What changed in this filing

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Item 9A. Controls and Procedures

2024-03-07 compared with 2023-03-09 · 128 added, 150 removed, 843 unchanged (25% of the section changed)

83 unchanged sentences

33-5573NY), declared effective by the Commission on July 8, 1986, and incorporated herein by reference.

Restated and amended Stockholder

Protection Rights Agreement between Research Frontiers Incorporated and Continental Stock Transfer & Trust Company, as Rights

Agent, dated February 11, 2023 - Filed herewith.

Rights Agreement dated as of February 18, 2003 between Research Frontiers Incorporated and Continental Stock Transfer & Trust Company, as Rights Agent, which includes as Exhibit A thereto the Form of Rights Certificate.

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Frontiers Incorporated

on the Financial Statements

have audited the accompanying consolidated balance sheets of Research Frontiers Incorporated (the “Company”) as of

December 31, 2022 and 2021, and the related consolidated statements of operations, shareholders’ equity and cash flows for

each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Research Frontiers Incorporated and subsidiary (the “Company”)

as of December 31, 2023 and 2022, and the related consolidated statements of operations, shareholders’ equity, and cash flows for

each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the

United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years

in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial report, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

We determined that there were no critical matters.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

CohnReznick LLP

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31, 2023 and 2022

December 31, 2022

December 31, 2021

and cash equivalents

receivable, net of reserves of $ 1,253,450 in 2023 and $ 1,158,450 in 2022

expenses and other current assets

current assets

Cash and cash equivalents

Marketable securities

Royalties receivable, net of reserves of $ 1,158,450 in 2022 and $ 1,016,678 in 2021, respectively

Prepaid expenses and other current assets

Total current assets

Fixed assets, net

Operating lease ROU assets

Deposits and other assets

Liabilities and Shareholders’ Equity

lease ROU assets

and other assets

and Shareholders’ Equity

portion of operating lease liability

expenses and other

current liabilities

Current portion of operating lease liability

Accounts payable

Accrued expenses and other

Total current liabilities

Operating lease liability, net of current portion

Total liabilities

Shareholders’ equity:

Common stock, par value $ 0.0001 per share;

authorized 100,000,000 shares, issued and outstanding 33,150,396 in 2022 and

31,650,396 in 2021

Additional paid-in capital

Accumulated deficit

lease liability, net of current portion

Shareholders’

stock, par value $ 0.0001 per share;

authorized 100,000,000 shares, issued and outstanding 33,509,287 in 2023 and 33,150,396 in

paid-in capital

( 124,264,841 )

( 122,356,477 )

Total shareholders’ equity

Total liabilities and shareholders’ equity

shareholders’ equity

liabilities and shareholders’ equity

accompanying notes to consolidated financial statements.

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( 2,625,130 )

Net investment loss

Net investment income (loss)

$ ( 1,908,364 )

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ended December 31, 2023 and 2022

Balance, January 1, 2021

Additional Paid-in

Balance, December 31, 2021

$ 123,467,886

$ ( 119,687,128 )

Exercise of options

Share-based compensation

Issuance of common stock and warrants

( 2,669,349 )

3 unchanged sentences

( 122,356,477 )

Exercise of warrants

Share-based compensation

Issuance of common stock and warrants

( 1,908,364 )

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Depreciation and amortization

Realized loss on marketable securities

Unrealized loss on marketable securities

Realized (gain) loss on marketable securities

Share-based compensation

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( 5,434,386 )

Sales of marketable securities

Net cash used in investing activities

( 2,784,710 )

Sales and maturities of marketable securities

Net cash provided by investing activities

Cash flows from financing activities:

Net proceeds from exercise of options and warrants

Net proceeds from exercise of warrants

Proceeds from issuance of common stock and warrants

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 1,754,958 )

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for any non-recurring cash expenses 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 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 at least 12 months from the issuance of these financial statements.

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 at least 12 months from the issuance of these financial statements.

the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required

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To date, the Company has not generated sufficient revenue from its licensees to fund its operations.

Global Events:

March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and

recommended containment and mitigation measures worldwide.

2020 revenues have been negatively impacted due to delays in manufacture of products using our technology.

Most of the products using

our technology are manufactured by licensees overseas in Europe and Asia who have been similarly affected by the pandemic.

The disruption

caused by public health crises, such as COVID-19, could result in lower levels of sale activity for products using our technology resulting

in lower level of royalties owed to us from the sale of these products.

The duration of the potential business disruptions and related

financial impact cannot be reasonably estimated at this time, but could materially adversely affect our business, financial condition,

results of operations, and cash flows.

amounts in the accompanying December 31, 2021 statements of cash flows have been reclassified to conform with the December 31, 2022 presentation.

Summary of Significant Accounting Policies

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Amounts on deposit in excess of federally insured limits

at December 31, 2022 and 2021 are approximately $ 2.7 million and $ 0 , respectively.

at December 31, 2023 and 2022 are approximately $ 1.2 million and $ 2.7 million, respectively.

Marketable Securities

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measurement date.

December 31, 2022, the Company invested only in investments qualified as cash and cash equivalents.

During the year ended December 31,

2022, the Company incurred a realized loss on the sale of marketable securities of $ 60,143 .

At December 31, 2021 all investments are

Level 1 and were classified as trading and consisted of the following:

Schedule of Unrealized Loss on Investments

December 31, 2021

Value of trading

Putnam Short Duration Bond

Putnam Ultra Short Duration Income

Unrealized loss

December 31, 2023 and 2022, the Company invested only in investments qualified as cash and cash equivalents.

During the years ended December

31, 2023 and 2022, the Company incurred a realized gain (loss) on the sale and maturities of marketable securities of $ 57,149 and $ ( 60,143 ) ,

respectively.

Royalties Receivable

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collection have been exhausted and the potential for recovery is considered remote.

As of December 31, 2023, three companies accounted

for 17 %, 12 % and 10 % of the Company’s outstanding receivables.

As of December 31, 2022, one company accounted for

14 % of the Company’s outstanding receivables.

As of December 31, 2021, two companies accounted for 14 % and 11 % of the Company’s

outstanding receivables.

assets are carried at cost less accumulated depreciation and amortization.

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continuing performance obligations going forward.

The Initial Term of this agreement will end as of December 31, 2024, The Company

currently expects this agreement will renew annually at the end of the Initial Term.

As of December 31, 2022, the aggregate amount

of the revenue to be recognized upon the satisfaction of the remaining performance obligations for this license agreements is $ 123,000 .

The revenue for the remaining performance obligations for this license agreement is expected to be recognized evenly throughout the

The Initial Term of this agreement will end as of December 31, 2024, The Company currently

expects this agreement will renew annually at the end of the Initial Term.

As of December 31, 2023, the aggregate amount of the revenue

to be recognized upon the satisfaction of the remaining performance obligations for this license agreements is $ 100,000 .

for these remaining performance obligations for each of the three license agreements is expected to be recognized evenly throughout their

remaining period of the Initial Term.

the years ended December 31, 2022 and 2021, the Company entered into a number of license agreements covering its light control technology.

The Company received minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition

each quarter.

In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional

fee income as the amounts have been earned.

Certain of the fees are accrued by, or paid to, the Company in advance of the period in which

they are earned resulting in deferred revenue.

Such excess amounts are recorded as deferred revenue and are typically recognized as fee

income when earned.

the years, the Company has entered into a number of license agreements covering its light control technology.

The Company received

minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition each quarter.

In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional fee

income as the amounts have been earned.

Certain of the fees are accrued by, or paid to, the Company in advance of the period in

which they are earned resulting in deferred revenue.

Such excess amounts are recorded as deferred revenue and are typically

recognized as fee income when earned.

As of December 31, 2023 and 2022, there was no balance in deferred revenue.

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The Company is not currently being audited by any tax jurisdiction.

Equity-Based Compensation

Share-Based Compensation

recognize all stock-based compensation as an expense in the consolidated financial statements and such costs are measured at the fair

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Trade show materials

Life of lease or estimated

Leasehold improvements

life of asset if shorter

Life of lease or estimated life of asset if shorter

Less accumulated depreciation

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Accrued Expenses and Other

expenses consist of the following at December 31, 2022 and 2021:

expenses and other consist of the following at December 31, 2023 and 2022:

Schedule of Accrued Expenses and Other

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five years if the R&D activities are performed in the U.S., or over 15 years if the activities were performed outside the U.S.

tax reporting purposes, the Company capitalized $ 609,000 of R&D expenses incurred as of December 31, 2022.

tax reporting purposes, the Company capitalized $ 583,000 and $ 609,000 of R&D expenses incurred as of December 31, 2023 and 2022,

respectively.

August 16, 2022, The Inflation Reduction Act (“IRA”) was signed into law in the United States.

Among other provisions,

the IRA includes a 15 %

corporate minimum tax rate which applies to certain large corporations and a 1 %

excise tax on corporate stock repurchases made after December 31, 2022.

We do not expect the IRA to have a material impact on our

consolidated financial statements.

Among other provisions, the

IRA includes a 15 % corporate minimum tax rate applies to certain large corporations and a 1 % excise tax on corporate stock repurchases

made after December 31, 2022.

We do not expect the IRA to have a material impact on our consolidated financial statements.

tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2023 and 2022

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Lease liability

Other temporary differences

Total gross deferred tax liabilities

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Common Stock and Warrants

2021, the Company received proceeds of $ 86,262 and issued 74,610 shares of common stock in connection with the exercise of outstanding

options and warrants.

In addition, during February 2023, the Company received proceeds of $ 484,503 and issued 358,891 common shares in connection

with the exercise of outstanding warrants.

September 16, 2022, the Company entered into subscription agreements from a group of private accredited investors to sell them 2.0

million shares of common stock of the Company at a price of $ 2.30 per share (which represents the closing market price of the

Company’s common stock on September 14, 2022 which was the date that the transaction was agreed to).

As of December 31,

2022, the Company received $ 3,450,000 under these subscription agreements and has issued 1,500,000 common shares and issued

1,500,000 warrants.

In addition, the Company expects to receive the remaining $ 1,150,000 under these subscription agreements in

The shares were issued to the investors in a private placement and, along with the shares issued in

connection with the exercise of any warrants in the future, are not registered and therefore currently subject to at least a

six-month holding period by the investor.

September 16, 2022, the Company entered into subscription agreements from a group of private accredited investors to sell them 2.0 million

shares of common stock of the Company at a price of $ 2.30 per share (which represents the closing market price of the Company’s

common stock on September 14, 2022 which was the date that the transaction was agreed to).

As of December 31, 2022, the Company received

$ 3,450,000 under these subscription agreements and has issued 1,500,000 common shares and issued 1,500,000 warrants.

In addition, the

Company has an outstanding commitment from a potential investor for the remaining $ 1,150,000 under these subscription agreements.

Company did not sell any other equity securities during the years ended December 31, 2023 and 2022.

shares were issued to the investors in a private placement and, along with the shares issued in connection with the exercise of any warrants

in the future, are not registered and therefore currently subject to at least a six-month holding period by the investor.

Options and Warrants

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were available for issuance under this plan as of December 31, 2023.

the discretion of the Board of Directors, options expire in ten years or less from the date of grant and are generally fully exercisable

the discretion of the Board of Directors, options expire in 10 years or less from the date of grant and are generally fully exercisable

upon grant but in some cases may be subject to vesting in the future.

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Schedule of Option Activity

Number of Shares Subject to Option

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (Years)

Number of Shares

Subject to Option

Weighted Average

Exercise Price

Weighted Average Remaining

Aggregate Intrinsic Value

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Schedule of Warrant Activity

Number of Shares Underlying Warrants Granted

Weighted Average Exercise Price

Number of Shares

Weighted Average

Warrants Granted

Exercise Price

Balance at January 1, 2022

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Schedule of Minimum Annual Future Rental Commitments

lease payments

Total lease payments

imputed lease interest

value of lease liabilities

Present value of lease liabilities

February 2013, the Company’s Board of Directors adopted a Stockholders’ Rights Plan (the “Rights Plan”) and declared

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A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request.

Related Party

June 4, 2023, the Chairman and CEO of Gauzy, Ltd., one of the Company’s licensees, joined the Board of the Company.

license agreement has been in effect since September 17, 2017 and provides for minimum annual royalties and earned royalties relating

to sales of SPD-SmartGlass architectural window products.

Because the Company collects a 10 - 15 % percentage royalty from the higher-priced

end product sales by Gauzy’s customers purchasing their SPD-Smart light control film, under its license agreement with Gauzy, the

Company does not collect a royalty on sales by Gauzy of SPD-Smart light control film to these licensee customers.

In addition, the Company’s

licensee Vision Systems, Inc.

is a 100 % owned subsidiary of Gauzy, Ltd.

For years ended December 31, 2023 and 2022, fee income related

to Gauzy and Vision Systems represented 18 % and 31 %, respectively, of the Company’s total fee income.

In addition, as of December

31, 2023 and 2022, the Company’s accounts receivable from Gauzy and Vision Systems represented 8 % and 9 %, respectively, of the

Company’s total royalty receivables, before reserves.

In January 2024 these receivables were paid in full by Gauzy and Vision

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures