-----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, HRVQr2obTZHJVHmfxXEl9Bol/oUuH6QsnFUKPZMkaINd2qEdfi7NeTdggpq3RlLw c3fNU9OqMsRm+Wtiku4oVA== 0000793524-98-000004.txt : 19980514 0000793524-98-000004.hdr.sgml : 19980514 ACCESSION NUMBER: 0000793524-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: SEC FILE NUMBER: 001-09399 FILM NUMBER: 98618627 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 March 31, 1998 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 May 12, 1998, there were outstanding 10,868,932 shares of Common Stock, par value $0.0001 per share. RESEARCH FRONTIERS INCORPORATED Condensed Balance Sheets March 31,1998 Assets (Unaudited) Dec.31,1997 Current assets: Cash and cash equivalents $ 4,234,204 2,157,687 Marketable investment securities-held-to-maturity 4,537,977 7,499,184 Accrued interest and dividends receivable 86,037 43,007 Royalty receivable 50,000 -- Prepaid expenses and other current assets 9,390 28,407 Total current assets 8,917,608 9,728,285 Fixed assets, net 238,192 228,002 Deposits and other assets 67,376 77,376 Total assets $ 9,223,176 10,033,663 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 133,756 114,738 Accrued expenses 91,192 296,946 Total liabilities 224,948 411,684 Shareholders' equity: Capital stock, par value $.0001 per share; authorized 100,000,000 shares, issued and outstanding 10,837,057 shares and 10,342,195 shares 1,084 1,034 Additional paid-in capital 34,972,868 34,787,860 Accumulated deficit (24,548,577)(23,739,768) 10,425,375 11,049,126 Notes receivable from officers (1,427,147) (1,427,147) Total shareholders' equity 8,998,228 9,621,979 Total liabilities and shareholders' equity $ 9,223,176 10,033,663 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Condensed Statements of Operations (Unaudited) Three months ended March 31,1998 March 31,1997 Fee income $ 50,000 50,000 Operating expenses 456,322 348,217 Research and development 513,794 519,524 970,116 867,741 Operating loss (920,116) (817,741) Net investment income 111,307 144,711 Net loss $ (808,809) (673,030) Basic and diluted net loss per common share $ (.08) (.07) Weighted average number of common shares outstanding 10,641,112 10,124,691 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Condensed Statements of Cash Flows (Unaudited) Three months ended March 31,1998 March 31, 1997 Cash flows from operating activities: Net loss $ (808,809) (673,030) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 29,221 16,990 Unrealized gain on trading securities -- (48,917) Expense relating to issuance of warrants for services performed 27,058 -- Changes in assets and liabilities: Accounts receivable, licensee (50,000) (50,000) Investments-trading securities -- 1,139,549 Accrued interest and dividends receivable (43,030) (7,104) Prepaid expenses and other current assets 19,017 (35,623) Deposits and other assets 10,000 -- Accounts payable & accrued expenses (186,73) 9,654 Net cash(used in)provided by operating activities (1,003,279) 351,519 Cash flows from investing activities: Proceeds from maturity of treasury securities 2,961,207 -- Purchase of fixed assets (39,411) (36,058) Net cash provided by (used in)investing activities 2,921,796 (36,058) Cash flows from financing activities: Proceeds from issuances of common stock 158,000 475,005 Loans to officers -- (385,000) Net cash provided by financing activities 158,000 90,005 Net increase in cash and cash equivalents 2,076,517 405,466 Cash and cash equivalents at beginning of year 2,157,687 457,959 Cash and cash equivalents at end of period $ 4,234,204 863,425 Non-cash financing activities: Technology acquisition paid in stock $ -- 46,970 See accompanying notes to condensed financial statements. RESEARCH FRONTIERS INCORPORATED Notes to Condensed Financial Statements March 31, 1998 (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 presentation 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 three-month period ended March 31, 1998 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 the financial statements of the Company as of December 31, 1997 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 microscopic particles that are either in the form of a liquid suspension or a film, which is usually enclosed between two glass or plastic plates, having transparent, electrically conductive coatings on the facing surfaces thereof. At least one of the two plates is transparent. Marketable Investment Securities The Company accounts for its investments in marketable securities under the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investment in Debt and Equity Securities" (Statement 115). As of July 1, 1997 the Company transferred its marketable securities from trading securities to held-to-maturity securities, as management intends and has the ability to hold such securities until their maturity. Held-to-maturity securities are recorded at cost. Dividend and interest income are recognized when earned. Cost is maintained on a specific identification basis for purposes of determining realized gains and losses on sales of investments. Comprehensive Income Effective January 1, 1998, the Company adopted the Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This Statement requires that companies disclose comprehensive income, which includes net income, foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on marketable securities classified as available-for-sale. Because the Company did not have any foreign currency translation adjustments, minimum pension liability adjustments, or unrealized gains or losses on marketable securities classified as available-for-sale, for the three months ended March 31, 1998 and 1997, comprehensive loss equaled net loss of $808,809 and $673,030, respectively. Reclassifications Certain reclassifications have been made to the 1997 financial statements to conform to the 1998 presentation. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Three Month Periods Ended March 31, 1998 and 1997 The Company's fee income from licensing activities for the first three months of 1998 and 1997 was $50,000. Operating expenses increased by $108,105 for the first three months of 1998 from $348,217 for the first three months of 1997. This increase was primarily the result of increased public relations expenses, as well as payroll, insurance and depreciation expenses offset by decreased consulting and travel expenses. Research and development expenditures decreased slightly to $513,794 for the first three months of 1998 from $519,524 for the first three months of 1997. This decrease was primarily the result of decreased research-related consulting expenses, offset by higher costs for materials, payroll, insurance and patent expenses. The Company's net gain from its investing activities for the first quarter of 1998 was $111,307, as compared to a net gain from its investing activities of $144,711 for the first quarter of 1997. This difference was primarily a result of increased interest income earned in the first quarter of 1998, offset by an unrealized gain on the Company's trading securities of $48,917 recorded during the first quarter of 1997. The Company has invested the proceeds from all sales of marketable equity securities in short-term U.S. Treasury securities. As a consequence of the factors discussed above, the Company's net loss was $808,809 ($0.08 per share) for the first three months of 1998 as compared to $673,030 ($.07 per share) for the first three months of 1997. Financial Condition, Liquidity and Capital Resources During the first three months of 1998, the Company's cash and marketable investment securities balance decreased by $884,690 principally as a result of cash used to fund the Company's net loss of $808,809, changes in assets and liabilities of $250,749 and purchase of fixed assets of $39,411, offset by the sale of common stock of approximately $158,000 from the exercise of options and warrants, the proceeds of which have been invested by the Company in short-term U.S. Treasury securities. At March 31, 1998, the Company had working capital of $8,692,660 and its shareholders' equity was $8,998,228. The Company expects to use its cash and the proceeds from maturities of its 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 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. 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 at least 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. The Year 2000 issue is a result of many computer programs using only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. The Company is aware of the issues associated with the programming code in existing computer systems as the millennium (Year 2000) approaches. Although there cannot be absolute assurance, the Company has considered the impact of Year 2000 issues on its internal computer systems and applications and believes that they are Year 2000 compliant. 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. 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: May 13, 1998 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 ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 MAR-31-1998 4,234,204 4,537,977 136,037 0 0 8,917,608 238,192 0 9,223,176 224,948 0 0 0 10,837,057 0 9,223,176 50,000 161,307 0 970,116 0 0 0 (808,809) 0 0 0 0 0 (808,809) (0.08) (0.08)
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