Research Frontiers Reports First Quarter 2020 Financial Results
May 07 2020 - 4:05PM
Research Frontiers Inc. (Nasdaq: REFR) announced its financial
results for its first quarter ended March 31, 2020. 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, May 7, 2020, 4:30 PM
ET
- Dial-in Information: 1-888-334-5785
- Replay: Available on Friday, May 8, 2020 for
90 days at www.SmartGlass-IR.com
Key First Quarter 2020 Comments:
1) |
In
April 2020, Gauzy Ltd. announced that it secured Series C
investments from Hyundai Motor Company, Blue Red Partners VC, and
Avery Dennison. |
- This strategic investment marks the first known equity
investment by an automotive OEM in Research Frontiers’ entire
industry.
- As part of the announcement of this
investment, Gauzy confirmed that its state-of-the-art material
synthesis facility in Israel, and its custom SPD production line
strategically located in Germany are currently operating and
producing SPD emulsion and light control film for the automotive,
aircraft, and architectural industries, with modified staffing and
procedures to protect Gauzy’s employees during the COVID-19
pandemic.
- In January 2020, Research
Frontiers, Gauzy Ltd. and their customers showed 175 thousand
attendees at this year’s CES new ways to benefit from
SPD-SmartGlass.
2) |
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 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.
- The Company currently does not have
the ability to assess whether the COVID-19 pandemic is likely to
have a material impact on our near-term financial results. Most of
the products using the Company’s technology are manufactured by
licensees overseas in Europe and Asia who have been similarly
affected by the pandemic. The disruption caused by 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.
3) |
The
Company’s fee income from licensing activities for the three months
ended March 31, 2020 was $356,173 as compared to $418,657 for the
three months ended March 31, 2019 representing a $62,484 (14.9%)
decrease between these two periods. |
- Lower fees in the automotive,
aircraft and architectural markets (believed to be related to
temporary customer shutdowns in these industries due to the
COVID-19 pandemic) was partially offset by higher fee income from
licensees in the display markets.
4) |
Expenses increased by $22,630, or 2.3%, for the 3-month period
ending March 31, 2020 as compared to the same period in 2019 due to
higher payroll, marketing and investor relations costs partially
offset by lower patent, legal and professional costs and other cost
reduction initiatives of the Company. |
- Total expenses plus the warrant
market adjustment line items declined by $224,960 in the first
quarter of 2020 compared to the first quarter of 2019.
5) |
Compared to the first quarter of 2019, the Company’s net loss for
the first quarter of 2020 was reduced by $179,303 to $624,594
($0.02 per common share) for the three months ended March 31, 2020
as compared to $803,897 ($0.03 per common share) for the three
months ended March 31, 2019. |
6) |
As of
March 31, 2020, the Company had cash and cash equivalents of
$5,837,395 and working capital of $6,343,149. |
- 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 $450,000-500,000 per quarter.
- Based on this burn rate, we expect
to have sufficient working capital for at least the next 34 months
of operations.
For more details, please see the Company’s
Quarterly Report on Form 10-Q which was filed today with the SEC,
the contents of which are incorporated by reference herein.
About Research Frontiers
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 Facebook, Twitter,
LinkedIn and YouTube.
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, especially those reliant on activities
by third parties, 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.
CONTACT:Seth L. Van VoorheesChief Financial
OfficerResearch Frontiers
Inc.+1-516-364-1902Info@SmartGlass.com
RESEARCH FRONTIERS INCORPORATED Condensed
Consolidated Balance Sheets Unaudited
|
|
March 31, 2020 (Unaudited) |
|
|
December 31, 2019 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,837,395 |
|
|
$ |
6,591,960 |
|
Royalties receivable, net of reserves of $885,598 as of March 31,
2020 and $1,135,598 as of December 31, 2019 |
|
|
746,653 |
|
|
|
656,062 |
|
Prepaid expenses and other current assets |
|
|
182,092 |
|
|
|
58,835 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
6,766,140 |
|
|
|
7,306,857 |
|
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
94,083 |
|
|
|
141,720 |
|
Operating lease ROU
assets |
|
|
733,691 |
|
|
|
773,989 |
|
Deposits and other assets |
|
|
33,567 |
|
|
|
33,567 |
|
Total assets |
|
$ |
7,627,481 |
|
|
$ |
8,256,133 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion of operating lease liabilities |
|
$ |
163,198 |
|
|
$ |
163,236 |
|
Accounts payable |
|
|
67,934 |
|
|
|
169,750 |
|
Accrued expenses and other |
|
|
112,936 |
|
|
|
46,709 |
|
Deferred revenue |
|
|
78,923 |
|
|
|
7,734 |
|
Total current liabilities |
|
|
422,991 |
|
|
|
387,429 |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities, net of current portion |
|
|
772,976 |
|
|
|
812,596 |
|
Total liabilities |
|
|
1,195,967 |
|
|
|
1,200,025 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, par value $0.0001 per share; authorized 100,000,000
shares, issued and outstanding 31,411,107 in 2020 and 31,254,262 in
2019 |
|
|
3,141 |
|
|
|
3,125 |
|
Additional paid-in capital |
|
|
122,552,879 |
|
|
|
122,552,895 |
|
Accumulated deficit |
|
|
(116,124,506 |
) |
|
|
(115,499,912 |
) |
Total shareholders’ equity |
|
|
6,431,514 |
|
|
|
7,056,108 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
7,627,481 |
|
|
$ |
8,256,133 |
|
RESEARCH FRONTIERS INCORPORATED Condensed
Consolidated Statements of Operations Unaudited
|
|
Three Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Fee income |
|
$ |
356,173 |
|
|
$ |
418,657 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
820,441 |
|
|
|
751,166 |
|
Research and development |
|
|
183,318 |
|
|
|
229,963 |
|
Total expenses |
|
|
1,003,759 |
|
|
|
981,129 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(647,586 |
) |
|
|
(562,472 |
) |
|
|
|
|
|
|
|
|
|
Warrant market adjustment |
|
|
- |
|
|
|
(247,590 |
) |
Net investment income |
|
|
22,992 |
|
|
|
6,165 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(624,594 |
) |
|
$ |
(803,897 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
common share |
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding |
|
|
31,323,205 |
|
|
|
28,221,975 |
|
RESEARCH FRONTIERS INCORPORATED Condensed
Consolidated Statements of Cash Flows Unaudited
|
|
Three Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(624,594 |
) |
|
$ |
(803,897 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
44,619 |
|
|
|
48,919 |
|
Warrant market adjustment |
|
|
- |
|
|
|
247,590 |
|
Bad debts expense (recovery) |
|
|
(5,237 |
) |
|
|
- |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
Royalty receivables |
|
|
(85,354 |
) |
|
|
(74,685 |
) |
Prepaid expenses and other current assets |
|
|
(123,257 |
) |
|
|
(98,715 |
) |
Accounts payable and accrued expenses |
|
|
(35,589 |
) |
|
|
(52,414 |
) |
Deferred revenue |
|
|
71,189 |
|
|
|
651 |
|
Net cash used in operating activities |
|
|
(758,223 |
) |
|
|
(732,551 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Purchases of fixed assets |
|
|
(55 |
) |
|
|
(134 |
) |
Proceeds from sale of fixed assets |
|
|
3,713 |
|
|
|
- |
|
Net cash provided by (used in) investing activities |
|
|
3,658 |
|
|
|
(134 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Net proceeds from issuances of
common stock and warrants and exercise of options and warrants |
|
|
- |
|
|
|
1,101,782 |
|
Net cash provided by financing activities |
|
|
- |
|
|
|
1,101,782 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in
cash and cash equivalents |
|
|
(754,565 |
) |
|
|
369,097 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period |
|
|
6,591,960 |
|
|
|
2,969,416 |
|
Cash and cash equivalents at
end of period |
|
$ |
5,837,395 |
|
|
$ |
3,338,513 |
|
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