What changed in this filing

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Item 9A. Controls and Procedures

2025-03-06 compared with 2024-03-07 · 254 added, 212 removed, 759 unchanged (38% of the section changed)

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Supplemental Data” of this Report.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB # 596 )

Financial Statements:

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Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and incorporated herein by reference.

Sixth Amendment to Lease dated May 16, 2016 between the Company and CLK-HP 230-240 CROSSWAYS PARK LLC and LAKE PARK 230-240 CROSSWAYS PARK LLC.

Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Seventh Amendment to Lease dated November 18, 2024 between the Company and CLK-HP 230-240 CROSSWAYS PARK LLC and LAKE PARK 230-240 CROSSWAYS PARK LLC.

Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Agreement effective as of August 2, 1995 between the Company and General Electric Company.

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Executive Compensation Plan or Arrangement.

Form 10-K Summary

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed

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as of December 31, 2024 and 2023, 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 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.

the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2024 and 2023 and the results of its operations and its cash flows for the years then ended, in conformity with accounting

principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s

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 the U.S.

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.

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31, 2024 and 2023

and cash equivalents

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

expenses and other current assets

December 31, 2024

December 31, 2023

Current assets:

lease ROU assets

and other assets

and Shareholders’ Equity

portion of operating lease liability

expenses and other

Cash and cash equivalents

Royalties receivable, net of reserves of $ 1,253,450 in 2024 and 2023, 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

Current liabilities:

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

Current portion of operating lease liability

Accounts payable

Accrued expenses

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

33,648,221 in 2024 and 33,509,287 in 2023

Additional paid-in capital

Accumulated deficit

( 125,576,223 )

( 124,264,841 )

shareholders’ equity

liabilities and shareholders’ equity

Total shareholders’ equity

Total liabilities and shareholders’ equity

accompanying notes to consolidated financial statements.

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( 2,033,302 )

Net investment income (loss)

Net investment income

$ ( 1,311,382 )

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ended December 31, 2024 and 2023

Additional Paid-in

Balance, December 31, 2022

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$ ( 122,356,477 )

Exercise of warrants

Share-based compensation

Issuance of common stock and warrants

( 1,908,364 )

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( 124,264,841 )

Exercise of warrants

Exercise of options

Share-based compensation

Issuance of common stock and warrants

( 1,311,382 )

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$ ( 125,576,223 )

accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

FRONTIERS INCORPORATED

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$ ( 1,908,364 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Realized (gain) loss on marketable securities

Realized gain on marketable securities

Share-based compensation

Credit loss expense

ROU asset amortization

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( 2,295,051 )

( 2,182,745 )

Cash flows from investing activities:

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Sales and maturities of marketable securities

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Net proceeds from exercise of warrants

Net proceeds from exercise of options and warrants

Proceeds from issuance of common stock and warrants

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

( 1,754,958 )

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Cash and cash equivalents at end of year

Supplemental disclosure of non-cash items:

Operating lease assets obtained for operating lease liabilities

accompanying notes to consolidated financial statements.

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Company has primarily utilized its cash, cash equivalents, and investments generated from sales of our common stock, proceeds from the

exercise of options and warrants, and royalty fees collected to fund its research and development of SPD light valves, for marketing

exercise of stock options and warrants, and royalty fees collected to fund its research and development of SPD light valves, for marketing

initiatives, and for other working capital purposes.

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Our limited capital resources and operations to date have been substantially funded through sales of our common

stock, exercise of options and warrants and royalty fees collected.

stock, exercise of stock options and warrants and royalty fees collected.

As of December 31, 2024, we had working capital of approximately

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accumulated deficit of approximately $ 125.6 million.

Our quarterly projected cash flow shortfall, based on our current operations, adjusted

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 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.

Based on current operations, we 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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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 fund its operations.

Summary of Significant Accounting Policies

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at December 31, 2024 and 2023 are approximately $ 0.6 million and $ 1.2 million, respectively.

Marketable Securities

Company classifies investments in marketable securities as trading, available-for-sale or held-to-maturity at the time of purchase and

periodically re-evaluates such classification.

Trading securities are carried at fair value, with unrealized holding gains and losses

included in earnings.

Held-to-maturity securities are recorded at cost and are adjusted for the amortization or accretion of premiums

or discounts over the life of the related security.

Unrealized holding gains and losses of available-for-sale securities are excluded

from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized.

In determining

realized gains and losses, the cost of the securities sold is based on the specific identification method.

Interest and dividends on

the investments are accrued at the balance sheet date.

value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”)

in an orderly transaction between market participants at the measurement date.

Fair value measurements are broken down into three levels

based on the reliability of inputs as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities

that the Company has the ability to access at the measurement date.

An active market for the asset or liability is a market in which

transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

or indirectly.

Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices

that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current

market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level 3 inputs are

unobservable inputs for the asset or liability.

Unobservable inputs are used to measure fair value to the extent that observable inputs

are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the

measurement date.

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.

assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term, using

the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessor did not provide an

implicit rate, nor is one readily available.

The Company has a lease that includes an option to renew and when it is reasonably probable

that such option would be exercised, the Company will include the renewal option terms in determining the lease asset and lease liability.

Lease assets represent the Company’s right-to-use an underlying asset for the lease term and lease liabilities represent the Company’s

obligation to make lease payments arising from the lease.

Lease expense for lease payments is recognized on a straight-line basis over

the lease term.

Operating lease assets are shown as right-of-use assets and financing lease assets are a component of fixed assets on

the consolidated balance sheets.

The current and long-term portions of operating and financing lease liabilities are shown separately

as such on the consolidated balance sheets.

Royalties Receivable

receivable from licensees are recorded at the amounts specified within the license agreements when the collectability of the receivable

is reasonably assured.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses

in the Company’s existing royalties receivable.

The Company determines the allowance based on historical write-off experience as

well as the current status of the Company’s customers.

The Company reviews its allowance for doubtful accounts periodically.

due accounts are reviewed individually for collectability.

Account balances are charged off against the allowance after all means of

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

receivable from licensees are recorded at the amounts specified within the license agreements when the collectability of the

receivable is reasonably assured.

The allowance for credit losses is the Company’s best estimate of the amount of probable

credit losses in the Company’s existing royalties receivable.

The Company determines the allowance based on historical

write-off experience as well as the current status of the Company’s customers.

The Company reviews its allowance for credit

losses periodically.

Past due accounts are reviewed individually for collectability.

Account balances are charged off against the

allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of December 31,

2024, one company accounted for 23 %

of the Company’s outstanding receivables before reserves.

As of December 31, 2023, three companies accounted for 17 %, 12 %

of the Company’s outstanding receivables.

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each model produced with SPD-SmartGlass, and changes in pricing or exchange rates.

of December 31, 2023, the Company has one license agreement that are in its initial multiyear term (“Initial Term”) with

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, 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, 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.

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

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.

of December 31, 2024 and 2023, there was no balance in deferred revenue.

As of December 31, 2024 and 2023, the Company had $ 42,853 and

$ 22,853 , respectively, in unbilled revenue included in royalty receivables.

income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company.

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or converted into common stock.

The Company’s dilutive loss per share equals basic loss per share for each of the years in the

two-year period ended December 31, 2023 because all potentially dilutive securities (i.e ., options and warrants) were antidilutive

in those periods.

The number of options and warrants that were not included because their effect is antidilutive was 3,294,515 and 4,146,951

for 2023 and 2022, respectively.

The Company’s dilutive loss per share equals basic loss per share for years ended December 31,

2024 and 2023, because all potentially dilutive securities (i.e ., options and warrants) were antidilutive in those periods.

number of options and warrants that were not included because their effect is antidilutive was 2,773,422 and 3,294,515 for 2024 and 2023,

respectively.

Research and Development Costs

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taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected

to be recovered or settled.

Deferred tax assets and liabilities are recognized for the future tax

consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and

liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are

measured using enacted tax rates expected to be recovered or settled.

accordance with ASC Topic 740, we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination

by tax authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized

The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized

upon ultimate settlement.

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

Share-Based Compensation

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

value of the award at the date of grant.

In addition to reflecting compensation expense for new share-based payment awards, expense is

also recognized to reflect the remaining vesting period of awards that had been granted in prior periods.

Tax benefits related to stock

option exercises are reflected as financing cash inflows.

Equity-Based Compensation

recognize all stock-based compensation as an expense in the consolidated financial statements at the fair value of the award at the date

exercise prices for stock options granted are generally set at the average for the high and low trading prices of the Company’s

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As of December 31, 2024, these awards were fully vested.

In lieu of higher cash compensation,

the Company has granted warrants and non-employee options to consultants.

These warrants and non-employee options vested fully on the

date of grant.

There were no such charges for the year ended December 31, 2023 and 2022.

Restricted Stock

cost for restricted stock is measured using the quoted market price of the Company’s common stock at the date the common stock

The compensation cost is recognized over the period between the issue date and the vesting period for such shares.

stock is included in total common shares outstanding upon the lapse of any vesting conditions.

Impairment of Long-Lived Assets

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of December 31, 2024 and 2023, the fair value of the Company’s financial assets and non-warrant liabilities including cash and

cash equivalents, marketable securities, royalties receivable, accounts payable and accrued expenses approximated carrying value due

cash equivalents, royalties receivable, accounts payable approximated carrying value due

to the short-term maturity of these instruments.

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Accounting Standards

Company believes that no new accounting standards that are not yet effective will have a material effect on the Company’s consolidated

financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”)

issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes – Improvements to Income Tax Disclosures”,

requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application

is permitted.

The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements.

2024, the Company adopted the provisions of ASU 2023-07, “Segment Reporting”.

The standard requires public

companies to provide enhanced disclosures regarding operating segments (Note 3).

Segment Information

Company operates as a single operating segment which is engaged in the development and marketing of technology and devices to control

the flow of light (as described in Note 1).

The Company develops and licenses our patented suspended particle device (“SPD-Smart”)

light-control technology to other companies that manufacture and/or market the:

(i) SPD-Smart chemical emulsion, (ii) light-control film

made from the chemical emulsion, (iii) the light-control panels made by laminating the film, (iv) electronics to power end-products incorporating

the film, or (v) lamination services for, and the end-products themselves such as “smart” windows, skylights and sunroofs.

The Company currently has over 40 licensees that, in the aggregate, are licensed to primarily serve five major SPD-Smart application

areas (aerospace, architectural, automotive, marine and display products) in every country of the world.

The Company derives revenue

from licensees in North America, Europe and Asia.

The Company’s Chief Operating Decision Maker (CODM) reviews revenue and consolidated

net operating loss as a total and not by industry of licensees and the royalty rates that we charge our licensees are consistent when

measuring the Company’s profitability and allocating resources across geographical location and by industry.

The Company does not

have intra-entity sales or transfers.

The Company’s long-lived assets consist of property and equipment and operating lease right-of-use

assets, all of which are located in the United States.

In 2024 and 2023, approximately 70 % and 95 %, respectively, of the

Company’s revenue was generated from sources outside of the United States.

accounting policies of the Company’s single operating segment are the same as those described in Note 2.

CODM is the Company’s Chief Executive Officer and acting Chief Financial Officer.

The CODM assesses performance for the single

operating segment and decides how to allocate resources based on consolidated net operating loss that is also reported on the

Company’s consolidated statement of operations.

net operating loss is used by the Company’s CODM to monitor budget versus actual results;

conducting this monitoring on at least a quarterly basis

as a part of the Company’s quarterly 10-Q and annual 10-K filing processes.

Included in the review process is a detailed review and discussion

related to the Company’s Management’s Discussion and Analysis.

In addition, meetings of the Company’s Audit Committee are also held

at least quarterly and those meetings include a review of consolidated operating results.

following table illustrates the information about the Company’s single reportable segment, which the Company’s CODM regularly evaluates in addition to the

information already presented on the Company’s statement of operations and identifies expense items exceeding the Company’s significant expense thresholds

described above:

Schedule of Segment Information Related to Statement of Operations

Year ended December 31

Operating expenses

Employee compensation

Professional fees

Directors fees and expenses

Marketing and investor relations

Occupancy costs

Stock listing fees

Depreciation and amortization

Other operating expenses *

Operating expenses

Research and Development expenses

Employee compensation

Occupancy costs

Depreciation and amortization

Other research and development expenses*

Research and development

Net Operating Loss

* Other operating

expenses and other research and development expenses consist principally of miscellaneous expenses, each of which is under the Company’s

threshold to be separately presented as a significant expense.

** Insurance includes

all coverage including property, liability, directors and officers and employee medical.

assets and their estimated useful lives as of December 31, 2024 and 2023 are as follows:

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Accrued Expenses and Other

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

expenses consist of the following at December 31, 2024 and 2023:

Schedule of Accrued Expenses and Other

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in the valuation allowance recorded in each year.

Tax Cuts and Jobs Act of 2017 (“TCIA”) amended IRC Section 174 to require capitalization of all research and development

(“R&D”) costs incurred in tax years beginning after December 31, 2021.

These costs are required to be amortized over

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 $ 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 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, 2024 and 2023

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Deferred tax assets:

Allowance for bad debts

Net operating loss carry-forwards

Allowance for credit losses

Net operating loss carryforwards

Stock option expense

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Net operating losses generated since 2018, totaling approximately $ 12,681,000 , will carry forward indefinitely, but cannot

offset more than 80 percent of taxable income.

offset more than 80 % of taxable income.

Research and other credit carryforwards of approximately $ 821,000 are available to the

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complete an analysis to determine whether its net operating losses are subject to the 382 limitation.

At December 31, 2024, the Company had net operating loss carryforwards for state income tax purposes of approximately

$ 2,688,000 .

State net operating loss carryforwards subject to expiration are $ 2,515,000 and $ 173,000 do not expire.

Shareholders’ Equity

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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.

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

During 2024, the Company

received $ 300,000 and issued 130,434 shares and 130,434 warrants in connection with a remaining outstanding commitment under these subscription

T he Company has an outstanding commitment

from a potential investor for the remaining $ 850,000 under these subscription agreements.

The Company did not sell any equity securities

during the year ended December 31, 2023.

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

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The Company may also award stock appreciation rights, restricted stock, or restricted stock units under this plan.

The Company initially reserved 1,400,000 shares of its common stock for issuance under this plan, and 84,500 options and other awards

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

The Company initially reserved 1,400,000 shares of its common stock for issuance under this plan, and no options and other awards are

available for issuance under this plan as of December 31, 2024.

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

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of the exercised options.

Company granted 223,000 fully vested options during 2023 and recorded share-based compensation of $ 144,728 .

The Company granted 178,000

fully vested options during 2022 and recorded share-based compensation of $ 232,291 .

The Company valued these grants using the Black-Scholes

option pricing model with the following weighted average assumptions:

Schedule of Assumptions Used to Value Options Granted to Employees

Company granted 84,500 fully vested stock options during 2024 and recorded share-based compensation of $ 89,316 .

In addition, the Board

of Directors approved 138,501 stock options under the Company’s 2019 Equity Incentive Plan to be granted upon shareholder approval

at the annual meeting of shareholders planned for June 2025.

These contingent options will be fully vested upon removal of the contingency

and the Company will record share-based compensation upon removal of the contingency.

The Company granted 223,000 fully vested options

during 2023 and recorded share-based compensation of $ 144,728 .

Company valued these grants using the Black-Scholes option pricing model with the following weighted average assumptions:

of Weighted Average Assumptions Used to Value Options Granted to Employees

Fair value on grant date

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Number of Shares

Subject to Option

Weighted Average

Exercise Price

Weighted Average Remaining

Aggregate Intrinsic Value

Exercise Price

Intrinsic Value

Balance at January 1, 2023

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Schedule of Warrant Activity

Number of Shares

Number of Shares Underlying

Weighted Average

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the Black-Scholes option valuation model.

There are 2,079,143 warrants issued to investors that are outstanding that are accounted for

There are 1,630,343 warrants issued and outstanding as of December 31, 2024.

and non-employee options generally expire in five years from the date of issuance.

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options outstanding were exercisable.

Restricted Stock Grants

2023 and 2022, the Company did not issue restricted stock to its directors and employees.

License and Other Agreements

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Most licenses are non-exclusive and generally last as long as our patents remain in effect.

March 14, 2019, the Company suspended its VariGuard SmartGlass business unit activities.

Instead, the Company licensed a new entity to

pursue the business opportunities previously pursued by the Company’s VariGuard SmartGlass business unit.

This new licensee continues

to use the VariGuard SmartGlass name.

In addition to other employees at VariGuard SmartGlass Inc., one of the Company’s officers

LaPointe) and one former officer (Seth L.

Van Voorhees) are shareholders of VariGuard SmartGlass Inc.

and, as consequence,

this transaction is a related party relationship which has been reviewed and approved by the Company’s Board of Directors pursuant

to the requirements of Delaware corporate law and the Company’s Code of Ethics.

LaPointe also remains a full-time employee

at the Company.

In October 2021, the Company entered into an amendment to the license agreement with VariGuard modifying its scope and

Company has an employment agreement with its chief executive officer which provides for an annual base salary of $ 500,000 for calendar

This employment agreement has an evergreen provision that extends the term by one year on the expiration date unless either

the Company or the employee has given notice that they will not be renewing the agreement upon the expiration of its term.

Company has an employment agreement with its chief executive officer which provides for an annual base salary of $ 625,000

for calendar year 2025.

This employment agreement has an evergreen provision that extends the term by one

year on the expiration date unless either the Company or the employee has given notice that they will not be renewing the

agreement upon the expiration of its term.

The agreement also calls for bonus payments in the event of achievement of revenue milestones.

Company has a defined contribution profit sharing (401k) plan covering employees who have completed one year of service.

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the obligation is incurred.

Company has operating leases for certain facilities, vehicles and equipment with a weighted average remaining lease term of 1.3 years

as of December 31, 2023.

Operating leases are included in right of use lease assets, other current liabilities and long-term lease liabilities

on the consolidated balance sheet.

Right of use lease assets and liabilities are recognized at each lease’s commencement date based

on the present value of its lease payments over its respective lease term.

The Company does not have an established incremental borrowing

rate as it does not have any debt.

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.

As of December 31, 2023, the weighted average remaining lease term was

The initial term of the lease expires on December

31, 2027 with renewal options that potentially extend expiration through December 31, 2031.

Operating leases are included in

Operating lease ROU assets, other current liabilities and long-term lease liabilities on the consolidated balance sheets.

lease ROU assets and operating lease liabilities are recognized at each lease’s commencement date based on the present value

of its lease payments over its respective lease term.

The Company does not have an established incremental borrowing rate as it does

not have any debt.

The Company uses the stated borrowing rate for a lease when readily determinable.

When the interest

rate implicit in its lease agreements is not readily determinable, the Company uses an interest rate based on the marketplace for public

The weighted average discount rate associated with operating leases as of December 31, 2023 is 5.5 %.

When the interest rate implicit

in its lease agreements is not readily determinable, the Company uses an interest rate based on the marketplace for public debt.

incremental borrowing rate associated with the operating lease as of December 31, 2024 and 2023 is 7.0 %

respectively.

Cash rent paid for the years ended December 31, 2024 and 2023 was $ 213,000 and $ 227,000 , respectively.

of operating lease liabilities as of December 31, 2024 were as follows:

Schedule of Minimum Annual Future Rental Commitments

Schedule of Maturities of Operating Lease

December 31, 2024

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Current portion of operating lease liability

Operating lease liability, net of current portion

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

25 unchanged sentences

Related Party

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

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

Because the Company collects a 10 - 15 % 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

8 unchanged sentences

Company’s total royalty receivables, before reserves.

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

March 14, 2019, the Company suspended its VariGuard SmartGlass business unit activities.

Instead, the Company licensed a new entity to

pursue the business opportunities previously pursued by the Company’s VariGuard SmartGlass business unit.

This new licensee continues

to use the VariGuard SmartGlass name.

In addition to other employees at VariGuard SmartGlass Inc., one of the Company’s officers

LaPointe) and one former officer (Seth L.

Van Voorhees) are shareholders of VariGuard SmartGlass Inc.

and, as consequence,

this transaction is a related party relationship which has been reviewed and approved by the Company’s Board of Directors pursuant

to the requirements of Delaware corporate law and the Company’s Code of Ethics.

LaPointe also remains a full-time employee

at the Company.

In October 2021, the Company entered into an amendment to the license agreement with VariGuard modifying its scope and

the year ended December 31, 2024, the Company received $ 35,152 in Employee Retention Credits, a refundable 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.

There were no such credits received during the year ended December 31, 2023.

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