Earnings Call Transcript - REFR Q1 2021

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the first quarter 2021 results of operations and recent developments. This conference is being recorded today. A replay of this conference will be available starting later today in the Investors section of Research Frontiers' website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information. The words expect, anticipate, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for the future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were emailed to it prior to this conference call, either in our presentation or as part of the Q&A session at the end. In some cases, the company has responded directly to email questions prior to the call or will do so afterwards, in order to answer more questions of general interest to shareholders on this call.

Joseph Harary, President & CEO

Thank you, Paul, and good afternoon, everyone, and thanks for being here. It was the first quarter of last year that the COVID-19 pandemic shut down the world economy. Now we are coming out of those shutdowns, but key industries, such as the automotive industry, are still affected with other supply chain disruptions. As outlined in the prior conference calls, our revenues in automotive were affected by two factors: one, the industrywide production halt due to COVID-19, which also affected our revenues in the aircraft market; and two, the end of the nine years that we were on the Magic Sky Control SmartGlass roof option on certain models of cars within Daimler. Revenues from the display and consumer electronics market were up quarter-over-quarter, and our royalty income from the architectural market was stable compared to the same quarter last year. We expect architectural revenues to grow based on recent activity on new projects in this area, and for activity in the automotive and aircraft markets to also rebound and grow due to new projects using our technology in these areas, as well as the restarting of the world economy. Major disruptions outside of the pandemic such as the computer chip shortage that has caused many factories to slow down production considerably or even shutdown have not had a direct effect on Research Frontiers other than a small reduction in the number of McLaren models coming off the production line with our technology. For the most part, the supply chain disruptions in the automotive industry occurred after the end of the current Mercedes model that offered our technology as part of the Magic Sky Control glass in Daimler, and prior to the introduction of new models coming up by Mercedes and other car manufacturers using our SPD-SmartGlass technology. So we are largely unaffected by these current chip shortages in the automotive industry. In the meantime, neither we nor our hard-working licensees have slowed down a bit. Several of our licensees have also recently made major investments since the beginning of this year to increase production capacity of SPD emulsions, films and end products for all industries. So everyone is preparing for success. In March and April and even already in May, new projects for SPD-SmartGlass have sprung up in various places around the world. If these projects use the amount of glass currently specified for SmartGlass, the surface area that suggests the architectural projects alone could exceed the usage of Mercedes and the McLaren in their peak years. Part of this increased level of activities is attributable to the world waking backdrop, partly attributable to cost reductions in our technology, making our SmartGlass more affordable to a wider group of projects. And part can be attributed to the high level of activities, not only by our licensees but also by our competitors, which has stimulated interest and activity. One of our active competitors in the architectural space is View. I will spend some time discussing it today because we received a number of questions since our last conference call from existing and even new investors in Research Frontiers, asking how we compare to them. And since our last call, they went public with a destaffing process. View is scheduled to release their first quarter financial results about six days after ours, and I, for one, look forward to studying these numbers. Here's what I found so far since View started publishing their financial results for the first time. I think that you will find it enlightening and it puts our own results of operations in quite a favorable context and gives you a better insight into one of the industries that we're both in. View lost $441.5 million in 2018. They lost $290 million in 2019 on revenues of $24.3 million, and they lost $257 million in 2020 on revenues of $32.3 million. Their 2020 loss was higher than the upper end of the range that I had predicted on our last conference call in early March. To put this in context, View's net loss was over 100 times larger than Research Frontiers' and they're projected to lose at least another $250 million this year and next year. One number that I focus on is View's own reported data regarding their cost of revenue. This is their cost to generate each dollar of sales revenue even before R&D and selling, general and administrative expenses are accounted for. I found this number interesting because View's reported costs for each dollar of revenue in the fourth quarter of 2019 was $3.70. Their reported cost for each dollar of revenue increased to $3.81 for all of 2020. And it went even higher to an estimated $4.03 in the fourth quarter of 2020. So I am scratching my head because the reported cost per dollar of revenue is going up and not down as one would expect in a normal business operation with economies of scale kicking in. Unless they had either: one, production problems; or two, the cost of their raw materials went up substantially; or three, they were heavily subsidizing each project and charging customers less than one-fourth of what it costs them to make and deliver their glass. Perhaps it's a combination of these factors, and we should get more insight on Wednesday when they release their numbers. So in the fourth quarter and in order for View to generate $7.7 million in revenue, that revenue had a direct cost to View of $31.3 million and their total loss for the fourth quarter to generate that $7.7 million in revenue was $55.3 million. That's roughly half the money that we have spent since inception. All in for the year, each dollar of revenue in 2020 cost View $8.36, making their loss for each dollar of revenue in 2020 over seven times the amount of their revenue. Now in comparison, let's talk about our financial results. Our loss this quarter was up once again, one-hundredth of View's most recently reported quarterly loss. Our loss this quarter was $557,000 or 11% lower than the first quarter of 2020. And this lower loss this quarter is coming off of the lowest loss that Research Frontiers has had in over 26 years. So there has been a constant move towards achieving breakeven, positive cash flow and profitability. I have emphasized on our past conference calls that it is important for us to make sure that we're operating as efficiently as possible to make being cash flow positive easier to attain. And our expenses are continuously coming down. 2020 was the sixth consecutive year that expenses were lower than the year before in the company. In 2020, expenses decreased by over $1.3 million, and this trend continues in 2021. Our expenses this quarter were also down 23% from the same quarter last year. And because of our continuous reduction in our burn rate, which is now down to $400,000 to $450,000 per quarter, we actually have an estimated 32 months of cash available to fund our operations. So our existing capital should take us into late 2023 before we would need to have more capital. And we may never need to raise additional capital because, as you will hear today, we expect many reasons for revenue increases this year and next year. Over the past year, there were some very major positive developments. Our SPD-Smart sale licensee, Gauzy, announced last April a Series C investment from Hyundai Motor Company and Avery Dennison. Since then, things have been moving even more quickly than originally expected within Hyundai. As noted on our past conference call, in automotive, we make cars more energy efficient, reduce CO2 emissions by four grams per kilometer and increase the driving range of electric vehicles by up to 5.5%. We also make people more comfortable and safer and protect the interiors of cars. And as Bentley has noted in their public presentations about the future of sunroof within Bentley, there is a greater need for SmartGlass too because of the movement towards fixed non-movable panoramic roofs in cars. Bentley noted that SPD-SmartGlass can reduce weight in the roof by up to 13 pounds and eliminate the need for 54 components. This reduces costs and further increases driving range and reliability while contributing to the stability of the car on the road. The first quarter of 2021 brought us a major new announcement in automotive. Cadillac announced in January that their new ultra-luxury all-electric flagship vehicle, the Celestiq, will be coming out and offering an SPD-SmartGlass roof that gives passengers the ability to control the amount of light coming in into four segments of the large panoramic roof on the Celestiq. They launched this flagship Celestiq at CES, and we're pleased to see that almost the entire video about this magnificent vehicle featured our SPD glass proof and subsequent articles have focused on our roofs as well. GM's all-electric strategy makes this development even more important to us. And I expect that there will be other car models within GM that use our technology using the Celestiq program as a platform for the development on many other cars within GM. And as was the case with Hyundai, the press has been speculating that this Celestiq will also come out sooner than originally expected. Because of this newsworthy event, since then, Research Frontiers has been interviewed by major automotive publications such as Automotive News, Autoline and Wards Automotive. These major automotive publications featured us and the benefits that we bring to cars, especially electric vehicles. Also, I just learned that we're appearing in Chapter 15 of the book Jetliner 7, which is the Bible on commercial aircraft interiors. These major publications featured us and the benefits that we bring into these vehicles, and some of these have helped us carry the message about all the benefits of SPD-SmartGlass broadly to key decision-makers in the automotive industry and the aircraft industry. And the media is helping us bring this message out just when all the major car companies in the world are going all electric. We're also moving into many new areas. One important new area that we moved into is the higher volume segment of the automotive market. With the lowering of the cost of our technology, new markets in automotive, such as the higher volume, mid-level market, are now working with us. And of course, the new fast-growing market of electric vehicles around the world, especially as pretty much every major automaker continues to announce their plans to become all-electric. And also new aircraft, such as the Airbus A220 VIP Jet. Airbus has already announced orders for 15 of these transportation category sized jets, and each of these A220 aircraft will have SPD electronically dimmable windows, covering 50 structural windows. In addition to the Airbus A220, there are a number of other new aircraft models that have not yet been announced by our licensees in the aircraft industry. These licensees are Vision Systems, InspecTech and Isoclima. The companies are really cool, by the way. I've seen some amazing designs that really need SmartGlass. Other new areas are more yachts, consumer electronics and architectural applications. And as I've mentioned in the past, the architectural market uses twice as much of the world's glass as the automotive market. Smart homes and buildings are potentially our largest market, as evidenced by the high valuations of some of our competitors aspiring for just on this market alone. And as many of you know from prior conference calls, with the opening of Gauzy's Stuttgart factory in the fourth quarter of 2019 and its current ability to make SPD film of 1.8 meters wide, this will allow us for the first time to practically address the large potential architectural market. That market has become very active and in connection with competitive bidding on some large architectural projects for SPD, we learned that we actually have gone from having a size disadvantage, I'm referring to the limitation on the Asahi film where they're only quoting 1 meter wide, to now having a size advantage over electrochromic since making these similar widths to the Gauzy film, 1.8 meters, but have limitations on the height of the window. And of course, the bigger and electrochromically it gets overall, the slower it gets, with 10 switching needing tens of minutes with electrochromic compared to two seconds or less with SPD, regardless of the size of our windows. I'm also pleased to announce to you today that even in the eight short weeks since our last conference call, Gauzy has made further improvements in the efficiency of their emulsion line in Israel and their firm coating line in Germany and even has made large investments to expand further their production capacity. Some of our other licensees on the end product side have also made production and capacity-enhancing investments. Now, let me address some questions that our shareholders have sent me via email before this call. We will cover many of these questions today, including some additional ones we've received. First question: Is the plant in Stuttgart, Germany closed or operational, and what is its maximum production? It's operational. There was a brief closure in late December and early January due to holiday shutdowns and COVID reasons, but it has since reopened. The maximum production capacity for that facility is one million square meters of SPD film. We are using a new product from Gauzy film instead of Hitachi film for many of the automotive developments we have discussed. I also want to recognize Gauzy for their participation in the China Glass event in Shanghai, which is a major glass industry event. Next question: Would it be easy to create a chemistry that achieves 90% light blockage in the off state? Would this chemistry result in a more neutral tone while still being about twice as dark as conventional architectural fixed tint? That's an excellent question. Essentially, can we configure the film to be less dark so that less blue light is transmitted when the film is clear? The answer is yes. If the film is very dark, no blue light will be visible at all. The blue appearance of windows is due to blue light and daylight being transmitted. By making the film coating thicker, we can reduce the bluish tint. The same applies when we make the film lighter. The answer to your question is affirmative. The Audi production line can accommodate a tolerance of plus or minus 1 micron, while the standard SPD film currently produced by Hitachi and Gauzy is 90 microns. Gauzy can address this and still collaborate with Hitachi for specific applications. Moving on to another question from Jared Albert: Would it benefit RFI if the Dynamic Glass Act became part of the Internal Revenue Code? Would it provide a 30% tax credit for SPD Glass not currently available for other forms in the U.S.? Are there tax credits for SPD leads in the U.S. or other subsidies elsewhere in the world? Is it likely that states will adopt tax credits if it passes nationally? Do you believe it will pass in its current form? That's a great question. It’s nearly impossible to predict political developments today, but this provision seems sensible. Dynamic glass, as defined in the pending Senate Bill, refers to glass that uses electricity to change its light-transmitting properties to heat or cool a structure. This provision has bipartisan support, increasing its chances of passing. This definition does apply to SPD technology, which is undoubtedly beneficial as it encourages energy-efficient upgrades in buildings through tax credits specifically targeting SPD. This recognition of dynamic glass as an energy-efficient feature represents a significant shift, and additional credit rules and demand management incentives from local utilities may support this mix of private and public partnerships. Lastly, I've received questions regarding a company called Nodis and their TruTint technology. Nodis is based in Singapore and recently relocated to Ohio as part of a technology incubator. They've raised a modest amount of capital. While they are a competitor to us and to Gauzy, every dynamic tint could potentially be a competitor, but many small startups struggle to advance beyond the lab stage. I did not find computer simulations on their website. The other thing I found interesting is that I met with them in 2018, and they sent me a presentation that surprisingly included many of our SPD projects, which they were claiming as their own. We asked them to stop that. Given that they have no working samples on their website and their presentations, even as recently as this past October, were using SPD instead of their own technology, it raises concerns about their claims. Moving to the next question, is there a schedule for Daimay to introduce its sun visor product? There are two timelines for the Daimay sun visor product. One is specifically tied to a vehicle with an auto manufacturer that is funding the development, allowing them to carry out the necessary corporate development. The second is the aftermarket, which could be released much sooner. So, there are two timelines to observe for that. I received a question from another shareholder about how to obtain SmartGlass for their homes. We have established a system that allows you to fill out a form with your details, including who you are, where your project is, and what it entails. This form is then sent to all the licensees capable of fulfilling that request. Most of our licensees are focused on commercial projects, but they can also handle residential projects, even if it’s not their primary focus initially. Another shareholder inquired about our stock price. I cannot comment specifically on our stock price, but I would like to highlight that we were included in the Russell 2000 last year, which led to approximately 3.1 million shares being purchased by funds targeting Russell 2000 companies. This is why there was a buying surge last April, May, and into June. However, we were rebalanced and subsequently reduced on that index. At the time, the requirement to be on the Russell was a market value of around $96 million, and our market value was about $116 million, so we were comfortably included last year. Due to recent market activities, including companies going public and the reliance on market value, the latest analysis shows that to be included in the Russell 2000 this year, a market value of approximately $248 million is needed, which is about 2.5 times last year's market value, influenced by various corporate activities. I believe part of our stock's decline over the past month or two is due to reports released by various research firms, which hedge funds may use for trading decisions. When they anticipate a company is performing well, they tend to buy the stock, similar to what we saw last year before our own performance was known. Conversely, if they expect a company to underperform, especially since many have reported losses this year, they will make that information public. I think that’s one reason for the decline. Another factor could be linked to the fact that, around this time, people’s personal assets are generally favorable. We have another question from long-time shareholders regarding the Q1 '21 call. If companies like Tesla or Apple were interested in acquiring Research Frontiers completely, including all intellectual property rights, could you give an estimate of what you would consider a fair price for the company? I appreciate the question. If we were to receive an acquisition offer, we have a duty to create a competitive bidding environment. We can't simply choose a buyer based on preference due to our fiduciary responsibilities under Delaware law; we need to seek the best possible price for our shareholders, which typically involves hiring investment bankers and obtaining valuation assessments. It's worth noting that in the smart glass market, there's a reference point of a company that has incurred losses of nearly $260 million this year with a market value around $1.8 billion. This indicates that the market holds smart glass companies and their potential in very high regard, which would certainly play a role in any decision regarding a buyout offer. Okay. Let me just ask our operator of our call to open up the conference to any live questions that we haven't answered already. And remember, if I have not fully answered any questions that were either emailed to us or in the live Q&A in our presentation, feel free to call or email me, and in some cases, I have cut questions a little bit short to leave time for more live questions today.

Unknown Analyst, Analyst

Joe, I'm curious about the advantages of SPD compared to other light control technologies. It seems that most companies in architectural glass are working with Sage or View. Would that be the reason, especially considering that Research Frontiers has reduced the price of the film?

Joseph Harary, President & CEO

You interrupted, but I believe we understood the question. To summarize, there are significant projects from View and Sage that they've been pursuing for years, the latest with Walmart, with a purchase price of $26 million. However, if they are investing heavily in each dollar of revenue, this project might cost them over $100 million. If they choose to take a loss of $75 million or $80 million on such projects, it's their choice, but it's not how we prefer to conduct business. The same applies to Sage. Some of our licensees competing against them are winning these bids due to SPD's superior performance in response speed, light transmission, the variety of glass laminators, and easier control system implementations. There are many advantages to selecting SPD, and the cost difference for using the best material is not significantly more than the heavily subsidized pricing offered by some competitors. Additionally, these competitors often pursue projects that take a long time to develop, sometimes one or two years, as seen in their announcement patterns. We are in a much better position in this regard. Just because we haven't announced certain projects yet doesn't mean we won't; we tend to wait until they are more developed. For instance, View announced a project about 14 or 16 months ago, then reiterated it in March. They typically announce initiatives as early as possible, likely to attract public market interest for fundraising.

Unknown Analyst, Analyst

I'm in South Florida, our market is on fire. And we hear a lot about smart homes and the builders here are becoming more and more acutely aware of the SmartGlass technology. So I'm wondering what our market penetration is like in the U.S. on the new smart home?

Joseph Harary, President & CEO

Well, funny you mentioned Florida. I was recently there, initially to discuss one project. It turned out to be three projects. And then a fourth one was added as I was leaving. So some of these could have a fairly major use of glass. And if you go down to the Miami, Aventura area, you can see all the construction going on there. And our licensees like down here actually handle some of those projects from a while ago with their PDLC projects, so they know all of the developers and the architects in that area as well. And they even opened up a special sales office in Aventura, which I had the opportunity to visit while I was down there. So there's a lot of activity, and you'll see a lot more of it.

Unknown Analyst, Analyst

So do you feel like we have a good exposure and presence in all of these new big buildings and the smart glass going in?

Joseph Harary, President & CEO

Yes. And I think what was happening, and I alluded to this earlier, Gary, is that part of the increase in activity is coming from the fact that we have two very active competitors that are creating more excitement in the market. And competition can be good. As a matter of fact, when Gauzy became a film licensee, Hitachi called and thanked me. They said this is really creating a lot of interest out there. And that's benefited Hitachi as well. So you have some benefits to having an active market with competitors spending tremendous amounts to market. But if you're an architect or a developer who wants a result, you're going to do your homework. And our licensees have been called in on the same projects that Sage and View have been pitching, and they're doing well. So if you're faced with a demonstration where a window takes 40 minutes to switch and another one takes 2 seconds to switch and if you're using a glass laminator you want for that. As long as there's not too much of a cost premium, that becomes a really compelling sales tool and our licensees are really good at presenting the benefits of that technology.

Unknown Analyst, Analyst

So hopefully, one of them may have a connection with the related companies that Steve brought down here in South Florida where he just mentioned all these ginormous projects that they're involved with. It will be a fantastic customer for us.

Joseph Harary, President & CEO

Yes. And we know the related companies from New York and from Florida. So a lot of good stuff happening.

Unknown Analyst, Analyst

A couple of questions. I know Gauzy, when they announced, it was first made up of Hyundai, back to 2020. They had indicated in an article that their first product would be a visor for their sunroof. Is there anything you could say on that? Would that kind of guidance still be holding true today?

Joseph Harary, President & CEO

I believe that in most automotive situations, the sunroof is a key area to focus on since it is a major source of heat entering the vehicle. This becomes especially relevant as we transition to fixed panoramic roofs that eliminate the complexity, cost, and maintenance difficulties associated with sliding roofs, while still providing an open-air experience. This ties back to Bentley’s vision for the future of sunroofs. It seems clear that sunroofs will remain a popular choice for smart glass technology. We are also observing automakers incorporating this technology in other areas, such as the windshield above the AS1 line, essentially creating an embedded sun visor. In SUVs, there is flexibility with what can be done behind the rear glass as well. Overall, sunroofs will likely continue to be a reliable option, showcasing clear advantages in controlling sunlight, particularly when dealing with larger sunroofs that can't utilize mechanical shades. Instead of relying on traditional shading solutions, using the glass itself to manage sunlight can be more effective.

Unknown Analyst, Analyst

I have one more question. We're seeing an increase in vehicles, particularly electric ones, that feature roofs made of curved glass. Can you clarify how curved glass compares to flat glass in terms of technology and costs? I've come across some articles suggesting that implementing curved glass may not be feasible, even though I know SPD can be integrated into curved glass.

Joseph Harary, President & CEO

Yes. The S-Class Coupe has a three-dimensional curved roof. And as you correctly pointed out, a lot of the designs that are coming out now in the electric vehicles also have very sleek, elegant curved lines including curved glass. That's one area where we're really good at compared to our competitors. Electrochromic is really flat glass only. And that's why you see it only in two areas. One is architectural where glass is basically flat. And in aircraft, also where the non-structural window is also flat.

Operator, Operator

And we have a question from Alan Denver.

Unknown Analyst, Analyst

I'm curious about Gauzy. Are you aware of any potential plans they have for going public? What do you think the likelihood is of that happening, even if they haven't indicated anything to you?

Joseph Harary, President & CEO

If I had details about specific plans, I wouldn't be able to discuss them. However, I believe it's a natural progression for their company to become a publicly traded smart glass company, especially considering that companies like View currently have a market value of $1.8 billion. If you compare our business or Gauzy's business to View's, you would see that we are stronger companies. I have great respect for Rao Mulpuri at View, but they face significant challenges. They have high costs and some limitations. Although they're good at raising funds, that market seems to have dried up. Recently, when asked about their transactions, he mentioned that going public was a possibility, which indicates they are in need of capital.

Unknown Analyst, Analyst

Yes. Well, maybe if they made a deal with you first, that would make the company a little more attractive to the public market.

Joseph Harary, President & CEO

We welcome everyone. And companies that are competitors of ours in the past have become part of us.

Operator, Operator

And our final question comes from Leonard Lisa.

Unknown Analyst, Analyst

I was just listening to your earlier comment about the amount of cash that the company has with probably carrying through to the third quarter...

Joseph Harary, President & CEO

Towards the end of 2023.

Unknown Analyst, Analyst

Yes. And, I think, judging from the way you said that you think we would positive cash flow by the way things are going now. However, as I was looking, there are options outstanding currently from previous activities. And if those were exercised, which should be, they will be, if the stock moves higher, that would raise an additional $7 million almost anyhow. So you wouldn't need any outside financing. Or you don't factor that?

Joseph Harary, President & CEO

That's exactly correct. We don't factor that into calendar months, because you can't predict your own stock price and whatever, some warrants and the options would be in the money. But I think it's a safe bet. And you've seen recently options have been exercised also beginning this year.

Unknown Analyst, Analyst

Yes. So I don't think cash for the company is needed with all those activities that's going on now. We're going to be looking at...

Joseph Harary, President & CEO

Yes, if we did something, Len, then it would be first strategically, not for the need for capital.

Unknown Analyst, Analyst

Yes. Okay. Well, that's what I was just looking at...

Joseph Harary, President & CEO

Yes, one of the things I love is the fact that Hyundai made an excellent investment in Gauzy because that's a strategic investor that now has an invested interest in the success of SPD-SmartGlass. And they need to do something about it. They're car makers. So I want those kinds of investments, those are really good ones.

Unknown Analyst, Analyst

Is the activity over in Asia? Is it different from here? I mean, they're very busy. I know they may manufacture lots of cars for exporting, but I think their market alone is very good over there. So I wouldn't think the delay in chips are bothering their market at all. So we should see things going forward here pretty quickly like you said.

Joseph Harary, President & CEO

Right. And in other sense, I mean, Volkswagen just today announced huge profits, 4-point something billion, and it's basically because of the strength of the premium car market. So they're making money in car companies now.

Operator, Operator

And we have some additional questions. This is from Seth Nickerson.

Unknown Analyst, Analyst

I know you don't like to discuss this because it's public. However, I came across a discussion on a public forum regarding a military contract. I'm not sure if you want to address it, but there were many details shared in that discussion.

Joseph Harary, President & CEO

I'm not familiar with the post. So I can't really comment on it. And if you want to share a little bit more, I'd be happy to listen...

Unknown Analyst, Analyst

Microsoft patent has mentioned SPD, 118 with the military.

Joseph Harary, President & CEO

As I said in the past, you can get a good idea of where the activity is, even if it hasn't been announced, by following who's mentioning us in their patents. You see it in Hyundai; you see it in Apple. You see it pretty much in a lot of major companies out there have all mentioned us on their patents and it gives you an idea of what they're looking at.

Unknown Analyst, Analyst

The contract said I think 40,000 units initially and then 120,000. Sounds a little significant. I mean, it's not big, but it's not small.

Joseph Harary, President & CEO

Yes. The advantage of our business is that we do not need to invest in capital expenditures to enter those markets. Our licensees have the ability to handle that, and we can produce sufficient film for this purpose. It is a favorable business model, as we avoid the risks associated with vertically integrated manufacturing companies like View, where various issues can arise.

Operator, Operator

And we have a question from Gary Carroll.

Unknown Analyst, Analyst

Joe, I'm back again.

Joseph Harary, President & CEO

You want to go after the property that they're building in Florida that you just mentioned? Okay.

Unknown Analyst, Analyst

No, I'm not looking at exactly that, no.

Joseph Harary, President & CEO

To drive by. Okay.

Unknown Analyst, Analyst

I want to just drive by it. Actually, as a fairly recent investor in the company, I would like a clarification as part of my ignorance, but what exactly is the relationship between Research and Gauzy?

Joseph Harary, President & CEO

So aside from both being in the smart glass industry with a shared belief in the importance of performance and quality, we immediately connected. We both agree that the best-performing technology is crucial, and there should be no compromises on performance and quality. The formal relationship is that Gauzy is a licensee of ours and is authorized to produce SPD film for the entire industry. They can sell this film to companies like Asahi for automotive applications, Vision Systems for trains, or InspecTech for aircraft. They play a key role as our licensed supplier for the industry and also hold an implied license for architectural applications, allowing them to create parts using plexiglass. However, their primary focus is on being a film manufacturer and a materials science company, which highlights their strategic importance. They are also a pleasure to work with.

Operator, Operator

We have no further questions in queue.

Joseph Harary, President & CEO

Thank you, Paul. I would like to share some closing thoughts. Over the last six months, we've gained deeper insights into our competitors' activities. View has reported significant losses, rising costs relative to their revenue, and their market value has decreased since going public in March. Despite this, with a valuation of $1.8 billion, their market value remains significantly higher than that of Research Frontiers, indicating that investors value smart glass highly. View primarily targets the architectural market, a sector we have just begun to explore, yet we are already achieving success. Additionally, we are active in several major markets where they have no presence, including automotive, aircraft, marine, museums, and consumer electronics, further enhancing our market and revenue potential. In the architectural sector, View's electrochromic glass takes 20 to 40 minutes to switch, while our SPD-SmartGlass can switch in just two seconds, regardless of size. This doesn't necessarily imply View has a faulty business model or technology; the future will reveal that. For now, we can confidently assert that our business model differs and we take pride in our leadership and achievements in the smart glass sector. At the conclusion of our last conference call, I highlighted several areas where we have either been first or the only company to reach significant milestones within our industry, which amounted to numerous points taking over five pages to document. We are experiencing traction not only in View's primary architectural market but also in spaces they are not involved in, such as automotive, with new vehicles integrating our technology, and exciting developments in aircraft with our SPD smart windows. We also see applications in marine glass, consumer electronics, and museum display systems. Today’s call covered our operations across these markets and what we anticipate in the coming year. Now, regarding research comparisons and investments, I want to share feedback from an institutional investor who appreciates the diversity of the markets we operate in, including automotive, aircraft, green buildings, boats, and consumer electronics. They value our positioning as an ESG company, making us increasingly attractive in today's investment landscape. Through our licensees, we are the only smart window company with a significant presence across all these markets. Investors commend our established cutting-edge technology, proven through real-world applications in tens of thousands of cars, boats, planes, and buildings. Over six million people have experienced our SPD-SmartGlass—a figure that continues to rise. Our business model avoids heavy capital expenditures, consistent operational losses, or large payrolls. How do you assess this? Our industry now has a public valuation benchmark in the smart window sector; last checked, View holds a market value of $1.8 billion while being active in only one of the five markets we serve. We're pleased to provide smart glass industry investors with a comparative basis for shareholder value and operational efficiency. In these areas, alongside the superior performance of our SPD technology, our company delivers significantly more value, stability, and efficiency to our shareholders. Given our presence in five markets, we are positioned to offer even greater value, especially with the rapid growth of electric vehicles and energy-efficient buildings. We are gaining traction not just in automotive and aircraft, but also in consumer electronics and architectural markets where our SPD-SmartGlass is chosen for its superior performance and quality. In the past year, we doubled the number of automakers featuring SPD-SmartGlass in their vehicles, with two new manufacturers publicly supporting our technology, along with interest from one of the largest aircraft manufacturers. More announcements are anticipated from our customers and licensees. We have been advocating the advantages of SPD-SmartGlass across various sectors for several years. As the world shifts towards greener solutions, we enhance buildings' energy efficiency and improve comfort and safety for occupants. Our projects in architecture showcase unique designs enabled by smart glass technology. The shift toward electric vehicles will allow our SPD-SmartGlass technology to extend vehicle range, improve safety, enhance comfort, and create remarkable experiences for drivers and passengers. Let me conclude with some statistics: The future of transportation is approaching rapidly. This year, Research Frontiers' President mentioned that we will see 30 electric vehicles from 21 brands, up from 17 EV models in 2020. The Boston Consulting Group predicts that EVs will make up over half of light vehicle sales by 2026. As investors, you are integral to this green building and electric vehicle future. Thank you for your support, and I look forward to our next conference call.

Operator, Operator

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