, I'd like to sincerely thank you for your patience, your thoughtful questions and your continued confidence during what has unquestionably been a very difficult period. And many of you have been with us for years and some, including a number of our Board members, for decades. We never take that support for granted. And for those that have joined us more recently, we welcome you, and we hope today's discussion has helped provide greater context for where we are, how we got here, and why we remain optimistic about the future.

We don't control every event that affects our business, but we do control how we respond. And over the past 9 months, we've stayed focused, we stayed disciplined. We've continued investing in our future, and we've continued building value for the long term. And perhaps the strongest endorsement of SPD over the past 9 months didn't come from us at all. It came from our customers. Despite every delay, despite every headline, despite every challenge, they stayed with the technology. In business, actions speak louder than words, and I think that's one of the strongest votes of confidence SPD can receive from our customers.

Many times, the mark of a good captain is a steady, watchful, and experienced hand at the tiller, especially in rough seas. Our mission today is the same as it has always been, to make SPD Smart Glass a standard featured in products around the world that improve comfort, safety, energy efficiency, and the user experience. I remain as excited about that opportunity today as I have ever been. I thank you for your continued support of Research Frontiers. And we look forward to updating you again next quarter with Gauzy continuing to execute on their plans in Israel, Germany, and France and the final appeal in France scheduled for mid-September that could bring substantial additional capital to the company.

And also Gauzy expanding in the United States. I'm very confident that we will be able to once again focus where our attention belongs, on the steady and growing adoption of SPD technology across the automotive, aerospace, architectural, and consumer markets that we serve. Thank you again.

This concludes today's conference call. Thank you for attending.

Good afternoon, and welcome to Research Frontiers investor conference call to discuss the first quarter of 2026 results of operations and recent developments. The company will be answering many of the questions that were e-mailed to it prior to this conference call in their presentation. In some cases, the company has responded directly to e-mail questions prior to this call or will do so afterwards. Some statements today may contain forward-looking information identified by words such as expect, anticipate and forecast. 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 Herary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, Paul, and good afternoon, everyone, and thank you for joining us on our first quarter 2026 investor conference call. I was informed a little after 4:00 p.m. that the SEC website was down. I'm not sure if it's up yet or not, but our 10-K should be filed once everything gets straightened out and whatever backlog they have is cleared. As always, I appreciate the time and interest of our shareholders, customers, licensees and industry partners joining us today.

Today, I want to talk about Research Frontiers, our business, our markets and also address the question I've been asked most frequently over the past 6 months, what's happening with our licensee, Gauzy. I'm going to give you an honest, informed and candid assessment of the situation and explain why I remain optimistic about their future and ours.

Before discussing our operations and recent developments, I want to briefly address our first quarter financial results and some of the factors affecting the quarter. First, first quarter reported revenues compared to the same period last year were affected by the timing of revenue recognition under our license agreements as well as the nonrecurrence of upfront revenue recognized from a new license agreement entered into during the first quarter of 2025.

Typically, royalties in the first quarter are almost always lower than the underlying economic activity taking place in our business because GAAP accounting requires that additional royalty revenue is not recognized until a licensee exceeds their minimum annual royalty obligation for the year. And until it exceeds that level, minimum annual royalties are basically spread out roughly evenly over each of the 4 quarters of the year.

Another factor affecting the comparison was ASC 606 accounting treatment associated with the new license agreement entered into during the first quarter of 2025. Under generally accepted accounting principles, or GAAP, much of that revenue was front-loaded into the first quarter of last year. As a result, from an accounting perspective, the quarter looked weaker than the underlying economic activity taking place across several areas of our business.

Sequentially, royalties from the automotive and aircraft markets increased from the fourth quarter of 2025 to the first quarter of 2026. The quarter was also affected by what we believe to be temporary operational and liquidity impacts relating to the ongoing French rehabilitation proceedings involving French subsidiaries of our licensee, Gauzy. The processing of payments to us and revenue recognition slowed because of the French proceedings and the liquidity constraints that resulted from them. Since both Gauzy and Vision Systems are strategic licensees with meaningful businesses in multiple industries relevant to us, those issues also temporarily affected our own liquidity and financial strength.

Not knowing exactly how long the situation in France would take to resolve, we took steps during the quarter to strengthen our balance sheet through a focused financing with long-term accredited investors. As of March 31, 2026, cash and cash equivalents increased to approximately $1.28 million compared to approximately $664,000 at year-end 2025, and the company remains debt-free. Our operating expenses and R&D expenses also declined compared to the same period last year. We run a tight ship.

Now let me turn in more detail to the subject many of you have asked about, Gauzy. There's been a tremendous amount of hard and focused work taking place there. Things have been improving, and they have been actively working through the situation. The liquidity issues affecting Gauzy have certainly impacted us temporarily. Funds sitting in France were subject to oversight as part of the rehabilitation proceedings and both Gauzy and Vision Systems needed approval from the French administrator for many financial transactions during the process. That naturally slowed payments to Research Frontiers as well as other companies.

But importantly, the flow of funds has already begun loosening up. A few weeks ago, we received a meaningful payment from Vision Systems that was authorized by the French monitor. So while things have not yet fully normalized, they are beginning to normalize, and we remain optimistic that they will continue to do so. This Tuesday, May 12, there is a court hearing in France to determine the next steps. The range of possible outcomes include liquidation of the French subsidiaries, a sale process, approval of Gauzy's plan of continuance or potentially an extension of the monitoring period, although we currently believe that the most likely outcome, fortunately, is approval of Gauzy Vision Systems continuation plan.

As a lawyer, I know you can never predict the outcome of a court proceeding with certainty. But based on what has been shared with me, I believe the best outcome, not only for Research Frontiers, but also for Gauzy, Vision Systems, their employees, suppliers, lenders, customers and the SPD industry overall is approval of Gauzy's continuation plan.

The details underlying the continuation plan have been described to me. The plan eliminates unprofitable non-SPD business lines and provides enough capital for Gauzy to emerge from the process substantially healthier, leaner and better capitalized. Importantly, based on the information shared with me, the reorganized company could emerge with stronger working capital, lower overhead and without the drag of unprofitable legacy operations outside of the SPD business.

Gauzy would have substantial working capital and suppliers, lenders and employees would be paid in full, not only in France but worldwide. In other words, if the continuation plan is approved, Gauzy could emerge from this process as a much healthier and stronger strategic partner for us and for the SPD industry overall. We have also worked on contingency plans in case the court approval does not approve Gauzy's continuation plan or decides to delay decision. Amid the mostly public silence from Gauzy, many of the things I've discussed today have been referred to in their SEC filings. Hopefully, I've helped connect some of the dots for you with additional color, context and details.

Throughout this period, Gauzy has kept me informed and we have had many in-person meetings and many late night and early morning conversations. At times during the height of the war involving Iran and its proxies, conversations literally started with, I just got out of the bomb shelter or ended with, I have to call you back because sirens are going off. Travel became extraordinarily difficult at times with executives operating from multiple countries and dealing with severe transportation disruptions throughout the region.

I mentioned this because it illustrates both the operational challenges they were facing outside of France and also the determination of the people there to keep their business moving forward. These circumstances also temporarily slowed some of the R&D work involving next-generation SPD products, including black SPD and certain specialized SPD film being developed primarily for automotive and architectural applications and for specific customers.

Some of these projects are now getting very close to completion. If you step back and look at the last 12 months objectively, we have seen 2 licensees liquidate, another licensee -- key licensee go through restructuring proceedings in France and a highly volatile military environment in the Middle East. Despite all of that, SPD production has continued, development work has continued. Customer programs and customer engagement remain active and plans are now in place that could allow Gauzy to emerge stronger, healthier and better capitalized. That resilience says a great deal about the determination of the people involved and their belief in our SPD technology.A number of shareholders e-mailed questions primarily relating to Gauzy. I'll answer them now. John Nelson asked whether Gauzy continues to produce and deliver SPD film on schedule and whether the current situation is limiting new business opportunities.

John, while there have certainly been delays and distractions associated with the French proceedings and broader operational challenges, SPD production activity has continued and multiple automotive, aerospace and architectural programs remain active.

Turning now to questions mailed to me about some of the other markets, starting with automotive. Automotive projects in North America, Europe and Asia continue moving forward during the first quarter and into the second quarter of 2026. When Ferrari business transitioned from AGP to another European licensee, this transition required the successor licensee to purchase and install new specialized advanced equipment. That equipment has now been installed. So activity and investment in the SPD ecosystem continues at multiple levels from the licensees to OEMs to end customers. We continue to see strong interest in SPD because of its ability to instantly and uniformly control light, glare and heat while improving comfort, energy efficiency and the user experience.

Several shareholders have submitted questions regarding the previously discussed Asian vehicle program and black SPD technology. Jared asked whether the mid-market Asian vehicle program may involve black SPD technology, while Rick Carrell has asked whether the Asian program remains active since it was not discussed in our last call. Last call was kind of long, so I didn't have a chance to catch everything, but the Asian program remains active, and it does involve black SPD.

I point out that is often the case with large automotive programs, time lines and launch schedules can shift because of platform timing, integration testing, design changes, supply chain coordination and other factors. We're pretty good at dealing with that. We've been in 4 different OEMs with products put in series production. So I don't think anybody else in the world can say that.

We're actively working with multiple parties on these programs, including projects involving black SPD technology currently under development. And regarding black SPD specifically, we're making encouraging progress. Black SPD has the potential to significantly expand the design flexibility and addressable market for SPD technology, particularly in automotive and architectural applications where darker neutral aesthetics are important.

Several shareholders also asked about the large volume quotations we discussed on previous conference calls and whether any have been awarded. At this stage -- well, first of all, the awards go to our licensees. We just collect the royalties from those licensees. At this stage, we remain limited in what we could publicly disclose regarding customer programs and quotations, but discussions and evaluations remain active in multiple areas, including ultimate supply licensee selection.

As I have noted in the past, the 2 biggest challenges to wider adoption in the automotive industry were color, especially in vertical glass applications and cost. As I said on previous conference calls, we were given aggressive price targets to match competitive technologies, and we and our licensees were able to meet those targets. So cost and color are being addressed nicely between that and the black particle.

Turning to aerospace. Deliveries of SPD-Smart electronically dimmable windows for aircraft applications continued during the first and second quarter of 2026. Just today, I saw an announcement of another ACJ TwoTwenty being delivered by Airbus to one of its customers. As you may know, Vision Systems handles this business.

Aerospace remains an important long-term market for SPD technology because of the operational, passenger comfort, weight maintenance and performance advantages that SPD offers compared to traditional mechanical shading systems and also compared to competing technologies. We are also advancing development efforts in specialty transportation and other applications where dynamic light control and energy management are becoming increasingly important. On the architectural side, we continue advancing our retrofit initiatives with our licensee AIT LTI. Judy McKay asked whether AIT's SPD RetroWAL system may qualify under certain low-carbon building standards.

Thanks, Judy, and I apologize for the delay in responding. Retrofit applications like these are becoming increasingly attractive because they improve energy efficiency and occupant comfort without requiring full window replacement. They also can meaningfully reduce the carbon footprint of a building and allow the SPD Smart Glass to work symbiotically with the other systems in the building such as HVAC and lighting systems. That is particularly important in government buildings, transportation hubs, historic structures, commercial retrofits and other projects where replacing exterior glazing is expensive, disruptive or impractical. We believe architectural retrofit applications represent an important and near-term growth area for SPD Technology.

Another shareholder asked whether there have been renewed discussions with General Motors regarding SPD following the previously reported issues with the Corvette Targa roof involving another company's electrochromic glass technology. That's a well-known competitor of ours. As you may know, like other automotive industry suppliers, we don't comment on specific OEM discussions unless programs become public. But SPD remains one of the most capable technologies available for large area automotive glazing applications because of its switching speed, uniformity, heat management and overall user experience. It is also the only switchable shading technology that has been reliably commercialized in serial production. And frankly, our public profile in automotive smart glass is second to none, and I mean to none.

I recently served as keynote speaker at North America's premier automotive glass conference with many OEMs, licensees and prospective new licensees in attendance. We're also the only company that has successfully worked with 4 different OEMs to incorporate switchable glass into multiple production vehicle platforms. That's multiple models and multiple spec standards and procurement systems, and we were able to succeed in all of them. No one else has been able to do that as recently exhibited by one of our competitors. But to answer your specific question, I think that the recent negative experience that GM had with the Corvette and another supplier's technology and execution has helped us tremendously. It has shown them the strength and resiliency of our supply chain and the dominant and superior performance of SPD Smart Glass technology.

We also received questions regarding sun visor development. SPD remains very well suited for dynamic visor applications because of its ability to instantly manage glare and light transmission while maintaining visibility and user comfort, and we have been approached specifically about that. Development discussions and evaluation in this area remain active. Because sun visors have relatively small surface areas, this market, similar to aircraft, also has several technologies that try to compete against us. However, none of them have the combination of switching speed, range of light transmission and logistical and performance benefits that we have with SPD technology.

Now before concluding, I want to briefly address today's format. As many of you know, our conference calls are normally very open and often include extensive live Q&A. They also tend to run much longer than most typical quarterly conference calls at other companies. However, because of Gauzy's ongoing legal rehabilitation proceedings as well as ongoing discussions involving strategic opportunities and alternative paths forward, we decided not to conduct a live Q&A session today. I'm glad that we received so many mailing questions because it allowed me to cover them earlier.

Given the circumstances and the sensitivity surrounding Tuesday's court proceedings in France regarding Gauzy Vision Systems, I wanted to avoid saying anything that could potentially interfere with a successful outcome there. At the same time, I also wanted to share as much meaningful information and context with our shareholders as I responsibly could. As you heard today, we incorporated many shareholder questions directly into this presentation, and I want to stress, we remain available following the call by e-mail and telephone.

And in closing, as we look forward, we believe the long-term opportunities for SPD Technology remain significant. Despite the disruptions of the past year at some of our licensees, the overall platform supporting SPD technology today is broader, more diversified and more mature than any previous point in our company's history. We see opportunities across automotive, aerospace, architecture, specialty transportation and other emerging applications. Our focus remains straightforward, supporting our licensees and customers, advancing next-generation SPD technologies, executing carefully and positioning Research Frontiers for long-term and sustained growth.

Thank you again for joining us today and for your continued support of Research Frontiers.

The meeting has now concluded. Thank you for joining, and have a pleasant day.

Good afternoon, and welcome to Research Frontiers' investor conference call to discuss the fourth quarter and year-end 2025 results of operations and recent developments.

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.

Some statements today may contain forward-looking information identified by words such as expect, anticipate and forecast. These reflect the 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.

[Operator Instructions]

The call is being recorded and will be available for replay on Research Frontiers website at smartglass.com for the next 90 days.

[Operator Instructions]

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 thank you, everyone, for joining us for our year-end and fourth quarter 2025 Conference Call. 2025 was a year of not just incremental developments but structural adjustments in the supply chain and meaningful expansion in our automotive pipeline, architectural retrofit execution and new product development and capital positioning.

This call is important because when you step back and look at 2024 and 2025 together, the trajectory of this becomes clearer. We have maintained production continuity in automotive through license transitions, expanded OEM engagement with high unit volume vehicle programs, allowing cost reductions by our licensees and expanded engagement through other areas of the vehicle besides just the sunroof.

We've seen Ferrari expand production of cards with SPD-SmartGlass and Cadillac enter the market with SPD. We've seen Mercedes showcase SPD broadly in a concept vehicle and launched architectural retrofit initiatives. We've seen advancement in the [ black SPD development ]. We've strengthened our balance sheet. And our licensees, and I think this is important, are making new investments that are specific to SPD business, and they're moving forward and winning new business. We're going to talk about that later.

I'll begin with financial results and our recent financing and then address Gauzy directly and then transition to the significant positive developments that have occurred since our last conference call.

For the full year 2025 and continuing in 2026, we remain debt-free. We strengthened our working capital. Our royalties improved when adjusted for onetime licensee events early in the year. And let me now just address our February financing directly because we've gotten some questions about it.

And keep in mind, I'm trying to save time by answering as many questions as possible. And I have basically taken questions that have been given to us and included many of them in my presentation. So hopefully, that will allow us to efficiently cover a lot of ground because there's a lot of good things to talk about.

As we disclosed in our February 18, 2026 Form 8-K, we completed an oversubscribed $1.1 million private placement at $1 per share with 5-year warrants that are at increasing exercise prices. This offering included credit investors, several family members of one of our directors and also importantly, the owner of one of our SPD licensees, and I think even more significant, the one responsible for the SPD architectural retrofit application. And we all believe that the retrofit represents a potentially very significant market. So when the licensee [ closest ] to execution of this invests its own capital alongside long-term shareholders, I think that speaks clearly about their confidence in that opportunity.

And let me clarify something that I addressed in prior calls. I had stated that we would not need to raise capital if we were paid what we were owed and if we did not experience additional disruptions and there were several in 2025. And I also said we might raise capital for strategic reasons. In 2025, all of these elements were present. We experienced AGP related developments, Gauzy's French subsidiary rehabilitation process and slower collection of certain receivables some of which are now being collected as we speak. At the same time, we saw expanding opportunities in automotive programs, architectural retrofit, black SPD development as well as new product opportunities.

Given that combination, we believed that it was prudent to modestly reinforce the balance sheet. We deliberately kept the offering small and focused and was done at a market price. Participants were long-term holders who, other than our licensee had participated in prior friends and family offerings, including our last one in September 2022. The shares were not registered for resale and are subject to at least a 6-month holding period. We entered 2026 with strength in liquidity and no debt and resources to execute on our business.

I know a lot of people have been frustrated by the silence that has been coming out of our licensee Gauzy. So let me now address Gauzy directly. In mid-November, Gauzy's French subsidiaries entered into a court supervised rehabilitation proceeding in France. This applies specifically to the French entities. It does not apply to Gauzy's German SPD film production facility. It does not apply to SPD emulsion production in Israel. However, as one would expect through most business organizations, this filing has had some ripple effects. Liquidity has been reallocated by Gauzy to satisfy the French rehabilitation monitors. That allocation appears to have temporarily reduced access to liquidity in other areas of the company, and Gauzy is actively working to address this.

Senior management time and attention is understandably at Gauzy been focused on stabilizing and addressing these matters. In addition, Gauzy reduced headcount. And let me just say that sometimes workforce reductions are never easy, but by adjusting expenses and overhead, it can strengthen the long-term sustainability of the company. These actions by Gauzy appear aimed at lowering operating expenses, reducing capital requirements and moving toward a more stable operating profile for Gauzy.

And even in the midst of all of this, SPD emulsion production in Israel and SPD [ film ] production in Germany continues. In the midst of this, automotive and architectural development programs continue and expand. Gauzy is reconstituting its Board to restore its NASDAQ compliance. They postponed their third quarter 2025 conference call due to the timing of the French filing. But I think it's important to understand that as a foreign issuer, they are required to file financials only semiannually. And as a foreign issuer, their third quarter filing was purely voluntary and their annual filing is not due until the end of April. So they're on a bit of different as you see reporting schedule than we are as a U.S. reporting company.

From our standpoint, we remain in regular contact with them almost daily, production inside and outside of France continues. Program execution continues and progress on multiple fronts continues even during these restructuring efforts by Gauzy and we'll talk about some of those things a little later on in the call.

So now let me move from the discussion about stabilization to the acceleration of our business. While restructuring efforts were underway, development did not pause. Since our November call, expansion has accelerated. Ferrari continues to produce vehicles utilizing SPD-SmartGlass. And even though license supplier AGP and their European affiliate, Soliver, both filed for bankruptcy protection in 2025. This had a 6-figure impact on recorded royalties for us during 2025. But we successfully transitioned the Ferrari business to another licensee, [ Isoclima ] and even though this transition occurred midyear, [indiscernible] sales levels exceeded their minimum annual royalty thresholds in the third and fourth quarter of 2025. Maintaining continuity through a supply chain shift requires execution even when one has is [ Zig and Zag ], and we had to do that.

So initially, AGP asked that we transition the Ferrari business to their sister company [ Soliver ] in Belgium. And when some of the key suppliers, not SPD, but just in general, for automotive glass pulled their support they moved it back to their production in Peru, and then that didn't survive, so we had to shift it over to [ Esaclema ]. But I think that while that was certainly challenging for everybody, we successfully emerged. And I think it illustrates pretty clearly the strength and the robustness of our supply chain.

Moving from Ferrari to Cadillac, they also entered the market with SPD-SmartGlass and the Cadillac Celestiq this year. And the Celestiq is General Motors' flagship ultra luxury vehicle. And it has garnered great industry and press accolades with a strong and positive focus on the 4 quadrant SPD smart roof. It represents adoption by a major U.S. OEM or first, and also validates SPD in a next-generation engineered platform for General Motors. We believe this will result in substantial additional business for us.

And it's certainly significant that SPD-SmartGlass was chosen and introduced in European ultra performance and American ultra luxury vehicles. Mercedes also recently unveiled a concept vehicle featuring SPD integrated across much of the car, not just the roof. I think it was 75% of the surface area of the glass.

As those familiar with the automotive industry understand, concept vehicles often signal direction. They reflect where engineering resources are being allocated and based upon feedback where marketing resources are deployed and what makes it into ultimately new vehicles.

Let's reflect, since our November 2025 conference call, I was the keynote speaker at the Automotive Glazing Summit in Detroit. We now have high-volume quotations on 4 models of automotive -- in the automotive sector. Since our last conference call, we have also started work with a new European OEM. And in addition to those models, which can represent hundreds of thousands of units, we also have specialty programs with potential annual volumes in the tens of thousands of units that recently came on board since the last conference call. The automotive pipeline today is broader than at any point in our history.

We'll talk a little bit now about some of the new products and technical advances. SPD Black continues to advance and OEMs have made clear their preference for glazing applications that require a neutral or black aesthetic. Black SPD addresses that requirement and broadens the market. We are also advancing new SPD film variants, optical refinements, IR and UV integration, improved manufacturing and yield and broader access to key ancillary technologies to make a super smart window. These are adoption enabling refinements driven by OEM feedback. And of course, we listen carefully to the customer writing the checks.

Moving now to the architectural market. Since our last conference call, we and our licensee, AIT, also known as LTI Smart Glass launched the retrofit architectural SPD product at [ Glass fill ] America and Orlando. We have identified 4 initial retrofit projects of different sizes. Each highlights a different advantage of the SPD retrofit system, which is why they were selected.

In multiple cases, removing exterior glazing would be disruptive or costly. To give an example, in 1 case, the building is a historically designated building. That project initially specified [ Sage electrochromic glass ], but because Sage and their electrochromics required exteriors removal and replacement and something that was actually restricted because of the historical designation, the project pivoted from electrochromic to SPD retrofit.

Instead of replacing the facade, SPD upgrades performance from inside the existing frame. Why is this significant? The installed base of buildings globally is vastly larger than annual new construction. And the SPD retrofit system dramatically expands our addressable market and compressors manufacturing and installation time without requiring facade replacement or structural or occupant disruption. It could stay in the building while they do it. Other projects in the retrofit market also span residential and commercial buildings as well as government installations. And since our product launched last quarter, we are focusing on developing some new and innovative ancillary systems and peripherals for the retrofit application.

With that, I look forward to answering your questions, and we'll first include some of the questions previously sent in by our shareholders in -- so first, without pulling any punches, here are the additional questions we received that were e-mailed to us. And in some cases, I'm combining several related questions into one. And also we covered some of these [indiscernible] earlier, but I thought it would be helpful to you to hear some of the questions and for me to go into more detail.

Joe, how concerned are you about Gauzy's French rehabilitation proceeding? What happens if things deteriorate further?

Well, that's a fair question. And by the way, all indications are that they're not going to deteriorate further. They're actually improving from where I sit. First, it's important to separate the French subsidiary proceedings from the broader organization. The rehabilitation process applies specifically and only to Gauzy's French subsidiaries. It does not apply to the German SPD some production outside of [ Strip card ] or the SPD emulsion production operations in Israel.

SPD film production in Germany continues and SPD emulsion production in Israel continues. Automotive and architectural development programs continue. Market development and new business development for SPD continues. And yes, the French filing required liquidity allocation and management attention. And yes, Gauzy reduced [ head headcount ] as a part of the restructuring. But restructuring when done properly, can be very -- a very healthy change that strengthens the company. And we, of course, remain in regular contact with Gauzy and from our standpoint, we see operational continuity and SPD production and program execution.

I'm going to take another question that's related to that. Do I have a contingency plan of Gauzy does not perform?

The answer, Michael, is yes. We do. We have a plan A, B, C and D. My preference is not to have to use any of those.

Another question from Mr. Erdman. What can you say about the war?

Well, war is bad. And if I had to say what was the most disruptive thing to our business. We have some key technical developments that are on the verge of happening within Gauzy and we have some key meetings with companies outside of Israel that are going to be scheduled for this month or early next month. And really the limiting factor on both was when are they going to open up the Israeli airspace. Right now it's closed. I heard today, I think it was that they're reopening it on Sunday.

In some cases, people outside of Israel at Gauzy had to take claims to other countries, then trains and buses, including a 6-hour bus ride to get home. They're very able to operate in these environments where that happens. So kudos to them for the strength and determination to do that.

I got another question. Can you provide a postmortem why we didn't get a business on -- and there's a couple of car models mentioned. This is from Jared.

I'm going to talk about three of them that are on the list. The only one I'm not talking about is Mercedes, and that's because of some active discussions going on. But one of them was VW. Why don't we get the VW business or the Rivian business, which is somewhat related since they kind of share a lot of the platforms together. VW initially, [ we pushed Tyco went with a PDLC ] product. And I don't know why they did. So I can't answer the question, why didn't we get the business? I'm sure that they were told some things about the performance and reliability of PDLC as was these other companies. It's probably interesting to note that they took the PDLC out of the out of the [ Tycon ]. So sometimes what's promised isn't always delivered.

And the question also said, what about in particularly Corvette?

I know the reason it has nothing to do with performance. And as many people on the call may know a company that is a well-known supplier of other products to Corvette asked to supply an electrochromic sunroof. It was announced with a lot of fanfare in August of this year by Corvette, there was some good press accolades. And then they realized that they couldn't produce it in scale, and they took it off the configuration list.

Another question I got -- and this is from John Nelson. Is there a possibility that SPD can be used on [ core vent ] roofs as a replacement for the [ SAD ] option that GM offered earlier in 2025?

Well, thank you for calling it a [ sad ] option. I don't want to disparate anybody, but I'm just reading literally the questions. So thank you, John. Not that I disagree, by the way. Yes. A matter of fact, I think our chances are much higher as a result of what happened there. I think people realize that what we've accomplished in automotive is unprecedented. We're in 4 different OEMs. That means 4 different quality assurance requirements, 4 different supply chain preferences and we were successfully introduced in series production in all of them. So it's something that I highlighted at the Detroit Automotive Glazing Summit that I was the keynote and Chairman of. But I think now it's becoming crystal clear to a lot of the OEMs, how hard that is to do it, what we and our licensees did and what it means to have a reliable supply chain like we have.

Let me go back to some other questions. Do we see stabilization efforts underway at Gauzy?

Yes, not only that, but continued execution across all their active programs. And they're making progress and they're fixing what are mostly entirely cash flow issues caused by the French bankruptcy. I think once that's done, everything comes together again nicely. And like I said earlier, we're in very close contact almost daily with them. And we've been trying to help them navigate as best we can through some of these issues, and they're very receptive to that.

It's another tough question. When do you expect meaningful revenue growth from these automotive programs? And in general, what gives you confidence that 2026 and beyond will be better?

Well, thank you for that. Let me start. Not as an excuse but an observation, automotive integration takes time. You're talking about vehicles that have thousands and thousands parts and purchasing decisions and a lot of that has to be coordinated. Fortunately, we have a couple of things going on. Number one, even though these things take time, we started [indiscernible], so they're very much well under way.

And also another thing that's extremely helpful, and I think every day becomes clear to the OEMs, our SPD technology has been validated across 4 OEMs. And in the auto industry, that's unprecedented, and we have even more OEMs in aircraft. So I think that, that reliability and continuity and maturity of the technology, I think, has been very helpful. But bottom line is the seeds have been planted, getting back to the question, and they've been nourished and now you're seeing them begin to grow. And really, what matters and why I think this year is going to be different and this is going to continue is the breadth of our pipeline and the engagement of engineering that we have.

Today, we have Ferrari and McLaren models in production, we have Cadillac newly entered into production with some legs basically within General Motors, some of which I alluded to earlier. Mercedes showcasing SPD broadly in a concept platform, 4 high-volume quotations allowing us to get our costs down meaningfully. Additional new European OEM programs and specialty programs with tens of thousands of unit potential. And also, I think what's helpful is the new SPD related investment by our licensees. So that breadth is broader than at any point in our history. And that's why I think 2026 and beyond will be different. And as programs move from quotation to production, revenue follows, but not before, not in the automotive industry and not with a licensing model. So we focus on execution and integration, getting it into cars reliably. And then for revenue for us and for our licensees, that follows integration. And that's what we've been doing. It's very simple.

Next question. Ferrari's low volume, Cadillac is ultra low volume, isn't this still a niche technology?

Well, Ferrari and Cadillac and prior to the Mercedes and McLaren all validated performance of SPD technology and the ability of our supply chain to reliably produce for serial production. I might add, [ producer serial ] production across 4 different OEMs with 4 different requirements and 4 different production processes and 4 different procurement processes, we did it. What matters now is expansion. And we have 4 high-volume quotations in the automotive industry. We also have specialty programs in the tens of thousands of unit range. And we also have broader glazing integration discussions beyond just sunroofs.

So the pipeline today is about scalability and not just [ halo ] vehicles, it's about cost and it's about performance. And we've always had great performance, but the scalability and the costs are things that we're now showing people we can do.

Another tough question, also automotive related. If this technology is so compelling, why hasn't a major OEM adopted across all vehicles already?

Well, from your mouth to God's ears that it happens, then it might, and I'll give you an example of why that might happen. But automotive adoption is very model specific, at least in the beginning and very platform-specific. OEMs integrate technology based on cost targets, future positioning and design cycles and also what their competition is doing. But we're now seeing broader glazing discussions beyond just sunroof panels, and that represents platform expansion.

And a useful historical analogy is antilock brakes. That began as a very expensive item, I mean a fairly significant percentage of the car. But Mercedes took a risk on that one. And even though it was very expensive, and they put in first and high-end vehicles, it eventually became standard across the industry. And as many of you know, we have very good relations with Mercedes, and we speak to them often. And we have pretty much an insider's viewpoint on how they think about things.

And I asked the guy that developed the S-Class. And of course, I met him in connection with our work on the [ SOK and the SL ] and then the Maybach and the S class. And we had a lot of discussions. And I said to them and I said, Hans, did you have ready regrets about a decision you made?

He goes, well, not about SPD, but I did have one regret. We had developed a dynamic shock absorber system that would take the 6 cameras in a car and feed the data into dynamically changing the shock absorbers on the car. And we wanted to call it either Magic Carpet Ride or Magic Glide Control. It made the car really, really smooth to drive. And one day, [indiscernible] walked into my office and said, BMW wants to license it from us. And the regret I made as I said, no, because had I said yes, that would have gotten the cost of that down. And if I got the cost of it down by licensing BMW, so that the unit volumes for our supplier were much higher than it would have gone to other carmakers, too. And then it would have been in every one of our cars. So Magic Ride Control would have been in everything at Mercedes, and we'd have a better performing vehicle.

So the thinking is and this happens more than I thought it would, that OEMs do share technology. And when they don't, they regret it sometimes. So in our case, adoption, I think, across every model within an OEM will happen when we address 2 things that we spoke about earlier. Cost and color. We have already discussed the significant progress we made in both of these key areas.

Next question, which I asked myself today because I'm an investor is, why should investors be patient?

Well, first of all, it's a little easier for me to be patient because I have more information as you'd expect, as to what's going on and what's in the pipeline. But I think if you look at this even from an outside viewpoint, investors should be patient because the infrastructure has already been built. We have invested over $125 million in SPD and its markets. That's done. Because these major investments have been made and validated by significant customers, I think that's another reason to be patient. And diversification has increased. Diversification across multiple OEMs, diversification across now you're beginning to see different places in a car where this could be used, and you'll see more of that.

I think we should be patient because production continuity has been maintained. I'll mention it very briefly because people sometimes say, well, why do you talk about the competition? I pay attention to the competition. We've had several competitors go bankrupt. The most recent, which you may not be aware of, was eyrise, which is the company that makes architectural liquid crystal. Not PDLC, liquid crystals. So sometimes, when you see something that looks like SPD, it was the eyrise product in an architectural application or they ended up liquidating. And that was within the last month or so.

So it's a tough industry. But I think by being smarter, and not that I'm the smarter one, but just setting up a business that was smarter. We've been able to have that production continuity that no one else has had. New OEM programs have opened. Another reason to be patient because those things are seeds that have been planted that will sprout. The architectural retrofit greatly expands the addressable market. These are all structural developments. And durable growth follows those structural expansions, those foundations that we build.

So we've also set the table for lower cost and higher revenues, all without requiring large capital expenditures or erosion of profit margins at Research Frontiers. So we've built strong foundations in their we're green from them. And I think that's why investors should be patient.

We've discussed a lot of exciting topics [ so far ] today, and I'll now ask our operator, Paul, so please open up the conference to any additional questions people participating today might have had that have not already been covered.

And just one caveat. We have covered a lot of ground. The call was running a little bit long because there's a lot of exciting things that we wanted to talk about [indiscernible] share with you. So if we've not fully answered any of your questions, but they've been substantially answered, e-mail us rather than ask it on the call because we want to leave time for as many other questions as possible.

So Paul, if you can open up the Q&A for live questions, I'd appreciate it.

[Operator Instructions] And our first question comes from Jeff Harvey an investor.

So Gauzy announced a $50 million funding proposal. That obviously hasn't gone forward. At least I haven't seen anything to indicate that the funding has been in place. So that's a little disturbing. The other thing is that......

Having -- yes, let me address that first because having cut my teeth on corporate transactions as a lawyer and also as the CEO of Research Frontiers. It's not that it hasn't gone forward, but equity credit lines require a registration statement we filed with the SEC and they go effective. Due to kind of the timing of the year, I believe that Gauzy would have to actually have their audited financials in place in order for them to file that registration statement.

So I think -- but I think it's also probably important and I don't think I'm revealing anything that I shouldn't about Gauzy's funding plans. But that's more of an intermediate funding plan. They don't need that much money to execute on their business plan and move it forward. And they have access to more immediate, shorter-term capital. That's meant to take care of some of the debt that they have with a particular lender at a higher interest rate. And it's nice to reduce your interest expense. We don't have any debt, so we don't have any interest expense. But they're a different company, so they do.

Anyway, I didn't mean to cut you off. I just wanted to address the question while it's fresh. I think you had another question or comment.

Yes. Two other things. First of all, the stock has been under $1 for -- I would think getting to a point where they're going to get another letter from the SEC about getting delisted being under $1, but I also....

You're talking about Gauzy stock. You're talking about Gauzy stock.

Correct. So I think that's -- and the other thing is I would think that they're not going to be able to pay you on time the way you'd like to be paid until they get their financial house in order. So I would think that your expectations of getting royalty revenue from them, again, are going to be subdued near the near term. And I also.....

Let me address that while it's fresh. Okay. I'm sorry if it's related. I want to make sure I answer all your questions, Jeff.

I would think also that potential customers would be reluctant to want to do business with Gauzy given their financial distress.

Right. They're all excellent observations. Let me maybe put some color on it because like I said, I've been in very close contact with Gauzy throughout this process since pretty much the day after the filing, the bankruptcy filing.

So the first question is, are we going to get paid?

And the answer is yes. They have stressed to the French -- remember, we get our funding from 2 sources from Gauzy. Vision Systems, which is in France. Now that's directly under the control of the French regulators. And it's more of a monitor to basically just like internally, we have a list of bills that we had to pay, and my office manager presents it to me as CFO and CEO, and I approve it and our audit committee looks at it and it gets approved and then we pay it. What you're doing is you're adding 1 level on top of that, but it's a bureaucratic level, which is a French bureaucratic official that also has to do that. So it could slow down the process. Our invoices have been submitted. I'm told. No guarantee, but I'm told that it typically takes the regulators 1 to 2 weeks to approve something like that. So we're in the queue.

As far as post filing things, that's a little smoother because really what they do is they treat prefiling obligations a little bit differently than they do post filings. And November 13 was the prefiling -- was the filing date. So anything that existed, which is about half of our receivables from Gauzy, and from Vision Systems rather, is subject to the French regulator. And the other half is ongoing in the queue for payment.

As far as your other question, and it's an excellent observation, are they experiencing any customer concern about their finances?

And Jeff, that was the first question I asked them too. Is anybody concerned about your viability or -- [ they said ], no, Joe, they're not. We are -- I mean, I'm more focused on SPD film and emulsion obviously. But company-wide, I think when you consider that the flow of revenue and product sales is coming out of France and it's coming out of everywhere else in the world, the customers are continuing to buy. And these are -- some of these are very long-term lucrative contracts that Gauzy has. So because they're long term, the customer has to buy from them and they have to supply and the challenge is, do you have the liquidity to supply what's a very large backlog of orders.

And part of this I mean, I'll tell you 2 things. Number 1 is, the backlog -- Gauzy was on track to meet their projections for 2025 until the labor unions initiated this reorganization or rehabilitation proceeding. Then everything stopped because all of a sudden, you have to go through the monitor process to get paid if you're a supplier and it's not just us, it's people that are supplying glass and plastic film and cameras and everything else that they use in their systems. So it's very important to get that restarted quickly, especially since the backlog was tens of millions of dollars of product sales that were profitable.

So Gauzy, I think, did what they needed to do, which is they reallocated some capital and some liquidity from other areas of their company to get that flowing quickly because those have longer lead times. And of course, you have the steady-state stuff for research frontiers and other licensees with the SPD emulsion and film.

And I'll tell you, yesterday, I was speaking to the CTO of Gauzy and they're producing emulsion. It's ready to go. And they get it over to Germany. Probably after Sunday, it will be a lot easier when they open up the air space. But prior to the word they were getting it too. So it's not -- it's a little bit of a blip. But obviously, you want to see blips as possible.

At some point, I imagine, given what Israel has gone through with [indiscernible] in May when I was there on 7 different fronts. And now this war with the run, they may very well move a lot more of their emulsion production over to Germany so that -- and their people so that you have less concern about air spaces opening and closing. But I think we're on the tail end of that kind of disruption. So I think we're good.

And our next question comes from [ Mike Forrester ], an investor.

My question arises out of the third quarter report of Research Frontiers. And in light of everything you've said about how positive our whole situation is. It leads me to wonder why do we have a capitalization in January at basically $1 a share plus opportunities to buy more stock at $1.10 a share with a selective group of investors, including family members of a director when at the end of the third quarter report, it said we currently expect to have sufficient working capital for more than the next 5 years of operations. End of quote. So how do you justify that?

Sure. Michael, thank you for bringing that up, and I appreciate the question. So as I mentioned earlier, there was a qualifier on that, which is assuming we get paid what we're owed and assume there's no more supply disruptions because we had one in the second quarter with AGP, as you know. And also for strategic reasons. And what I said earlier in the call, I'm not sure if you were on it, is all three of those factors were present here.

Now you asked about directors participating or their family members participating. That was basically the terms were set not with the directors, obviously, they were set with the large investors, the anchor investors that were much larger investors in this offering. And then we were asked, "Hey, why don't you have a director participation in this?" And I said, "Guys, we already circulated our 10-K in [indiscernible]." No company in the world would allow a director to buy stock once that happens. We're closing on this deal. If there's people who know that want to participate on these terms, which have already been set, they're welcome to come into this.

And I'll say this to any shareholder out there. Where do these friends and family investors come from? A lot of them had amassed large positions in Research Frontiers and wanted more. And because they have large positions, they would call me throughout the year, throughout the years, I got to know them. Most of the people in this round had invested in the last round, which was in September of 2022. So I knew them there. And they had invested in the prior rounds and the prior rounds and the prior rounds. So these are long-term shareholders.

And maybe just to kind of put a color on this, if anybody out there is interested in participating in one of these things, assuming we have to do one again, maybe it's a couple of years before we do it or maybe it's sooner if isn't an acquisition we want to make or a marketing program we want to launch or something like that. Let me know when we're talking, I'm happy to put your name on a list, and we could always figure out if it makes sense for you. But it's not meant to exclude anyone. But these are people that we know and trust.

And just to put a little more color on it, in September 2022, the stock that everyone got had a restrictive legend, meaning you cannot sell it in the open market as long as this legend is on the stock certificate. And even though they could have taken that certificate legend off 6 months after the September 2022 offering, nobody in that offering did. So these are long-term holders. And we appreciate that because that's how you get rewarded with a company like this, which has relatively long development cycles with customers in automotive and an aircraft, I think everyone that works in that industry kind of knows about the development cycles.

But that's why we did it, and that's why we did it with the people we did. And if anyone is interested, love to hear from you. I can't promise you we're going to do this again. But if we do, and things make sense, we certainly would consider you.

Well, it's not just with respect to there being recapitalization, although the third quarter report does mention an expectation that there wouldn't -- this wouldn't happen for 5 years. But.......

But if you listen to the conference call.....

Hang on.

Okay. I'm sorry. I didn't mean to interrupt you.

Well, it's the timing. I mean you're giving us all this glowing information about how Gauzy's situation isn't as bad as the press, so to speak, present it to be. And I'd love to believe that because I have stock in Gauzy as well. But they just filed the bankruptcy or thrown into bankruptcy in mid-November, and here it is January, less than 3 months later that with Research Frontiers' stock plummeting just as Gauzy is plummeting, the offer is at $1 a share. When you talk about '22, I think it was like $2.30 a share and with better warrant rewards for those who reward to the company in terms of the total income. I question the timing, why not wait at least until May. We had at least 12 months before -- according to the latest quarterly report that we have cash and cash equivalents to take us at least 12 months. While this timing is like you're giving a gift to people who may not need that gift. .

I'm not giving a gift to anyone. This is an investment. But I will say this. Listen to what I said, please. If we were paid what we were owed, and we didn't have any supply disruptions. Two things that didn't happen, by the way. We did that -- we weren't paid what we were owed and we'd have supply disruptions, okay? And if we had a strategic reason, we would do another one. So here we are in March. We have something sitting at a French regulators desk hoping that it gets paid today versus tomorrow. And I don't think anybody on this call would want Research Frontiers to not have the liquidity to execute on our business plan.

So I'm thinking about the long-term shareholders and the execution of the business plan and capitalizing on the successes we've had in multiple markets and something no one else has done. And I'm not going to sit there and roll the dice with your money or my money and hope that I get paid on time or hope that there's no more supply disruptions. You wouldn't want a CEO of your company being that reckless.

One last question then for you. In light of what you're predicting is when you get the money and so on. Are you going to put out a press release of how things are going so that we might know?

Yes. We typically don't put out press releases unless there's a specific event like the launch of the Celestiq was a specific event or a major nonfinancial development, but the financial developments are on a cadence of being announced quarterly. And our next quarterly conference call is in the beginning of May. It's not that far off the way that the SEC filing schedule falls, early May is when we typically have our first quarter call. You might see it then.

So by then, we should know whether or not Research Frontiers has got its licensing fees from the bankruptcy monitor, right?

Yes. Yes. I think you'll see a change in our receivables when that happens and in our cash position. And that's not too far off. So financial results, we don't announce in between quarters, but it's close enough where you'll know about it soon enough, I think.

And our next question comes from John Nelson, an Investor.

Joe, just a couple of quick questions. You mentioned 4 projects with the retrofit window. Do you have -- can you give us any idea as to how soon any of those could start? .

I think they -- I mean, they've already started. I mentioned earlier that we're working on some peripherals that go in conjunction with the retrofit window. The retrofit window is a very solid developed product. But now think about any kind of smart window. You're going to want to have ways of controlling it in a smart manner that hopefully will be just as easy to install and integrate as the glasses. So that's one of the things that we're actively working on together. That's LTI and Gauzy and Research Frontiers and the customers to give them a choice. So that's basically what it is.

And we've selected different types of projects because I view these not only as revenue sources. I'm not worried about revenue on this. Revenue, when we decide that we're going full force with this, and we have these peripherals all done. AIT has the capacity and the customer base to do this quite quickly without buying a Super Bowl ad or anything like that. But I also want to have white papers so that the architects could get their ideas as to, hey, why would I use this?

In some cases, it's obvious. I have building facility management, building envelope issue that I got to deal with. I need glass on the outer skin of the building, but what about things like one of the residents has, I think, 30 or 40 interior windows that to take out the glass and put this in, it's a residential project would be very disruptive to the tenant and very expensive, whereas we could just pop it in and be done with it. And so it's a matter of creating proof points there.

Yes. Successful application will create awareness, more awareness......

And good news, John, I think -- the good news, John, is that in the architectural market, we have a lot more control over that good news getting out more so than an automotive aircraft where you're somewhat beholden to the OEM. Here, the architects and the homeowners like to brag about what's in their home unless they're rushing oligarchs or something that are trying to lay low. And we've had that happen, too.

Okay. And second question is, has Ferrari expressed any interest in expanding the SPD roofs to other models?

They have. I can't talk about the specifics on that, but they make a lot of money on the [indiscernible] and they're thrilled with the performance. I mean it has the performance of Ferrari. So what wouldn't they like about it?

Our next question comes from Art Brady, Investor.

Basically, I'm interested in learning a lot more about what is happening with the [ GL ] project, the Korean company that concentrates on building kiosks?

I'm not going to talk about a specific project. And I don't think, given that this has been an hour phone call, we should probably spend a lot of time on specifics. But Art, I know you try to reach me earlier in the week, and I typically don't answer shareholder calls right before the SEC filing because I don't want to get any shareholders in trouble, but feel free to call me tomorrow, and we could talk about that. And if you have -- I know you're a resourceful person, you might have some thoughts on that.

I'd like to now maybe make some closing remarks. Look at the fact that Ferrari and McLaren have their production continuity going on in Cadillac entering the market and Mercedes integrating SPD broadly in a concept that covered 75% of the car, not just the sunroof and the expanding OEM quotations, high-volume quotations that helped us get the cost down significantly and Black SPD advancing and the architectural retrofit launching and the strengthening of the balance sheet and new investments by our licensees and SPD equipment, and in 1 case, a [ direct ] investment in research frontiers to the friends and family offering.

You don't see a static company, you see a foundation that's been built and a technology platform that's being embedded in many of the different places. It's being embedded across geographies worldwide. It's being embedded across vehicle segments. It's being embedded across applications. And the major investments have already been made and the infrastructure has been built. And we've always had the best performance of any SmartGlass technology, and SPD continues to deliver industry-leading performance. And cost and color are being addressed and diversification has increased.

The breadth of engagement today is stronger than at any point in our history. And when you connect these developments together, you see a business that is no longer dependent on a single vehicle or a single OEM or a single customer in general or a single market. And we believe all of this positions research printers for durable, diversified growth as these programs mature and enter the marketplace.

With that, I want to thank everyone for their participation in the conference call today. If we haven't answered your questions, feel free to e-mail me or call. We try to do the best we can to respond quickly. And I look forward to sharing more upticks with everyone.

This concludes today's conference call. Thank you for attending.

Good afternoon, and welcome to Research Frontiers investor conference call to discuss the third quarter 2025 results of operations and recent developments. 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 of this call.

Some statements today may contain forward-looking information identified by words such as expect, anticipate and forecast. 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. [Operator Instructions] The call is being recorded and will be available for replay on Research Frontiers website at smartglass.com for the next 90 days. [Operator Instructions]

Now I'd like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Thank you, and hello, everyone, and welcome to our third quarter of 2025 investor conference call. Automotive and total royalties were up year-over-year and sequentially when we back out onetime events from 2024. As of the end of the third quarter, we remained debt-free with over $1.1 million in cash and our working capital position remains solid. Our architectural retrofit system debuted this week at GlassBuild 2025 in Orlando. The show ended earlier today, so my voice may be a little horse from speaking with customers since Tuesday.

We had an outstanding response. John Nelson had asked by e-mail a few questions about the show. What was the response? Were there any orders obtained for either the retrofit or the IGU products? We had a steady stream for all 3 days of interested parties, John, and they were amazed at SPD's performance and the ease of installation and elegance of the design of the system.

Full spec sheets for different configurations of SPD windows for architects, designers and facility managers were handed out. John also asked, how are you planning to market these products and to whom were any orders obtained? Initial customers are expected to be the government buildings through AIT Group's status as an approved GSA vendor, embassies across the world and commercial buildings such as high rises and office buildings. Homes are possible as well, and we are working together on some high-end projects there as well. We've also identified and are discussing specs for at least 2 major and highly visible projects.

The idea for GlassBuild and all of the shows and conferences we attend is to get the conversation started and for AIT Group, Gauzy and RFI to have real-world demonstrations underway. We and our licensees plan to build on that momentum through major trade shows early this year and even at the GLASSTEC 2026 show in Dusseldorf. That show is only held once every 2 years and is the largest glass industry event in the world. With respect to cars, we will also similarly build on momentum in the automotive market. As I noted on our last conference call, the bankruptcy of the original licensee supplying Ferrari and the shift of that business to another one of our long-standing licensees caused royalty income from strong Ferrari sales to be mostly absorbed by the high minimum annual royalties be paid by that new supplier at the start of 2025.

In real terms, because of the prepaid minimum annual royalties from 2 licensees absorbing the Ferrari sales royalties, and this was something that only first happened this year in our history, the switch from one licensee to another from an accounting standpoint reduced our reported automotive royalties this year by 6 figures. Even so, our royalties in Q3 and for the 9 months after the onetime events are backed out from 2024 are higher than last year. And even with this and the Ferrari business split between 2 licensees for the first half of this year, because of the sales levels achieved in Q3, the MARs for this licensee have now been exceeded in Q3.

So some of our royalty income comes from this licensee in the third quarter and all of the royalty income generated by Ferrari in the fourth quarter will now become recordable in full in the fourth quarter. We expect revenue in all market segments to increase further as several new car models and other products using the company's SPD-SmartGlass technology are introduced into the market. Turning to our financial condition and liquidity. We continue to manage our resources effectively.

As of September 30, 2025, we held approximately $1.13 million in cash and had working capital of $1.4 million. We remain debt-free. One shareholder, Jared, asked if we plan to raise additional capital. We do not currently plan to raise additional capital, assuming that we don't have a repeat of the Q2 licensee bankruptcies and none are expected, by the way, and we collect what is owed to us. We have had interested investors approach us, so capital is available if we ever need it, but there's no current plans to raise funds. We continue to see progress and significant developments across our markets.

Our SPD Smart technology is licensed or used by many major companies in 5 areas: aerospace, architectural, automotive, marine and display products in almost every region of the world. And we have had some very key developments within our industry since the last conference call. I can say we never had a more full pipeline of projects and opportunities. Some are medium term and some are near term with the timing and ability to announce more in our control. A good example is the architectural retrofit system. I was at GlassBuild in Orlando for its launch there this week by AIT.

Show is outstanding. AIT Group, Gauzy and RFI received enthusiastic responses to this, and we're working together to announce more details. In the architectural market, we will be following it up with major shows in January, February and perhaps several other shows after that, culminating with the GLASSTEC show in Dusseldorf in October. That show is the world's largest event for the glass industry and is held every 2 years. It gets considerable attention just like GlassBuild in Orlando did. We also expect to have SPD-SmartGlass for the automotive, architectural and aircraft markets in January at CES. And in addition to all this, there is something really exciting later this month.

As we announced in yesterday's press release, I am the keynote speaker at the Automotive Glazing Conference in Detroit, November 18 and 19. After being selected to give the keynote on SmartGlass, I am also quite honored to have also been named the Chairman of the conference as well. And I'm looking forward to an illustrious group of automakers, suppliers and colleagues presenting and attending that conference. These include executives and engineers from General Motors, Ford, Volkswagen, Stellantis, Lucid Motors, Jaguar Land Rover, Corning, Kuraray, Carlex Glass, Saint-Gobain Sekurit, NSG Pilkington, Fuyao, Guardian Industries, Renault, Webasto and others, representing the entire automotive glazing value chain from OEMs to Tier 1 suppliers and glass innovators.

As I mentioned, we included some questions previously sent in by our shareholders in our presentation today. I'll now answer some additional questions that have been e-mailed to us. Jared emailed in 3 questions. Are there any SPD retro wall installations? Is there a capital raise in the near future? And how does Gauzy's prefab lam stack benefit SPD? Well, I answered Jared's first 2 questions in my presentation earlier. Regarding the Gauzy prelaminated stack, it benefits the SPD industry in multiple ways. It promotes consistency and quality among different manufacturers with different capabilities.

It helps the customer be more able to easily interchange suppliers because of the consistency, and it also enhances performance by using a combination of materials in conjunction with the SPD film to create an optimized stack in terms of UV and IR protection and optical clarity. It also speeds up production times by our licensees, minimizes costs from wasted materials and other similar efficiencies of scale. Some other questions from John Nelson that were e-mailed to us prior to the call.

Any update on the sun visor, either aftermarket or built in the windshield? Well, John, since our last call, we've had more customer inquiries about this and some OEM activity as well. SPD Black development status. John, I'll be talking about this in my closing remarks later. Is there much interest by automakers in developing SPD for side windows? Yes, John. Apart from Mercedes concept van earlier this year, there is interest. This is one area that can greatly benefit from the black SPD.

The Sapphire Blue SPD is perfectly fine for sunroof, but I believe that the automakers want black or a more neutral colored SPD, which is better suited for side windows. Steve [ Azer ] asks, it was nice to see some price action in the stock of reefer a few weeks ago. Are we still lagging the market? And what will we need from REFR to see higher valuation going forward? Well, thanks, Steve. And as a shareholder myself, I too want to see higher stock prices. However, just one of the assumptions you made. When you back out the Magnificent 7 stocks, we're not lagging the small cap market.

Over the past 6 months, is as of yesterday, Refer outperformed U.S. micro caps. We were at roughly 68% in the last 6 months versus 38% for the general microcap market. Next question from Steve [Azer ]. Is anyone replacing Michael LaPointe from his recent retirement? We're not replacing Mike. He did a great job for us as VP of Aerospace Products and got many programs underway to the point where our licensees in the aircraft market and their teams of people are now able to carry the ball beautifully. Mike and I have spoken often in the past 2 months, and he's enjoying retirement and keeping busy, but he still keeps a close eye on things at Research Frontiers.

I'll now ask our operator to open up the conference to any additional questions people participating today might have that we haven't already covered. We ask that you please keep your questions brief and limited to questions of general interest. If you want to get into more specifics, we can certainly do that by e-mail or by telephone later. I plan to also cover a lot of exciting information and developments in my closing remarks. So I may be addressing your question in more detail actually in my closing remarks, and we'll let you know if that's the case when you ask your questions.

[Operator Instructions]

Our first question comes from James Leo of RBC.

So I mean this call is kind of like Groundhog Day. I mean it's the same call over and over again. I look at the 5-year growth rate of the company at minus 3%. And I'm just curious where are all these car sales that you've been saying we're going to be coming?

Okay. Well, I try to go into a little bit of it, James. Ferrari has been doing very, very well for us, increasing.

We know about Ferrari already, right?

Yes. But the accounting treatment, when you had a licensee go bankrupt in the second quarter and another licensee step in and have to meet their minimum royalties before you can book new income as part of it. But I expect -- and in my closing remarks, I'm going to talk about some exciting things about what's coming in the automotive.

I mean, how many quarters ago did you announce that there was going to be a high production car coming out? Was that 2 years ago?

And we'll be talking about that. Things take a while in the automotive industry, and we do it right as I think history has demonstrated. But if you wouldn't mind holding the rest of your question for the closing remarks, and if I haven't answered them, you could always call me. I'm happy to talk to you.

Next, we'll hear from John Nelson, an investor.

Joe, just an idea kind of afterthought. Since the retrofit product is so, I would call it, revolutionary and since it is -- you've indicated it is production ready, would it make any sense to see if any of the new shows or podcast would be interested in profiling your product?

Yes. And we actually have a couple of those in discussion right now. What I want to do, I mean, the best way to experience the retrofit, John, is to actually see it work because it's incredibly easy and elegant. I mean it's -- they did -- the AIT Group, which owns LTI, our licensee, has really just worked out so many, what I'll call subtle details. For example, you pop this into a window frame and you want to make sure that you're getting a good seal. You want to create an air space to create even better energy efficiency.

You want to make sure that there's no moisture in there that gets trapped. So a lot of things and of course, the wiring. And we actually are developing several different methods of wiring, including what I think is really, really exciting and quite doable, which is an autonomous window. What I mean by that is it's self-powered. So you pop this into the window frame and you don't have to call an electrician and everything is there. When I was at the show in Orlando, as soon as I walked in, I was handed a maybe a 1.5-inch long key fob remote control.

It's a 10-volt remote control, no wires, and I was able to control the SPD windows and dim them and do all of the things. And this was off-the-shelf controller, which means you can actually substantially reduce cost by not requiring specialty electronics and also more easily integrate into building control systems. And a lot of people use [ Lutron ] systems. So the fact that it works with the low-voltage Lutron stuff is very important, too. So these are the kind of things that we want to get -- make more visual for people so that people could actually see how easy it is to work with. And the hard work -- the harder you work, the easier and more elegant it looks, and there's been a lot of hard work that Gauzy and AIT Group and Research Frontiers has put into this to make it look easy.

Are AIT Group and/or Gauzy producing a video demonstrating the product's qualities?

Yes, they will be doing that and also appearing on podcasts and industry things. So we hope to have some nice visual assets to kind of help spread the word better. But also one of the things that I found interesting at the GlassBuild show, first of all, it's extremely well attended by the right people. But when you walked over to actually do the retrofit replacement where you took out -- in this case, they had a large and heavy bullet-resistant glass window.

And you could just walk over. I saw one guy who was maybe half my size, easily put this in. So what -- where the real benefit is, and that's -- it's kind of an interesting observation is you can go in there in the course of a weekend and totally upgrade all the windows on a couple of floors of a building. And they did one. It wasn't SPD, but it was for the White House. And unfortunately, you can't close down the White House during the day. So they had -- they said they had to go in there at 5:00 and work till 2:00 a.m. and the secret service was there with their guns ready, but they were able to upgrade the executive building in the White House with this system. So it's quite, quite easy to work with.

And we talked about distribution, which I think was one of your earlier questions about how we're going to market and deploy it. We talked about the marketing, but the deployment can be done with pretty much any installer. It's not a high skill to put this into a building once the system -- because of the system. So you could have groups of people in all over the country just go do this. And it's -- think of it as like a very elegant storm window maybe.

Next, we'll hear from an investor, Francis Altera.

The installation in the White House, what was the actual product that they installed?

That was an anti-eavesdropping bullet-resistant glass. So bullet-resistant, you understand, and they can now do Level 10, which means they could stop a 50-caliber round. And they had some there. I wouldn't recommend sending near this stuff when it's being shot at. But the anti-eavesdropping, you can shine a laser on a piece of glass.

And if you and I were talking in a room, the glass would vibrate and someone from the outside might be able to shine a laser on the outside of the window and turn the vibrations back into sound, which is sometimes what's done in [ Spycraft ]. So this special film that AIT Group and LTI can put in their windows, and they've done it for the CIA and others. And for Embassies prevents that from happening.

Okay. It's pretty cool. Is that glass capable of having SPD on it?

Yes. So that's a great follow-up question. So the way it would work, let's say, I'm a facility manager or in charge of an Embassy somewhere, the building of an Embassy and we have existing glass, and I want to make it upgraded. What I would do is go on the GSA schedule, which is basically if you're a GSA-approved vendor, the government can buy directly from you. And it's almost like a Chinese menu. So the plan with this is to have AIT Group have a whole different bunch of options for the retrofit.

So for example, if I particularly wanted bullet-resistant glass and I wanted bullet resistant up to Level 8 or Level 6 or Level 10, and I wanted it to have the anti-eavesdropping glass and I wanted it to have SPD. I just check a couple of boxes and order it. And that's the idea. It's like a Chinese menu. If I didn't want the anti-eavesdropping, but I want the bullet resistant in the SPD, I would just check those 2 boxes. And obviously, there's different prices for different things. But that's the idea is to make it very easy to deploy across the U.S. government.

How capable is the supply chain setup for the architectural market? And is it right now being focused on the blue tint or the black tint?

Right now, everything is focused on the existing commercial film, which is the blue, Sapphire Blue. One of the nice things about this retrofit system is, let's say, next year, the black comes out, and I happen to upgrade my Embassy or my building with the blue. And I said, money is no object. I really want the black. Someone comes in and within the course of a weekend can redo the whole building with the black. So it's really -- it makes it future-proof, which is great.

How far along is the black?

I'm going to talk about that in my closing remarks, but it's very, very far along.

Okay. Now you mentioned increasing sales with Ferrari. Whatever happened to Hyundai?

I'm going to talk about that also, but it's still moving forward.

Still moving forward. What caused them or whomever it was to totally not fall through -- follow through with the 2023 projection of us being greatly rewarded. What happened there?

My understanding is it was partly because of the car itself, not the SPD part. And I suspect that if you know that a black is coming and you're not -- you don't have a gun to your head to put the blue in the car, you might wait. Some automakers have expressed that and some haven't. So it might have unintentionally caused a slowdown in some areas. For the most part though, the sunroof for the most part, the sunroofs are fine with the blue. Things like side windows would prefer black.

Is there any difficulties in producing it? Do you have a good sense.

You mean the black or the retrofit? Or both?

Retrofit.

No. No, no. A matter of fact, AIT Group has an entire building devoted to just the framing system for the retrofit.

What about the supply...

That's building #3. And I'm told that building #4 is waiting when they -- if they hit capacity in building #3. So they have expansion room, too.

Yes, but that's the frame. What about prior -- the glass...

Well, they can do glass all the time.

The lamination.

Yes. That's what AIT and LTI do is they have a tremendous operation in -- outside of Tampa in Largo, Florida, and they have another tremendous and even larger operation in Pittsfield, Massachusetts.

Does [indiscernible].

They do it.

Lamination inhouse -- the lamination is done in-house with...

Yes, that's their specialty. Laminated Technologies, LTI is the part of AIT Group that does and has done SPD lamination for our licensees for a long time. They have very good experience.

So Gauzy makes the film, ships it to them and they do the rest.

They laminate it. Right.

Right.

And Gauzy was at the show yes, Gauzy was at the show along with AIT and of course, me.

On our last conference call with Gauzy, they never even discussed SPD. Why did they not even address that? I found that to be somewhat odd. Would you have any [indiscernible].

Yes, I've had this discussion with Gauzy. There's a very sexy high-growth part of their business. That's their switchable film division. And they have a very bread-and-butter part of their business, too, things like the Safety Tech division, which does the cameras for trucks and things like that. And as a new public company, I guess they were advised stick to kind of the more traditional way of presenting your company, which is here are your revenues in each division, here's your EBITDA in each division, and they have about 5 different divisions. So they devote some time to it. From a shareholder value standpoint, I believe they would do much better focusing on the growth areas like SPD. And I've expressed that to them, and I think they're getting that message.

[Operator Instructions]

We have no questions at this time. I'll turn it back over to you for any additional or closing comments.

Okay. Thanks a lot. And if we haven't fully answered anyone's questions, either live or by e-mail, please feel free to e-mail us, and we're happy to talk to you. And I'm going to put a lot more detail in my closing remarks. So I think a lot of the questions that have been asked, you'll get a little bit more meat and flavor from it. Success rarely comes in a straight line and how you navigate that path frequently determines the outcome. And some of our competitors never even crossed the finish line and went bankrupt.

On our past conference calls together, I've told you about our retrofit application and about how the automotive industry views SPD as the best performing and most reliable switchable tin technology. You're now seeing proof. What we discussed on earlier calls is materializing, sometimes not on the exact time frame we were told, but consistently moving forward. The architectural retrofit application was presented this week at the most prestigious U.S. Glass conference and will appear at additional major events worldwide. Our customers for the retrofit include both government and commercial entities.

Direct adoption by the government offers a large opportunity. The GSA is the largest customer in the world, and the government also promotes use of SPD Smart Glass in the private sector through tax incentives, such as the Dynamic Glass Act, which provides 30% to 50% credits. Both of these should accelerate use, especially now with the ease and speed that an existing window can be made SPD Smart. Yesterday's announcement about the Detroit conference, which incidentally is the same venue where we landed Cadillac years ago, and my selection as keynote speaker and Chairman highlight our growing credibility in the automotive industry.

Multiple markets and industries are now connecting the dots and they've responded positively to SPD Smart Glass technology. This industry isn't easy. Automotive makers demand the best and misinformation and overpromising and underdelivering from competitors is common. We counter that with the worldwide network of dedicated companies and the highest performing smart glass technology. In the past year, 2 competitors went bankrupt. Another performed a cumulative 4 million to 1 reverse stock split, yet its stock still trades for pennies, was delisted and they recently lost their CFO and COO.

Another competitor was not able to supply an electrochromic sunroof that was announced by the car manufacturer with great fanfare. That roof option is still on "production constraint, and my visit to the dealership to see it resulted in the salesperson wondering if the roof was actually switching tint at all because of the very slow switching speed. He said at the end that I might be able to get the option on a car in "a couple of months.

On October 24, 2025, so not too long ago, on the third quarter earnings call, the COO and CTO of Gentex Corporation, which incidentally is a company that I respect very, very much, noted the following, and it's worth my reading his public comments in detail to understand the real challenges that companies face in trying to get a switchable tin product into the automotive industry. Customer interest for dimmable sunroofs and visors continues to grow, and our teams have been working incredibly hard to continue moving this product from single unit production into more mass scale capability.

As noted in prior calls, this is an incredibly complex and challenging manufacturing process. To date, we've been utilizing partners to execute part of the process while we get our larger scale production equipment in-house and operational. The target is to have this in-house operation running in late Q1 to early Q2 2026. As with any new product or process launch, there will be challenges.

But with the manufacturing capability we have at Gentex, I remain confident in the team's ability to bring this product into the market in the next 1.5 years. The question was then asked of Gentex, what's left to be done in terms of achieving commercial viability? Where are you and what's left to do? I know there's a lot of technicals that go into getting that OEM certified.

And Gentex's response, yes, there is some -- there are still some of the bigger challenges, the requirements of taking that technology into automotive and meeting the environmental temperature, all of the above process requirements as well as when you have a really large piece of glass with a darken surface. It's easy to see small issues in the process that the dimming materials put down. So that's the big part of the Q1 and Q2 of the next year as we are getting that capability in-house so that we can get better control on that process quality.

So with those, I think those are some of the biggest hurdles that we still have got in front of us. There's a lot of little challenges that we fight every day, but the team has been doing a great job keeping those little challenges down and trying to get focus on some of the bigger ones. So they're not even at the bigger challenges yet. They're on the smaller ones. [indiscernible] let's contrast that -- and this may somewhat answer the question of why does it take so long. Research Frontiers overcame these same challenges 15 years ago. We brought SPD-SmartGlass into mass production with 4 automakers and multiple models.

We expanded business with Ferrari and other brands whose customers love the option. And even after 2 supplier bankruptcies that we endured, which is a testament to the strength of our business model, planning, technology and partners. Our mission has never changed. We pair the best-performing smart glass technology with a low-risk, asset-light business model. This approach keeps expenses predictable, preserves our upside and supports global diversification. These achievements are all beginning to be publicly recognized. At the Detroit Automotive Glass Conference in less than 2 weeks, I'll present a comparison of all the major glass technologies and their relative strengths and weaknesses.

I'll explain why SPD alone is already proven across tens of thousands of cars, yachts, aircraft, trains and architectural projects, real projects used by real people every day. We continue to compete against PDLC in privacy and in projection uses where SPD outperforms in clarity, shading and control. We also outperform electrochromics in nearly every large area application, sunroofs, panoramic roofs, architectural windows, yachts, cruise ships and museums, delivering faster response, better shading and greater durability.

And you will note the recent comments by Gentex about the challenges that they are still facing with electrochromics and their arduous tasks for the years ahead. SPD has always been the high-performance alternative, not the low-cost one. History shows that high-performance products are the most profitable and the most enduring. We have already solved the challenges of performance, durability, mass production and supply chain. And we and our licensees keep improving every day with continuous innovations such as Black SPD. As mentioned on prior calls, our recent focus was on cost and color. As the Black SPD film is expected to be out of development and in production and use shortly, cost is the next frontier.

On prior calls, I mentioned new car models in Asia, Europe and in the United States. These are still moving forward. And since our last call, we have been asked to bid on new multiple major car models. As part of that high-volume quote process, we were given very aggressive price targets, which were based on prices for other competitive technologies. And I'm pleased to report that we're able to meet it. And maybe cost is not really such a big frontier ahead of us. Our next investor call is not until March. So I encourage people to keep these things in mind. Perhaps reread the transcripts from this in prior conference calls.

And of course, we expect fairly significant developments to announce between now and then. I want to share my thoughts with you now as a fellow shareholder. Things have taken too long. They take longer than they take, but we do it right. One thing I'm especially proud of is how we derisked the smart glass industry for investors, licensees and customers alike. If you agree that the pipeline, especially for architectural and automotive is as large as we are predicting, then the only real risk here is whether it's going to take a little bit longer than whatever your personal time horizons are.

On the other hand, if you believe in smart glass, we are the most focused way to participate in that market. And on top of that, we are diversified across major industries for smart glass and not just focused on one. In September, JPMorgan Chase calculated that 75% of all gains in the market since ChatGPT got started are coming from AI-related stocks. Well, we're not an AI company, but this certainly shows that certain sectors can go from nonexistence or obscurity to highly relevant.

And I'm not giving portfolio allocation advice, but if you have small-cap and micro-cap companies allocated for your portfolio, we are one of the least risky business companies because of the combination of a high-performing and mature technology that has proven itself to be the best performing and most reliable, combined with a very modest asset-light business model that creates a meaningful participation in the upside for Research Frontiers and our shareholders through a 10% to 15% royalty based on revenues, profits from sales of licensed products.

We maintain low operating costs and license our technology to global partners who build factories, hire employees and expand distribution, all multiplying our reach without heavy capital outlays by us. Through their success, we all benefited. Even though these people are not on our payroll, they essentially all still work for us. We're in a tough industry, but as history shows, we're tougher. That persistence is now being rewarded as new products reach market and recognition grows.

While others in this industry are still struggling to even bring basic dimming functions to the market and several other notable ones have shut their doors completely, SPD-SmartGlass is already in tens of thousands of vehicles from Mercedes, Ferrari, Cadillac and McLaren, HondaJet to Boeing and to Airbus, and they're expanding. Architects, automakers and airlines are reaching out to us because they realize that SPD uniquely combines reliability, clarity, speed and durability. And with the retrofit, its ease and speed of installation, lower cost and high performance and energy efficiency, that's a combination of benefits that no one else can offer.

As the leader in the smart glass industry, conferences are reaching out to us to speak and educate. With Ferrari's program fully transitioned, the retrofit launch underway and multiple new car model introductions ahead, Research Frontiers is positioned for meaningful growth. The outlook for the smart glass industry remains extremely promising, at least when it comes to Research Frontiers and our licensees.

We stand at the forefront leading this industry with growth driven by our superior technology, increasing demand and regulatory support, continuous innovative breakthroughs and excellent global industry recognition. We look forward to sharing upcoming developments with you, our loyal shareholders. We created the smart glass industry. We've helped shape it, and we will continue to make the world better, more energy efficient, safer and more enjoyable. Thank you all very much.

That concludes our meeting today. You may now disconnect.