Research Frontiers Reports Fourth Quarter and Full Year 2019 Financial Results

Management to Host Conference Call at 4:30 p.m.

WOODBURY, N.Y., March 12, 2020 (GLOBE NEWSWIRE) — Research Frontiers Inc. (Nasdaq: REFR) announced its financial results for its fourth quarter and full year ended December 31, 2019. Management will host a conference call today at 4:30 p.m. Eastern Time to discuss its financial and operating results as well as recent developments.

  • Who: Joseph M. Harary, President & CEO, Seth Van Voorhees, CFO
  • Date/Time: Thursday, March 12, 2020 at 4:30PM ET
  • Dial-in Information: 1-888-334-5785
  • Questions: Email to Questions@SmartGlass.com
  • Replay: Available on Friday, March 13, 2020 for 90 days at www.SmartGlass-IR.com

Key Comments:

  • In December 2019, Gauzy celebrated the opening of its second production facility in Stuttgart, Germany to produce SPD-Smart light control film for the entire SPD-SmartGlass industry. New and improved film from this new facility is currently being shipped to customers worldwide.
    • This state-of-the-art facility, with specially designed coating and curing areas, gives Gauzy the capacity to coat over one million square meters of SPD film per year in widths of up to 1.8 meters.
  • In December 2019, Glatic Co. acquired a license from Research Frontiers to produce and sell SPD-SmartGlass smart windows for the South Korean architectural market.
  • The Company’s fee income from licensing activities for the year ended December 31, 2019 was $1,564,024 as compared to $1,488,642 for the year ended December 31, 2018 representing a $75,382 increase between these two periods.
    • This increase in revenues was principally the result of higher royalty income from licensees focused on automotive and architectural markets. Royalty income from the automotive and architectural markets was up over 40% in 2019 compared with 2018.
    • When operations from the Company’s suspended VariGuard business unit are factored out, fee income for 2019 would have been $130,316 (9%) higher than for 2018.
  • The amount of SPD light-control film sold in 2019 reached a twelve-year record high.
  • Expenses increased by $857,168 for the year ended December 31, 2019 to $4,764,029 from $3,906,861 for the year ended December 31, 2018.
  • The Company’s net loss increased by $1,122, 852 to $3,808,978 ($0.13 per common share) for the year ended December 31, 2019 as compared to $2,686,128 ($0.10 per common share) for the year ended December 31, 2018.
    • Approximately $1,310,236 of the increase in net loss between these two periods were non-cash accounting expenses relating to the issuance of options and warrants, and other one-time charges. Without these items, the Company’s net loss for 2019 would have been $2,108,039 ($0.07 per common share) or $187,386 higher than in 2018.
2019 2018 Change $
Net Loss $ (3,808,978 ) $ (2,686,128 ) $ (1,122,850 )
Options & Warrants Issued 841,612 69,309 772,303
Warrant Market Value Adjustment 652,025 278,044 373,981
Bad Debt/Impairment of Fixed Assets 207,302 43,350 163,952
Adjusted Net Loss $ (2,108,039 ) $ (2,295,425 ) $ 187,386
Adjusted Net Loss Per Common Share $ (0.07 ) $ (0.09 ) $ 0.02
  • During 2019, the Company’s cash and cash equivalents balance increased by $3,622,544 principally as a result of cash proceeds of $5,770,545 from the sale of common stock and warrants and the exercise of options and warrants.
    • At December 31, 2019 the Company had cash and cash equivalents of $6,591,960 and working capital of $6,919,428
    • The Company currently believes that its current cash and cash equivalents will fund its operations for at least the next 36 months.

Non-GAAP Financial Information
In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), from time to time we may use or publicly disclose certain “non-GAAP financial measures” in the course of our financial presentations, earnings releases, earnings conference calls and otherwise. For these purposes, the U.S. Securities and Exchange Commission (“SEC”) defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions or cash flows that (i) excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in financial statements, and (ii) includes amounts, or is subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure so calculated and presented.

Non-GAAP financial measures are provided as supplemental information to investors to provide an alternative method for assessing our financial condition and operating results. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better evaluate our performance and profitability. These measures are not in accordance with or a substitute for GAAP, and they may be different from or inconsistent with non-GAAP financial measures used by other companies. These measures should be used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

Pursuant to the requirements of Regulation G, whenever we refer to a non-GAAP financial measure in this press release, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

Adjusted Net Loss

“Adjusted Net Loss” is defined as net loss adjusted to exclude non-cash expenses related to stock-based compensation, warrants, and from time to time, other non-cash or nonrecurring items. We use Adjusted Net Loss to evaluate operating performance. We further believe that the presentation of Adjusted Net Loss is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management.

For more details, please see the Company’s Annual Report on Form 10-K which was filed today with the SEC, the contents of which are incorporated by reference herein.

Research Frontiers (Nasdaq: REFR) is a publicly traded technology company and the developer of patented SPD-Smart light-control film technology which allows users to instantly, precisely and uniformly control the shading of glass or plastic products, either manually or automatically. Research Frontiers has licensed its smart glass technology to over 40 companies that include well known chemical, material science and glass companies. Products using Research Frontiers’ smart glass technology are being used in tens of thousands of cars, aircraft, yachts, trains, homes, offices, museums and other buildings. For more information, please visit our website at www.SmartGlass.com, and on FacebookTwitterLinkedIn and YouTube.

CONTACT:
Seth L. Van Voorhees
Chief Financial Officer
Research Frontiers Inc.
+1-516-364-1902
Info@SmartGlass.com

Note: From time to time Research Frontiers may issue forward-looking statements which involve risks and uncertainties. This press release contains forward-looking statements. Actual results could differ and are not guaranteed. Any forward-looking statements should be considered accordingly. “SPD-Smart” and “SPD-SmartGlass” are trademarks of Research Frontiers Inc.

RESEARCH FRONTIERS INCORPORATED
Unaudited Consolidated Balance Sheets
December 31, 2019 and 2018

2019 2018
Assets
Current assets:
Cash and cash equivalents $ 6,591,960 $ 2,969,416
Royalties receivable, net of reserves of $1,135,598 in 2019 and $1,094,774 in 2018 656,062 689,677
Prepaid expenses and other current assets 58,835 52,729
Total current assets 7,306,857 3,711,822
Fixed assets, net 141,720 313,177
Operating lease ROU assets 773,989
Deposits and other assets 33,567 33,567
Total assets $ 8,256,133 $ 4,058,566
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of operating lease liability $ 163,236 $
Accounts payable 169,750 133,486
Accrued expenses and other 46,709 273,606
Deferred revenue 7,734 50,570
Total current liabilities 387,429 457,662
Operating lease liability, net of current portion 812,596
Warrant liability 501,414
Total liabilities 1,200,025 959,076
Shareholders’ equity:
Common stock, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 31,254,262 in 2019 and 27,665,211 in 2018 3,125 2,767
Additional paid-in capital 122,552,895 114,787,657
Accumulated deficit (115,499,912 ) (111,690,934 )
Total shareholders’ equity 7,056,108 3,099,490
Total liabilities and shareholders’ equity $ 8,256,133 $ 4,058,566

RESEARCH FRONTIERS INCORPORATED
Unaudited Consolidated Statements of Operations
Years ended December 31, 2019 and 2018

2019 2018
Fee income $ 1,564,024 $ 1,488,642
Operating expenses 3,677,740 3,043,460
Research and development 1,035,623 863,401
Loss on impairment of fixed asset 50,666
Total Expenses 4,764,029 3,906,861
Operating loss (3,200,005 ) (2,418,219 )
Warrant market adjustment (652,025 ) (278,044 )
Net investment income 43,052 10,135
Net loss $ (3,808,978 ) $ (2,686,128 )
Basic and diluted net loss per common share $ (0.13 ) $ (0.10 )
Weighted average number of common shares outstanding 30,011,556 25,956,232

RESEARCH FRONTIERS INCORPORATED
Unaudited Consolidated Statements of Shareholders’ Equity
Years ended December 31, 2019 and 2018

Common Stock Additional
Paid-in
Accumulated
Shares Amount Capital Deficit Total
Balance, January 1, 2018 24,043,846 $ 2,404 $ 111,627,789 $ (109,062,827 ) $ 2,567,366
Adoption of ASC 606 58,021 58,021
Issuance of capital stock 3,562,809 357 3,026,273 3,026,630
Exercise of options and warrants 58,556 6 64,286 64,292
Share-based compensation 69,309 69,309
Net loss (2,686,128 ) (2,686,128 )
Balance, December 31, 2018 27,665,211 2,767 114,787,657 (111,690,934 ) 3,099,490
Exercise of options and warrants 1,587,814 158 1,170,388 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
Share-based compensation 841,612 841,612
Net loss (3,808,978 ) (3,808,978 )
Balance, December 31, 2019 31,254,262 $ 3,125 $ 122,552,895 $ (115,499,912 ) $ 7,056,108

RESEARCH FRONTIERS INCORPORATED
Unaudited Consolidated Statements of Cash Flows
Years ended December 31, 2019 and 2018

 .

2019 2018
Cash flows from operating activities:
Net loss $ (3,808,978 ) $ (2,686,128 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 195,377 181,047
Warrant market adjustment 652,025 278,044
Share-based compensation 841,612 69,309
Loss on impairment of fixed asset 50,666
Bad debts 156,636 43,350
Change in assets and liabilities:
Royalties receivable (123,021 ) (77,565 )
Prepaid expenses and other current assets (6,104 ) (23,032 )
Accounts payable and accrued expenses 1,904 94,169
Deferred revenue (42,836 ) 49,746
Net cash used in operating activities (2,082,719 ) (2,071,060 )
Cash flows from investing activities:
Purchases of fixed assets (65,282 ) (11,663 )
Net cash used in investing activities (65,282 ) (11,663 )
Cash flows from financing activities:
Net proceeds from issuances of common stock and warrants
and exercise of options and warrants
5,770,545 3,314,292
Net cash provided by financing activities 5,770,545 3,314,292
Net increase in cash and cash equivalents 3,622,544 1,231,569
Cash and cash equivalents at beginning of year 2,969,416 1,737,847
Cash and cash equivalents at end of year $ 6,591,960 $ 2,969,416