[10-Q] RESEARCH FRONTIERS INC Quarterly Earnings Report
Research Frontiers (REFR) reported Q3 2025 results. Fee income was $359,444, up slightly year over year, while operating loss was $303,944 and net loss was $298,508 for the quarter. For the first nine months of 2025, fee income totaled $1,049,125 compared with $1,157,380 a year ago, and net loss widened to $1,280,021.
Cash and cash equivalents were $1,130,390, with working capital of about $1.4 million and shareholders’ equity of about $1.5 million as of September 30, 2025. The company continues to generate revenue primarily from automotive licensees and recognizes royalties under ASC 606.
Management disclosed that two significant European licensees and an affiliate filed for bankruptcy during the quarter; these parties represented approximately 44% of year-to-date revenue, though Ferrari-related SPD-SmartGlass production has transitioned to another existing European licensee.
- None.
- Two significant European licensees and an affiliate filed for bankruptcy; these parties represented approximately 44% of year-to-date revenue.
Insights
Licensee bankruptcies introduce revenue risk despite Ferrari transition.
Research Frontiers posted Q3 fee income of
The company reported that two significant European licensees and an affiliate filed for bankruptcy, and these parties accounted for approximately
Liquidity shows cash of
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarter ended
OR
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| (Address of principal executive offices) | (Zip Code) |
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telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Name of Exchange on Which Registered | |
| Common Stock, $0.0001 Par Value | The NASDAQ Stock Market |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
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Indicate
by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
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Emerging
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November
6, 2025, there were outstanding
| TABLE OF CONTENTS | Page(s) | |
| Condensed Consolidated Balance Sheets September 30, 2025 (Unaudited) and December 31, 2024 | 3 | |
| Condensed Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2025 and 2024 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Shareholders’ Equity for the Nine and Three Months Ended September 30, 2025 and 2024 (Unaudited) | 5 | |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 6 | |
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 7-13 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14-16 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 17 | |
| Item 4. Controls and Procedures | 17 | |
| PART II - OTHER INFORMATION | ||
| Item 6. Exhibits | 18 | |
| SIGNATURES | 19 |
| 2 |
RESEARCH FRONTIERS INCORPORATED
Condensed Consolidated Balance Sheets
| September 30, 2025 (Unaudited) | December 31, 2024 (See Note 1) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Royalties receivable, net of reserves of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Operating lease ROU assets | ||||||||
| Deposits and other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of operating lease liability | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Deferred revenue | - | |||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
| 3 |
RESEARCH FRONTIERS INCORPORATED
Condensed Consolidated Statements of Operations
(Unaudited)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Fee income | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net interest income | ||||||||||||||||
| Other income | - | |||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding | ||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| 4 |
RESEARCH FRONTIERS INCORPORATED
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)
For the nine months ended September 30, 2025 and 2024
| Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
| Common Stock | Additional | Accumulated | ||||||||||||||||||
| Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Exercise of options | - | |||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
For the three months ended September 30, 2025 and 2024
| Common Stock | Additional | Accumulated | ||||||||||||||||||
| Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| 5 |
RESEARCH FRONTIERS INCORPORATED
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| 2025 | 2024 | |||||||
| Nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | - | |||||||
| Credit loss expense | ||||||||
| ROU asset amortization | ||||||||
| Change in assets and liabilities: | ||||||||
| Royalty receivables | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Deferred revenue | - | |||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from exercise of options | - | |||||||
| Net cash provided by financing activities | - | |||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
| 6 |
RESEARCH FRONTIERS INCORPORATED
Notes to Condensed Consolidated Financial Statements
September 30, 2025
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K relating to Research Frontiers Incorporated for the fiscal year ended December 31, 2024.
Note 2. Business
Research Frontiers Incorporated (“Research Frontiers” or the “Company”) operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Such devices, often referred to as “light valves” or suspended particle devices (“SPDs”), use colloidal particles that are either incorporated within a liquid suspension or a film, which is usually enclosed between two sheets of glass or plastic having transparent, electrically conductive coatings on the facing surfaces thereof. At least one of the two sheets is transparent. SPD technology, made possible by a flexible light-control film invented by Research Frontiers, allows the user to instantly and precisely control the shading of glass/plastic manually or automatically. SPD technology has numerous product applications, including SPD-Smart™ windows, sunshades, skylights and interior partitions for homes and buildings; automotive windows, sunroofs, sun visors, sunshades, rear-view mirrors, instrument panels and navigation systems; aircraft windows; museum display panels; eyewear products; and flat panel displays for electronic products. SPD-Smart light control film is now being developed for, or used in, architectural, automotive, marine, aerospace and appliance applications.
The
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
initiatives, and for other working capital purposes. The Company’s working capital and capital requirements depend upon numerous
factors, including the results of research and development activities, competitive and technological developments, the timing and cost
of patent filings, and the development of new licensees and changes in the Company’s relationships with its 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. We have incurred recurring losses since inception and expect to continue to incur losses
as a result of costs and expenses related to our research and continued development of our SPD technology and our corporate general and
administrative expenses. Our capital requirements and operations to date have been substantially funded through sales of our common stock,
exercise of options and warrants and royalty fees collected. As of September 30, 2025, we had working capital of approximately $
| 7 |
In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company may seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available. The eventual success of the Company and generation of positive cash flow will be dependent upon the commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof.
Note 3. Segment Information
The
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 2). 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 (“ROU”), all of which are located in the United States. During the nine-month periods ended September
30, 2025 and 2024,
The 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 condensed consolidated statements of operations.
Consolidated 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.
| 8 |
The 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 condensed consolidated statements of operations and identifies expense items exceeding the Company’s significant expense thresholds described above:
Schedule of Segment Information Related to Statement of Operations
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Employee compensation | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Directors fees and expenses | - | |||||||||||||||
| Marketing and investor relations | ||||||||||||||||
| Insurance** | ||||||||||||||||
| Occupancy costs | ||||||||||||||||
| Credit loss expense | - | |||||||||||||||
| Patent costs | ||||||||||||||||
| Stock listing fees | ||||||||||||||||
| Legal fees | - | |||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other operating expenses* | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Research and Development Expenses | ||||||||||||||||
| Employee compensation | ||||||||||||||||
| Insurance** | ||||||||||||||||
| Occupancy costs | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other research and development costs | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| * | |
| ** |
Note 4. Patent Costs
The Company expenses costs relating to the development, acquisition or enforcement of patents due to the uncertainty of the recoverability of these items.
Note 5. Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606). The standard provides a single comprehensive revenue recognition model for all contracts with customers and supersedes existing revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.
ASC 606 follows a five-step approach to determining revenue recognition including: 1) Identification of the contract; 2) Identification of the performance obligations; 3) Determination of the transaction price; 4) Allocation of the transaction price; and 5) Recognition of revenue.
| 9 |
The Company determined that its license agreements provide for three performance obligations which include: (i) the Grant of Use to its Patent Portfolio (“Grant of Use”), (ii) Stand-Ready Technical Support (“Technical Support”) including the transfer of trade secrets and other know-how, production of materials, scale-up support, analytical testing, etc., and (iii) access to new Intellectual Property (“IP”) that may be developed sometime during the course of the contract period (“New Improvements”). Given the nature of IP development, such New Improvements are on an unspecified basis and can occur and be made available to licensees at any time during the contract period.
When a contract includes more than one performance obligation, the Company needs to allocate the total consideration to each performance obligation based on its relative standalone selling price or estimate the standalone selling price if it is not observable. A standalone selling price is not available for our performance obligations since we do not sell any of the services separately and there is no competitor pricing that is available. As a consequence, the best method for determining the standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Comparable license agreements must consider several factors including: (i) the materials that are being licensed, (ii) the market application for the licensed materials, and (iii) the financial terms in the license agreements that can increase or decrease the risk/reward nature of the agreement.
Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. The Company focuses a significant portion of its time and resources to provide the Technical Support and New Improvements services to its licensees which further supports the conclusions reached using the royalty rate analysis.
The Technical Support and New Improvements performance obligations are co-terminus over the term of the license agreement. For purposes of determining the transaction price, and recognizing revenue, the Company combined the Technical Support and New Improvements performance obligations because they have the same pattern of transfer and the same term. We maintain a staff of scientists and other professionals whose primary job responsibilities throughout the year are: (i) being available to respond to Technical Support needs of our licensees, and (ii) developing improvements to our technology which are offered to our licensees as New Improvements. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the initial contract period as these performance obligations are satisfied. If the agreement is not terminated at the end of the initial contract period, it will automatically renew on the same terms as the initial contract for a one-year period. Consequently, any fees or minimum annual royalty obligations relating to this renewal contract will be allocated similarly to the initial contract over the additional one-year period.
We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. The value of the Technical Support and New Improvements obligations is allocated throughout the contract period based on the satisfaction of its performance obligations. If the agreement is not terminated at the end of the contract period, it will renew on the same terms as the original agreement for a one-year period. Consequently, any fees or minimum annual royalties (“MAR”) relating to this renewal contract will be allocated similarly over that additional year.
The
Company’s license agreements have a variable royalty fee structure (meaning that royalties are a fixed percentage of sales that
vary from period to period) and frequently include a minimum annual royalty commitment. In instances when sales of licensed products
by its licensees exceed the MAR, the Company recognizes fee income as the amounts have been earned. Typically, the royalty rate for such
sales is
Because of the immediate recognition of the Grant of Use performance obligation: (i) the first period of the contract term will generally have a higher percent allocation of the transaction price under ASC 606, and (ii) the remaining periods in the year will have less of the transaction price recognized under ASC 606. After the initial period in the contract term, the revenue for the remaining periods will be based on the satisfaction of the Technical Support and New Improvements obligations.
| 10 |
As
of September 30, 2025, the Company had $
Certain of the contract fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue (contract liabilities). Such excess amounts are recorded as deferred revenue and are recognized as revenue in future periods as earned. Contract assets represent unbilled receivables and are presented within accounts receivable, net on the condensed consolidated balance sheets.
The Company operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Our revenue source comes from the licensing of this technology and all of these license agreements have similar terms and provisions. The majority of the Company’s licensing fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD-SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within each model produced with SPD-SmartGlass, and changes in pricing or exchange rates.
Note 6. Fee Income
Fee income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company.
During
the first nine months of 2025, five licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately
During
the three months ended September 30, 2025, two licensees accounted for 10% or more of fee income of the Company; these licensees accounted
for approximately
During
the quarter ended September 30, 2025, the Company was notified that one two of its significant European licensees and an affiliate
had filed for bankruptcy. These licensees accounted for approximately
Note 7. Income Taxes
Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carryforwards and other deferred tax items have been fully reserved since it was more likely than not that the Company would not achieve profitable operations and be able to utilize the benefit of the net operating loss carryforwards.
| 11 |
Note 8. Basic and Diluted Loss Per Common Share
Basic
net loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period.
Dilutive net loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were
exercised or converted into common stock. The Company’s dilutive loss per share equals basic loss per share for the periods ended
September 30, 2025 and 2024, respectively, because all common stock equivalents (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) were
Note 9. Equity
During
the nine months ended September 30, 2024, the Company received proceeds of $
On
September 16, 2022, the Company entered into subscription agreements from a group of private accredited investors to sell them
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.
In
December 2024, the Board of Directors approved
The
Company valued this grant using the Black-Scholes option pricing model with the following weighted average assumptions:
Schedule of Weighted Average Assumptions Used to Value Options Granted to Employees
| 2025 | ||||
| Fair value on grant date | $ | |||
| Expected dividend yield | - | |||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Expected term of the option | ||||
As
of September 30, 2025, there were
Note 10. Leases
The Company determines if an arrangement is a lease at its inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if the Company obtains the rights to direct the use of, and to obtain substantially all of the economic benefits from the use of, the underlying asset. Lease expense for variable leases and short-term leases is recognized when the obligation is incurred.
The
Company has an operating lease for its facility, which was amended and extended in 2024, with a remaining lease term of
| 12 |
Maturities of operating lease liabilities as of September 30, 2025 were as follows:
Schedule of Maturities of Operating Lease Liabilities
| September 30, 2025 | ||||
| Year 1 | $ | |||
| Years 2-3 | ||||
| Years 4-5 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: Imputed lease interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less: Current portion of operating lease liability | ( | ) | ||
| Operating lease liability, net of current portion | $ | |||
Note 11. Related Party
Effective
June 4, 2023, the Chairman and CEO of Gauzy, Ltd., one of the Company’s licensees, joined the Board of the Company. Gauzy’s
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
Note 12. Other Income
During
the nine months ended September 30, 2025, the Company received $
| 13 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies and Estimates
The following accounting estimates are important to understanding our financial condition and results of operations and should be read as an integral part of the discussion and analysis of the results of our operations and financial position.
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.
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.
The best method for determining the standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations.
We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the contract period as these performance obligations are satisfied.
The Company has entered into license agreements covering products using the Company’s SPD technology. When royalties from the sales of licensed products by a licensee exceed its contractual minimum annual royalties, the excess amount is recognized by the Company as fee income in the period that it was 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.
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.
Results of Operations
Overview
The majority of the Company’s fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market and the architectural market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD-SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of new car models produced with SPD-SmartGlass, and changes in pricing or exchange rates. Certain license fees, which are paid to the Company in advance of the accounting period in which they are earned resulting in the recognition of deferred revenue for the current accounting period, will be recognized as fee income in future periods. Also, licensees offset some or all of their royalty payments on sales of licensed products for a given period by applying these advance payments towards such earned royalty payments.
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In 2025 and 2024, the Company received royalty revenues from sales of SPD-SmartGlass products for various car models that were accretive to the Company’s royalty revenue. Production efficiencies are expected to continue and accelerate with the introduction of the higher vehicle production volumes for various car models going forward, and the Company expects that lower pricing per square foot of the Company’s technology could expand the market opportunities, adoption rates, and revenues for its technology in automotive and non-automotive applications. The Company expects to generate additional royalty income from the near-term introduction of additional new car and aircraft models from other OEMs (original equipment manufacturers), continued growth of sales of products using the Company’s technology for the marine industry in yachts and other watercraft, in trains, in museums, and in larger architectural projects.
Three months ended September 30, 2025 compared to the three months ended September 30, 2024
The Company’s fee income from licensing activities for the three months ended September 30, 2025 was $359,444 as compared to $354,408 for the three months ended September 30, 2024. This increase in fee income was primarily the result of higher royalties from the automotive market as compared to the third quarter of 2024 partially offset by lower royalties from the aircraft market. The Company expects revenue in all market segments to increase as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market. The Company has not booked any royalty income in the third quarter of 2025 from one of its European licensees that has in the past supplied Ferrari with SPD-SmartGlass sunroofs because of workforce reductions and a bankruptcy filing by this licensee in Europe. This has caused the reported royalty income in 2025 to be lower. In anticipation of this, Ferrari has fully transitioned its business for SPD-SmartGlass to another one of the Company’s existing licensees in Europe, and production by this additional licensee for Ferrari has already commenced.
Operating expenses increased by $66,776 for the three months ended September 30, 2025 to $521,642 from $454,866 for the three months ended September 30, 2024. This increase is primarily the result of higher marketing and investor relations costs ($81,000) and higher professional fees ($15,000) partially offset by lower credit loss allowances ($25,000) and lower insurance costs ($7,000)
Research and development expenditures increased by $10,500 to $141,746 for the three months ended September 30, 2025 from $131,246 for the three months ended September 30, 2024. This increase is primarily a result of higher allocated occupancy costs ($21,000) partially offset by lower insurance costs ($7,000) as well as lower depreciation and amortization ($3,000).
The Company’s net interest income, consisting of interest income, for the three months ended September 30, 2025 was $5,436 as compared to income of $29,736 for the three months ended September 30, 2024 with the change due to lower cash balances available for investment.
The Company recorded $35,152 of other income for the three months ended September 30, 2024, respectively, relating to an Employee Retention Credit, a refundable tax credit available under the CARES Act that was designed to keep employees on the payroll during the Covid-19 pandemic. No such credits were received during the three-months ended September 30, 2025.
As a consequence of the factors discussed above, the Company’s net loss was $298,508 ($0.01 per common share) for the three months ended September 30, 2025 as compared to a net loss of $166,816 ($0.00 per common share) for the three months ended September 30, 2024.
Nine months ended September 30, 2025 compared to the Nine months ended September 30, 2024
The Company’s fee income from licensing activities for the nine months ended September 30, 2025 was $1,049,125 as compared to $1,157,380 for the nine months ended September 30, 2024. This decrease in fee income was primarily the result of lower royalties from the automotive and aircraft markets as compared to the first nine months of 2024 and one-time royalty payments received by the Company in 2024. The Company expects revenue in all market segments to increase as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market. The Company has not booked any royalty income in the second and third quarters of 2025 from one of its European licensees that has in the past supplied Ferrari with SPD-SmartGlass sunroofs because of workforce reductions and a bankruptcy filing by this licensee in Europe. This has caused the reported royalty income in 2025 to be lower. In anticipation of this, Ferrari has fully transitioned its business for SPD-SmartGlass to another one of the Company’s existing licensees in Europe, and production by this additional licensee for Ferrari has already commenced.
Operating expenses increased by $368,889 for the nine months ended September 30, 2025 to $1,934,041 from $1,565,152 for the nine months ended September 30, 2024. This increase is the result of higher non-cash compensation cost ($165,000) recorded during the period related to a grant of stock options to the Company’s employees and directors, higher marketing and investor relations costs ($62,000), higher compensation costs ($18,000), higher professional fees ($33,000), higher occupancy costs ($18,000) and higher credit loss expense ($99,000), partially offset by lower legal fees ($32,000), insurance ($14,000) and marketing and investor relations costs ($21,000).
Research and development expenditures increased by $63,892 to $473,709 for the nine months ended September 30, 2025 from $409,817 for the nine months ended September 30, 2024. This increase is primarily a result of higher allocated occupancy costs ($58,000), higher materials costs ($16,000), as well as higher non-cash compensation costs ($10,000) recorded during the period related to a grant of stock options to the Company’s employees, partially offset by insurance costs ($13,000) and lower depreciation and amortization ($8,000).
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The Company’s net interest income, consisting of interest income, for the nine months ended September 30, 2025 was $31,247 as compared to income of $78,995 for the nine months ended September 30, 2024 with the change due to lower cash balances available for investment.
The Company recorded $47,357 and $35,152 of other income for the nine months ended September 30, 2025 and 2024, respectively, relating to an Employee Retention Credit, a refundable tax credit available under the CARES Act that was designed to keep employees on the payroll during the Covid-19 pandemic.
As a consequence of the factors discussed above, the Company’s net loss was $1,280,021 ($0.04 per common share) for the nine months ended September 30, 2025 as compared to net loss of $703,442 ($0.02 per common share) for the nine months ended September 30, 2024.
Financial Condition, Liquidity and Capital Resources
The 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 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.
During the nine months ended September 30, 2025, the Company’s cash and cash equivalents balance decreased by $863,796 as a result of cash used to fund operations of $863,214 and cash used to purchase fixed assets of $582. As of September 30, 2025, the Company had cash and cash equivalents of approximately $1.1 million, working capital of $1.4 million and total shareholders’ equity of $1.5 million.
We currently expect to have sufficient working capital for more than the next five years of operations.
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. 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 3 has been disclosed in Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There has been no material change in the disclosure regarding market risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We designed our disclosure controls and procedures to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and acting interim Chief Financial Officer, with assistance from other members of our management, has reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2025, and, based on his evaluation, has concluded that our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Forward-Looking Statements
The information set forth in this Report and in all publicly disseminated information about the Company, including the narrative contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above, includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by that section. Readers are cautioned not to place undue reliance on these forward-looking statements as they speak only as of the date hereof and are not guaranteed.
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PART II. OTHER INFORMATION
Item 6. Exhibits
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Joseph M. Harary - Filed herewith. | |
| 32.1 | Section 1350 Certification of Joseph M. Harary - Filed herewith. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.
| RESEARCH FRONTIERS INCORPORATED | |
| (Registrant) | |
| /s/ Joseph M. Harary | |
| Joseph M. Harary, President, CEO, acting interim CFO and Treasurer | |
| (Principal Executive Officer and Principal Financial Officer) |
Date: November 6, 2025
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FAQ
What were REFR’s Q3 2025 results?
How did year-to-date 2025 compare to 2024 for REFR?
What is REFR’s cash position and equity?
Did REFR report any major customer or licensee developments?
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