10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) of

THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarter ended September 30, 2019 Commission File Number 000-14893

RESEARCH FRONTIERS INCORPORATED

(Exact name of registrant as specified in its charter)

DELAWARE	11-2103466
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

240 CROSSWAYS PARK DRIVE
WOODBURY, NEW YORK	11797-2033
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (516) 364-1902

Securities registered pursuant to Section 12(b) of the Act:	Name of Exchange
Title of Class	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 [X]

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 [X]

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 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). Yes [X] No [  ]

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 [  ] Non-accelerated filer [  ]

Smaller reporting company [X] Emerging growth company [  ]

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 [X]

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	REFR	The NASDAQ Stock Market

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 7, 2019, there were outstanding 31,090,291 shares of Common Stock, par value $0.0001 per share.

TABLE OF CONTENTS	Page(s)
Condensed Consolidated Balance Sheets – September 30, 2019 (Unaudited) and December 31, 2018	3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	4
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)	6
Notes to the Condensed Consolidated Financial Statements (Unaudited)	7-13
Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	17
Item 4. Controls and Procedures	17
PART II - OTHER INFORMATION
Item 6. Exhibits	17
SIGNATURES	18

2

RESEARCH FRONTIERS INCORPORATED

Condensed Consolidated Balance Sheets

	September 30, 2019 (Unaudited)			December 31, 2018 (See Note 1)
Assets
Current assets:
Cash and cash equivalents	$	7,016,922		$	2,969,416
Royalties receivable, net of reserves of $1,117,441 in 2019 and $1,094,774 in 2018		775,760			689,677
Prepaid expenses and other current assets		105,884			52,729
Total current assets		7,898,566			3,711,822
Fixed assets, net		239,888			313,177
Operating lease ROU assets		814,285			-
Deposits and other assets		33,567			33,567
Total assets	$	8,986,306		$	4,058,566
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	163,276		$	-
Accounts payable		14,593			133,486
Accrued expenses and other		57,485			273,606
Deferred revenue		71,665			50,570
Total current liabilities		307,019			457,662
Operating lease liabilities, net of current portion		851,672			-
Warrant liability		-			501,414
Total liabilities		1,158,691			959,076
Shareholders’ equity:
Common stock, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 31,090,291 in 2019 and 27,665,211 in 2018		3,109			2,767
Additional paid-in capital		122,067,527			114,787,657
Accumulated deficit		(114,243,021	)		(111,690,934	)
Total shareholders’ equity		7,827,615			3,099,490
Total liabilities and shareholders’ equity	$	8,986,306		$	4,058,566

See accompanying notes to condensed consolidated financial statements.

3

RESEARCH FRONTIERS INCORPORATED

Condensed Consolidated Statements of Operations

(Unaudited)

	Nine Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2019			2018
Fee income	$	1,182,560		$	1,117,849		$	462,869		$	359,725
Operating expenses		2,356,875			2,228,757			666,356			572,968
Research and development		751,312			660,086			207,368			190,647
Total costs		3,108,187			2,888,843			873,724			763,615
Operating loss		(1,925,627	)		(1,770,994	)		(410,855	)		(403,890	)
Warrant market adjustment		(652,025	)		(286,631	)		-			(286,631	)
Net investment income		25,565			5,665			13,143			2,220
Net loss	$	(2,552,087	)	$	(2,051,960	)	$	(397,712	)	$	(688,301	)
Basic and diluted net loss per common share	$	(0.09	)	$	(0.08	)	$	(0.01	)	$	(0.03	)
Weighted average number of basic and diluted common shares outstanding		29,636,013			25,380,466			31,065,730			26,002,263

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, 2018 and 2019

	Common Stock				Additional		Accumulated
	Shares		Amount		Paid-in Capital		Deficit			Total
Balance, December 31, 2017		24,043,846	$	2,404	$	111,627,789	$	(109,062,827	)	$	2,567,366
Adoption of ASC 606		-		-		-		58,021			58,021
Issuance of common stock		3,618,365		362		3,026,268		-			3,026,630
Warrants converted to equity		-		-		61,111		-			61,111
Stock-based compensation		-		-		69,309		-			69,309
Net Loss		-		-		-		(2,051,960	)		(2,051,960	)
Balance, September 30, 2018		27,662,211	$	2,766	$	114,784,477	$	(111,056,766	)	$	3,730,477
Balance, December 31, 2018		27,665,211	$	2,767	$	114,787,657	$	(111,690,934	)	$	3,099,490
Exercise of options and warrants		1,423,843		142		1,170,404		-			1,170,546
Issuance of common stock		2,001,237		200		4,599,799		-			4,599,999
Warrants converted to equity		-		-		1,153,439		-			1,153,439
Stock-based compensation		-		-		356,228		-			356,228
Net Loss		-		-		-		(2,552,087	)		(2,552,087	)
Balance, September 30, 2019		31,090,291	$	3,109	$	122,067,527	$	(114,243,021	)	$	7,827,615

For the three months ended September 30, 2018 and 2019

	Common Stock				Additional		Accumulated
	Shares		Amount		Paid-in Capital		Deficit			Total
Balance, June 30, 2018		25,432,739	$	2,543	$	112,946,959	$	(110,368,465	)	$	2,581,037
Exercise of options and warrants		55,556		6		61,106		-			61,112
Issuance of common stock		2,173,916		217		1,776,412		-			1,776,629
Net Loss		-		-		-		(688,301	)		(688,301	)
Balance, September 30, 2018		27,662,211	$	2,766	$	114,784,477	$	(111,056,766	)	$	3,730,477
Balance, June 30, 2019		31,033,443	$	3,103	$	122,002,886	$	(113,845,309	)	$	8,160,680
Exercise of options and warrants		56,848		6		64,641		-			64,647
Net Loss		-		-		-		(397,712	)		(397,712	)
Balance, September 30, 2019		31,090,291	$	3,109	$	122,067,527	$	(114,243,021	)	$	7,827,615

See accompanying notes to condensed consolidated financial statements.

5

RESEARCH FRONTIERS INCORPORATED

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine months ended September 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(2,552,087	)	$	(2,051,960	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		146,496			135,400
Stock-based compensation		356,228			69,309
Provision for doubtful accounts		22,667			-
Warrant market adjustment		652,025			286,631
Change in assets and liabilities:
Royalty receivables		(108,750	)		(54,350	)
Prepaid expenses and other current assets		(53,155	)		(67,093	)
Accounts payable and accrued expenses		(142,477	)		7,100
Deferred revenue		21,095			38,142
Net cash used in operating activities		(1,657,958	)		(1,636,821	)
Cash flows from investing activities:
Purchases of fixed assets		(65,081	)		(11,295	)
Net cash used in investing activities		(65,081	)		(11,295	)
Cash flows from financing activities:
Net proceeds from issuances of common stock and warrants and exercise of options and warrants		5,770,545			3,311,111
Net cash provided by financing activities		5,770,545			3,311,111
Net increase in cash and cash equivalents		4,047,506			1,662,995
Cash and cash equivalents at beginning of period		2,969,416			1,737,847
Cash and cash equivalents at end of period	$	7,016,922		$	3,400,842
Supplemental disclosure of non-cash activities:
Right of use assets obtained in exchange for operating lease liabilities	$	941,284		$	-

See accompanying notes to condensed consolidated financial statements.

6

RESEARCH FRONTIERS INCORPORATED

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(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, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The balance sheet at December 31, 2018 has been derived from the audited consolidated financial statements at 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 (the “Company”) for the fiscal year ended December 31, 2018.

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 historically utilized its cash, cash equivalents, short-term investments, and the proceeds from the sale of its investments 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 resources 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, 2019, we had working capital of approximately $7.6 million, cash of approximately $7.0 million, shareholders’ equity of approximately $7.8 million and an accumulated deficit of approximately $114.2 million. Our quarterly projected cash flow shortfall, based on our current operations adjusted for any non-recurring cash expenses for the next 12 months, is approximately $450,000-$550,000 per quarter. We may eliminate some operating expenses in the future, which will further reduce our cash flow shortfall if needed. We expect to have sufficient working capital for at least the next 3 years to fund operations based upon current expense levels.

7

In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may delay, reduce or curtail our operations. 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. 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. To date, the Company has not generated sufficient revenue from its licensees to fund its operations.

Note 3. Recently Adopted Accounting Pronouncement

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board’s Standard, Leases (Topic 842), as amended. The standard requires all leases to be recorded on the balance sheet as a right of use asset and a lease liability. The standard provides practical expedients in order to simplify adoption, including the following:

● An entity need not reassess whether any expired or existing contracts are or contain leases.

● An entity need not reassess the lease classification for any expired or existing leases. Instead, any leases previously classified as operating leases will continue to be classified as operating leases, while any leases previously classified as capital leases will be classified as finance leases.

● An entity need not reassess initial direct costs for any leases.

The Company used the above practical expedients as the transition method in the application of the new lease standard at January 1, 2019. The Company applied a policy election to exclude short-term leases from balance sheet recognition and elected certain practical expedients at adoption. As permitted, the Company did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases or the initial direct costs for any existing leases which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $1,134,000 and an operating lease right of use asset of $941,000 were recorded. The operating lease liability was $193,000 more than the operating lease right of use asset due to unamortized lease incentive from periods prior to the adoption of the new lease standard. There was no cumulative earnings effect adjustment.

Note 4. Fair Value Measurements

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of all financial instruments classified as a current asset or current liability are deemed to approximate fair value because of the short maturity of those instruments.

Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”) establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC Topic 820 applies other previously issued accounting pronouncements that require or permit fair value measurements but does not require any new fair value measurements.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

We value financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices for similar assets or liabilities in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2019, and December 31, 2018, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. The carrying value of the previous warrant liabilities was adjusted to fair value each reporting period using the Black-Scholes method to determine the fair value of the warrants. The issued warrants treated as warrant liabilities had different exercise prices depending on the date of exercise. The lowest exercise price for these warrants was used in the Black Scholes method to value the warrant liabilities since it was deemed a reasonable approximation of fair market value. The Company’s warrant liability was considered a Level 3 financial instrument and the corresponding liabilities were reclassified to equity during the three months ended June 30, 2019, therefore there was no warrant liability as of September 30, 2019. The estimated fair value for warrant liabilities for the period ended December 31, 2018 using the Black-Scholes method was $501,414.

Note 5. 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 6. Revenue Recognition

Company recognizes revenue in accordance with 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.

This new ASC 606 guidance was adopted by the Company beginning January 1, 2018. ASC 606 was applied using the modified retrospective method, with the cumulative effect of the initial adoption being recognized as an adjustment to opening retained earnings at January 1, 2018.

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.

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 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.

8

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 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 10-15% of the selling price. While this is variable consideration, it is subject to the sales/usage royalty exception to recognition of variable consideration in ASC 606 10-55-65 and therefore is not recognized until the subsequent sales or usage occurs or the MAR period commences.

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 than under the accounting guidance used prior to the adoption of ASC 606, and (ii) the remaining periods in the year will have less of the transaction price recognized under ASC 606 than under the accounting guidance used prior to the adoption of 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. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher than the accounting guidance used prior to the adoption of ASC 606.

9

The Company does not have any contract assets under ASC 606 as of September 30, 2019.

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. Such excess amounts are recorded as deferred revenue and are recognized into income in future periods as earned.

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.

As of September 30, 2019, the Company has seven license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of four of these agreements will end as of December 31, 2019, one will end as of December 31, 2020, one will end as of December 31, 2021, and one will end as of December 31, 2022. The Company currently expects that all seven of these agreements will renew annually at the end of the Initial Term. As of September 30, 2019, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the seven license agreements is $282,632. The revenue for these remaining performance obligations for each of the seven license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term.

10

Note 7. 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 2019, three licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 43%, 15% and 10% of fee income recognized during such period. During the first nine months of 2018, four licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 33%, 14%, 11% and 10%, respectively, of fee income recognized during this period. During the three-month period ended September 30, 2019, two licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 53% and 15% of fee income recognized during such period. During the three-month period ended September 30, 2018, three licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 33%, 14% and 14%, respectively, of fee income recognized during such period.

Note 8. Stock-Based Compensation

The Company has granted options/warrants to consultants. GAAP requires that all stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair value of the award at the date of grant. These awards generally vest ratably over 12 to 60 months from the date of grant and the Company charges to operations quarterly the current market value of the options using the Black-Scholes method. During the three and nine months ended September 30, 2019 and 2018 there were no charges related to options granted to consultants.

During the nine-month period ended September 30, 2018, the Company granted 150,182 fully vested options to employees and recorded share-based compensation of $69,309. All of the options granted to employees during the nine-month period ended September 30, 2018 occurred during the second quarter of 2018. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	0.462
Expected dividend yield		0
Expected volatility		51	%
Risk free interest rate		2.77	%
Expected term of the option		5 years

During the nine-month period ended September 30, 2019, the Company granted 233,500 fully vested options to employees and directors and recorded share-based compensation of $356,228. All of the options granted to employees during the nine-month period ended September 30, 2019 occurred during the second quarter of 2019. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	1.5256
Expected dividend yield		0
Expected volatility		61	%
Risk free interest rate		1.84	%
Expected term of the option		5 years

There was no compensation expense recorded relating to restricted stock grants to employees and directors during the three and nine months ended September 30, 2019 and 2018.

As of September 30, 2019, there were 1,166,500 shares available for future grant under our 2019 Equity Incentive Plan, which was approved by the Company’s shareholders in June 2019.

Note 9. 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 10. Basic and Diluted Loss Per Common Share

Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive 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, 2019 and 2018, 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) was 3,324,213 and 2,975,985 for the three and nine months ended September 30, 2019 and 2018, respectively.

Note 11. Equity

During the nine months ended September 30, 2019, the Company received $1,170,546 in proceeds from the exercise of outstanding options and warrants and issued 1,060,718 shares of its common stock in connection with these exercises. In addition, during the nine months ended September 30, 2019, the Company issued 363,125 shares of its common stock in connection with the cashless exercise of 603,569 of its outstanding options and warrants. During the three-month period ended September 30, 2019, the Company received $64,647 in proceeds from the exercise of outstanding options and warrants and issued 56,848 shares of its common stock in connection with these exercises. There were no proceeds from the exercise of outstanding warrants and/or options during the three or nine month period ended September 30, 2018.

On or around February 16, 2018, a small group of long-time shareholders of the Company who are accredited investors made an interest-free five-year convertible loan of $1.25 million to the Company which, upon the occurrence of certain conditions which have already occurred, automatically converted into 1,388,893 shares of common stock at a price equal to the market price of the Company’s common stock when the loan was made, plus warrants expiring February 28, 2023 to purchase 1,388,893 shares of common stock at an exercise price of $1.10, $1.20 or $1.35 per share depending on the exercise date. No payments are due on this note during its five-year term or after conversion into equity. On April 23, 2018, Research Frontiers Incorporated filed a prospectus supplement relating to the issuance and sale of the above common stock and warrant securities with the Securities and Exchange Commission. The Company recorded this transaction as an equity transaction whereby the proceeds were accounted for as the issuance of the Company’s common stock on the date that the proceeds were received.

On September 7, 2018, the Company announced that it had sold common stock to a group of investors led by Gauzy Ltd., a licensee of the Company’s SPD technology (Gauzy). The aggregate proceeds from these stock offerings was $2.0 million. At the closing, the investors received 2,173,916 shares of Research Frontiers common stock at a price of $0.92 per share, as well as five-year warrants to purchase 1,086,957 shares of Research Frontiers common stock at an exercise price of $1.10, $1.20 or $1.38 per share depending on the exercise date. In connection with the issuance of certain of these warrants during the third quarter of 2018, the Company recorded $223,370 as a warrant liability upon the issuance of these warrants on August 13, 2018 and recorded a non-cash expense of $278,044 to mark the warrants to their estimated market value as of December 31, 2018. This resulted in a liability of $501,414 recorded on the Company’s December 31, 2018 balance sheet.

On or around May 30, 2019, the Company sold to accredited investors a total of 1,276,599 shares of common stock and warrants expiring May 31, 2024 to purchase 638,295 shares of common stock at an exercise price of $3.384, $3.666 or $4.23 per share depending on the exercise date. Research Frontiers Incorporated also sold to Gauzy, at a price of $1.38 per unit, with each unit comprised of one share of unregistered common stock and one half of one warrant. The warrant can be converted into one share of unregistered common stock at an exercise price of $1.656, $1.794 or $2.07 per share depending on the exercise date. Gauzy received a total of 724,638 shares of unregistered common stock and warrants expiring May 31, 2024 to purchase 362,319 shares of common stock. The aggregate proceeds from these stock offerings was $4.6 million.

Investors that participated in the May 30, 2019 offering agreed to amending/clarifying language to the terms of the warrants that they received in the September 7, 2018 offering. Those investors that received warrants in the September 7, 2018 offering that did not participate in the May 30, 2019 offering, separately agreed as of June 27, 2019 to the same amending/clarifying language used in the May 30, 2019 offering. The amending/clarifying language relating to the September 7, 2018 warrants does not allow for a net cash settlement option for the warrants even if no registered shares of common stock are available upon the exercise of the warrant. The Company recorded a non-cash expense of $0 and $652,025 respectively for the three- and nine-month periods ended September 30, 2019 to mark these warrants to their estimated market value as of their respective amendment/clarification date. The warrant liability was valued at $1,153,439 (including all valuation adjustments since their issuance) through the date of these new agreements and amendments and, based on the amended warrant terms, the warrant liability was reclassified to equity as of these dates.

As of September 30, 2019, there were 2,029,462 warrants outstanding.

12

Note 12. 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 operating leases for certain facilities, vehicles and equipment with a weighted average remaining lease term of 5.4 years as of September 30, 2019. Operating leases are included in right of use lease assets, other current liabilities and long-term lease liabilities on the condensed 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. The Company uses the stated borrowing rate for a lease when readily determinable. When the interest rates implicit in its lease agreements is not readily determinable, the Company used an interest rate based on the marketplace for public debt. The weighted-average discount rate associated with operating leases as of September 30, 2019 is 5.5%.

Operating lease expense for the three months ended September 30, 2019 was approximately $53,000 and approximately $164,000 for the nine months ended September 30, 2019. The Company has no material variable lease costs or sublease income for the nine months ended September 30, 2019. Subsequent to the Company’s adoption of the new lease accounting guidance on January 1, 2019, the Company recorded new right of use lease assets of approximately $900,000 and associated lease liabilities of approximately $1.1 million.

Maturities of operating lease liabilities as of September 30, 2019 were as follows:

	September 30, 2019
For the remainder of 2019	$	52,989
For the year ended December 31, 2020		213,146
For the year ended December 31, 2021		207,229
For the year ended December 31, 2022		213,320
For the year ended December 31, 2023		217,151
For the year ended December 31, 2024 and beyond		277,743
Total lease payments		1,181,578
Less: imputed lease interest		(166,630	)
Present value of lease liabilities	$	1,014,948

13

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The following accounting policies 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. For additional accounting policies, see Note 2 to our December 31, 2018 consolidated financial statements, “Summary of Significant Accounting Policies.”

The Company adopted ASC 606, the new revenue recognition standard, beginning January 1, 2018. 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 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 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 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 doubtful accounts. 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 uncollectible accounts when necessary.

The Company expenses costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items. All of our research and development costs are charged to operations as incurred. Our research and development expenses consist of costs incurred for internal and external research and development. These costs include direct and indirect overhead expenses.

The Company has historically used the Black-Scholes option-pricing model to determine the estimated fair value of each option grant. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest rates. These assumptions reflect our best estimates, but these items involve uncertainties based on market conditions generally outside of our control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Furthermore, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years.

On occasion, the Company may issue to consultants either options or warrants to purchase shares of common stock of the Company at specified share prices. These options or warrants may vest based upon specific services being performed or performance criteria being met. In accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, the Company is required to record consulting expenses based upon the fair value of such options or warrants on the earlier of the service period or the period that such options or warrants vest as determined using a Black-Scholes option pricing model and are marked to market quarterly using the Black-Scholes option valuation model.

14

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board’s Standard, Leases (Topic 842), as amended. The standard requires all leases to be recorded on the balance sheet as a right of use asset and a lease liability. The Company used a transition method that applies the new lease standard at January 1, 2019. The Company applied a policy election to exclude short-term leases from balance sheet recognition and also elected certain practical expedients at adoption. As permitted, the Company did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases, initial direct costs for any existing lease, which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $1,133,821 and an operating lease right of use asset of $941,000 was recorded. The operating lease liability was $192,537 more than the operating lease right of use asset due to unamortized lease incentive from periods prior to the adoption of the new lease standard. There was no cumulative earnings effect adjustment.

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. An example of a critical estimate is the full valuation allowance for deferred taxes that was recorded based on the uncertainty that such tax benefits will be realized in future periods.

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 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 model like 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, which 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.

In 2019 and 2018, the Company received royalty revenues from sales of the Magic Sky Control option on the S-Class Coupe, Maybach and S-Class Sedan, and SL and SLK/SLC. In addition to Daimler, one of the Company’s licensees started commercial production of SPD products for McLaren Automotive in the first quarter of 2019. 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.

Because the Company’s license agreements typically provide for the payment of royalties by a licensee on product sales within 45 days after the end of the quarter in which a sale of a licensed product occurs (with some of the Company’s more recent license agreements providing for payments on a monthly basis), and because of the time period which typically will elapse between a customer order and the sale of the licensed product and installation in a home, office building, automobile, aircraft, boat or any other product, there could be a delay between when economic activity between a licensee and its customer occurs and when the Company gets paid its royalty resulting from such activity.

15

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

The Company’s fee income from licensing activities for the three months ended September 30, 2019 was $462,869 as compared to $359,725 for the three months ended September 30, 2018, representing a $103,144 increase between these two periods. Higher fees in the automotive and aircraft markets were partially offset by lower fee income from licensees in the architect and display markets.

Operating expenses increased by $93,388 for the three months ended September 30, 2019 to $666,356 from $572,968 for the three months ended September 30, 2018. This increase was the result of higher marketing and investor relations cost ($29,000) and higher patent costs ($46,000).

Research and development expenditures increased by $16,721 to $207,368 for the three months ended September 30, 2019 from $190,647 for the three months ended September 30, 2018. This increase was the result of higher payroll and related costs ($13,000) plus higher allocated facility costs ($4,000).

In connection with the issuance of certain warrants during the third quarter of 2018, the Company recorded a non-cash expense of $286,631 to mark these warrant liabilities to their market value as of September 30, 2018. The warrant liability reclassified to equity as of the end of the second quarter of 2019, thus no adjustment in the market value of the warrant liabilities was needed for the three-month period ended September 30, 2019.

The Company’s net investment income for the three months ended September 30, 2019 was $13,143 as compared to $2,220 for the three months ended September 30, 2018. The difference was primarily due to higher cash balances available for investment.

As a consequence of the factors discussed above, the Company’s net loss was $397,712 ($0.01 per common share) for the three months ended September 30, 2019 as compared to $688,301 ($0.03 per common share) for the three months ended September 30, 2018.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

The Company’s fee income from licensing activities for the nine months ended September 30, 2019 was $1,182,560 as compared to $1,117,849 for the nine months ended September 30, 2018, representing a $64,711 increase between these two periods. Higher fees in the automotive and aircraft markets were partially offset by lower fee income from licensees in the architect and display markets.

Operating expenses increased by $128,118 for the nine months ended September 30, 2019 to $2,356,875 from $2,228,757 for the nine months ended September 30, 2018. This increase was the result of higher non-cash charges related to the grant of fully-vested stock options to employees and directors ($230,000), higher investor relations and marketing costs ($49,000) and higher accounting fees ($42,000) partially offset by lower cash payroll and related costs ($154,000) and lower expenses relating to the Company’s discontinued VariGuard business unit ($75,000).

Research and development expenditures increased by $91,226 to $751,312 for the nine months ended September 30, 2019 from $660,086 for the nine months ended September 30, 2018. This increase was the result of higher cash payroll and related costs ($33,000), higher non-cash charges related to the grant of fully vested options to employees ($56,000), as well as higher allocated facility costs ($10,000).

In connection with the issuance of certain warrants during the third quarter of 2018, the Company recorded a non-cash expense of $652,025 for the nine months ended September 30, 2019 to mark these warrants to their market value through the date that they were reclassified to equity in 2019. The Company recorded a non-cash expense of $286,631 for the nine months ended September 30, 2018 to mark these warrants to their market value.

The Company’s net investment income for the nine months ended September 30, 2019 was $25,565 as compared to $5,665 for the nine months ended September 30, 2018. The difference was primarily due to higher cash balances available for investment.

As a consequence of the factors discussed above, the Company’s net loss was $2,552,087 ($0.09 per common share) for the nine months ended September 30, 2019 as compared to $2,051,960 ($0.08 per common share) for the nine months ended September 30, 2018.

Financial Condition, Liquidity and Capital Resources

The Company has primarily utilized its cash, cash equivalents, short-term investments, and the proceeds from its investments to fund its research and development, 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, 2019, the Company’s cash and cash equivalents balance increased by $4,047,506 principally as a result of cash proceeds of $5,770,545 from the issuance of common stock and the exercise of warrants, partially offset by cash used for operations of $1,657,958 and cash used for the purchase of property and equipment of $65,081. As of September 30, 2019, the Company had cash and cash equivalents of $7,016,922, working capital of $7,591,547 and total shareholders’ equity of $7,827,615.

Our quarterly projected cash flow shortfall, based on our current operations adjusted for any non-recurring cash expenses for the next 12 months, is approximately $450,000-$550,000 per quarter. We expect to have sufficient working capital for at least the next 3 years of operations. We may seek to eliminate some operating expenses in the future to reduce our cash flow shortfall.

16

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 until at least the third quarter of 2022. 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. To date the Company has not generated sufficient revenue from its licensees to fully fund its operations.

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, 2018. 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 chief financial officer, with assistance from other members of our management, have reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2019, and, based on their evaluation, have 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, 2019 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.

PART II. OTHER INFORMATION

Item 6. Exhibits

31.1	Rule 13a-14(a)/15d-14(a) Certification of Joseph M. Harary - Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Seth L. Van Voorhees - Filed herewith.
32.1	Section 1350 Certification of Joseph M. Harary - Filed herewith.
32.2	Section 1350 Certification of Seth L. Van Voorhees - Filed herewith.

17

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 and Treasurer

(Principal Executive)

/s/ Seth L. Van Voorhees

Seth L. Van Voorhees, Vice President, CFO and Treasurer

(Principal Financial and Accounting Officer)

Date: November 7, 2019

18

EX-31.1

EXHIBIT 31.1 CERTIFICATION

I, Joseph M. Harary, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Research Frontiers Incorporated (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 7, 2019	/s/ Joseph M. Harary
	Joseph M. Harary
	President, Chief Executive Officer

EX-31.2

EXHIBIT 31.2 CERTIFICATION

I, Seth L. Van Voorhees, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Research Frontiers Incorporated (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 7, 2019	/s/ Seth L. Van Voorhees
	Seth L. Van Voorhees
	Vice President, Chief Financial Officer,
	Treasurer and Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Research Frontiers Incorporated (the “Company”) on Form 10-Q for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph M. Harary, President and Chief Executive Officer and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph M. Harary

Joseph M. Harary

President, Chief Executive Officer and Principal Executive Officer

November 7, 2019

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Research Frontiers Incorporated (the “Company”) on Form 10-Q for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Seth L. Van Voorhees, Vice President, Chief Financial Officer, Treasurer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Seth L. Van Voorhees

Seth L. Van Voorhees

Vice President, Chief Financial Officer,

Treasurer and Principal Accounting Officer

November 7, 2019

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Schedule of Operating Lease Liabilities

Maturities of operating lease liabilities as of September 30, 2019 were as follows:

	September 30, 2019
For the remainder of 2019	$	52,990
For the year ended December 31, 2020		213,146
For the year ended December 31, 2021		207,229
For the year ended December 31, 2022		213,320
For the year ended December 31, 2023		217,151
For the year ended December 31, 2024 and beyond		277,743
Total lease payments		1,181,579
Less: imputed lease interest		(166,630	)
Present value of lease liabilities	$	1,014,949

Schedule of Future Minimum Rental Commitments

As previously disclosed in its Annual Report filed on Form 10-K for the year ended December 31, 2018, the following table presents the Company’s future minimum rental commitments under operating leases as of December 31, 2018:

Year	Amount
2019	$	191,000
2020	$	197,000
2021	$	203,000
2022	$	209,000
Thereafter:	$	493,000

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Revenue Recognition (Details Narrative)	9 Months Ended
	Sep. 30, 2019 USD ($)
Seven License Agreements [Member]
Remaining performance obligations	$ 282,632
Minimum [Member]
Royalty rate	10.00%
Maximum [Member]
Royalty rate	15.00%

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Basic and Diluted Loss Per Common Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Warrant [Member]
Anti-dilutive securities effect	3,384,304	2,975,985	3,384,304	2,975,985
Stock Option [Member]
Anti-dilutive securities effect	3,384,304	2,975,985	3,384,304	2,975,985

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Fee income	$ 462,869	$ 359,725	$ 1,182,560	$ 1,117,849
Operating expenses	666,356	572,968	2,356,875	2,228,757
Research and development	207,368	190,647	751,312	660,086
Total	873,724	763,615	3,108,187	2,888,843
Operating loss	(410,855)	(403,890)	(1,925,627)	(1,770,994)
Warrant market adjustment		(286,631)	(652,025)	(286,631)
Net investment income	13,143	2,220	25,565	5,665
Net loss	$ (397,712)	$ (688,301)	$ (2,552,087)	$ (2,051,960)
Basic and diluted net loss per common share	$ (0.01)	$ (0.03)	$ (0.09)	$ (0.08)
Weighted average number of basic common shares outstanding	31,065,730	26,002,263	29,636,013	25,380,466

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Business

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

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 historically utilized its cash, cash equivalents, short-term investments, and the proceeds from the sale of its investments 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 resources 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, 2019, we had working capital of approximately $7.6 million, cash of approximately $7.0 million, shareholders’ equity of approximately $7.8 million and an accumulated deficit of approximately $114.2 million. Our quarterly projected cash flow shortfall, based on our current operations adjusted for any non-recurring cash expenses for the next 12 months, is approximately $450,000-$550,000 per quarter. We may eliminate some operating expenses in the future, which will further reduce our cash flow shortfall if needed. We expect to have sufficient working capital for at least the next 3 years to fund operations based upon current expense levels.

In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may delay, reduce or curtail our operations. 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. 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. To date, the Company has not generated sufficient revenue from its licensees to fund its operations.

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Note 6. Revenue Recognition

Company recognizes revenue in accordance with 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.

This new ASC 606 guidance was adopted by the Company beginning January 1, 2018. ASC 606 was applied using the modified retrospective method, with the cumulative effect of the initial adoption being recognized as an adjustment to opening retained earnings at January 1, 2018.

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.

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 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 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 10-15% of the selling price. While this is variable consideration, it is subject to the sales/usage royalty exception to recognition of variable consideration in ASC 606 10-55-65 and therefore is not recognized until the subsequent sales or usage occurs or the MAR period commences.

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 than under the accounting guidance used prior to the adoption of ASC 606, and (ii) the remaining periods in the year will have less of the transaction price recognized under ASC 606 than under the accounting guidance used prior to the adoption of 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. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher than the accounting guidance used prior to the adoption of ASC 606.

The Company does not have any contract assets under ASC 606 as of September 30, 2019.

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. Such excess amounts are recorded as deferred revenue and are recognized into income in future periods as earned.

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.

As of September 30, 2019, the Company has seven license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of four of these agreements will end as of December 31, 2019, one will end as of December 31, 2020, one will end as of December 31, 2021, and one will end as of December 31, 2022. The Company currently expects that all seven of these agreements will renew annually at the end of the Initial Term. As of September 30, 2019, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the seven license agreements is $282,632. The revenue for these remaining performance obligations for each of the seven license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term.

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Basic and Diluted Loss Per Common Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Basic and Diluted Loss Per Common Share

Note 10. Basic and Diluted Loss Per Common Share

Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive 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, 2019 and 2018, 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) was 3,324,213 and 2,975,985 for the three and nine months ended September 30, 2019 and 2018, respectively.

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Leases - Schedule of Operating Lease Liabilities (Details) - USD ($)	Sep. 30, 2019	Jan. 02, 2019
Leases [Abstract]
For the remainder of 2019	$ 52,990
For the year ended December 31, 2020	213,146
For the year ended December 31, 2021	207,229
For the year ended December 31, 2022	213,320
For the year ended December 31, 2023	217,151
For the year ended December 31, 2024 and beyond	277,743
Total lease payments	1,181,579
Less: imputed lease interest	(166,630)
Present value of lease liabilities	$ 1,014,949	$ 1,134,000

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Recently Adopted Accounting Pronouncement

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Recently Adopted Accounting Pronouncement

Note 3. Recently Adopted Accounting Pronouncement

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board’s Standard, Leases (Topic 842), as amended. The standard requires all leases to be recorded on the balance sheet as a right of use asset and a lease liability. The standard provides practical expedients in order to simplify adoption, including the following:

● An entity need not reassess whether any expired or existing contracts are or contain leases.

● An entity need not reassess the lease classification for any expired or existing leases. Instead, any leases previously classified as operating leases will continue to be classified as operating leases, while any leases previously classified as capital leases will be classified as finance leases.

● An entity need not reassess initial direct costs for any leases.

The Company used the above practical expedients as the transition method in the application of the new lease standard at January 1, 2019. The Company applied a policy election to exclude short-term leases from balance sheet recognition and elected certain practical expedients at adoption. As permitted, the Company did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases or the initial direct costs for any existing leases which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $1,134,000 and an operating lease right of use asset of $941,000 were recorded. The operating lease liability was $193,000 more than the operating lease right of use asset due to unamortized lease incentive from periods prior to the adoption of the new lease standard. There was no cumulative earnings effect adjustment.

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance beginning at Dec. 31, 2017	$ 2,404	$ 111,627,789	$ (109,062,827)	$ 2,567,366
Balance beginning, shares at Dec. 31, 2017	24,043,846
Adoption of ASC 606			58,021	58,021
Issuance of common stock	$ 362	3,026,268		3,026,630
Issuance of common stock, shares	3,618,365
Warrants converted to equity		61,111		61,111
Stock-based compensation		69,309		69,309
Net loss			(2,051,960)	(2,051,960)
Balance ending at Sep. 30, 2018	$ 2,766	114,784,477	(111,056,766)	3,730,477
Balance ending, shares at Sep. 30, 2018	27,662,211
Balance beginning at Jun. 30, 2018	$ 2,543	112,946,959	(110,368,465)	2,581,037
Balance beginning, shares at Jun. 30, 2018	25,432,739
Issuance of common stock	$ 217	1,776,412		1,776,629
Issuance of common stock, shares	2,173,916
Stock-based compensation
Exercise of options and warrants	$ 6	61,106		61,112
Exercise of options and warrants, shares	55,556
Net loss			(688,301)	(688,301)
Balance ending at Sep. 30, 2018	$ 2,766	114,784,477	(111,056,766)	3,730,477
Balance ending, shares at Sep. 30, 2018	27,662,211
Balance beginning at Dec. 31, 2018	$ 2,767	114,787,657	(111,690,934)	3,099,490
Balance beginning, shares at Dec. 31, 2018	27,665,211
Adoption of ASC 606
Issuance of common stock	$ 200	4,599,799		4,599,999
Issuance of common stock, shares	2,001,237
Warrants converted to equity		1,153,439		1,153,439
Stock-based compensation		356,228		356,228
Exercise of options and warrants	$ 142	1,170,404		1,170,546
Exercise of options and warrants, shares	1,423,843
Net loss			(2,552,087)	(2,552,087)
Balance ending at Sep. 30, 2019	$ 3,109	122,067,527	(114,243,021)	7,827,615
Balance ending, shares at Sep. 30, 2019	31,090,291
Balance beginning at Jun. 30, 2019	$ 3,103	122,002,886	(113,845,309)	8,160,680
Balance beginning, shares at Jun. 30, 2019	31,033,443
Exercise of options and warrants	$ 6	64,641		64,647
Exercise of options and warrants, shares	56,848
Net loss			(397,712)	(397,712)
Balance ending at Sep. 30, 2019	$ 3,109	$ 122,067,527	$ (114,243,021)	$ 7,827,615
Balance ending, shares at Sep. 30, 2019	31,090,291

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 07, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	RESEARCH FRONTIERS INC
Entity Central Index Key	0000793524
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		31,090,291
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

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Fee Income

9 Months Ended

Sep. 30, 2019

Fee Income

Fee Income

Note 7. 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 2019, three licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 43%, 15% and 10% of fee income recognized during such period. During the first nine months of 2018, four licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 33%, 14%, 11% and 10%, respectively, of fee income recognized during this period. During the three-month period ended September 30, 2019, two licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 53% and 15% of fee income recognized during such period. During the three-month period ended September 30, 2018, three licensees accounted for 10% or more of fee income of the Company; these licensees accounted for approximately 33%, 14% and 14%, respectively, of fee income recognized during such period.

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Equity

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Equity

Note 11. Equity

During the nine months ended September 30, 2019, the Company received $1,170,546 in proceeds from the exercise of outstanding options and warrants and issued 1,060,718 shares of its common stock in connection with these exercises. In addition, during the nine months ended September 30, 2019, the Company issued 363,125 shares of its common stock in connection with the cashless exercise of 603,569 of its outstanding options and warrants. During the three-month period ended September 30, 2019, the Company received $64,647 in proceeds from the exercise of outstanding options and warrants and issued 56,848 shares of its common stock in connection with these exercises. There were no proceeds from the exercise of outstanding warrants and/or options during the three or nine month period ended September 30, 2018.

On or around February 16, 2018, a small group of long-time shareholders of the Company who are accredited investors made an interest-free five-year convertible loan of $1.25 million to the Company which, upon the occurrence of certain conditions which have already occurred, automatically converted into 1,388,893 shares of common stock at a price equal to the market price of the Company’s common stock when the loan was made, plus warrants expiring February 28, 2023 to purchase 1,388,893 shares of common stock at an exercise price of $1.10, $1.20 or $1.35 per share depending on the exercise date. No payments are due on this note during its five-year term or after conversion into equity. On April 23, 2018, Research Frontiers Incorporated filed a prospectus supplement relating to the issuance and sale of the above common stock and warrant securities with the Securities and Exchange Commission. The Company recorded this transaction as an equity transaction whereby the proceeds were accounted for as the issuance of the Company’s common stock on the date that the proceeds were received.

On September 7, 2018, the Company announced that it had sold common stock to a group of investors led by Gauzy Ltd., a licensee of the Company’s SPD technology (Gauzy). The aggregate proceeds from these stock offerings was $2.0 million. At the closing, the investors received 2,173,916 shares of Research Frontiers common stock at a price of $0.92 per share, as well as five-year warrants to purchase 1,086,957 shares of Research Frontiers common stock at an exercise price of $1.10, $1.20 or $1.38 per share depending on the exercise date. In connection with the issuance of certain of these warrants during the third quarter of 2018, the Company recorded $223,370 as a warrant liability upon the issuance of these warrants on August 13, 2018 and recorded a non-cash expense of $278,044 to mark the warrants to their estimated market value as of December 31, 2018. This resulted in a liability of $501,414 recorded on the Company’s December 31, 2018 balance sheet.

On or around May 30, 2019, the Company sold to accredited investors a total of 1,276,599 shares of common stock and warrants expiring May 31, 2024 to purchase 638,295 shares of common stock at an exercise price of $3.384, $3.666 or $4.23 per share depending on the exercise date. Research Frontiers Incorporated also sold to Gauzy, at a price of $1.38 per unit, with each unit comprised of one share of unregistered common stock and one half of one warrant. The warrant can be converted into one share of unregistered common stock at an exercise price of $1.656, $1.794 or $2.07 per share depending on the exercise date. Gauzy received a total of 724,638 shares of unregistered common stock and warrants expiring May 31, 2024 to purchase 362,319 shares of common stock. The aggregate proceeds from these stock offerings was $4.6 million.

Investors that participated in the May 30, 2019 offering agreed to amending/clarifying language to the terms of the warrants that they received in the September 7, 2018 offering. Those investors that received warrants in the September 7, 2018 offering that did not participate in the May 30, 2019 offering, separately agreed as of June 27, 2019 to the same amending/clarifying language used in the May 30, 2019 offering. The amending/clarifying language relating to the September 7, 2018 warrants does not allow for a net cash settlement option for the warrants even if no registered shares of common stock are available upon the exercise of the warrant. The Company recorded a non-cash expense of $0 and $652,025 respectively for the three- and nine-month periods ended September 30, 2019 to mark these warrants to their estimated market value as of their respective amendment/clarification date. The warrant liability was valued at $1,153,439 (including all valuation adjustments since their issuance) through the date of these new agreements and amendments and, based on the amended warrant terms, the warrant liability was reclassified to equity as of these dates.

As of September 30, 2019, there were 2,029,462 warrants outstanding.

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Leases (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Jan. 02, 2019	Dec. 31, 2018
Leases [Abstract]
Operating weighted average remaining lease term	5 years 4 months 24 days	5 years 4 months 24 days
Weighted average discount rate, percent	5.50%	5.50%
Operating lease expense	$ 53,000	$ 164,000
Right of use lease assets	814,285	814,285	$ 941,000
Operating lease liability	$ 1,014,949	$ 1,014,949	$ 1,134,000

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Equity (Details Narrative) - USD ($)				3 Months Ended		9 Months Ended		12 Months Ended
	May 30, 2019	Sep. 07, 2018	Feb. 16, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Aug. 13, 2018
Proceeds from exercise of options and warrants				$ 64,647		$ 1,170,546
Options and warrant issued in connection with exercises				56,848		1,060,718
Additional issuance of common stock options and warrants						363,125
Convertible loan period			5 years
Proceeds from loan			$ 1,250,000
Conversion of stock, shares converted			1,388,893
Warrants to purchase common stock			1,388,893
Warrant expiry date			Feb. 28, 2023
Warrants term			5 years
Warrant liability								$ 501,414	$ 223,370
Warrant market adjustment					$ 286,631	652,025	$ 286,631	$ 278,044
Warrant liability reclassified to equity						$ 1,153,439
Number of warrants outstanding				2,029,462		2,029,462
SPD Technology [Member]
Shares issued price per share	$ 1.38
Warrants issued description	One share of unregistered common stock and one half of one warrant
Investors [Member] | SPD Technology [Member]
Warrants to purchase common stock		1,086,957
Proceeds from stock offering		$ 2,000,000
Number of shares issued to investors		2,173,916
Shares issued price per share		$ 0.92
Warrants term		5 years
Warrant Exercise Price One [Member]
Warrant exercise price per share			$ 1.10
Warrant Exercise Price One [Member] | Accredited Investors [Member]
Warrant exercise price per share	$ 3.384
Warrant Exercise Price One [Member] | SPD Technology [Member]
Warrant exercise price per share	1.656
Warrant Exercise Price One [Member] | Investors [Member] | SPD Technology [Member]
Warrant exercise price per share		$ 1.10
Warrant Exercise Price Two [Member]
Warrant exercise price per share			1.20
Warrant Exercise Price Two [Member] | Accredited Investors [Member]
Warrant exercise price per share	3.666
Warrant Exercise Price Two [Member] | SPD Technology [Member]
Warrant exercise price per share	1.794
Warrant Exercise Price Two [Member] | Investors [Member] | SPD Technology [Member]
Warrant exercise price per share		1.20
Warrant Exercise Price Three [Member]
Warrant exercise price per share			$ 1.35
Warrant Exercise Price Three [Member] | Accredited Investors [Member]
Warrant exercise price per share	4.23
Warrant Exercise Price Three [Member] | SPD Technology [Member]
Warrant exercise price per share	$ 2.07
Warrant Exercise Price Three [Member] | Investors [Member] | SPD Technology [Member]
Warrant exercise price per share		$ 1.38
Common Stock [Member]
Number of shares issued to investors					2,173,916	2,001,237	3,618,365
Common Stock [Member] | Accredited Investors [Member]
Number of common stock sold	1,276,599
Warrants [Member] | Accredited Investors [Member]
Warrants to purchase common stock	638,295
Warrant expiry date	May 31, 2024
Warrants [Member] | SPD Technology [Member]
Warrants to purchase common stock	362,319
Warrant expiry date	May 31, 2024
Unregistered Common Stock [Member] | SPD Technology [Member]
Number of shares issued to investors	724,638
Warrant [Member]
Warrant market adjustment				$ 0		$ 652,025
Cashless Exercise [Member]
Additional issuance of common stock options and warrants						603,569

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Business (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Working capital	$ 7,600,000
Cash	7,016,922		$ 2,969,416
Shareholders' equity	7,827,615	$ 8,160,680	3,099,490	$ 3,730,477	$ 2,581,037	$ 2,567,366
Accumulated deficit	(114,243,021)		$ (111,690,934)
Minimum [Member]
Non-recurring cash expenses	450,000
Maximum [Member]
Non-recurring cash expenses	$ 550,000

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Fee Income (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Three Licensees [Member]
Percentage of fee income		10.00%	10.00%
Licensee One [Member]
Percentage of fee income	53.00%	33.00%	43.00%	33.00%
Licensee Two [Member]
Percentage of fee income	15.00%	14.00%	15.00%	14.00%
Licensees Three [Member]
Percentage of fee income		14.00%	10.00%
Four Licensees [Member]
Percentage of fee income				10.00%
Licensee Three [Member]
Percentage of fee income				11.00%
Licensee Four [Member]
Percentage of fee income				10.00%
Two Licensees [Member]
Percentage of fee income	10.00%

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The condensed consolidated financial statements as of December 31, 2018 are audited financial statements. 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 (the “Company”) for the fiscal year ended December 31, 2018.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Royalties receivables, reserves	$ 1,117,441	$ 1,094,774
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	31,090,291	27,665,211
Common stock, shares outstanding	31,090,291	27,665,211

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Leases - Schedule of Future Minimum Rental Commitments (Details)	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 191,000
2020	197,000
2021	203,000
2022	209,000
Thereafter:	$ 493,000

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Patent Costs

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Patent Costs

Note 5. 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.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. 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.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation, Black-Scholes Option Pricing Model Valuation Assumptions

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

Fair value on grant date	$	0.462
Expected dividend yield		0
Expected volatility		51	%
Risk free interest rate		2.77	%
Expected term of the option		5 years

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

Fair value on grant date	$	1.5256
Expected dividend yield		0
Expected volatility		61	%
Risk free interest rate		1.84	%
Expected term of the option		5 years

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Fair Value Measurements (Details Narrative)	12 Months Ended
	Dec. 31, 2018 USD ($)
Fair Value Disclosures [Abstract]
Fair value for warrant liabilities	$ 501,414

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Stock-Based Compensation - Schedule of Stock-based Compensation, Black-Scholes Option Pricing Model Valuation Assumptions (Details) - $ / shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Share-based Payment Arrangement [Abstract]
Fair value on grant date	$ 1.5256	$ 0.462
Expected dividend yield	0.00%	0.00%
Expected volatility	61.00%	51.00%
Risk free interest rate	1.84%	2.77%
Expected term of the option	5 years	5 years

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Recently Adopted Accounting Pronouncement (Details Narrative) - USD ($)	Sep. 30, 2019	Jan. 02, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Operating lease liability	$ 1,014,949	$ 1,134,000
Operating lease right of use asset	814,285	$ 941,000
Excess amount of operating lease liability	$ 193,000

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Stock-Based Compensation (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
2019 Equity Incentive Plan [Member]
Shares available for future grant	1,166,500		1,166,500
Employees and Directors [Member]
Stock-based compensation fully vested stock option granted	233,500		233,500
Share-based compensation	$ 356,228		$ 356,228
Employees and Directors [Member] | Restricted Stock [Member]
Compensation expense recorded
Employee Stock [Member]
Stock-based compensation fully vested stock option granted		150,182		150,182
Share-based compensation		$ 69,309		$ 69,309
Minimum [Member]
Award vesting period			12 months
Maximum [Member]
Award vesting period			60 months

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ (397,712)	$ (688,301)	$ (2,552,087)	$ (2,051,960)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			146,496	135,400
Stock-based compensation			356,228	69,309
Provision for doubtful accounts			22,667
Warrant market adjustment		286,631	652,025	286,631	$ 278,044
Change in assets and liabilities:
Royalty receivables			(108,750)	(54,350)
Prepaid expenses and other current assets			(53,155)	(67,093)
Accounts payable and accrued expenses			(142,477)	7,100
Deferred revenue			21,095	38,142
Net cash used in operating activities			(1,657,958)	(1,636,821)
Cash flows from investing activities:
Purchases of fixed assets			(65,081)	(11,295)
Net cash used in investing activities			(65,081)	(11,295)
Cash flows from financing activities:
Net proceeds from issuances of common stock and warrants and exercise of options and warrants			5,770,545	3,311,111
Net cash provided by financing activities			5,770,545	3,311,111
Net increase in cash and cash equivalents			4,047,506	1,662,995
Cash and cash equivalents at beginning of period			2,969,416	1,737,847	1,737,847
Cash and cash equivalents at end of period	$ 7,016,922	$ 3,400,842	7,016,922	3,400,842	$ 2,969,416
Supplemental disclosure of non-cash activities:
Right of use assets obtained in exchange for operating lease liabilities			$ 941,284

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Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 7,016,922	$ 2,969,416
Royalties receivable, net of reserves of $1,117,441 in 2019 and $1,094,774 in 2018	775,760	689,677
Prepaid expenses and other current assets	105,884	52,729
Total current assets	7,898,566	3,711,822
Fixed assets, net	239,888	313,177
Operating lease ROU assets	814,285
Deposits and other assets	33,567	33,567
Total assets	8,986,306	4,058,566
Current liabilities:
Current portion of operating lease liabilities	163,276
Accounts payable	14,593	133,486
Accrued expenses and other	57,485	273,606
Deferred revenue	71,665	50,570
Total current liabilities	307,019	457,662
Operating lease liabilities, net of current portion	851,672
Warrant liability		501,414
Total liabilities	1,158,691	959,076
Shareholders' equity:
Common stock, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 31,090,291 in 2019 and 27,665,211 in 2018	3,109	2,767
Additional paid-in capital	122,067,527	114,787,657
Accumulated deficit	(114,243,021)	(111,690,934)
Total shareholders' equity	7,827,615	3,099,490
Total liabilities and shareholders' equity	$ 8,986,306	$ 4,058,566

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 12. 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 operating leases for certain facilities, vehicles and equipment with a weighted average remaining lease term of 5.4 years as of September 30, 2019. Operating leases are included in right of use lease assets, other current liabilities and long-term lease liabilities on the condensed 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. The Company uses the stated borrowing rate for a lease when readily determinable. When the interest rates implicit in its lease agreements is not readily determinable, the Company used an interest rate based on the marketplace for public debt. The weighted-average discount rate associated with operating leases as of September 30, 2019 is 5.5%.

Operating lease expense for the three months ended September 30, 2019 was approximately $53,000 and approximately $164,000 for the nine months ended September 30, 2019. The Company has no material variable lease costs or sublease income for the nine months ended September 30, 2019. Subsequent to the Company’s adoption of the new lease accounting guidance on January 1, 2019, the Company recorded new right of use lease assets of approximately $900,000 and associated lease liabilities of approximately $1.1 million.

Maturities of operating lease liabilities as of September 30, 2019 were as follows:

	September 30, 2019
For the remainder of 2019	$	52,989
For the year ended December 31, 2020		213,146
For the year ended December 31, 2021		207,229
For the year ended December 31, 2022		213,320
For the year ended December 31, 2023		217,151
For the year ended December 31, 2024 and beyond		277,743
Total lease payments		1,181,578
Less: imputed lease interest		(166,630	)
Present value of lease liabilities	$	1,014,948

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4. Fair Value Measurements

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of all financial instruments classified as a current asset or current liability are deemed to approximate fair value because of the short maturity of those instruments.

Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”) establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC Topic 820 applies other previously issued accounting pronouncements that require or permit fair value measurements but does not require any new fair value measurements.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

We value financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices for similar assets or liabilities in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2019, and December 31, 2018, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. The carrying value of the previous warrant liabilities was adjusted to fair value each reporting period using the Black-Scholes method to determine the fair value of the warrants. The issued warrants treated as warrant liabilities had different exercise prices depending on the date of exercise. The lowest exercise price for these warrants was used in the Black Scholes method to value the warrant liabilities since it was deemed a reasonable approximation of fair market value. The Company’s warrant liability was considered a Level 3 financial instrument and the corresponding liabilities were reclassified to equity during the three months ended June 30, 2019, therefore there was no warrant liability as of September 30, 2019. The estimated fair value for warrant liabilities for the period ended December 31, 2018 using the Black-Scholes method was $501,414.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 8. Stock-Based Compensation

The Company has granted options/warrants to consultants. GAAP requires that all stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair value of the award at the date of grant. These awards generally vest ratably over 12 to 60 months from the date of grant and the Company charges to operations quarterly the current market value of the options using the Black-Scholes method. During the three and nine months ended September 30, 2019 and 2018 there were no charges related to options granted to consultants.

During the nine-month period ended September 30, 2018, the Company granted 150,182 fully vested options to employees and recorded share-based compensation of $69,309. All of the options granted to employees during the nine-month period ended September 30, 2018 occurred during the second quarter of 2018. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	0.462
Expected dividend yield		0
Expected volatility		51	%
Risk free interest rate		2.77	%
Expected term of the option		5 years

During the nine-month period ended September 30, 2019, the Company granted 233,500 fully vested options to employees and directors and recorded share-based compensation of $356,228. All of the options granted to employees during the nine-month period ended September 30, 2019 occurred during the second quarter of 2019. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	1.5256
Expected dividend yield		0
Expected volatility		61	%
Risk free interest rate		1.84	%
Expected term of the option		5 years

There was no compensation expense recorded relating to restricted stock grants to employees and directors during the three and nine months ended September 30, 2019 and 2018.

As of September 30, 2019, there were 1,166,500 shares available for future grant under our 2019 Equity Incentive Plan, which was approved by the Company’s shareholders in June 2019.