-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WBrS06BkTdEbPgfmsqJQQxduR3jgZLnbVRg4D5E3JnzYiXtEtJqbf74PLioMLRV4 WclUl6u0ehmRLiSCN0bixw== 0000793524-96-000011.txt : 19961115 0000793524-96-000011.hdr.sgml : 19961115 ACCESSION NUMBER: 0000793524-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: BSE SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESEARCH FRONTIERS INC CENTRAL INDEX KEY: 0000793524 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 112103466 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09399 FILM NUMBER: 96661987 BUSINESS ADDRESS: STREET 1: 240 CROSSWAYS PARK DR CITY: WOODBURY STATE: NY ZIP: 11797-2033 BUSINESS PHONE: 5163641902 MAIL ADDRESS: STREET 1: 240 CROSSWAYS PARK DR CITY: WOODBURY STATE: NY ZIP: 11797-2033 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1996 Commission File No. 1-9399 RESEARCH FRONTIERS INCORPORATED (Exact name of registrant as specified in charter) Delaware 11-2103466 (State of incorporation or organization) (IRS Employer Identification No.) 240 Crossways Park Drive, Woodbury, N.Y. 11797 (Address of principal executive offices) (Zip Code) (516) 364-1902 (Registrant's telephone number, including area code) 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) has been subject to such filing requirements for the past 90 days. Yes X No __ 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 12,1996, there were outstanding 10,070,897 shares of Common Stock, par value $0.0001 per share. RESEARCH FRONTIERS INCORPORATED Condensed Balance Sheets September 30,1996 Assets (Unaudited) Dec.31,1995 Current assets: Cash and cash equivalents $ 2,531,992 3,827,573 Marketable investment securities 6,237,414 5,937,308 Accrued interest and dividends receivable 61,059 82,422 Prepaid expenses and other current assets 20,910 23,699 Total current assets 8,851,375 9,871,002 Fixed assets, net 165,115 96,491 Deposits and other assets 59,769 58,620 Total assets $ 9,076,259 10,026,113 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 63,227 113,120 Other accrued expenses 100,966 129,933 Total liabilities 164,193 243,053 Shareholders' equity: Capital stock, par value $.0001 per share; authorized 100,000,000 shares,issued and outstanding 10,069,397 shares and 9,830,761 shares, respectively 1,007 983 Additional paid-in capital 29,296,146 28,399,562 Accumulated deficit (19,760,587) (18,035,485) 9,536,566 10,365,060 Notes receivable from officers (624,500) (582,000) Total shareholders' equity 8,912,066 9,783,060 Total liabilities and shareholders' equity $ 9,076,259 10,026,113 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Condensed Statements of Operations (Unaudited) Nine months ended Three months ended Sept.30,1996 Sept.30,1995 Sept.30,1996 Sept.30,1995 Fee income $ 50,000 1,500 $ -- 1,500 Operating expenses 946,120 958,240 247,723 236,862 Research and development 1,127,486 1,054,929 394,717 347,511 2,073,606 2,013,169 642,440 584,373 Operating loss (2,023,606) (2,011,669) (642,440) (582,873) Investment income(loss) (748,457) 329,979 47,173 74,951 Interest income on note receivable from officer 211,360 -- -- -- Unrealized gain (loss) on investments 835,601 (70,895) 119,622 (143,615) Net loss $ (1,725,102) (1,752,585) $ (475,645) (651,537) Net loss per share $ (.17) (.19) $ (.05) (.07) Weighted average number of common shares outstanding 9,875,892 9,139,663 9,965,104 9,201,194 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Condensed Statements of Cash Flows (Unaudited) Nine months ended Sept. 30,1996 Sept. 30, 1995 Cash flows from operating activities: Net loss $ (1,725,102) (1,752,585) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 23,008 41,451 Unrealized loss (gain) on investments (835,601) 70,895 Interest income on notes receivable from officer (211,360) (7,073) Changes in assets and liabilities: Decrease in investments 535,495 1,766,892 Decrease in accrued interest and dividends receivable 21,374 24,133 Decrease (increase) in other assets 1,640 (29,586) Decrease in accounts payable & accrued expenses (78,860) (79,855) Net cash provided by(used in)operating activities (2,269,406) 34,272 Cash flows from investing activities: Capital expenditures (91,631) (5,637) Net cash used in investing activities (91,631) (5,637) Cash flows from financing activities: Proceeds from issuances of common stock 1,410,456 886,044 Increase in notes from officers (345,000) -- Net cash provided by financing activities 1,065,456 886,044 Net increase(decrease)in cash and cash equivalents (1,295,581) 914,679 Cash and cash equivalents at beginning of year 3,827,573 219,771 Cash and cash equivalents at end of period $ 2,531,992 1,134,450 Non-Cash Transactions: Redemption of treasury stock as payment for officer note receivable $ 302,500 300,000 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Notes to Condensed Financial Statements September 30, 1996 (Unaudited) Basis of Presentation The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations, and cash flows for the interim periods to which the report relates. The results of operations for the nine-month period ended September 30, 1996 are not necessarily indicative of the results to be expected for the full year. The notes included herein should be read in conjunction with the notes to financial statements of the Company at December 31, 1995 and for the three years then ended, included in the Company's Annual Report on Form 10-K. Business Research Frontiers Incorporated (the Company) is primarily 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 a suspension of microscopic particles that is either in the form of a liquid suspension or a film, usually enclosed between two glass or plastic plates, at least one of which is transparent. Cash and Cash Equivalents Cash equivalents consist of short-term investments in all U.S. Treasury securities. The Company considers securities purchased within three months of their maturity date to be cash equivalents. Shareholders' Equity During the first nine months of 1996, the Company received approximately $1,410,456 as net proceeds from the net issuance of 288,345 shares of common stock from a private placement, and the exercise of warrants and options. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Nine Month Periods Ended September 30, 1996 and 1995 The Company earned fee income for the nine months ended September 30, 1996 of $50,000 relating to the Company's new license agreement with Glaverbel, SA. Operating expenses decreased by $12,120 for the first nine months of 1996 from $958,240 for the first nine months of 1995. This decrease was due to decreased travel and depreciation expenses offset partially by increased insurance expenses. Research and development expenditures increased by 72,557 to $1,127,486 for the first nine months of 1996 from $1,054,929 for the first nine months of 1995. This increase was primarily the result of higher labor costs offset by a decrease in costs related to patents and materials. Net investment income decreased by $1,078,436 to a loss of $748,457 for the first nine months of 1996 from net investment income of $329,979 for the first nine months of 1995. This decrease was due to a realized loss recognized by the Company on the sale of securities against which the Company had previously recorded unrealized losses. In addition, the Company recorded an unrealized gain on investments of $835,601 for the nine months ended September 30, 1996 compared to an unrealized loss of $70,895 for the first nine months of 1995 due to the sale of the aforementioned securities and a change in the Company's investment portfolio during these periods. As a consequence of the factors discussed above, the Company's net loss was $1,725,102 ($.17 per share) for the first nine months of 1996 as compared to $1,752,585 ($.19 per share) for the first nine months of 1995. Results of Operations for the Three Month Periods Ended September 30, 1996 and 1995 There was no fee income relating to the Company's license or other agreements for the third quarter of 1996 as compared to $1,500 in fee income for the third quarter of 1995. Operating expenses increased by $10,861 for the third quarter of 1996 from $236,862 for the third quarter of 1995. This increase was due to increased insurance expenses offset partially by decreased travel and depreciation expenses. Research and development expenditures increased by 47,206 to $394,717 for the third quarter of 1996 from $347,511 for the third quarter of 1995. This increase was primarily the result of higher labor and patent costs offset by a decrease in costs related to materials. Net investment income decreased by $27,778 to $47,173 for the third quarter of 1996 from $74,951 for the third quarter of 1995. This decrease was due to a realized loss recognized by the Company on the sale of securities against which the Company had previously recorded unrealized losses. In addition, the Company recorded an unrealized gain on investments of $119,622 for the third quarter of 1996 compared to an unrealized loss of $143,615 for the third quarter of 1995 due to the sale of the aforementioned securities and a change in the Company's investment portfolio during these periods. As a consequence of the factors discussed above, the Company's net loss was $475,645 ($.05 per share) for the third quarter of 1996 as compared to $651,537 ($.07 per share) for the third quarter of 1995. Financial Condition, Liquidity and Capital Resources During the first nine months of 1996, the Company's cash and cash equivalents and marketable investment securities balance decreased by approximately $995,475 principally as a result of cash used to fund the Company's net loss from operations (approximately $1,725,000), the decrease in accounts payable and accrued expenses of approximately $79,000, and the increase in notes receivable from officers of $345,000, offset by the sale of common stock through the exercise of options, warrants, and the sale of newly issued common stock aggregating $1,410,456. During the third quarter of 1996, the Company continued to strengthen its balance sheet and raised approximately $1.2 million from the private sale of common stock to institutional investors. These shares are subject to various restrictions on their resale or transfer by such institutions, and the proceeds from their sale have been invested by the Company in U.S. Treasury securities. At September 30, 1996, the Company had working capital of $8,687,182 and its shareholders' equity was $8,912,066. Notes receivable from officers increased by approximately $42,500 during the first nine months of 1996. This was a result of the repayment by the Company's President of an outstanding note receivable, including $211,360 in accumulated interest thereon, offset by three new notes issued by the Company to certain of its officers. Repayment was made through the transfer to the Company of 49,528 shares of the Company's common stock held by the President, which shares were subsequently retired by the Company. The Company expects to use its cash and short-term investments to fund its research and development of SPD light valves 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 would provide additional working capital, and changes in relationships with existing licensees would have a favorable or negative impact depending upon the nature of such changes. Based upon existing levels of expenditures, assumed ten percent annual increases therein, existing cash reserves and budgeted revenues, the Company believes that it would not require additional funding for the next three years. There can be no assurance 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 commercialization of products using the Company's technology by the Company's licensees and payments of continuing royalties on account thereof. PART II.OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. None (b) Reports on Form 8-K. None. 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/ Robert L. Saxe Robert L. Saxe, President and Treasurer (Principal Executive, Financial, and Accounting Officer) Date: November 13, 1996 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS CONTAINED IN THE MOST RECENT QUARTERLY REPORT ON FORM 10-Q OF RESEARCH FRONTIERS INCORPORATED FOR THE QUARTER ENDING SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1995 SEP-30-1996 2,531,992 6,237,414 61,059 0 0 8,851,375 165,115 0 9,076,259 164,193 0 0 0 10,069,397 0 9,076,259 50,000 348,504 0 2,073,606 0 0 0 (1,725,102) 0 0 0 0 0 (1,725,102) (0.17) (0.17)
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