RESEARCH FRONTIERS INC
For the period ended Dec 31, 2024. Filed Mar 6, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 6, 2025
REFR$0.37-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-07.
0001493152-24-009207
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0001493152-25-009377
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 39 previous paragraphs and 36 current paragraphs.
21 unchanged; 13 reworded; 2 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Critical Accounting Policies and Estimates
Current report
The Company recorded $35,152 of other income during the year ended December 31, 2024 relating to an Employee Retention Credit, a refundable payroll tax credit available under the Coronavirus Aid, Relief, and Economic Security Act (“Cares Act”) that was designed to keep employees on the payroll during the COVID-19 pandemic.
Removed paragraphs (5)
Previous report
Critical Accounting Estimates
Previous report
The Company has historically used the Black-Scholes option-pricing model to determine the estimated fair value of each option grant. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest rates. These assumptions reflect our best estimates, but these items involve uncertainties based on market conditions generally outside of our control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Furthermore, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years.
Previous report
On occasion, the Company may issue to consultants either options or warrants to purchase shares of common stock of the Company at specified share prices. These options or warrants may vest based upon specific services being performed or performance criteria being met. In accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, the Company is required to record consulting expenses based upon the fair value of such options or warrants on the earlier of the service period or the period that such options or warrants vest as determined using a Black-Scholes option pricing model and are marked to market quarterly using the Black-Scholes option valuation model.
Previous report
Because the Company’s license agreements typically provide for the payment of royalties by a licensee on product sales within 45 days after the end of the quarter in which a sale of a licensed product occurs (with some of the Company’s more recent license agreements providing for payments on a monthly basis), and because of the time period which typically will elapse between a customer order and the sale of the licensed product and installation in a home, office building, automobile, aircraft, boat or any other product, there could be a delay between when economic activity between a licensee and its customer occurs and when the Company gets paid its royalty resulting from such activity.
Previous report
The consolidated financial statements listed in Item 15(a)(1) and (2) are included in this report beginning on page F-1.
Reworded paragraphs (13)
Previous wording
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. An example of a critical estimate is the full valuation allowance for deferred taxes that was recorded based on the uncertainty that such tax benefits will be realized in future periods.
Current wording
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.
Previous wording
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606,Revenue from Contracts with Customers. The Company determined that its license agreements provide for three performance obligations: (i) Grant of Use, (ii) Technical Support, and (iii) New Improvements.
Current wording
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”. The Company determined that its license agreements provide for three performance obligations: (i) Grant of Use, (ii) Technical Support, and (iii) New Improvements.
Previous wording
Royalty receivables are stated less allowance for doubtful accounts. The allowance represents estimated uncollectible receivables usually due to licensees’ potential insolvency. The allowance includes amounts for certain licensees where risk of default has been specifically identified. The Company evaluates the collectability of its receivables on at least a quarterly basis and records appropriate allowances for uncollectible accounts when necessary.
Current wording
Royalty receivables are stated less allowance for credit losses. The allowance represents estimated uncollectible receivables usually due to licensees’ potential insolvency. The allowance includes amounts for certain licensees where risk of default has been specifically identified. The Company evaluates the collectability of its receivables on at least a quarterly basis and records appropriate allowances for credit losses when necessary.
Previous wording
The Company’s fee income from licensing activities for the year ended December 31, 2023 was $909,598 compared to $539,686 for the year ended December 31, 2022. This increase in fee income in 2023 by $369,912, an increase of 69%, was primarily the result of higher royalties from the automotive markets, an increase by 178%, as compared to 2022. The Company expects revenue in all market segments to increase further as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market.
Current wording
The Company’s fee income from licensing activities for the year ended December 31, 2024 was $1,335,531 compared to $909,598 for the year ended December 31, 2023. This increase in fee income in 2024 by $425,933, an increase of 47%, was primarily the result of higher royalties from the automotive and aircraft markets, an increase by 48%, as compared to 2023. The Company expects revenue in all market segments to increase further as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market.
Previous wording
Operating expenses decreased by $196,055 for the year ended December 31, 2023 to $2,359,634 from $2,555,689 for the year ended December 31, 2022. The decrease is the result of lower compensation and related costs ($65,000), as well as lower patent ($56,000), lower bad debts ($47,000), lower director costs ($37,000) and lower investor relations costs ($18,000) partially offset by higher legal and professional fees ($30,000). Operating expenses for the years ended December 31, 2023 and 2022 include $137,000 and $216,000, respectively, of non-cash charges for options granted to employees and directors.
Current wording
Operating expenses decreased by $152,237 for the year ended December 31, 2024 to $2,207,397 from $2,359,634 for the year ended December 31, 2023. The decrease is the result of lower credit loss expense ($70,000), lower marketing and investor relations costs ($59,000), lower patent costs ($45,000) as well as lower legal and professional fees ($37,000), partially offset by higher foreign taxes withheld on payments received from foreign licensees ($34,000). Operating expenses for the years ended December 31, 2024 and 2023 include $84,000 and $137,000, respectively, of non-cash charges for stock options granted to employees and directors.
Previous wording
Research and development expenditures decreased by $25,861 for the year ended December 31, 2023 to $583,266 from $609,127 for the year ended December 31, 2022. This decrease was the result of lower allocated facility costs ($22,000) as well as lower compensation and related costs ($20,000) partially offset by higher materials costs ($12,000) and higher allocated insurance costs ($5,000). Research and development costs include non-cash charges for options granted to employees of $8,000 and $16,000 in 2023 and 2022, respectively.
Current wording
Research and development expenditures decreased by $13,259 for the year ended December 31, 2024 to $570,007 from $583,266 for the year ended December 31, 2023. This decrease was the result of lower materials costs ($15,000), lower allocated insurance costs ($14,000) partially offset by higher allocated facility costs ($17,000). Research and development costs include non-cash charges for stock options granted to employees of $5,000 and $8,000 in 2024 and 2023, respectively.
Previous wording
The Company’s net investment income for the year ended December 31, 2023 was $124,938 as compared to a net investment loss of $44,219 for the year ended December 31, 2022. This difference was primarily due to changes in market values of a marketable security and higher interest rates paid on investments.
Current wording
The Company’s net investment income for the year ended December 31, 2024 was $95,339 as compared to net investment income of $124,938 for the year ended December 31, 2023. This difference was primarily due to changes in interest rates paid on money market accounts and gain on sale of investments of $57,149 during the year ended December 31, 2023, as well as lower cash balances available for investment.
Previous wording
As a consequence of the factors discussed above, the Company’s net loss was $1,908,364 ($0.06 per common share) for the year ended December 31, 2023, which was $760,985 (29%) lower than the net loss of $2,669,349 ($0.08 per common share) for the year ended December 31, 2022.
Current wording
As a consequence of the factors discussed above, the Company’s net loss was $1,311,382 ($0.04 per common share) for the year ended December 31, 2024, which was $596,982, (31%) lower than the net loss of $1,908,364 ($0.06 per common share) for the year ended December 31, 2023.
Previous wording
The Company has primarily utilized its cash, cash equivalents, marketable securities, and proceeds from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development, for marketing initiatives, and for other working capital purposes. The Company’s working capital and capital requirements depend upon numerous factors, including, but not limited to, the results of research and development activities, competitive and technological developments, the timing and costs of patent filings, and the development of new licensees and changes in the Company’s relationship with existing licensees. The degree of dependence of the Company’s working capital requirements on each of the foregoing factors cannot be quantified; increased research and development activities and related costs would increase such requirements; the addition of new licensees may provide additional working capital or working capital requirements, and changes in relationships with existing licensees would have a favorable or negative impact depending upon the nature of such changes.
Current wording
The Company has primarily utilized its cash, cash equivalents and proceeds from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development, for marketing initiatives, and for other working capital purposes. The Company’s working capital and capital requirements depend upon numerous factors, including, but not limited to, the results of research and development activities, competitive and technological developments, the timing and costs of patent filings, and obtaining new licensees and changes in the Company’s relationship with existing licensees. The degree of dependence of the Company’s working capital requirements on each of the foregoing factors cannot be quantified; increased research and development activities and related costs would increase such requirements; the addition of new licensees may provide additional working capital or working capital requirements, and changes in relationships with existing licensees would have a favorable or negative impact depending upon the nature of such changes.
Previous wording
During 2023, the Company’s cash and cash equivalents balance decreased by $1,754,958 principally as a result of cash generated from the exercise of warrants of $484,502 as well as cash generated from the sale and maturities of marketable securities of $5,491,535 offset by cash used for operations of $2,295,051 and cash used for the purchase of marketable securities of $5,434,386 and for the purchase of property and equipment of $1,558. At December 31, 2023, the Company had cash and cash equivalents of $2.5 million, working capital of $3.3 million and total shareholders’ equity of $3.5 million. Our quarterly projected cash flow shortfall, based on our current operations, adjusted for any non-recurring cash expenses for the next 12 months and adjusted for additional royalties expected to be received for use of our products in new production, for the next 12 months, is approximately $200,000 to $250,000 per quarter. We may eliminate some operating expenses in the future, which will further reduce our cash flow shortfall if needed. Based on these assumptions, we currently expect to have sufficient working capital for more than the next five years of operations.
Current wording
During 2024, the Company’s cash and cash equivalents balance decreased by $481,772 principally as a result of cash used for operations of $788,819 and for the purchase of property and equipment of $1,623, partially offset by cash generated from the issuance of capital stock and warrants of $300,000 as well as cash generated from the exercise of options of $8,670. At December 31, 2024, the Company had cash and cash equivalents of $2.0 million, working capital of $2.5 million and total shareholders’ equity of $2.6 million. Based on current operations, we expect to have sufficient working capital for more than the next five years of operations.
Previous wording
The Company expects to use its cash to fund its research and development of SPD light valves, its expanded marketing initiatives, and for other working capital purposes. The Company believes that its current cash and cash equivalents would fund its operations for more than the next five years. There can be no assurances that expenditures will not exceed the anticipated amounts or that additional financing, if required, will be available when needed or, if available, that its terms will be favorable or acceptable to the Company. The eventual success of the Company and generation of positive cash flow will be dependent upon the extent of commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof. To date, the Company has not generated sufficient revenue from its licensees to fully fund its operations.
Current wording
The Company expects to use its cash to fund its research and development of SPD light valves, its expanded marketing initiatives, and for other working capital purposes. The Company believes that its current cash and cash equivalents would fund its operations for more than the next five years. There can be no assurances that expenditures will not exceed the anticipated amounts or that additional financing, if required, will be available when needed or, if available, that its terms will be favorable or acceptable to the Company. The eventual success of the Company and generation of positive cash flow will be dependent upon the extent of commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof.
Previous wording
During 2022, the Company’s cash and cash equivalents balance increased by $3,960,952 principally as a result of cash generated from the sale of common stock and warrants of $3,450,000 as well as cash generated from the sale of marketable securities of $2,694,968 partially offset by cash used for operations of $2,182,745 and cash used for the purchase of property and equipment of $1,271. At December 31, 2022, the Company had cash and cash equivalents of $4.2 million, working capital of $4.6 million and total shareholders’ equity of $4.8 million.
Current wording
During 2023, the Company’s cash and cash equivalents balance decreased by $1,754,958 principally as a result of cash generated from the exercise of warrants of $484,502 as well as cash generated from the sale and maturities of marketable securities of $5,491,535 offset by cash used for operations of $2,295,051 and cash used for the purchase of marketable securities of $5,434,386 and for the purchase of property and equipment of $1,558. At December 31, 2023, the Company had cash and cash equivalents of $2.5 million, working capital of $3.3 million and total shareholders’ equity of $3.5 million.
Previous wording
The Company has operating leases for certain facilities and equipment with a weighted average remaining lease term of 1.3 years as of December 31, 2023. The maturities over time of the operating lease obligations as of December 31, 2023 were as follows:
Current wording
The Company has an operating lease for its facility with a remaining lease term of 7.0 years, including renewal options as of December 31, 2024. The maturities over time of the operating lease obligations as of December 31, 2024 were as follows: