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Research Frontiers Inc. Reports Operating Results (10-Q)

May 06, 2010 | About:

Research Frontiers Inc. (NASDAQ:REFR) filed Quarterly Report for the period ended 2010-03-31.

Research Frontiers Inc. has a market cap of $58.2 million; its shares were traded at around $3.4 with and P/S ratio of 81.9. REFR is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

No options were granted during the first three months of 2009. During

the quarter ended March 31, 2009, $31,602 was charged to operations in

connection with the vesting of an earlier option grant to a consultant.

During the quarter ended March 31, 2009, the Company granted

100,000, 199,700 and 250 shares of restricted common stock to its

directors, employees and a consultant, respectively. All of the shares

granted to the directors and the consultant, as well as 1,200 shares

granted to employees vested immediately upon grant. The remaining

198,500 shares vest ratably over the next 36 months. The market value

per share on the date of grant was $2.14. In connection with this grant,

the Company charged $252,503 to operations during the quarter ended

March 31, 2009.

On May 9, 2007, the Company began participating in the funding of the

ongoing development of automotive controllers by SPD Control Systems

Corp., a licensee of the Company. This development work is to produce

the electronic controllers to operate SPD-Smart automotive windows and

glass roof systems for one or more of the top five automotive makers in

the world. The Company's funding of this project is reflected in the

form of a senior secured convertible promissory note (the "Note") of

SPD Control Systems Corp. held by Research Frontiers' wholly-owned

subsidiary, SPD Enterprises Inc. The note bears interest at 10% per

annum, is secured by all of the assets (including intellectual property) of

SPD Control Systems, and is convertible at the option of SPD

Enterprises into common stock of SPD Control Systems at an initial

conversion price of $0.50 per share. This conversion price is adjustable

downward to result in the issuance to SPD Enterprises of additional

shares of SPD Control Systems common stock under certain conditions.

The Note provides for funding of up to $150,000 by SPD Enterprises

based upon the achievement of certain development milestones by SPD

Control Systems. As of March 31, 2010, the principal and interest

amount outstanding under this Note was $150,000 and $35,198,


Operating expenses decreased by $16,112 for the first three months of

2010 to $1,300,187 from $1,316,299 for the first three months of 2009.

This decrease was the result of lower patent ($78,000), insurance

($17,000), professional fees ($18,000) and directors expenses ($99,000)

partially offset by higher payroll and stock compensation charges

($195,000) as well as higher marketing and investor relations costs


Research and development expenditures increased by $29,937 to

$496,312 for the first three months of 2010 from $466,375 for the first

three months of 2009. This increase was principally the result of higher

payroll and stock compensation charges ($86,000) partially offset by

lower materials costs ($38,000) as well as lower allocated insurance

costs ($17,000).

As a consequence of the factors discussed above, the Company's net

loss was $1,665,769 ($.10 per common share) for the first three months

of 2010 as compared to $1,590,550 ($.10 per common share) for the first

three months of 2009.

During the first three months of 2010, the Company's cash and cash

equivalent balance increased by $1,006,117 principally as a result of

cash proceeds from the sale of common stock of $1,618,653 partially

offset by cash used to fund the Company's operating activities of

$610,940. At March 31, 2010, the Company had working capital of

$4,567,150 and its shareholders' equity was $4,724,236.

Read the The complete Report

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