| 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 primarily utilized its cash, cash equivalents, and investments generated from sales of our common stock, proceeds from the
exercise of options and warrants, and royalty fees collected 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 requirements 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, 2021, we had working capital of approximately $ 4.2 3.0 4.3 118.9 400,000- 450,000 In
the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required
to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse
effect on our business, operating results, financial condition and long-term prospects. 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. The 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. Recent
Global Events: On
March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and
recommended containment and mitigation measures worldwide. As a result, the Company expects operations at its facility to continue to
be affected in some capacity, as the COVID-19 virus continues to proliferate and the federal, state and local governments under which
we operate continue to adopt new rules. The Company has put in place enhanced procedures, such as restricting international and domestic
travel, adopting a variety of steps designed to ensure social distancing in our facilities, including working remotely where available,
and increasing our cleaning and sanitizing procedures in our facilities, in an effort to protect its employees and communities. Revenues
were negatively impacted since the onset of the pandemic due to delays in manufacture of products using our technology. Most of the products
using our technology are manufactured by licensees overseas in Europe and Asia who have been similarly affected by the pandemic. The
disruption caused by public health crises, such as COVID-19, could result in lower levels of sale activity for products using our technology
resulting in lower level of royalties owed to us from the sale of these products. The duration of the potential business disruptions
and related financial impact cannot be reasonably estimated at this time, but could materially adversely affect our business, financial
condition, results of operations, and cash flows. Net of amounts previously reserved which were fully written off in 2020, the Company
increased its allowance for uncollectible royalty receivables in 2020 until the collectability from certain licensees can be better ascertained
in the regions affected by COVID-19. In
connection with the COVID-19 crisis, Congress passed, and the president signed, the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”) which, among other things, provides relief for businesses impacted by the pandemic. The Company applied for
and received $ 202,052 202,052 7,912 202,052 |
