Financial Report Articles: Q1 2024 - Q1 2023 Comparison

Press release · 05/10/2024 18:07
Financial Report Articles: Q1 2024 - Q1 2023 Comparison

Financial Report Articles: Q1 2024 - Q1 2023 Comparison

The financial report highlights key events and developments, such as changes in common stock, additional paid-in capital, and retained earnings. It also discusses minimum and maximum sales revenue, license agreements, and concentration risk. Additionally, it covers employee and director information, equity incentive plans, options and warrants, and subscription agreements.

Overview of Company’s Financial Performance

The company, Research Frontiers Inc., develops and licenses technology to control the flow of light. Their main source of revenue comes from licensing fees paid by companies that incorporate Research Frontiers’ SPD-SmartGlass technology into products like cars, aircrafts, boats, museums, and buildings.

In the first quarter of 2024, Research Frontiers’ total licensing revenue increased by 26% compared to the first quarter of 2023, from $248,175 to $313,378. This growth was primarily driven by higher royalty income from the automotive and aircraft industries as new car and plane models using SPD-SmartGlass entered production.

While licensing revenue was up in Q1 2024, the company still operated at a net loss of $442,604 for the quarter. However, this net loss narrowed from a loss of $462,638 in Q1 2023. Overall expenses increased mainly due to higher legal/professional fees, directors’ fees, and foreign tax expenses.

Revenue and Profit Trends

Metric Q1 2023 Q1 2024 Trend
Licensing Revenue $248,175 $313,378 Increased 26%
Operating Expenses $587,799 $633,387 Increased 8%
Net Loss $462,638 $442,604 Loss Narrowed 4%
  • Licensing revenue has an upward trajectory as more products enter production with SPD-SmartGlass
  • Operating expenses are increasing at a slower rate than licensing growth
  • Sequential improvements in net loss and move towards profitability

Strengths and Weaknesses

Strengths

  • Growing licensing revenue from an expanding portfolio of products using the company’s patented SPD-SmartGlass technology
  • Increased automotive and aircraft adoption of technology expected to drive further licensing growth
  • Lean operational structure with ability to scale rapidly without major expense increases

Weaknesses

  • Still in overall net loss position on an annual basis
  • Relies heavily on adoption timing and production volumes from major licensees
  • Limited influence over licensees’ product development and production decisions

Future Outlook

Research Frontiers has a positive outlook for continued licensing growth in the next several years. The company expects the automotive industry to be its largest revenue source as production volumes of vehicles using SPD-SmartGlass ramps up significantly.

Additional near-term growth is expected from the launch of new car and aircraft models that incorporate SPD-SmartGlass. Expansion in other industries like marine vessels and museums also provide incremental licensing opportunities.

If adoption and production volumes increase at the rates projected by management, Research Frontiers is forecasting much narrower losses in 2024 and a potential move to profitability within 2-3 years. With its minimal overhead and operating expenses, revenue growth from new production has high incremental profit margins.

At its current cash burn rate, the company has over 5 years of liquidity even without further licensing growth. This allows Research Frontiers the runway to continue focusing on expanding licensee adoption rather than pursuing capital raises or major expense reductions.