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What changed in RESEARCH FRONTIERS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RESEARCH FRONTIERS INC's 2022 and 2023 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 2023 report.

+51 added−58 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-09)

Top changes in RESEARCH FRONTIERS INC's 2023 10-K

51 paragraphs added · 58 removed · 45 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

19 edited+2 added−2 removed28 unchanged
Biggest changeThere 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. Products using SPD technology have only recently begun to be introduced into the marketplace.
Biggest changeSome 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.
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 per quarter.
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.
In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements. 34
In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
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. 33 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. 37 SPD-Smart products face intense competition, which could affect our ability to increase our revenues.
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 5 years of operations. 32 History of Operating Losses.
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.
Limited source of SPD film. Our end-product licensees require a source of SPD film to manufacture finished products. Currently, Hitachi 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.
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. There are several other companies that are licensed to manufacture SPD-film, but they have not begun commercial production of this film.
Our net loss was $2.7 million in 2022 and $1.8 million in 2021, (which includes non-cash accounting charges in 2022 and 2021 of $0.2 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 $1.9 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.
As of December 31, 2022, we had approximately $4.2 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, 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.
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, 2022, we had an accumulated deficit of $122.4 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, 2023, we had an accumulated deficit of $124.3 million since our inception.
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.
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. 36 We have never declared a cash dividend and do not intend to declare a cash dividend in the foreseeable future.
Although a variety of products have been sold by our licensees, and because it is up to our licensees to decide when and if they will introduce products using SPD technology, we cannot predict when and if our licensees will generate substantial sales of such products. Our SPD technology is currently licensed to over 40 companies.
We currently depend upon the activities of our licensees in order to be profitable. Although a variety of products have been sold by our licensees, and because it is up to our licensees to decide when and if they will introduce products using SPD technology, we cannot predict when and if our licensees will generate substantial sales of such products.
As of December 31, 2022, the Company had cash and cash equivalents of approximately $4.2 million, working capital of $4.6 million and total shareholders’ equity of $4.8 million.
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.
During 2022, four licensees accounted for 28%, 23%, 13% and 11%, respectively, of fee income recognized for the year. During 2021, four licensees accounted for 20%, 18%, 18% and 12%, 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. During 2022, four licensees accounted for 28%, 23%, 13% and 11%, respectively, of fee income recognized for the year.
As of December 31, 2022, we had working capital of approximately $4.6 million, cash and cash equivalents of approximately $4.2 million, shareholders’ equity of approximately $4.8 million and an accumulated deficit of $122.4 million.
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.
We currently depend upon the activities of our licensees and their customers in order to be profitable. We do not directly manufacture products using SPD technology. We currently depend upon the activities of our licensees in order to be profitable.
We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. We do not directly manufacture products using SPD technology. We currently depend upon the activities of our licensees and their customers in order to be profitable. We do not directly manufacture products using SPD technology.
Payment of dividends on our common stock is within the discretion of our Board of Directors and will depend upon our future earnings, capital requirements, financial condition and other relevant factors. We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. We do not directly manufacture products using SPD technology.
We have never declared or paid cash dividends on our common stock. Payment of dividends on our common stock is within the discretion of our Board of Directors and will depend upon our future earnings, capital requirements, financial condition and other relevant factors.
Other companies are also evaluating SPD technology for use in various products. In the past, some companies have evaluated our technology without proceeding further. While we expect that our licensees would be primarily responsible for manufacturing and marketing SPD-Smart products and components, we are also engaging in market development activities to support our licensees and build the smart glass industry.
While we expect that our licensees would be primarily responsible for manufacturing and marketing SPD-Smart products and components, we are also engaging in market development activities to support our licensees and build the smart glass industry. We cannot control whether or not our licensees will develop SPD products.
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.
In addition, the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may be expensive.
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.
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.
Removed
We have never declared a cash dividend and do not intend to declare a cash dividend in the foreseeable future. We have never declared or paid cash dividends on our common stock.
Added
Our SPD technology is currently licensed to over 40 companies. Other companies are also evaluating SPD technology for use in various products. In the past, some companies have evaluated our technology without proceeding further.
Removed
We cannot control whether or not our licensees will develop SPD products. 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.
Added
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

1 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES The Company currently occupies approximately 9,500 square feet of space at an annual rent which, in 2022 was approximately $183,000, 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 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed0 unchanged
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, 2021 $ 2.65 $ 5.66 June 30, 2021 2.01 3.15 September 30, 2021 1.76 3.18 December 31, 2021 1.65 2.63 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 These quotations may reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions. 35 (b) Approximate Number of Security Holders As of March 8, 2023, there were approximately 312 holders of record of the Company’s common stock and the closing price of our common stock was $1.80 per share.
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.
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 8, 2023, there were 33,509,287 shares of common stock outstanding.
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”.
The Company estimates that there are approximately 7,100 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.
(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.
Removed
There are no restrictions on the payment of dividends. (d) Issuer Purchases of Equity Securities None.
Added
(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.

Item 7. Management's Discussion & Analysis

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

22 edited+3 added−10 removed29 unchanged
Biggest changeResearch and development costs include non-cash charges for options granted to employees of $16,000 and $10,000 in 2022 and 2021, respectively. 39 The Company’s net investment loss for the year ended December 31, 2022 was $44,219 as compared to $7,537 for the year ended December 31, 2021.
Biggest changeThis 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.
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 per quarter.
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.
Furthermore, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years. 37 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.
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.
Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. 36 We recognize revenue when or as the performance obligations in the contract are satisfied.
Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. We recognize revenue when or as the performance obligations in the contract are satisfied.
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 2022 and 2021, 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 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.
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 5 years of operations.
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.
The maturities over time of the operating lease obligations as of December 31, 2022 were as follows: December 31, 2022 Year 1 $ 217,000 Years 2-3 278,000 Years 4-5 - Thereafter - Total lease payments $ 495,000 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, 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.
Contractual Obligations: The Company has operating leases for certain facilities and equipment with a weighted average remaining lease term of 2.2 years as of December 31, 2022.
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.
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.
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.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods.
For additional accounting policies, see Note 2 to our Consolidated Financial Statements, “Summary of Significant Accounting Policies.” The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods.
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.
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 .
At December 31, 2021, the Company had cash and cash equivalents of $3.0 million, working capital of $3.7 million and total shareholders’ equity of $3.8 million. 40 Inflation The Company does not believe that inflation has a significant impact on its business.
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, 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.
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.
Operating expenses include non-cash charges for options granted to employees and directors of $216,000 and $207,000 in 2022 and 2021, respectively Research and development expenditures increased by $29,127 for the year ended December 31, 2022 to $609,127 from $580,000 for the year ended December 31, 2022.
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.
As a consequence of the factors discussed above, the Company’s net loss was $2,669,349 ($0.08 per common share) for the year ended December 31, 2022 as compared to $1,846,352 ($0.06 per common share) for the year ended December 31, 2021.
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.
Critical Accounting Policies The following accounting policies 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.
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.
Year ended December 31, 2022 Compared to the Year ended December 31, 2021 The Company’s fee income from licensing activities for the year ended December 31, 2022 was $536,686 compared to $1,263,034 for the year ended December 31, 2021.
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 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. 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.
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.
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 .
During 2021, the Company’s cash and cash equivalents balance decreased by $4,502,741 principally as a result of cash used for the purchase of marketable securities of $3,433,633 and cash used for operations of $1,804,293 and cash used for the purchase of property and equipment of $1,077 partially offset by cash generated from the exercise of options and warrants of $86,262 and cash generated from the sale of marketable securities of $650,000.
During 2023, the Company’s cash and cash equivalents balance decreased by $1,754,958 principally as a result of cash generated from the exercise of warrants of $484,502 as well as cash generated from the sale and maturities of marketable securities of $5,491,535 offset by cash used for operations of $2,295,051 and cash used for the purchase of marketable securities of $5,434,386 and for the purchase of property and equipment of $1,558.
Without these one-time events, fee income in 2022 would have been comparable to fee income in 2021. The Company expects revenue in all market segments to further increase as new car models and other products using the Company’s SPD-SmartGlass technology are introduced into the market.
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.
This difference was primarily due to changes in market interest rates and the sale of marketable securities to convert them into cash and cash equivalents resulting in a loss. No income tax benefit or expense was recorded for the years ended December 31, 2022 and 2021.
The 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.
Removed
For additional accounting policies, see Note 2 to our Consolidated Financial Statements, “Summary of Significant Accounting Policies.” The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company determined that its license agreements provide for three performance obligations: (i) Grant of Use, (ii) Technical Support, and (iii) New Improvements.
Added
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.
Removed
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. Revenues were negatively impacted since 2020 due to delays in manufacture of products using our technology.
Added
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).
Removed
Most of the products using our technology are manufactured by licensees overseas in Europe and Asia who have been similarly affected by the pandemic.
Added
No income tax benefit or expense was recorded for the years ended December 31, 2023 and 2022.
Removed
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.
Removed
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. 38 Results of Operations Overview The majority of the Company’s fee income comes from the activities of several licensees participating in the automotive market.
Removed
As discussed in Note 1 to our Consolidated Financial Statements, the Company’s financial results has been impacted by the COVID-19 pandemic. 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.
Removed
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.
Removed
This decrease in fee income was the result of the timing of payments and new and amended license agreements entered into in 2021 and was predominantly from one-time settlements from two licensees for royalty payments due, as well as for a current special government contract in the automotive area.
Removed
Operating expenses increased by $33,840 for the year ended December 31, 2022 to $2,555,689 from $2,521,849 for the year ended December 31, 2021. The increase is the result of higher bad debt expense ($80,000) as well as higher payroll and related costs ($80,000) and higher insurance costs ($13,000) partially offset by lower legal ($80,000) and patent ($57,000) costs.
Removed
This increase was the result of higher allocated insurance costs ($12,000) as well as higher payroll and related costs ($10,000) and higher allocated facility costs ($3,000).

Other REFR 10-K year-over-year comparisons