| 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; 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
and cash equivalents 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 forgoing 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 on the nature of such changes. 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. As of June 30, 2017, the Company had cash and cash equivalents of $2,405,619,
working capital (total current assets less total current liabilities) of $2,859,304 and total shareholder’s equity of $3,462,559.
The Company expects to have sufficient working capital for the next 12-15 months of operations. Since last year we have reduced
our cash shortfall and are working to further reduce it, and may seek new sources of financing. However, there can be no assurance
as to the availability or terms upon which such financing and capital might be available. |
