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What changed in RESEARCH FRONTIERS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RESEARCH FRONTIERS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+52 added−60 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in RESEARCH FRONTIERS INC's 2024 10-K

52 paragraphs added · 60 removed · 48 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLimited source of SPD film. Our end-product licensees require a source of SPD film to manufacture finished products. Currently, Showa Denko Chemical and Gauzy Ltd. are the only sources of commercial quantities of SPD-film. There are several other companies that are licensed to manufacture SPD-film, but they have not begun commercial production of this film.
Biggest changeIf such commercialization is reduced, our revenues, results of operations and financial condition could be negatively impacted. 37 Limited source of SPD film. Our end-product licensees require a source of SPD film to manufacture finished products. Currently, Showa Denko Chemical and Gauzy Ltd. are the only sources of commercial quantities of SPD-film.
Some of our licensees appear to be more active than others, some appear to be better capitalized than others, and some licensees appear to be inactive. There is no guarantee when or if our licensees will successfully produce any commercial product using SPD technology in sufficient quantities to make the Company profitable. Some SPD-Smart products have only recently been introduced.
Some of our licensees appear to be more active than others, some appear to be better capitalized than others, and some licensees appear to be inactive. There is no guarantee when or if our licensees will successfully produce any commercial product using SPD technology in sufficient quantities to make the Company profitable. SPD-Smart products have only recently been introduced.
The loss of all or a substantial portion of the fee income from any of these customers (or certain other significant customers) could have a material adverse effect on our business, financial condition, and/or results of operations. 37 SPD-Smart products face intense competition, which could affect our ability to increase our revenues.
The loss of all or a substantial portion of the fee income from any of these customers (or certain other significant customers) could have a material adverse effect on our business, financial condition, and/or results of operations. SPD-Smart products face intense competition, which could affect our ability to increase our revenues.
As of December 31, 2023, we had approximately $2.5 million in cash and cash equivalents. As we take steps in the commercialization and marketing of our technology or respond to potential opportunities and/or adverse events, our working capital needs may change.
As of December 31, 2024, we had approximately $2.0 million in cash and cash equivalents. As we take steps in the commercialization and marketing of our technology or respond to potential opportunities and/or adverse events, our working capital needs may change.
Our net loss was $1.9 million in 2023 and $2.7 million in 2022, (which includes non-cash accounting charges in 2023 and 2022 of $0.1 million and $0.2 million, respectively, resulting from the expensing of grants of stock options). We may not generate sufficient cash flows to cover our operating expenses.
Our net loss was $1.3 million in 2024 and $1.9 million in 2023, (which includes non-cash accounting charges in 2024 and 2023 of $0.1 million and $0.1 million, respectively, resulting from the expensing of grants of stock options). We may not generate sufficient cash flows to cover our operating expenses.
We have experienced net losses from operations, and we may continue to incur net losses from operations in the future. We have incurred substantial costs and expenses in researching and developing our SPD technology. As of December 31, 2023, we had an accumulated deficit of $124.3 million since our inception.
We have experienced net losses from operations, and we may continue to incur net losses from operations in the future. We have incurred substantial costs and expenses in researching and developing our SPD technology. As of December 31, 2024, we had an accumulated deficit of $125.6 million since our inception.
The existence of material weaknesses or significant deficiencies in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our stock. In addition, we may incur additional costs to remediate material weaknesses or significant deficiencies in our internal control over financial reporting.
The existence of material weaknesses or significant deficiencies in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our stock.
Declining production of automobiles, airplanes, trains, boats and real estate could harm our business. Our licensees’ commercialization efforts of SPD-Smart products could be negatively impacted if the global production of automobiles, airplanes, trains, boats and real estate construction declines significantly. If such commercialization is reduced, our revenues, results of operations and financial condition could be negatively impacted.
Declining production of automobiles, airplanes, trains, boats and real estate could harm our business. Our licensees’ commercialization efforts of SPD-Smart products could be negatively impacted if the global production of automobiles, airplanes, trains, boats and real estate construction declines significantly.
As of December 31, 2023, we had working capital of approximately $3.3 million, cash and cash equivalents of approximately $2.5 million, shareholders’ equity of approximately $3.5 million and an accumulated deficit of $124.3 million.
As of December 31, 2024, we had working capital of approximately $2.5 million, cash and cash equivalents of approximately $2.0 million, shareholders’ equity of approximately $2.6 million and an accumulated deficit of $125.6 million.
We cannot assure you that a material weakness will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting.
In addition, we may incur additional costs to remediate material weaknesses or significant deficiencies in our internal control over financial reporting. 38 We cannot assure you that a material weakness will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting.
Our end-product licensees’ ability to sell SPD products could be negatively impacted if there was a prolonged disruption in SPD-film availability. Such a disruption could also negatively impact our revenues, results of operations and financial condition. We are dependent on key personnel.
There are several other companies that are licensed to manufacture SPD-film, but they have not begun commercial production of this film. Our end-product licensees’ ability to sell SPD products could be negatively impacted if there was a prolonged disruption in SPD-film availability. Such a disruption could also negatively impact our revenues, results of operations and financial condition.
Our continued success will depend, to a significant extent, on the services of our directors, executive management team, key personnel and certain key scientists. If one or more of these individuals were to leave the Company, there is no guarantee that we could replace them with qualified individuals in a timely or economically satisfactory manner or at all.
If one or more of these individuals were to leave the Company, there is no guarantee that we could replace them with qualified individuals in a timely or economically satisfactory manner or at all.
Developing products using new technologies can be risky because problems, expenses and delays frequently occur, and costs may or may not come down quickly enough for such products using new technologies to rapidly penetrate mass market applications. We have several large licensees that account for 10% or more of our annual fee income.
Products using SPD technology have only recently begun to be introduced into the marketplace. Developing products using new technologies can be risky because problems, expenses and delays frequently occur, and costs may or may not come down quickly enough for such products using new technologies to rapidly penetrate mass market applications.
During 2023, four licensees accounted for 39%, 16%, 16% and 13%, respectively, of fee income recognized for the year. During 2022, four licensees accounted for 28%, 23%, 13% and 11%, respectively, of fee income recognized for the year.
We have several large licensees that account for 10% or more of our annual fee income. During 2024, four licensees accounted for 34%, 28%, 11% and 11%, respectively, of fee income recognized for the year. During 2023, four licensees accounted for 39%, 16%, 16% and 13%, respectively, of fee income recognized for the year.
In addition, the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may be expensive.
In addition, the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may be expensive. Our inability to protect our proprietary intellectual property rights or gain a competitive advantage from such rights could harm our ability to generate revenues and, as a result, our business and operations.
Our inability to protect our proprietary intellectual property rights or gain a competitive advantage from such rights could harm our ability to generate revenues and, as a result, our business and operations. 38 If we fail to maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.
If we fail to maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.
As of December 31, 2023, the Company had cash and cash equivalents of approximately $2.5 million, working capital of $3.3 million and total shareholders’ equity of $3.5 million.
As of December 31, 2024, the Company had cash and cash equivalents of approximately $2.0 million, working capital of $2.5 million and total shareholders’ equity of $2.6 million. Based on our current operations, we expect to have sufficient working capital for more than the next 5 years of operations. History of Operating Losses.
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Our quarterly projected cash flow shortfall, based on our current operations, adjusted for any non-recurring cash expenses and adjusted for additional royalties expected to be received for use of our products in new production, for the next 12 months, is approximately $200,000 to $250,000 per quarter.
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We are dependent on key personnel. Our continued success will depend, to a significant extent, on the services of our directors, executive management team, key personnel and certain key scientists.
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We may eliminate some operating expenses in the future, which will further reduce our cash flow shortfall if needed. Based on these assumptions, we currently expect to have sufficient working capital for more than the next five years of operations. History of Operating Losses.
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Products using SPD technology have been in the market for decades and new product applications are being introduced in various industries. Some of these new products have only recently begun to be introduced into the marketplace.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES The Company currently occupies approximately 9,500 square feet of space at an annual rent which, in 2023 was approximately $175,000, for its executive office, research facility and SPD-Smart Glass Design Center at 240 Crossways Park Drive, Woodbury, New York 11797 under a lease expiring March 31, 2025.
Biggest changeITEM 2. PROPERTIES The Company currently occupies approximately 9,500 square feet of space at an annual rent which, in 2024 was approximately $198,000, for its executive office, research facility and SPD-Smart Glass Design Center at 240 Crossways Park Drive, Woodbury, New York 11797 under a lease expiring December 31, 2027, with renewal options through December 31, 2031.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 6, 2024, there were 33,509,287 shares of common stock outstanding. 39 (2) The following table sets forth the range of the high and low selling prices (as provided by the National Association of Securities Dealers) of the Company’s common stock for each quarterly period within the past two fiscal years: Quarter Ended Low High March 31, 2022 $ 1.34 $ 2.45 June 30, 2022 1.51 2.29 September 30, 2022 1.55 2.85 December 31, 2022 1.83 2.53 March 31, 2023 $ 1.68 $ 2.30 June 30, 2023 1.42 1.85 September 30, 2023 0.99 1.75 December 31, 2023 0.90 1.29 These quotations may reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.
Biggest change(2) The following table sets forth the range of the high and low selling prices (as provided by the National Association of Securities Dealers) of the Company’s common stock for each quarterly period within the past two fiscal years: Quarter Ended Low High March 31, 2023 $ 1.68 $ 2.30 June 30, 2023 1.42 1.85 September 30, 2023 0.99 1.75 December 31, 2023 0.90 1.29 March 31, 2024 $ 0.93 $ 1.57 June 30, 2024 1.16 2.41 September 30, 2024 1.79 2.39 December 31, 2024 1.53 2.31 These quotations may reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions. 39 (b) Approximate Number of Security Holders As of March 5, 2025, there were approximately 269 holders of record of the Company’s common stock and the closing price of our common stock was $1.27 per share.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information (1) The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “REFR”.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information (1) The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “REFR”. As of March 5, 2025, there were 33,648,221 shares of common stock outstanding.
(c) Dividends The Company has not declared or paid cash dividends on its common stock for the two most recent fiscal years and does not expect to declare or pay any cash dividends in the foreseeable future. There are no restrictions on the payment of dividends. (d) Issuer Purchases of Equity Securities None.
The Company estimates that there are approximately 5,000 beneficial holders of the Company’s common stock. (c) Dividends The Company has not declared or paid cash dividends on its common stock for the two most recent fiscal years and does not expect to declare or pay any cash dividends in the foreseeable future.
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(b) Approximate Number of Security Holders As of March 6, 2024, there were approximately 283 holders of record of the Company’s common stock and the closing price of our common stock was $1.09 per share. The Company estimates that there are approximately 7,100 beneficial holders of the Company’s common stock.
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There are no restrictions on the payment of dividends. (d) Issuer Purchases of Equity Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Company’s net investment income for the year ended December 31, 2023 was $124,938 as compared to a net investment loss of $44,219 for the year ended December 31, 2022. This difference was primarily due to changes in market values of a marketable security and higher interest rates paid on investments.
Biggest changeThis difference was primarily due to changes in interest rates paid on money market accounts and gain on sale of investments of $57,149 during the year ended December 31, 2023, as well as lower cash balances available for investment.
The Company determined that its license agreements provide for three performance obligations: (i) Grant of Use, (ii) Technical Support, and (iii) New Improvements. The best method for determining the standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements.
The Company determined that its license agreements provide for three performance obligations: (i) Grant of Use, (ii) Technical Support, and (iii) New Improvements. 40 The best method for determining the standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements.
The Company’s working capital and capital requirements depend upon numerous factors, including, but not limited to, the results of research and development activities, competitive and technological developments, the timing and costs of patent filings, and the development of new licensees and changes in the Company’s relationship with existing licensees.
The Company’s working capital and capital requirements depend upon numerous factors, including, but not limited to, the results of research and development activities, competitive and technological developments, the timing and costs of patent filings, and obtaining new licensees and changes in the Company’s relationship with existing licensees.
Also, licensees offset some or all of their royalty payments on sales of licensed products for a given period by applying these advance payments towards such earned royalty payments. In 2023 and 2022, the Company received royalty revenues from sales of SPD-SmartGlass products for various car models that were accretive to the Company’s royalty revenue.
Also, licensees offset some or all of their royalty payments on sales of licensed products for a given period by applying these advance payments towards such earned royalty payments. In 2024 and 2023, the Company received royalty revenues from sales of SPD-SmartGlass products for various car models that were accretive to the Company’s royalty revenue.
Financial Condition, Liquidity and Capital Resources The Company has primarily utilized its cash, cash equivalents, marketable securities, and proceeds from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development, for marketing initiatives, and for other working capital purposes.
Financial Condition, Liquidity and Capital Resources The Company has primarily utilized its cash, cash equivalents and proceeds from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development, for marketing initiatives, and for other working capital purposes.
Certain of the fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue. Royalty receivables are stated less allowance for doubtful accounts. The allowance represents estimated uncollectible receivables usually due to licensees’ potential insolvency.
Certain of the fees are accrued by, or paid to, the Company in advance of the period in which they are earned, resulting in deferred revenue. Royalty receivables are stated less allowance for credit losses. The allowance represents estimated uncollectible receivables usually due to licensees’ potential insolvency.
No income tax benefit or expense was recorded for the years ended December 31, 2023 and 2022.
No income tax benefit or expense was recorded for the years ended December 31, 2024 and 2023.
The Company expects revenue in all market segments to increase further as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market. 42 Operating expenses decreased by $196,055 for the year ended December 31, 2023 to $2,359,634 from $2,555,689 for the year ended December 31, 2022.
The Company expects revenue in all market segments to increase further as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market. Operating expenses decreased by $152,237 for the year ended December 31, 2024 to $2,207,397 from $2,359,634 for the year ended December 31, 2023.
At December 31, 2022, the Company had cash and cash equivalents of $4.2 million, working capital of $4.6 million and total shareholders’ equity of $4.8 million. 43 Inflation The Company does not believe that inflation has a significant impact on its business.
At December 31, 2023, the Company had cash and cash equivalents of $2.5 million, working capital of $3.3 million and total shareholders’ equity of $3.5 million. Inflation The Company does not believe that inflation has a significant impact on its business.
At December 31, 2023, the Company had cash and cash equivalents of $2.5 million, working capital of $3.3 million and total shareholders’ equity of $3.5 million.
At December 31, 2024, the Company had cash and cash equivalents of $2.0 million, working capital of $2.5 million and total shareholders’ equity of $2.6 million.
The maturities over time of the operating lease obligations as of December 31, 2023 were as follows: December 31, 2023 Year 1 $ 222,000 Years 2-3 56,000 Years 4-5 - Thereafter - Total lease payments $ 278,000 See Note 8 to our Consolidated Financial Statements for further discussion of the Company’s lease obligations.
The maturities over time of the operating lease obligations as of December 31, 2024 were as follows: December 31, 2024 Year 1 $ 217,000 Years 2-3 450,000 Years 4-5 481,000 Thereafter 511,000 Total lease payments $ 1,659,000 See Note 8 to our Consolidated Financial Statements for further discussion of the Company’s lease obligations.
The Company expects to use its cash to fund its research and development of SPD light valves, its expanded marketing initiatives, and for other working capital purposes. The Company believes that its current cash and cash equivalents would fund its operations for more than the next five years.
Based on current operations, we expect to have sufficient working capital for more than the next five years of operations. 42 The Company expects to use its cash to fund its research and development of SPD light valves, its expanded marketing initiatives, and for other working capital purposes.
Operating expenses for the years ended December 31, 2023 and 2022 include $137,000 and $216,000, respectively, of non-cash charges for options granted to employees and directors. Research and development expenditures decreased by $25,861 for the year ended December 31, 2023 to $583,266 from $609,127 for the year ended December 31, 2022.
Operating expenses for the years ended December 31, 2024 and 2023 include $84,000 and $137,000, respectively, of non-cash charges for stock options granted to employees and directors. Research and development expenditures decreased by $13,259 for the year ended December 31, 2024 to $570,007 from $583,266 for the year ended December 31, 2023.
This decrease was the result of lower allocated facility costs ($22,000) as well as lower compensation and related costs ($20,000) partially offset by higher materials costs ($12,000) and higher allocated insurance costs ($5,000). Research and development costs include non-cash charges for options granted to employees of $8,000 and $16,000 in 2023 and 2022, respectively.
This decrease was the result of lower materials costs ($15,000), lower allocated insurance costs ($14,000) partially offset by higher allocated facility costs ($17,000). Research and development costs include non-cash charges for stock options granted to employees of $5,000 and $8,000 in 2024 and 2023, respectively.
The Company expects to generate additional royalty income from the near-term introduction of additional new car and aircraft models from other OEMs (original equipment manufacturers), continued growth of sales of products using the Company’s technology for the marine industry in yachts and other watercraft, in trains, in museums, and in larger architectural projects.
The Company expects to generate additional royalty income from the near-term introduction of additional new car and aircraft models from other OEMs (original equipment manufacturers), continued growth of sales of products using the Company’s technology for the marine industry in yachts and other watercraft, in trains, in museums, and in larger architectural projects. 41 Year ended December 31, 2024 Compared to the Year ended December 31, 2023 The Company’s fee income from licensing activities for the year ended December 31, 2024 was $1,335,531 compared to $909,598 for the year ended December 31, 2023.
The eventual success of the Company and generation of positive cash flow will be dependent upon the extent of 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 fully fund its operations.
The eventual success of the Company and generation of positive cash flow will be dependent upon the extent of commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof.
In reviewing Management’s Discussion and Analysis of Financial Condition and Results of Operations, you should refer to our consolidated financial statements and the notes related thereto. 40 Critical Accounting Estimates The following accounting estimates are important to understanding our financial condition and results of operations and should be read as an integral part of the discussion and analysis of the results of our operations and financial position.
Critical Accounting Policies and Estimates The following accounting estimates are important to understanding our financial condition and results of operations and should be read as an integral part of the discussion and analysis of the results of our operations and financial position.
As a consequence of the factors discussed above, the Company’s net loss was $1,908,364 ($0.06 per common share) for the year ended December 31, 2023, which was $760,985 (29%) lower than the net loss of $2,669,349 ($0.08 per common share) for the year ended December 31, 2022.
As a consequence of the factors discussed above, the Company’s net loss was $1,311,382 ($0.04 per common share) for the year ended December 31, 2024, which was $596,982, (31%) lower than the net loss of $1,908,364 ($0.06 per common share) for the year ended December 31, 2023.
There can be no assurances that expenditures will not exceed the anticipated amounts or that additional financing, if required, will be available when needed or, if available, that its terms will be favorable or acceptable to the Company.
The Company believes that its current cash and cash equivalents would fund its operations for more than the next five years. There can be no assurances that expenditures will not exceed the anticipated amounts or that additional financing, if required, will be available when needed or, if available, that its terms will be favorable or acceptable to the Company.
The allowance includes amounts for certain licensees where risk of default has been specifically identified. The Company evaluates the collectability of its receivables on at least a quarterly basis and records appropriate allowances for uncollectible accounts when necessary. The Company has historically used the Black-Scholes option-pricing model to determine the estimated fair value of each option grant.
The allowance includes amounts for certain licensees where risk of default has been specifically identified. The Company evaluates the collectability of its receivables on at least a quarterly basis and records appropriate allowances for credit losses when necessary.
This increase in fee income in 2023 by $369,912, an increase of 69%, was primarily the result of higher royalties from the automotive markets, an increase by 178%, as compared to 2022.
This increase in fee income in 2024 by $425,933, an increase of 47%, was primarily the result of higher royalties from the automotive and aircraft markets, an increase by 48%, as compared to 2023.
The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years.
Results of Operations Overview The majority of the Company’s fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years.
You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Annual Report on Form 10-K .
You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Annual Report on Form 10-K . In reviewing Management’s Discussion and Analysis of Financial Condition and Results of Operations, you should refer to our consolidated financial statements and the notes related thereto.
During 2022, the Company’s cash and cash equivalents balance increased by $3,960,952 principally as a result of cash generated from the sale of common stock and warrants of $3,450,000 as well as cash generated from the sale of marketable securities of $2,694,968 partially offset by cash used for operations of $2,182,745 and cash used for the purchase of property and equipment of $1,271.
During 2024, the Company’s cash and cash equivalents balance decreased by $481,772 principally as a result of cash used for operations of $788,819 and for the purchase of property and equipment of $1,623, partially offset by cash generated from the issuance of capital stock and warrants of $300,000 as well as cash generated from the exercise of options of $8,670.
Contractual Obligations: The Company has operating leases for certain facilities and equipment with a weighted average remaining lease term of 1.3 years as of December 31, 2023.
Contractual Obligations: The Company has an operating lease for its facility with a remaining lease term of 7.0 years, including renewal options as of December 31, 2024.
The decrease is the result of lower compensation and related costs ($65,000), as well as lower patent ($56,000), lower bad debts ($47,000), lower director costs ($37,000) and lower investor relations costs ($18,000) partially offset by higher legal and professional fees ($30,000).
The decrease is the result of lower credit loss expense ($70,000), lower marketing and investor relations costs ($59,000), lower patent costs ($45,000) as well as lower legal and professional fees ($37,000), partially offset by higher foreign taxes withheld on payments received from foreign licensees ($34,000).
Year ended December 31, 2023 Compared to the Year ended December 31, 2022 The Company’s fee income from licensing activities for the year ended December 31, 2023 was $909,598 compared to $539,686 for the year ended December 31, 2022.
The Company’s net investment income for the year ended December 31, 2024 was $95,339 as compared to net investment income of $124,938 for the year ended December 31, 2023.
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Actual results could differ from these estimates. An example of a critical estimate is the full valuation allowance for deferred taxes that was recorded based on the uncertainty that such tax benefits will be realized in future periods. The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .
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Actual results could differ from these estimates. The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”.
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The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest rates. These assumptions reflect our best estimates, but these items involve uncertainties based on market conditions generally outside of our control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted.
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The Company recorded $35,152 of other income during the year ended December 31, 2024 relating to an Employee Retention Credit, a refundable payroll tax credit available under the Coronavirus Aid, Relief, and Economic Security Act (“Cares Act”) that was designed to keep employees on the payroll during the COVID-19 pandemic.
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Furthermore, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years. On occasion, the Company may issue to consultants either options or warrants to purchase shares of common stock of the Company at specified share prices.
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These options or warrants may vest based upon specific services being performed or performance criteria being met.
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In accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, the Company is required to record consulting expenses based upon the fair value of such options or warrants on the earlier of the service period or the period that such options or warrants vest as determined using a Black-Scholes option pricing model and are marked to market quarterly using the Black-Scholes option valuation model. 41 Results of Operations Overview The majority of the Company’s fee income comes from the activities of several licensees participating in the automotive market.
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Because the Company’s license agreements typically provide for the payment of royalties by a licensee on product sales within 45 days after the end of the quarter in which a sale of a licensed product occurs (with some of the Company’s more recent license agreements providing for payments on a monthly basis), and because of the time period which typically will elapse between a customer order and the sale of the licensed product and installation in a home, office building, automobile, aircraft, boat or any other product, there could be a delay between when economic activity between a licensee and its customer occurs and when the Company gets paid its royalty resulting from such activity.
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Our quarterly projected cash flow shortfall, based on our current operations, adjusted for any non-recurring cash expenses for the next 12 months and adjusted for additional royalties expected to be received for use of our products in new production, for the next 12 months, is approximately $200,000 to $250,000 per quarter.
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We may eliminate some operating expenses in the future, which will further reduce our cash flow shortfall if needed. Based on these assumptions, we currently expect to have sufficient working capital for more than the next five years of operations.

Other REFR 10-K year-over-year comparisons