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Section 1: 10-K (ANNUAL REPORT)


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of
THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013                            Commission File Number 1-9399

RESEARCH FRONTIERS INCORPORATED
(Exact name of registrant as specified in its charter)

DELAWARE                                     11-2103466
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

240 CROSSWAYS PARK DRIVE                                            
WOODBURY, NEW YORK 11797-2033
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (516) 364-1902

Securities registered pursuant to Section 12(b) of the Act:                                Name of Exchange
Title of Class on Which Registered
Common Stock, $0.0001 Par Value The NASDAQ Stock
Market

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.          Yes [   ]     No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act..          Yes [   ]     No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).          Yes [X]     No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

[   ] Large accelerated filer        [X] Accelerated filer        [   ] Non-accelerated filer        [   ] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [   ]     No [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2013 (the last business day of the registrant’s most recently completed second fiscal quarter), computed based on the closing sale price of $3.98 was $73,886,802. In making this computation, all direct and indirect shares known to be owned by directors and executive officers of the Company and all direct and indirect shares known to be owned by other persons holding in excess of 5% of the Company’s common stock have been deemed held by “affiliates” of the Company, and awards of restricted stock subject to vesting are assumed to have been fully issued and outstanding. Nothing herein shall prejudice the right of the Company or any such person to deny that any such director, executive officer, or stockholder is an “affiliate.”

On March 10, 2014 the registrant had 23,109,665 shares of Common Stock outstanding.

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PART I

ITEM 1. BUSINESS

Forward-Looking Statements

Information included in this Annual Report on Form 10-K may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in this Annual Report on Form 10-K under “Item 1A. – Risk Factors” below. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.

General

     As used herein, “we,” “us,” “our,” the “Company” or “Research Frontiers” means Research Frontiers Incorporated unless otherwise indicated. We develop and license our patented suspended particle device (“SPD-Smart”) light-control technology to other companies that manufacture and market either the SPD-Smart chemical emulsion, light-control film made from the chemical emulsion, lamination services, electronics to power end-products incorporating the film, or the end-products themselves such as “smart” windows, skylights and sunroofs. Research Frontiers currently has over 40 companies that, in the aggregate, are licensed to primarily serve four major SPD-Smart application areas (aerospace, architectural, automotive and marine products) in every country of the world. In addition, in 2013 we launched our VariGuard business unit that markets and sells SPD-Smart products directly to customers for specialty uses such as the protection of artwork and light-sensitive documents in museums and private collections.

     Research Frontiers was incorporated in New York in 1965 to continue early work that Dr. Edwin Land, founder of Polaroid Corporation, and others had done in the area of light-control beginning in the 1930s. Research Frontiers was reincorporated in Delaware in 1989. Since 1965, Research Frontiers has actively worked to develop and license its own SPD technology, which it protects using patents, trade secrets and know-how. Although patent and trade secret protection is not a guarantee of commercial success, Research Frontiers currently has approximately 260 patents that have issued worldwide. In addition, the Company has current patent applications in the US and other countries that if granted, would add a significant number of additional patents to its portfolio. The Company has and continues to devote significant resources to develop, license and protect its intellectual property position.

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     SPD-Smart products use microscopic light-absorbing nanoparticles that are typically suspended in a film. These particles align when an electrical voltage is applied, thus permitting light to pass through the film. Adjustment of the voltage to the SPD film gives users the ability to quickly, precisely and consistently regulate the amount of light, glare and heat passing through the window, skylight, sunroof, window shade or other SPD-Smart end-product. This SPD film can be incorporated between two layers of glass or plastic, or combinations of both, to produce a laminate that has enhanced energy efficiency, light-control and security performance properties.

     Research Frontiers believes that the SPD industry is in the initial phase of growth. SPD light-control technology may have commercial applicability in many products where variable light-control is desired. Some existing product applications for SPD-Smart glass or plastic include the following:

     Some of our licensees consider the stage of development, product introduction strategies and timetables, and other plans to be proprietary or secret. Unless required to disclose such information, the Company may limit its disclosure of licensees activities until such licensees, or their customers, make their own public announcements of planned or actual product launches.

     Some of the early sales and uses of SPD technology were to low volume commercial installations and some have involved concept and test installations by licensees and their customers. Recent progress with regard to market development and commercialization activity has been the result of focused and active efforts by Research Frontiers and its key licensees who have invested in product development and improvements, production facilities, increased production capacity, durability, performance testing, quality control and assurance, and marketing programs.

     Beginning in late 2011, higher volume sales of SPD products commenced with the launch by Daimler AG of the Magic Sky Control™ all glass roof option on their Mercedes-Benz SLK, and SL vehicles starting in 2012. This roof is made with Research Frontiers’ SPD-SmartGlass technology. In August 2013, the Company announced that Magic Sky Control™ will be offered as an option on the new Mercedes-Benz S-Class sedan, starting the second half of 2014. In addition, in September 2013, the Company announced that Magic Sky Control™ will be offered as an option on the new Mercedes-Benz S-Class Coupe, renamed from CL or CL-Class, also starting the second half 2014.

     Research Frontiers believes that with the normal progression of product and manufacturing improvements, and as licensees become more experienced at the lamination, fabrication and installation of SPD-Smart products for various applications, the adoption rates for SPD-Smart products will grow and accelerate, which we expect will increase the stream of royalty income for the Company. Research Frontiers believes the largest and most predictable near and intermediate term market for its technology will be automotive glass.

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     As part of their marketing and branding programs, many of our licensees have developed their own trademarks for SPD-Smart emulsion, film, and end-products and these are listed in their respective press releases, product brochures, advertising and other promotional materials. Research Frontiers uses the following trademarks: SPD-Smart™, SPD-SmartGlass™, VaryFast™, SPD-CleanTech™, SPD Clean Technology™, SmartGlass™, The View of the Future - Everywhere you Look™, Powered by SPD™, Powered by SPD-CleanTech™, Powered by SPD Clean Technology™, SG Enabled™, SPD Green and Clean™, SPD On-Board™, Speed Matters™, VariGuard™ and Visit SmartGlass.com - to change your view of the world™.

     In each of the last three fiscal years the Company devoted substantially all of its time to the development of one class of products, namely SPD-Smart light-control technology, and therefore revenue analysis by class is not provided herein. Information about our operations and those of our licensees is included below and in our financial statements and notes thereto.

     The Company does not believe that future sales will be seasonal in any material respect. The Company does not currently directly manufacture products on its own but rather depends on activities of its licensees and vendors. Due to the nature of the Company’s business operations and the fact that the Company is not presently a manufacturer, there is no backlog of orders for the Company’s products.

     The Company believes that compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, will not have a material effect upon the capital expenditures, earnings and competitive position of the Company. The Company has no material capital expenditures for environmental control facilities planned for the remainder of its current fiscal year or its next succeeding fiscal year.

Employees

     On March 10, 2014 the Company had thirteen full-time employees, five of whom are technical personnel, and the rest of whom perform legal, finance, marketing, investor relations, and administrative functions. Of these employees, three have obtained doctorates in chemistry, one has a masters degree in chemistry, one has extensive industrial experience in electronics and electrical engineering, and one has majored in physics. Three employees also have additional postgraduate degrees in business administration. Also the Company’s suppliers and licensees have people on their teams with advanced degrees in a number of areas relevant to the commercial development of products using the Company’s technology. The success of the Company is dependent upon, among other things, the services of its senior management, the loss of which could have a material adverse effect upon the prospects of the Company.

Smart Glass Industry Trends

     There are favorable converging global trends in the major near-term markets for smart glass and SPD-Smart products. The potential for smart glass products is significant and is expected to attain economies of scale with increasing high volume production. This increased production is also expected to bring down end product costs and expand market opportunities.

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In both public and private sectors across the world, there are substantial efforts targeted toward the promotion and use of energy efficient smart glass materials, including those used in automobiles, windows and other architectural glazings, aircraft and boats. Products using SPD-Smart technology continue to be exhibited at trade shows, conferences, and industry events, with such products not only being exhibited by our licensees but also by their customers and by OEMs. While there can be no assurance that these trends will continue, to the extent that they do continue, each is expected to have a beneficial effect on future interest in SPD-Smart technology.

Automotive Market:

     In the automotive industry, global trends include the introduction of larger sunroofs and panoramic roof panels in transportation vehicles, and a higher percentage of these vehicles having a sunroof or using more glass in the roof.

     SPD-SmartGlass has also been shown in armored automotive glass applications, recreational vehicles, and a new market is also beginning to develop for personalized custom conversions of automobiles for owners who wish to express themselves through the design of the cars they own and/or drive.

Aircraft Market:

     In the aircraft industry there is a trend towards larger windows with more passenger control and functionality. In the “transport category” (primarily large commercial passenger aircraft) segment, the world's two largest aircraft manufacturers are both promoting the size of the windows in new aircraft platforms either already being delivered (e.g. Boeing 787) or in preproduction (e.g. Airbus A350). In the “general aviation” category (primarily private or chartered smaller aircraft) this trend is true as well. For example Gulfstream is promoting the size of the windows on their G650 platform, and Bombardier highlights the size of the cabin window on the upcoming Global 7000 and 8000 platforms. Several OEMs either already offer, or have announced their interest to include, electronic smart window shades in their aircraft – including Boeing, Airbus, Bombardier, Embraer, Beechcraft, HondaJet, Eurocopter, Dassault and Nextant.

     Electronic aircraft window shades may use SPD technology, or may use other smart window technologies such as liquid crystal or electrochromic technology. A window system using electrochromic technology was introduced in the Boeing 787. There have been concerns raised that this aircraft's electronic dimmable windows are not dark enough for long haul flights, transmits too much heat into the cabin, and have a switching speed that is too slow.

     The Company believes its SPD technology offers important performance advantages over other technologies including faster, more uniform response time, greater light-blockage, maximum heat-rejection when the aircraft is parked on the ramp, an automated dimming system to continuously maintain a constant level of light in the cabin in real-time, and weight-savings. To date, SPD technology is also the only commercially available light-control smart window technology known to have passed the stringent safety and durability tests required by the aviation industry and to have received a Supplemental Type Certificate (STC) from the Federal Aviation Administration. Today SPD-Smart window shades are flying in 31 models of various aircraft including those used in commercial aviation, general aviation and military aviation. Three leading companies manufacturing electromechanical pleated window shades have announced new products that incorporate SPD dimmable windows into their designs.

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Architectural Market:

     The architectural community is actively increasing the use of daylight harvesting, green building technologies and building automation systems to more effectively capture and control natural light as part of energy reduction strategies to offset cooling/heating costs and electricity used by artificial lighting. In addition to design, aesthetic and other benefits, this, the expanded use of glass also supports a growing body of research which finds that the presence of and control over incoming natural light improves an individual’s well-being and productivity. Products using SPD-Smart light-control technology – sunroofs, windows, skylights, partitions and others – can play an important role in supporting these converging global trends.

     For architectural applications, various market forces and the distinctive features of SPD-SmartGlass are having a positive influence on interest for SPD-Smart products. Many architects are specifying more glass in their designs to satisfy building occupants’ desire for greater connectedness with the outside environment. In addition, there is increasing interest in improving energy efficiency in both commercial and residential buildings. Various studies indicate that buildings in the United States and Europe now account for an estimated 39-40% of total energy use and upwards of 70% or more of electricity consumption. Many architects and building owners are striving for sustainable, "green" buildings that are highly energy-efficient, reduce environmental impact, and improve occupant health and well-being. In addition, the design community is increasingly interested in advanced daylighting systems in buildings that lower electrical lighting usage and reduce heating and cooling loads. Because of this, the ability to control light, glare and heat in these building applications is very important and advanced solutions often are needed to optimize operating efficiencies. SPD-Smart architectural products instantly and precisely provide shading, glare control and heat management solutions for offices and homes, especially when these products are available for new construction, replacement and retrofit projects. These products include insulated glass units, single-panel retrofits, unusually shaped glazings, and products with advanced fabrications such as those with ballistic- and blast-resistant capabilities.

     In November 2012, MarketsandMarkets issued a global smart window study that projects 20.3 percent annual growth for this market from 2012 through 2017. The global smart glass market is expected to reach $3.83 billion by 2017.

Marine Market:

     In the marine application, where light-control needs are especially important, many yacht manufacturers currently employ less than ideal glazing solutions as they try to satisfy various shading and solar control objectives. For example, some report having to use as many as five different types of glass in a typical yacht to satisfy diverse glazing needs. SPD-Smart marine products can reduce the number of different types of glass used in these yachts because of its increased functionality, superior performance and versatility. SPD-Smart marine products provide an innovation that allows these operators to manage incoming light, glare and heat while achieving privacy or maintaining one’s view as desired.

Historical Background and Recent Developments

SPD-Smart Film Production:

     An important material used in SPD-Smart end-products is SPD light-control film that varies the tint of glass or plastic. In early 2007, our licensee Hitachi Chemical began producing their initial SPD-Smart light-control film on their first factory line. During the second half of 2009, Hitachi Chemical announced that they had begun mass production on their new, larger capacity production line and expanded their annual production capacity to 400,000 square meters (over 4.3 million square feet).

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     Hitachi Chemical’s production line is dedicated exclusively to the production of SPD-Smart film. In July 2009, Hitachi Chemical launched its website dedicated to its SPD-Smart light control film and during 2009, Hitachi Chemical outlined in its press releases and public presentations that it plans to "accelerate the use of SPD film, which holds significant potential for growth" and noted that "SPD film is positioned as one of the key emerging products promoted by Hitachi Chemical to become a future leading product for the company."

     Customers for Hitachi Chemical's SPD-Smart film are end-product licensees of Research Frontiers. These licensees receive the film, laminate it between glass or plastic substrates, and then fabricate end-products which are sold into various industries. Most end-product licensees pay Research Frontiers a royalty on the sale of these end-products that typically range from 10-15%.

     In 2010, Hitachi Chemical expanded its SPD film product portfolio by initiating commercial production of a “lighter” version of its film. Both the SPD “dark” and “light” films provide very high ranges of visible light transmission. SPD “dark” film has a range of approximately 0.5% to 55.0%, and SPD “light” film has a range of approximately 2% to 65%. This leads to contrast ratios (the ratio of clear to dark light transmission) of up to 110:1. The commercialization of both “dark” and “light” versions of SPD-film provides greater design and performance options for various end-product applications.

     In February 2012, Research Frontiers filed a patent application relating to the production of SPD-films with even higher light and dark transmission states than currently are available commercially.

     Two other companies are currently developing SPD-Smart light-control film under license from Research Frontiers using SPD-Smart emulsion. These two companies are licensed to sell SPD-Smart light-control film to other licensees of Research Frontiers. Neither of these companies has yet announced commercial SPD film products for sale.

     In February 2010, iGlass acquired a license from Research Frontiers granting it the right to manufacture and sell SPD-Smart architectural end-products in Australia, New Zealand and South Africa. The license also grants ID Research Pty Ltd the worldwide right to manufacture and sell SPD emulsion and film to end-product licensees of Research Frontiers. The license follows a $1.5 million grant to ID Research Pty Ltd from the Government of Victoria's Science Agenda (VSA) Investment Fund for "Electro Responsive Material Coatings for Switchable Automotive Tinted Glass." The proceeds of this investment are to upgrade and modify the company’s factory to produce SPD light-control film.

SPD-Smart Automotive Products:

     Research Frontiers and its licensees are currently working with multiple automotive manufacturers to introduce SPD-Smart windows, sunroofs and roof systems on both concept and production vehicles. Research Frontiers’ end-product licensees in this sector include: American Glass Products, Asahi Glass, BOS Automotive, Custom Glass, Daimler AG, DuPont, GKN Aerospace Transparency Systems, Isoclima, Pilkington Glass, Pittsburgh Glass Works, Saint-Gobain Vision Systems, Tint-It JSC and Advnanotech. The Company’s automotive glass licensees account for the majority of all glass produced for the automotive market throughout the world.

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Automotive OEMs

     In 2011, Daimler AG began using SPD-SmartGlass technology in its Magic Sky Control panoramic glass roof as an option on its new Mercedes-Benz 2012 SLK. In 2012, Daimler AG also began offering its Magic Sky Control panoramic glass roof as an option on its new Mercedes-Benz 2013 SL. These SPD products allow drivers and passengers to change the tint of the car roof from dark to clear quickly with a touch of a button. The SLK and SL are the first large-scale series production vehicles to offer SPD-SmartGlass. The Research Frontiers licensees involved with the production of the Magic Sky Control roof for the SLK and SL include Hitachi Chemical, which manufactures the SPD-Smart light-control film in Japan. Automotive glass companies Nippon Sheet Glass in Japan and Pilkington in the UK and Germany then process and laminate Hitachi’s SPD film into the glass for the Magic Sky Control roof.

     In August 2013, the Company announced that Magic Sky Control™ will be offered as an option on the new Mercedes-Benz S-Class sedan, starting the second half of 2014. In addition, in September 2013, the company announced that Magic Sky Control™ will be offered as an option on the new Mercedes-Benz S-Class Coupe, renamed from CL or CL-Class, also starting the second half 2014. The all-new Mercedes-Benz S-Class is the third large-scale serial production vehicle to offer Magic Sky Control™ using SPD-Smart technology. The S-Class will offer the largest panoramic Magic Sky Control™ roof ever put into serial production. The surface area of the panoramic roof using SPD-SmartGlass technology on the S-Class is approximately three times the size of the roof glass used on the current SLK and SL roadster, and third-party market forecasters estimate that the total vehicle production volumes for the S-Class will be higher than the SLK and SL roadsters combined. Research Frontiers believes that the addition of this new car model is also significant since it applies our SPD-Smart light-control technology to the broader class of vehicles by moving beyond roadsters to passenger sedans. Historically, since its debut over 40 years ago, the S-Class represents the premier platform to introduce new technologies to the customer, which in many cases expand to the other less expensive model lines within the Mercedes-Benz brand.

     Some automakers have incorporated SPD-SmartGlass in concept vehicles, with some of these concept vehicles being exhibited at major auto shows:

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Automotive Aftermarket:

     While the highest volume market for which SPD-Smart technology is being developed is new car production by the world’s automakers, the aftermarket upgrade market also presents near-term opportunities in the automotive market. Research Frontiers licensee American Glass Products (AGP) is offering its Vario Plus Sky SPD-SmartGlass to the automotive aftermarket. In March of 2013 Research Frontiers announced that it had added two new licensees, Tint-It JSC and Advnanotech, both of whom are targeting the automotive aftermarket in Russia.

     Vision Systems announced in January 2012 that Notin, manufacturer of motorhomes and campers, has selected Visions Systems’ Nuance brand of SPD-SmartGlass for the skylight of Notin's Angara luxury motorhome. The SPD-Smart skylight is standard equipment on the Angara. In October 2013 at Busworld 2013, Vision Systems showcased a new sun visor using SPD-Smart light-control film technology and a light sensor to automatically and dynamically adjust the sun visor to deal with changing light and glare conditions. Vision Systems indicated that they have been working for almost two years with a major automotive OEM to test the ease of installation, reliability, design and performance of their new sun visor in real world conditions. They further indicated that customer reaction regarding the effectiveness and ease of use of this product has been excellent. The fact that this feature can be installed in the aftermarket should bring these benefits to a wider range of drivers.

Automotive Armored Glass Market:

     Within the automotive market, a potentially additional sector is the armored glass market. Armored glass (sometimes referred to as “transparent armor” and “bullet-resistant glass”) encompasses the military, non-military government, and civilian markets. In addition, SPD-Smart technology in this market not only provides the benefits of light-control and UV blockage, it also enhances security by introducing darker tints and privacy. A number of the Company’s licensees including American Glass Products, GKN, Isoclima and Pittsburgh Glass Works are recognized industry leaders in the armored glass market.

SPD-Smart Aircraft Products:

     Some aircraft manufacturers have incorporated SPD-Smart cabin windows in mockups, with some of these mockups being exhibited at major aviation shows:

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     In July 2012, Research Frontiers marked the opening of the 2012 Farnborough International Airshow by announcing the availability of new SPD-Smart electronically dimmable aircraft windows with an unprecedented combination of instant switching speed, and light-, noise- and heat-blocking capabilities. The latest generation provides the aircraft industry's only complete solution to managing in real-time the environmental challenges that outside conditions inflict on the cabin interior and passengers including light, glare, heat and noise.

Level of darkness:

Solar radiation onboard aircraft is extreme, and requires a dimmable window that creates an environment dark enough for passengers to sleep, even during daylight hours. Research Frontiers licensees now offer SPD-Smart windows that can be set to block over 99.96% of incoming light – achieving cabin blackout conditions whenever desired – to meet the needs of OEMs and their customers.

Switching speed:

Whenever a passenger wants relief from glare, SPD-Smart aircraft windows offer immediate response. Due to instant switching, an infinite number of light-transmission states can be selected by the passenger or flight crew, from clear to blackout, and any level of view-preserving tint in between.

Heat-blocking:

Aircraft cabins can become hot when the aircraft is parked because of solar heat streaming through windows. The result is an uncomfortably warm cabin upon boarding or the need to use jet fuel or auxiliary power units before boarding to cool down the cabin. SPD-Smart aircraft windows automatically switch to their maximum heat-blocking state, even when the aircraft is parked unpowered, and the cabin remains cool.

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Other performance benefits:

Additional challenges stated by OEMs and their customers that have been successfully met by SPD-Smart dimmable aircraft windows include:

Aircraft Window Licensee - InspecTech Aero Service Inc.

     Research Frontiers' licensee InspecTech Aero Service Inc. markets its iShade and eShade brands of SPD-Smart windows to both the OEM new production segment and aftermarket segment of the aviation industry. Building on previously announced milestones including the selection by Hawker Beechcraft Corporation of InspecTech smart window shades for aftermarket installation on King Air aircraft, and receiving a Supplemental Type Certificate (STC) for all models of King Air aircraft by the FAA, InspecTech and its strategic partners are working with a growing number of aircraft manufacturers and their customers and are selling SPD-Smart dimmable windows for fixed wing aircraft and helicopters. InspecTech’s SPD-Smart products have been installed on 31 models of helicopters and commercial, corporate, and military aircraft.

     InspecTech’s SPD-Smart aircraft windows are now available for any aircraft as an aftermarket installation worldwide, and for new production aircraft. In the transport category of the industry, InspecTech’s SPD-Smart products have been installed in selected areas on all Airbus A380 aircraft delivered by Airbus to Qantas Airlines to date, making SPD-Smart window shades the first and only instantly dimmable window shade flying on commercial airlines.

     In 2013, InspecTech marked the 12-year anniversary of the world’s first dimmable aircraft windows. SPD-Smart iShades installed in 2001 are still in service, validating the superior durability of iShades over any other shading system. InspecTech’s SPD-Smart product line has evolved as a result of working closely with aircraft OEMs, private jet owners, and the changing certification requirements of the FAA. Recent improvements include:

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     Throughout 2013, InspecTech’s strategic partner MSA Aircraft Products showcased SPD-Smart shades at industry trade shows and events. MSA’s products combine InspecTech’s SPD-Smart iShade dimmable window with a pleated shade. The integration of InspecTech’s iShade greatly enhances the flexibility and light-control capability now available to MSA Aircraft Products’ customers. MSA’s SPD-Smart products offer a combination of performance benefits in a single system – view preservation, variable shading, complete privacy, and a broader set of interior design options with the addition of a pleated shade. This integration highlights the creative potential and adaptability of SPD technology.

     Throughout 2013, InspecTech’s strategic partner Lou Martin and Associates (LMA) showcased its SPD-Smart E3 Shades at industry trade shows and events. Their aircraft cabin window shading system integrates LMA’s electromechanical pleated shade with InspecTech’s SPD-Smart iShade dimmable window. Aircraft owners and operators can maintain the soft fabrics and warm colors of LMA’s shades and benefit from the SPD-Smart film technology used in InspecTech’s iShades.

     In April 2013, it was announced that InspecTech and premier aircraft shade manufacturer Aerospace Technologies Group (ATG) had joined forces as strategic partners. At the 2013 Aircraft Interiors Expo in April, they announced a new product, branded Panacea, combining InspecTech’s SPD-Smart dimmable window with ATG’s pleated shade technology. In June 2013, ATG announced it was expanding its product line, branded Tranquility, featuring InspecTech’s SPD-Smart dimmable window without a pleated shade component. ATG now offers customers a full range of EDW options: Tranquility brand (standalone SPD), with a clean, sleek look and their Panacea brand (incorporates an elegant fabric look into a combination electromechanical and SPD-Smart shade. ATG featured their SPD-Smart products at industry trade shows and events beginning in April 2013.

     At the end of 2013, InspecTech’s sales of its iShade and eShade brands of SPD-Smart dimmable windows had extended to installation on 31 different aircraft models, and its mature SPD-Smart dimmable windows had been on in-service aircraft for eleven years.

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Aircraft Window Licensee - Vision Systems

     In November 2011, licensee Vision Systems exhibited its Nuance and Noctis brands of SPD-Smart aircraft cabin windows at the Dubai Airshow in Dubai, United Arab Emirates. Nuance and Noctis SPD-Smart aerospace windows offer instant and precise light-control at every level which provides OEMs and private aircraft owners a solar protection solution that enhances flying comfort and supports fuel efficiency. These electronically dimmable aircraft and helicopter window shades and cabin dividers are impact-resistant, completely silent, available in flat and curved surfaces, and can be controlled by the cabin management system or by passengers. Vision Systems’ Noctis SPD-Smart product line offers enhanced blackout solar protection and complete privacy. Also at the November 2011 Dubai Airshow, Vision Systems announced that Bombardier Aerospace was featuring Vision Systems’ SPD-Smart aircraft windows in Bombardier’s CSeries aircraft cabin mock-up. Bombardier equipped the business class windows in its mock-up with Vision Systems’ SPD-Smart Noctis aerospace windows. Developed for the 100- to 149-seat market segment, the CSeries family of aircraft is Bombardier’s all new mainline transport solution.

     In March 2012, Vision Systems announced that the company has invested over $750,000 to expand its existing factory in France to add a production facility dedicated to the manufacture of its SPD-Smart Nuance and Noctis aerospace and transportation windows and cabin dividers.

     In April 2013, Vision Systems debuted its new SPD-Smart window with integrated electronics and controls directly on the window at the 2013 Hamburg Air Show. Developed with strategic partner Vaupell, a world leader in the production of aircraft interior subassemblies for commercial aerospace applications, it became the first dimmable window with integrated electronics and control panel directly on the aesthetically attractive window reveal.

     In June 2013 at the Paris Air Show, Vision Systems announced it will open its first-ever U.S. SPD-SmartGlass factory, investing nearly $1.2 million in capital expenditures to serve customers with strong U.S. operations. The new factory was highlighted by Florida Governor Rick Scott and Vision Systems President and CEO Carl Putman, with Research Frontiers President and CEO Joseph M. Harary and others in attendance for this special announcement. This announcement of a further expansion to the United States indicates an acceleration of existing and projected business in North and South America where major aircraft OEMs and customers of Vision Systems are located, including HondaJet and Gulfstream.

     In October 2013, at the 2013 AIX Americas show, Vision System’s strategic partner Vaupell announced they are offering the industry a complete SPD-Smart light-control window system – Vision Systems’ SPD-Smart Noctis window and control system, integrated with Vaupell’s window assembly. This product offering was showcased at Vaupell’s AIX Americas booth. Vision Systems and Vaupell entered into a strategic partnership to develop and offer SPD-Smart Noctis and Nuance windows to OEMs, including Vaupell’s longstanding customer Boeing.

     In October 2013, at the 2013 NBAA, Vision Systems unveiled Energia – the world’s first self-powered dimmable window for aircraft cabins. Energia adds the many practical, technical, and financial benefits of solar power to the instant switching speed, wide range of light transmission, and relief from light, glare and heat that SPD-Smart aircraft windows already provide. Energia operates without using the aircraft’s electrical system because it integrates a transparent photovoltaic layer that is capable of producing its own energy – from the sun, or from artificial light sources. Energia facilitates the installation of dimmable windows on new production and aftermarket aircraft. It is completely independent of the cabin’s wiring, and no modifications to the aircraft’s existing electrical system are required. Energia was developed in collaboration with Sunpartner Technologies, Vision Systems partner and the inventor and manufacturer of the transparent photovoltaic panel.

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Aircraft Window Licensee - GKN Aerospace Transparency Systems

     In January 2011, Research Frontiers and GKN Aerospace Transparency Systems publicly announced the expansion of the scope of the former license agreement to include the sale of SPD-Smart windows, window shades, interior partitions, cabin dividers and other products for aircraft. The earlier license agreement with GKN focused on SPD-Smart products for armored transportation applications. GKN Aerospace is the world-leading supplier of cockpit transparencies and passenger cabin windows.

     In October 2013, in a press release at the 2013 NBAA in Las Vegas, GKN stated: “In addition to the Global 7000/8000, the aircraft transparencies operation equips the Beechcraft KingAir, the Lear 35/45 and 60 – and the complete Embraer aircraft family. The company’s latest passenger windows are the largest and most effective on the market and GKN Aerospace is developing new dimmable cabin management technology that will include full cabin blackout – providing passengers with new levels of comfort and environmental control during their journey.”

Aircraft Window Licensee - SmartGlass International Ltd.

     In 2010, Research Frontiers and SmartGlass International Ltd. announced an agreement to expand the scope of SmartGlass International’s license. Under this agreement, SmartGlass International is authorized to manufacture and offer SPD-Smart products, including aerospace windows, worldwide. Prior to this agreement, SmartGlass International was licensed to offer SPD-Smart architectural products worldwide outside of North America.

     In 2014 the Company was advised that Smart Glass International is being liquidated. Sales by SmartGlass International in this market have been negligible and we do not expect their liquidation to have a material impact on Research Frontiers or its revenues going forward.

Aircraft Window Licensee - Isoclima, S.p.A.

     In March 2012, at the 2012 Aircraft Interiors Expo in Hamburg, Germany, Isoclima S.p.A. announced that Isoclima’s CromaLite brand of SPD-Smart aerospace windows made their world premier. CromaLite is Isoclima’s SPD-Smart solar control glazing product and enables users to efficiently control the transmitted solar radiation in both the visible and the solar range. Dr. Alberto Bertolini, Executive Director of Isoclima, commented: “Our CromaLite brand of SPD-Smart window offers many valuable light-control benefits: instant shading, glare control, UV rejection, the desire for passenger comfort, and keeping aircraft cool when they are on the ground. We are very excited by the reactions we have received from OEMs and cabin designers who are here at the Aircraft Interiors Expo, and are excited about our growing portfolio of SPD-Smart CromaLite solutions for the transportation and architectural markets.”

SPD-Smart Architectural Products:

     Research Frontiers and its licensees are currently working with multiple architectural customers to introduce SPD-Smart products including windows, skylights, partitions and doors. The architectural markets for these products are highly fragmented and in general have a high sensitivity to price. In the near term, the Company expects SPD-SmartGlass products primarily will be commercialized in specialty applications and/or sectors that value its distinctive performance attributes including fast switching speed regardless of window size, a very wide range of visible light transmission, infinite light-control between its dark and clear states, and availability in unusual shapes and sizes. Research Frontiers’ end-product licensees in this sector include: Advnanotech (ADV), American Glass Products (AGP), Asahi Glass, Cricursa Cristales Curvados, ID Research Pty Ltd. (“i-Glass”), Innovative Glass, LTI SmartGlass, Prelco, Isoclima, Traco (a business unit of Alcoa), Mecanica de Vidros Industria E Comercio (“MDV”), and Tint-It JSC.

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     SPD-Smart windows, skylights, doors and partitions offer various benefits in architectural applications. During 2009, independent tests were conducted by DSET Laboratories, a division of Atlas Material Testing Technology, in accordance with ASTM and ASHRAE testing and calculation protocols. These test results demonstrate that SPD-Smart windows have excellent solar heat rejection and control capabilities. In January 2011 a new study published by the Department of Engineering at the University of Cambridge concluded that SPD-Smart light-control windows are exceptionally energy efficient, reducing solar heat gain by as much as 90%. The Cambridge study indicated that the real-world testing "confirms theoretical predictions that SPD glass holds great energy saving potential and is a technology that can really help to reduce energy wastage of glass facades." In addition to SPD-Smart technology, the Cambridge study discussed alternative dynamic glazing technologies that could be used in windows (e.g. electrochromics) and reported that SPD-Smart technology did not have the disadvantages that limited the potential of these alternative technologies. For example, the study cited that an electrochromic window that is 2.4 square meters can take up to 30 minutes to change from clear to dark.

     In November 2011, Research Frontiers licensee Innovative Glass Corporation was awarded two 2010 Crystal Achievement Awards for their smart window product line using our SPD-Smart light-control technology. In October 2010, their SPD-SmartGlass product was awarded WFX’s (Worship Facilities Conference & Expo) New Product award for Best Building System Material Product/Window. Innovative Glass has completed or is working on a variety of SPD-SmartGlass projects in the commercial, residential and institutional markets. JSC, Innovative Glass exhibited its SPD-SmartGlass architectural products at Glass Expo Northeast in Hauppauge, New York. Glass Expo Northeast is the region’s largest conference and trade show dedicated to the architectural glass and metal industry.

     Research Frontiers licensee SmartGlass International has announced completion of several high visibility SPD-SmartGlass installations. During February 2012, the company announced installation of SPD-SmartGlass at CERN, the European Organization for Nuclear Research, which is one of the world’s largest and most respected centers for scientific research. SmartGlass International installed SPD-SmartGlass in CERN’s Globe of Science and Innovation that will house a permanent exhibition and is intended to serve as a venue for a wide range of activities, conferences and other events, In February 2011, SmartGlass International announced it supplied retrofit SPD-SmartGlass to five London television studios of the Associated Press. The SPD-SmartGlass used in these projects harvests daylight when it's needed, improves occupant comfort by providing controllable solar shading during peak light conditions, and preserves views. Just prior to this installation, it was announced that SmartGlass International installed retrofit SPD-SmartGlass panels at the set of "Daybreak," the breakfast anchor program from ITV, one of the UK's largest commercial television networks.

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     In November 2012, licensee LTI Smart Glass exhibited SPD-SmartGlass at the 2012 ArchitectureBoston Expo (formerly known as Build Boston) architectural trade event. Known as a pioneer in the processing and laminating of electrified films, the LTI Smart Glass product line includes high-performance SPD-Smart ballistic- and blast-rated glazings, in addition to conventional SPD-Smart windows, doors, skylights and partitions.

     In March of 2013 Research Frontiers announced that it had added two new licensees, Tint-It JSC and Advnanotech, both of whom are targeting the architectural market (in addition to the automotive aftermarket discussed previously) in Russia.

     In November of 2013 Research Frontiers announced that it had a new licensee, MDV, who is targeting the architectural market in Brazil.

SPD-Smart Marine Products:

     Research Frontiers and its licensees are currently working with marine customers to introduce SPD-Smart products including windows, doors and partitions. In December 2010, Diamond Sea Glaze Manufacturing Ltd. acquired a license from Research Frontiers granting it the right to manufacture and sell SPD-Smart marine end-products worldwide. When our patented SPD-Smart light-control technology is used in yacht windows and other products, users can quickly and precisely control and “tune” the amount of light, glare and heat coming through their windows, while preserving their view. Diamond Sea-Glaze Manufacturing commenced marketing activities for products using SPD technology during the second quarter of 2011.

     In October 2011, Cheoy Lee Shipyards unveiled the Alpha, its most advanced production yacht, which is fully-equipped with the latest yacht design features including SPD-SmartGlass supplied by Research Frontiers licensee Diamond Sea Glaze. The Alpha has approximately 150 square feet of SPD-SmartGlass at various places throughout the vessel and it is the first large-scale production yacht to make such extensive use of SPD-SmartGlass.

     In October 2012, Cheoy Lee Shipyards exhibited two yachts – the Alpha 76 Express and the Alpha 76 Flybridge – at the 2012 Fort Lauderdale International Boat Show. These production yachts featured Research Frontiers licensee Diamond Sea Glaze’s DiamondSmart brand of SPD-SmartGlass. In November 2012, licensee Isoclima exhibited its VebLite brand of SPD-SmartGlass for marine applications at the Marine Equipment Trade (METS) Show 2012 in The Netherlands. VebLite is Isoclima’s SPD-Smart solar control and privacy glazing product that functions like a venetian blind. It has multiple segments that provide instantly customizable shading fully controlled by the passenger and can be operated individually to create the effect of a shade being raised or lowered or moved to the side. This precisely controls where incoming heat and glare enter a yacht or boat through a window or rooflite, and also controls privacy levels.

     In addition to exhibiting its SPD-Smart marine products at METS 2012, licensee Vision Systems’ SPD-Smart Nuance dimmable marine window was named the category winner in the prestigious METS 2012 Design Award METS (DAME) competition for interior equipment, furnishing, materials and electrical fittings used in cabins. DAME is considered the world’s most prestigious design competition for new marine equipment and accessories. In METS’ news release about the DAME award, it was noted “The Jury felt that Nuance is a major innovation that will benefit designers and owners greatly - with comparatively little increase in cost.”

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     In February 2013, licensee Isoclima demonstrated its VebLite brand of SPD-SmartGlass for marine applications at SEATEC 2013 in Italy. SEATEC 2013 is a leading international exhibition of technology and design for boats, megayachts and ships.

     In November 2013, Hatteras Yachts unveiled their new flagship motor yacht, the 100 Raised Pilothouse with dual SPD-SmartGlass skylights in the galley as standard equipment at the 2013 Fort Lauderdale Boat Show.

VariGuard Business Unit:

     In May of 2013 Research Frontiers announced the formation of its VariGuard business unit. This business unit allows the Company to directly address market opportunities for SPD technology outside the scope of its current license agreements or the focus of its licensees. Variguard is a developmental activity for the Company and its revenues are currently immaterial relative the Company’s licensing activities.

     The VariGuard business unit markets and sells SPD-Smart products directly to customers for specialty uses such as the protection of artwork and light-sensitive documents in museums and private collections. The business uses an optimized fabrication designed specifically for its exhibition panels. The production of these panels is outsourced to current licensees that have experience producing SPD laminates.

     Excessive light-exposure is a leading cause of irreversible damage to many precious objects, particularly works on paper, textiles and watercolor. Presently, no display system is able to provide these artifacts with any protection against visible light damage. VariGuard provides the world's first and only display panels that limit an artifact's light-exposure only to when the artifact is being viewed. This provides unequalled protection for light-sensitive artifacts by substantially reducing an artifact's overall lux-hour exposure when compared to conventional display panels.

     In May 2013, VariGuard featured its panels in several framing applications at Museum Expo 2013 at the Baltimore Convention Center in Baltimore, MD.

     In January 2014, the VariGuard business unit announced that Omega Moulding will distribute its patented light control SmartGlass products for frames and display cases in the United States and Canada. That month Omega Moulding showcased the benefits of VariGuard SmartGlass products at the 15th Annual West Coast Art and Frame Expo and National Conference in Las Vegas, NV.

     More information about VariGuard can be found on its independent website at www.VariGuard.com.

Marketing Activities and Licensee Support

     In addition to supporting the efforts of its licensees, the Company also recognizes the need to develop the SPD industry as a whole. As such, the Company continues to plan and execute complementary programs that build awareness and interest in smart glass generally and demand for SPD-Smart products specifically. In 2013, these programs include presentations at various general industry conferences, participation in panel presentations and discussions hosted by academia, development of trade association educational materials, and presentations to architects, designers, and other influential specifiers including a smart window conference sponsored by Israel Berger Associates. In 2014, the Company expects to participate in additional conferences and events including a keynote presentation at the April 2014 IDTechEx Energy Harvesting & Storage Conference in Berlin, Germany.

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     The Company’s market development department has a number of other initiatives in place. To help guide and prioritize its technical and marketing investments, the Company periodically retains outside strategic marketing and other consultants to help generate increased short- and medium-term market penetrations for each of the major markets for the Company’s light-control technology, and to provide support and guidance to the Company’s licensees worldwide.

     The Company has emerged as a leading resource for market research information on the subject of smart glass. Research Frontiers lectures and presents at industry conferences in areas of energy efficiency, daylight harvesting and sustainability. The Company has published independent test data about SPD-SmartGlass, shared the results of its research studies and test data with industry and the media, posted various reference materials to the Company’s website for global dissemination, and published presentations, data and bylined articles.

     Research Frontiers maintains an active role with various standards-setting organizations, including ASTM International which has an active committee developing standards for smartglass.

     In addition to Research Frontiers providing overarching support of licensees’ sales efforts by developing the SPD industry as a whole, leveraging its prominence as a leading resource on the topic of smart glass, and maintaining an active role with standards organizations, Research Frontiers also supports licensees’ marketing and sales efforts directly. Activities include advising and assisting with branding strategies and advertising campaigns, website development and other marketing materials, joint presentations to prospective customers, and additional support. As a focal point of interest in smart glass, resulting in many consumer and business inquiries, Research Frontiers has an active referral program to generate customer leads for its licensees.

     As part of this mission to develop the industry and to support our licensees’ acquiring SPD projects, in March of 2009 Research Frontiers announced the completion of the SPD-SmartGlass Design Center. Research Frontiers and its licensees have begun to host a series of events at this new facility which has drawn visitors from throughout the world. This Center is also configured as an interactive and energy-efficient "smart" executive office and conference room, and is located at the Company's corporate headquarters in Woodbury, New York. The SPD-SmartGlass Design Center features leading-edge SPD-Smart windows of different sizes (some floor-to-ceiling) and framing materials. It has a multi-functional electronic controller system for manual, remote, and automatic SPD-SmartGlass switching, and windows that can be controlled remotely over the internet or using a smart phone. This interactive area also contains other types of smart glass, such as those using liquid crystal and electrochromic technologies, allowing users to operate and experience first-hand the differences in performance characteristics of different types of smart glass. Additional showcases of SPD-SmartGlass are being established in other geographic locations to make it convenient for even more people to experience the benefits of SPD-SmartGlass technology.

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     Research Frontiers’ Design Center is the only known public forum where designers, specifiers and end-users can compare performance between SPD-Smart technology and products using other light-control technologies. Research Frontiers believes that the growth of the smart glass industry will accelerate as more information is made available through direct comparisons. Research Frontiers believes that SPD products will be strongly preferred over competing technologies once a direct comparison is available to potential buyers. Research Frontiers continues to encourage its competitors to participate in public forums where consumers of electronically tintable products can see the relative performance of products that are available.

Licensees of Research Frontiers

     Currently, the Company’s licensees are categorized into four main areas: materials for making films (emulsions), film, lamination of film to glass or plastic, and end-products. Emulsion makers produce and combine the necessary materials (i.e. SPD particles and various liquids and special polymers) from which SPD-Smart films are made. The film makers coat a thin layer of emulsion between two sheets of plastic film, each of which has a transparent conductive coating. This emulsion is then partly solidified to form an SPD film that allows users to control the amount of light, glare and heat passing through this film. The end-product licensees then integrate this film into a variety of SPD-Smart products, or make electronic systems to control such SPD-Smart products. Some of these end-product licensees do their own lamination of the SPD light-control film to glass or plastic, and some outsource this lamination to other companies. The names of this growing list of licensees, and the year that their license agreements were entered into, are contained in the Exhibit section of this Annual Report on Form 10-K.

     Licensees of Research Frontiers that incorporate SPD technology into end-products will pay Research Frontiers a royalty of 5-15% of net sales of licensed products under license agreements currently in effect, and may also be required to pay Research Frontiers fees and minimum annual royalties. Licensees that sell components (such as SPD emulsion or film) or lamination services to other licensees of Research Frontiers do not pay a royalty on such sale or service, and Research Frontiers will collect a royalty from the licensee incorporating these components into their own SPD-Smart end-products. Research Frontiers’ license agreements typically allow the licensee to terminate the license after some period of time, and give Research Frontiers only limited rights to terminate before the license expires. The licenses granted by the Company are non-exclusive and generally last as long as Research Frontiers’ patents remain in effect. Due to their bankruptcy filings or other termination of their general business activities or for other reasons, the Company does not believe that Polaroid Corporation, Kerros Limited, ThermoView Industries, BRG Group, SPD Technologies, SPD Systems, SmartGlass International and Film Technologies International are pursuing business activities with respect to SPD technology. Also the Company and licensee N.V. Bekaert, S.A mutually agreed to terminate their license agreement during 2008 for reasons unrelated to SPD technology. Some of the Company’s other licensees are currently inactive with respect to SPD technology, but may hereafter become active again. To date, the Company has not generated sufficient revenue from its licensees to profitably fund its operations. All of the Company’s license agreements are included as exhibits to the Company’s periodic reports filed with the United States Securities and Exchange Commission (the “SEC”).

     The Company plans to continue to exploit its SPD-Smart light-control technology by entering into additional license and other agreements with end-product manufacturers such as manufacturers of flat glass, flat panel displays and automotive products, and with other interested companies who may wish to acquire rights to manufacture and sell the Company’s proprietary emulsions and films. Although the Company believes based upon the status of current negotiations that additional license agreements with third parties will be entered into, there can be no assurance that any such additional license agreements will be consummated, or of the extent to which any current or future licensee of the Company will produce or sell commercial products using the Company’s technology or generate meaningful revenue from sales of such licensed products.

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     The Company’s plans also call for further development of its technology and the provision of additional technological and marketing assistance to its licensees to develop commercially viable SPD-Smart products, and expand the markets for such products. The Company cannot predict when or if new license agreements will be entered into or the extent to which commercial products will result from its existing or future licensees because of general economic conditions and the risks inherent in the developmental process and because commercialization is dependent upon the efforts of its licensees as well as on the continuing research and development efforts of the Company.

Competitive Technologies

     The Company believes that its SPD light-control technology has certain performance advantages over other “smart glass” technologies which electrically vary the amount of light passing through windows and other smart products.

     The Company believes that pricing and product performance are the two main factors critical to the adoption of smart glass products. Because the non-SPD smart glass technologies listed below do not have published, consistent pricing or cost data that can be relied upon, the Company cannot accurately report its price position relative to these other technologies. In terms of product performance, the Company believes that SPD-SmartGlass technology offers numerous advantages over other smart glass technologies as discussed below.

     Variable light transmission technologies can be classified into two basic types: “active” technologies that can be controlled electrically by the user either automatically or manually, and “passive” technologies that can only react to ambient environmental conditions such as changes in lighting or temperature. One type of passive variable light transmission technology is photochromic technology; such devices change their level of transparency in reaction to external ultra-violet radiation. As compared to photochromic technology, the Company’s SPD technology permits the user to adjust the amount of light passing through the viewing area of the device, rather than the viewing area of the photochromic device merely reacting to external radiation without control by the user. In addition, the reaction time necessary to change from light to dark with SPD-Smart technology can be almost instantaneous, as compared to the much slower reaction time for photochromic devices. Also, unlike SPD technology, photochromic technology does not function well at the high and low ends of the temperature range in which smart windows and other devices are normally expected to operate, nor does photochromic technology perform well in vehicles or other enclosed settings where existing glass is blocking incoming ultra-violet light which is required for photochromic devices to operate.

     Similarly, thermochromic smart windows are passive systems which change their light transmission properties as sunlight heats or cools the glass. Because the light transmission properties of thermochromic systems are not controlled by the user, their ability to adapt to the specific needs of occupants is very limited. For example, thermochromic glazings will remain tinted on hot days even when occupants desire more daylight to enter the building or when they want to preserve their views. SPD-Smart windows, which require very low amounts of power to operate, allow for much greater control of incoming light, glare and heat and can be adjusted to any level of light transmission from dark to clear at any time. In addition, SPD-Smart windows can block up to 99.5% of incoming light, a level many times darker than thermochromic systems. The added advantage offers much higher levels of privacy and control over incoming solar energy. Companies involved in thermochromic technology include Pleotint, Suntek and Ravenbrick.

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     Active, user-controllable technologies, sometimes referred to as “smart” technologies, are generally more useful than passive technologies because they allow the user to actually control the state of the window. This control is achieved with a manual adjustment, or automatically when coupled with a timer or sensing device such as a photocell, motion detector, thermostat or other intelligent building system. There are three main types of active devices which are compared below:

Electrochromic Technology:

Electrochromic windows and rear-view mirrors use a direct current voltage to alter the molecular structure of electrochromic materials (which can be in the form of either a liquid, gel or solid film) causing the material to darken. When compared to electrochromic devices, SPD technology is expected to have numerous potential performance and manufacturing advantages, including some or all of the following:

     Many companies with substantially greater resources than Research Frontiers such as 3M, Gentex Corp., Pilkington, PPG Industries, Saint-Gobain and other large corporations have pursued or are pursuing projects in the electrochromic area. While some of these companies have reportedly discontinued or substantially curtailed their work on electrochromics due to technical problems and issues relating to the expense of these technologies, at least four companies (Gentex, PPG Industries, View (formerly known as Soladigm), and Sage Electrochromics) are currently working to commercialize electrochromic window products. In May 2012, Saint-Gobain acquired Sage Electrochromics and combined all of their respective electrochromic manufacturing and developmental efforts.

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Liquid Crystal Technology:

To date, the main types of liquid crystal smart windows have been produced by Taliq Corp. (a subsidiary of Raychem Corp. which has since discontinued its liquid crystal operations and licensed its technology to others), Asahi Glass Co., Nippon Sheet Glass, Saint-Gobain Glass, iGlass Projects Pty Limited, Polytronix, Inc., DMDisplays, and 3M (which has also reportedly discontinued its liquid crystal film making operations). The first four companies listed above are also licensees of Research Frontiers Inc. for SPD-Smart technology. Liquid crystal windows only change from a cloudy, opaque milky-white to a clear state, are hazy when viewed at an angle and have no useful intermediate states. As compared to liquid crystal windows, SPD smart windows are expected to have some or all of the following advantages:

     In the flat panel display market, further development (such as the achievement of faster switching speeds sufficient for full-motion video applications) is required if the Company expects to compete against display technologies that are currently being used commercially such as liquid crystal displays (“LCDs”) and organic light-emitting diodes (“OLEDs”). Some of the advantages that SPD displays might have include the ability to make displays without using sheet polarizers or alignment layers, and lower light loss and a corresponding reduction in backlighting requirements. However, such products need additional product design, engineering or testing before an evaluation of the commercial potential of such SPD-SmartGlass products can be determined and when, or if, its licensees may begin to penetrate the flat panel display market.

     LCDs and other types of displays, liquid crystal windows, as well as electrochromic self-dimmable rear-view mirrors, are already on the market, whereas products incorporating SPD technology (as well as electrochromic windows) have only begun to appear in the marketplace. Therefore, the long-term durability and performance of SPD-Smart displays have not yet been fully ascertained. The companies manufacturing LCD and other display devices, liquid crystal windows, and electrochromic self-dimmable rear-view mirrors and windows, have substantially greater financial resources and manufacturing experience than the Company. There is no assurance that comparable systems having the same advantages of the Company’s SPD technology could not be developed by competitors at a lower cost or that other products could not be developed which would render the Company’s products difficult to market or otherwise render our products obsolete.

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Research and Development

     As a result of the Company’s research and development efforts, the Company believes that its SPD technology is now, or with additional development will become, usable in a number of commercial products. Such products may include one or more of the following fields: “smart” windows, doors, skylights and partitions; variable light transmission eyewear such as sunglasses and goggles; self-dimmable automotive sunroofs, sunvisors, and mirrors; display cases/frames; and instruments and other information displays that use digits, letters, graphic images, or other symbols to supply information, including scientific instruments, aviation instruments, automobile dashboard displays and, if certain improvements can be made in various features of the Company’s SPD technology that increases switching speed to the levels needed for video applications, portable computer displays and flat panel television displays.

     Even though the Company’s SPD technology has much faster switching speeds than electrochromic technology, current switching speeds are not fast enough for such video applications. The Company believes that most of its research and development efforts have applicability to products that may incorporate the Company’s technology. At its current state of development, the Company’s technology has been judged sufficiently advanced by various of its licensees and their customers for them to proceed with the development, introduction and sale of SPD-Smart products. However, the Company is continuously investing in research and development because it believes that further improvements will result in accelerated and increased market penetration. The Company intends to continue its research and development efforts for the foreseeable future to improve its SPD light-control technology and thereby assist our licensees in the product development, sales and marketing of various existing and new SPD-Smart products.

     During the past few years, and during the past year in particular, the Company and/or its licensees have made significant advances relating to materials to enable (1) improved stability of SPD emulsions, (2) a wider range of light transmission, (3) improved film adhesion and cohesion and (4) increased durability of SPD films/laminates, and (5) cost reductions.

     The Company has devoted most of the resources it has heretofore expended to research and development activities with the goal of producing commercially viable SPD products and has developed working prototypes of SPD-Smart products for several different applications, with primary emphasis on smart windows for various industries. In addition to working with the Company’s licensees, Research Frontiers has also expanded its efforts to also work directly with some of our licensees’ major customers.

Research Frontiers’ main goals in its research and development include:

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     Excluding non-cash expenses of approximately $648,000, $143,000, and $108,000, associated with the grant of stock options and restricted stock to the Company’s technical personnel, Research Frontiers incurred approximately $1,555,000, $1,529,000, and $1,283,000, during the years ended December 31, 2013, 2012, and 2011, respectively, for research and development. Research Frontiers plans to engage in substantial continuing research and development activities to invest in future improvements in SPD light-control technology and to expand for its licensees the capabilities of SPD-Smart technology and the markets for SPD-Smart products.

Patents and Proprietary Information

     Research Frontiers continues to make substantial investments to develop, license and protect its intellectual property position. The Company has 27 United States and 234 foreign patents in force. The Company’s patents expire at various dates from 2014 through 2029, while its foreign patents expire at various dates from 2014 through 2030.

     The Company has current US and foreign patent applications that, if granted, would add a significant number of additional patents to its portfolio. The Company believes that its SPD light-control technology is adequately protected by its patent position and by its proprietary technological know-how. However, the validity of the Company’s patents has never been contested in any litigation. The Company also possesses know-how and relies on trade secrets and nondisclosure agreements to protect its technology. The Company generally requires any employee, consultant, or licensee having access to its confidential information to execute an agreement whereby such person agrees to keep such information confidential.

Rights Plan

     In February 2013, the Company’s Board of Directors adopted a Stockholders’ Rights Plan (the “Rights Plan”) and declared a dividend distribution of one right (a “Right”) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (“Record Time”) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time.

     “Separation Time” shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Person’s becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.

     Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15% or more of the Company’s common stock, unless redeemed by the Company’s Board of Directors, each Right entitles the holder (other than the acquiring person) to purchase from the Company $80 worth of common stock for $40. If the Company is merged into, or 50% or more of its assets or earning power is sold to, the acquiring company, the Rights will also enable the holder (other than the acquiring person) to purchase $80 worth of common stock of the acquiring company for $40. The Rights will expire at the close of business on February 11, 2023, unless the Rights Plan is extended by the Company’s Board of Directors or unless the Rights are earlier redeemed by the Company at a price of $.0001 per Right. The Rights are not exercisable during the time when they are redeemable by the Company.

     The above description highlights some of the features of the Company’s Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request.

Subsequent Event:

     The Company currently occupies approximately 9,500 square feet for its executive office, research facility and SPD-Smart Glass Design Center at 240 Crossways Park Drive, Woodbury, New York 11797 (“Company Office”) under a lease expiring March 31, 2014. On February 21, 2014, the Company amended its lease agreement for the Company Office. The amended lease agreement for the Company Office expires on March 31, 2025 and will result in reduced rental costs for the Company over the life of the lease.

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Available Information

     Our principal executive offices are located at 240 Crossways Park Drive, Woodbury, New York 11797, our telephone number is (516) 364-1902, and our Internet website address is www.SmartGlass.com. We make available free of charge on or through our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.

ITEM 1A. RISK FACTORS

     In addition to the other information in this Annual Report on Form 10-K, you should carefully consider the following factors in evaluating us and our business. This Annual Report contains, in addition to historical information, forward-looking statements that involve risks and uncertainties, some of which are beyond our control. Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, our actual results could differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, as well as those discussed elsewhere in this Annual Report, including the documents incorporated by reference.

     There are risks associated with investing in companies such as ours who are primarily engaged in research and development. In addition to risks which could apply to any company or business, you should also consider the business we are in and the following:

Source and Need for Capital.

     As of December 31, 2013, we had approximately $10.9 million in cash, cash equivalents and short-term investments. 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 anticipate that if our cash and cash equivalents are insufficient to satisfy our liquidity requirements, we will require additional funding to sustain our ongoing operations and to continue our SPD technology research and development activities.

     We have funded most of our activities through sales of our common stock to investors, and upon the exercise of options and warrants. 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. We can give no assurances that we will generate sufficient revenues in the future (through sales of our common stock, exercise of options and warrants, royalty fees, or otherwise) to satisfy our liquidity requirements or sustain future operations, or that additional funding, if required, will be available when needed or, if available, on favorable terms.

25



History of Operating Losses.

     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, 2013, we had a cumulative net loss of $93,316,974 since our inception. Our net loss was $5,845,087 in 2013, $3,063,601 in 2012, and $4,134,068 in 2011 (which includes non-cash accounting charge in 2013, 2012 and 2011 of $2,719,380, $878,578, and $702,837, respectively, resulting from the expensing of grants of restricted stock and stock options).

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. 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 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. 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. 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. 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. 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.

     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.

SPD-Smart products face intense competition, which could affect our ability to increase our revenues.

     The market for SPD-Smart products is intensely competitive and we expect competition to increase in the future. We compete based on the functionality and the quality of our product. Many of our current and potential competitors have significantly greater financial, technical, marketing and other resources than we have. In addition, many of our competitors have well-established relationships with our current and potential customers and have extensive knowledge of our industry. If our competitors develop new technologies or new products, improve the functionality or quality of their current products, or reduce their prices, and if we are unable to respond to such competitive developments quickly either because our research and development efforts do not keep pace with our competitors or because of our lack of financial resources, we may be unable to compete effectively.

26



Declining production of automobiles, airplanes, 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, boats and real estate construction declines significantly. If such commercialization is reduced, our revenues, results of operations and financial condition could be negatively impacted.

Single source of SPD film.

     Our end-product licensees require a source of SPD film to manufacture finished products. Currently, Hitachi Chemical is the sole source 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 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.

     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. The loss or unavailability of any or all of these individuals could harm our ability to execute our business plan, maintain important business relationships and complete certain product development initiatives, which would have a material adverse effect on our business, results of operations and financial conditions.

Dependence on SPD-Smart technology.

     Because SPD technology is the only technology we work with, our success depends upon the viability of SPD technology which has yet to be fully proven. We have not fully ascertained the performance and long-term reliability of our technology, and therefore there is no guarantee that our technology will successfully be incorporated into all of the products which we are targeting for use of SPD technology. We expect that different product applications for SPD technology will have different performance and reliability specifications. We expect that our licensees will primarily be responsible for reliability testing, but that we may also continue to do reliability testing so that we can more effectively focus our research and development efforts towards constantly improving the performance characteristics and reliability of products using SPD technology.

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Our patents and other protective measures may not adequately protect our proprietary intellectual property, and we may be infringing on the rights of others.

     Our intellectual property, particularly our proprietary rights in our SPD technology, is critical to our success. We have received various patents, and filed other patent applications, for various applications and aspects of our SPD technology. In addition, we generally enter into confidentiality and invention agreements with our employees and consultants. Such patents and agreements and various other measures we take to protect our intellectual property from use by others may not be effective for various reasons generally applicable to patents and their granting and enforcement. 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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None

ITEM 2. PROPERTIES

     The Company currently occupies approximately 9,500 square feet of space at an annual rental which in 2013 was approximately $200,000 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, 2014. The Company believes that its space, including its laboratory facilities, is adequate for its present needs.

     On February 21, 2014, the Company amended its lease agreement for the Company Office. The amended lease agreement for the Company Office (as previously defined), which includes the same space currently occupied by the Company. The new lease expires on March 31, 2025 and will result in reduced rental costs for the Company over the life of the lease.

ITEM 3. LEGAL PROCEEDINGS

Research Frontiers Inc. v. E Ink Corporation et al

     On July 12, 2013, Research Frontiers Inc. initiated a lawsuit against E Ink Corporation; E Ink Holdings, Inc. (f/k/a Prime View International Co., Ltd.); Amazon.com, Inc.; Sony Electronics Inc.; Sony Corporation; Barnes & Noble, Inc.; and Barnesandnoble.com LLC in the United States District Court for the District of Delaware for patent infringement.

     Research Frontiers seeks an injunction in addition to monetary damages and pre-judgment interest and other relief. In this lawsuit, Research Frontiers asserts infringement by the named defendants of United States Patent No. 6,606,185, entitled "SPD Films and Light Valves Comprising Liquid Suspensions of Heat-Reflective Particles of Mixed Metal Oxides and Methods of Making Such Particles," and United States Patent No. 5,463,491, entitled "Light Valve Employing a Film Comprising an Encapsulated Liquid Suspension, and Method of Making Such Film."

28



     On December 2, 2013 Research Frontiers amended its complaint and asserted an additional claim of United States No. 6,271,956 entitled “Method and Materials for Enhancing the Adhesion of SPD Films, and Light Valves Comprising Same.” No hearing or trial dates have been set.

     In general, many patent infringement lawsuits end in a negotiated settlement before trial; lawsuits that do not settle, however, can often last more than two to three years from the date the complaint is filed until a trial is concluded. The timeframe is influenced by a number of factors specific to each case. Also in the course of a typical patent litigation, defendants often attempt to challenge the infringement, validity, scope, and enforceability of certain of plaintiff’s patents.

     Any action we take to protect intellectual property rights could be costly and could require significant amounts of time by key members of executive management and other personnel. Research Frontiers entered into a contingency agreement with its legal counsel regarding this matter that reduces the Company’s exposure to the costs associated with the prosecution of this litigation.

ITEM 4. MINE SAFETY DISCLOSURES

     N/A

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PART II

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 10, 2014, there were 23,109,665 shares of common stock outstanding.

 
 

(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, 2012 3.39 4.59
       June 30, 2012 2.79 3.63
       September 30, 2012                            2.80 4.99
       December 31, 2012 3.25 5.17
 
       March 31, 2013 2.93 4.10
       June 30, 2013 3.31 4.91
       September 30, 2013 3.75 5.15
       December 31, 2013 4.18 7.64
 

These quotations may reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.


(b) Approximate Number of Security Holders

     As of March 7, 2014, there were approximately 410 holders of record of the Company’s common stock and the closing price of our common stock was $6.09 per share. The Company estimates that there are approximately 6,900 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. There are no restrictions on the payment of dividends.

(d) Issuer Purchases of Equity Securities

     None.

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ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected data regarding the Company’s operating results and financial position. The data for fiscal years 2013, 2012, and 2011 should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our audited consolidated financial statements and notes thereto, which are contained in this Annual Report on Form 10-K.

Year ended December 31,
2013 2012 2011 2010 2009
Statement of Operations Data:                        
Fee income $       2,161,359 $       1,957,336 $       845,982 $       767,522 $       709,811
 
Operating expenses (1) 5,841,268 3,995,633 3,618,635 3,253,250 3,183,492
Research and development (1) 2,203,326 1,671,872 1,390,689 1,404,654 1,549,707
       Total Expenses 8,044,594 5,667,505 5,009,324 4,657,904 4,733,199
 
Operating loss (5,883,235 ) (3,710,169 ) (4,163,342 ) (3,890,382 ) (4,023,388 )
 
Net investment income 38,148 33,171 29,274 15,517 20,627
Net loss before provision
       for income tax benefit (5,845,087 ) (3,676,998 ) (4,134,068 ) (3,874,865 ) (4,002,761 )
Income tax benefit - 613,397 - - -
       Net loss $ (5,845,087 ) $ (3,063,601 ) $ (4,134,068 ) $ (3,874,865 ) $ (4,002,761 )
 
Basic and diluted net loss
       per common share $ (0.25 ) $ (0.15 ) $ (0.22 ) $ (0.22 ) $ (0.25 )
Dividends per share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
 
Weighted average number of
common shares outstanding 22,946,019 20,125,309 18,538,041 17,321,360 16,065,248
  
As of December 31,
2013 2012 2011 2010 2009
Balance Sheet Data:
       Total current assets $ 11,945,295 $ 14,333,421 $ 4,312,104 $ 7,455,820 $ 4,307,485
       Total assets 12,032,265 14,415,067 4,417,137 7,784,691 4,473,860
       Total shareholders’ equity 11,869,937 14,172,675 4,107,198 7,472,452 4,165,337
____________________
 
(1)       Reflects non-cash charges of $2,071,086, $735,544, $594,492, $602,218 and $419,879, to operating expenses, and non-cash charges of $648,294, $143,026, $108,345, $170,386 and $26,034, to research and development expenses relating to the issuance of stock and stock options in 2013, 2012, 2011, 2010, and 2009, respectively which increased the Company’s net loss for 2013, 2012, 2011, 2010, and 2009, by $2,719,380, $878,578, $702,837, $772,604 and $445,913, respectively.

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

     Information included in this Annual Report on Form 10-K may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in this Annual Report on Form 10-K under “Item 1A. – Risk Factors” above. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.

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. For additional accounting policies, see note 2 to our consolidated financial statements, "Summary of Significant Accounting Policies.”

     The Company has entered into a number of license agreements covering potential products using the Company’s SPD technology. The Company receives fees and minimum annual royalties under certain license agreements and records fee income on a ratable basis each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognizes fee income as the amounts have been earned. 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.

     The Company expenses costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items. All of our research and development costs are charged to operations as incurred. Our research and development expenses consist of costs incurred for internal and external research and development. These costs include direct and indirect overhead expenses.

     The Company has historically used the Black-Scholes option-pricing model to determine the estimated fair value of each option grant. 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. Furthermore, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years.

32



     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. These options or warrants may vest based upon specific services being performed or performance criteria being met. In accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, the Company would be 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.

     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 assets and 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.

Results of Operations

Year ended December 31, 2013 Compared to Year ended December 31, 2012

     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. The Company's royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company's royalty income from the automotive market could also be influenced by specific factors such as whether the Company's SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD-SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within model like produced with SPD-SmartGlass, and changes in pricing or exchange rates.

     The Company's fee income from licensing activities for the year ended December 31, 2013 increased 10% to $2,161,359, as compared to $1,957,336 for the year ended December 31, 2012. Most of the increase in fee income during this period was a result of higher product sales and minimum annual royalty and other payments from licensees in the automotive market. Certain license fees, which are paid to the Company in advance of the accounting period in which they are earned resulting in the recognition of deferred revenue for the current accounting period, which will be recognized as fee income in future periods. Also, licensees may 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. 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.

33



     Operating expenses increased by $1,845,635 for the year ended December 31, 2013 to $5,841,268, from $3,995,633 for the year ended December 31, 2012. This increase was principally the result of higher non-cash compensation charges related to common stock and option grants to employees and directors ($1,167,000), payroll costs ($227,000), marketing and investor relations costs ($296,000) and patent costs ($95,000) and bad debts ($81,000).

     Research and development expenditures increased by $531,454 to $2,203,326 for the year ended December 31, 2013 from $1,671,872 for the year ended December 31, 2012. This increase was principally the result of higher non-cash compensation charges related to common stock and option grants to employees ($505,000), payroll and related costs ($104,000) partially offset by lower materials and project costs ($28,000) as well as lower allocated insurance ($25,000) and office costs ($32,000). Included in research and development expenses are approximately $648,000 and $143,000 of noncash compensation charges for the year ended December 31, 2013 and 2012, respectively.

     The Company's net investment income for the year ended December 31, 2013 was $38,148 as compared to $33,171 for the year ended December 31, 2012. The difference was primarily due to interest from higher cash balances available for investment partially offset the interest on the Note from SPD Control Systems which was collected at the end of March 2012.

     No income tax benefit or expense was recorded for the year ended December 31, 2013. The Company recorded an income tax benefit of $613,397 for the year ended December 31, 2012. This benefit results from state research and development refundable credits that the Company applied for related to the years ended December 31, 2006, 2007, 2008, and 2009. The Company does not currently expect to collect additional credits.

     As a consequence of the factors discussed above, the Company's net loss was $5,845,087 ($0.25 per common share) for the year ended December 31, 2013 as compared to $3,063,601 ($0.15 per common share) for the year ended December 31, 2012.

Year ended December 31, 2012 Compared to the Year ended December 31, 2011

     The majority of the Company’s fee income comes from the activities of several licensees participating in automotive market. The Company’s fee income from licensing activities for the year ended December 31, 2012 was $1,957,336, as compared to $845,982 for the year ended December 31, 2011. Most of the increase in fee income during this period was a result of higher product sales in the automotive market from one of our licensees. This licensee's sales levels exceeded its minimum annual royalty levels under its license agreement, thereby resulting in the amount of royalty fee income in excess of the minimum annual royalty being recognized as additional fee income. Certain license fees, which are paid to the Company in advance of the accounting period in which they are earned resulting in the recognition of deferred revenue for the current accounting period, which will be recognized as fee income in future periods. Also, licensees may 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. 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.

34



     Operating expenses increased by $376,998 for the year ended December 31, 2012 to $3,995,633 from $3,618,635 for the year ended December 31, 2011. This increase was principally the result of higher payroll and related costs ($285,000), plus higher professional fees ($71,000). Included in operating expenses are approximately $736,000 and $594,000 of non cash compensation charges for the years ended December 31, 2012 and 2011, respectfully, relating to common stock and options granted to directors, employees and consultants.

     Research and development expenditures increased by $281,183 to $1,671,872 for the year ended December 31, 2012 from $1,390,689 for the year ended December 31, 2011. This increase was principally the result of higher payroll and related costs ($103,000) as well as higher materials and project costs ($98,000) and higher allocated office costs ($64,000). Included in research and development expenses are approximately $143,000 and $108,000 of non-cash compensation charges for the years ended December 31, 2012 and 2011, respectively.

     The Company’s net investment income for the year ended December 31, 2012 was $33,171 as compared to $29,724 for the year ended December 31, 2011. The difference was primarily due to interest from higher cash balances available for investment partially offset the interest on the Note from SPD Control Systems which was collected at the end of March 2012.

     The Company recorded an income tax benefit of $613,397 for the year ended December 31, 2012. This benefit results from state research and development refundable credits that the Company applied for related to the years ended December 31, 2006, 2007, 2008, and 2009. The Company does not currently expect to collect additional credits. No income tax benefit or expense was recorded for the year ended December 31, 2011.

     As a consequence of the factors discussed above, the Company's net loss was $3,063,601 ($0.15 per common share) for the year ended December 31, 2012 as compared to $4,134,068 ($0.22 per common share) for the year ended December 31, 2011.

Financial Condition, Liquidity and Capital Resources

     The Company has primarily utilized its cash, cash equivalents, short-term investments, and the proceeds from its investments to fund its research and development, for marketing initiatives, and for other working capital purposes. 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 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.

35



     During 2013, the Company’s cash and cash equivalents balance decreased by $2,524,110. This decline was mainly due to: (i) cash used for operations, and (ii) cash received from financing activities. The Company’s reported net loss in 2013 produced ($3,244,859) of cash used for operations. The negative impact from cash used for operations on the Company’s cash and cash equivalents balance was partially offset by proceeds from the exercise of options and warrants of $795,294. At December 31, 2013, the Company had working capital of $11,782,967 and total shareholders’ equity of $11,869,937.

     During 2012, the Company’s cash and cash equivalents balance increased by $5,986,869 principally as a result of cash proceeds from the sale of common stock of $12,250,500 partially offset by cash used for operations of $2,679,093 as well as net cash invested in certificates of deposits of $3,797,865.

     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’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, 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. Based upon existing levels of cash expenditures, existing cash reserves and budgeted revenues, the Company believes that it would not require additional funding for the forseeable future. There can be no assurance 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. 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 fund its operations.

Inflation

     The Company does not believe that inflation has a significant impact on its business.

36



Contractual Obligations

     The Company occupies premises under an operating lease agreement which was to expire on March 31, 2014 and has recently been extended through 2025 and requires minimum annual rent which rises over the term of the lease to approximately $177,000, plus tenant’s share of applicable taxes. These lease obligations are summarized over time as of December 31, 2013:

Payments due by period
      <1 year       1-3 years       4-5 years       >5 years       Total
Operating lease obligations $      163,000 $      342,000 $      366,000 $      1,294,000 $      2,165,000

Off-Balance Sheet Arrangements

     We have no variable interest entities or other off-balance sheet obligation arrangements.

Related Party Transactions

     None.

Forward Looking Statements

     The information set forth in this Report and in all publicly disseminated information about the Company, including the narrative contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above, includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by that section. Readers are cautioned not to place undue reliance on these forward-looking statements as they speak only as of the date hereof and are not guaranteed.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     At times, the Company invests available cash and cash equivalents in money market funds or in short-term U.S. treasury securities with maturities that are generally one year or less. Although the rate of interest paid on such investments in money market funds may fluctuate over time, each of the Company’s investments in U.S. treasury securities is made at a fixed interest rate over the duration of the investment. Accordingly, the Company does not believe it is materially exposed to changes in interest rates as it generally holds these treasury securities until maturity.

     The Company does not currently have any sales, purchases, assets or liabilities determined in currencies other than the U.S. dollar, and as such, is not subject to foreign currency exchange risk.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements listed in Item 15(a)(1) and (2) are included in this Report beginning on page F-1.

37



ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A.   CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

     As of the end of the period covered by this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company’s Chairman and its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based upon that evaluation, the Company's Chairman and its Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic SEC filings. Our officers have concluded that as of December 31, 2013 our disclosure controls and procedures are designed, and are effective, to ensure that information required to be disclosed by our company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the commission’s rules and forms, and are also effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. There were no changes in the Company's internal control over financial reporting during the quarterly period ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Based on our evaluation under the COSO Framework (1992) our management concluded that our internal control over financial reporting was effective as of December 31, 2013.

     The effectiveness of our internal control over financial reporting as of December 31, 2013 has been independently audited by BDO USA, LLP, an independent registered public accounting firm, as stated in its report that is included herein.

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Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors
Research Frontiers Incorporated
Woodbury, New York

     We have audited Research Frontiers Incorporated’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Research Frontiers Incorporated’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, “Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     In our opinion, Research Frontiers Incorporated maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Research Frontiers Incorporated as of December 31, 2013 and 2012, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013 and our report dated March 10, 2014 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP
Melville, New York
March 10, 2014

39



ITEM 9B.   OTHER INFORMATION

     None.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The Company has adopted a code of ethics applicable to its Chief Executive Officer, Chief Operating Officer, Treasurer and Chief Financial Officer, any Vice President and other employees of the Company with important roles in the financial reporting process. This Code of Ethics was adopted by the entire Board of Directors of the Company, including all of its Audit Committee members, in March 2004 in accordance with the requirements of the Sarbanes Oxley Act. The code of ethics is available on the Company’s website at www.SmartGlass.com and was also filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. The Company intends to satisfy the disclosure requirement under Item 10 of Form 8-K regarding any amendment to, or waiver from, a provision of this code of ethics by posting such information on the website specified above.

     The other information required by this Item 10 is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Commission on or before April 30, 2014, in connection with the Company’s Annual Meeting of Stockholders scheduled to be held on June 12, 2014.

ITEM 11.   EXECUTIVE COMPENSATION

     The information required by this Item 11 is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Commission on or before April 30, 2014, in connection with the Company’s Annual Meeting of Stockholders scheduled to be held on June 12, 2014. Notwithstanding anything to the contrary set forth herein or in any of the Company’s past or future filings with the SEC that might incorporate by reference the Company’s definitive Proxy Statement, in whole or in part, the report of the compensation committee and the stock price performance graph contained in such definitive Proxy Statement shall not be incorporated by reference into this Annual Report on Form 10-K or in any other such filings.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information required by this Item 12 is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Commission on or before April 30, 2014, in connection with the Company’s Annual Meeting of Stockholders scheduled to be held on June 12, 2014.

40



ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

     The information required by this Item 13 is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Commission on or before April 30, 2014, in connection with the Company’s Annual Meeting of Stockholders scheduled to be held on June 12, 2014.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information required by this Item 14 is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Commission on or before April 30, 2014, in connection with the Company’s Annual Meeting of Stockholders scheduled to be held on June 12, 2014.

41



PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)(1) and (2) Financial Statements and Financial Statement Schedules

     The following consolidated financial statements of Research Frontiers Incorporated are filed under “Item 8. Financial Statements and Supplemental Data” of this Report.

Page
Report of Independent Registered Public Accounting Firm F-1
 
Consolidated Financial Statements:
 
       Consolidated Balance Sheets,
              December 31, 2013 and 2012 F-2
 
       Consolidated Statements of Operations,
              Years ended December 31, 2013, 2012 and 2011 F-3
 
       Consolidated Statements of Shareholders’ Equity,
              Years ended December 31, 2013, 2012 and 2011 F-4
 
       Consolidated Statements of Cash Flows,
              Years ended December 31, 2013, 2012 and 2011 F-5
 
Notes to Consolidated Financial Statements F-6
 
Schedule II - Valuation and Qualifying Accounts F-19

All other schedules have been omitted because they are not applicable, or not required, or the required information is disclosed elsewhere in this Annual Report.

(a)(3)      Exhibits

3.1 Restated Certificate of Incorporation of the Company. Previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994, and incorporated herein by reference.
             
3.2 Amended and Restated Bylaws of the Company. Previously filed as Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.
 
4.1 Form of Common Stock Certificate. Previously filed as an Exhibit to the Company’s Registration Statement on Form S-18 (Reg. No. 33-5573NY), declared effective by the Commission on July 8, 1986, and incorporated herein by reference.

42



4.2 Rights Agreement dated as of February 18, 2003 between Research Frontiers Incorporated and Continental Stock Transfer & Trust Company, as Rights Agent, which includes as Exhibit A thereto the Form of Rights Certificate. Previously filed as an Exhibit to the Company’s Registration Statement on Form 8-A dated February 13, 2013, and incorporated herein by reference.
             
4.3 Common Stock and Warrants Purchase Agreement between the Company and certain investors. Previously filed as an Exhibit 4.3 to the Company’s Current Report on Form 8-K dated October 2, 2012 filed with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.1A*

Amended and Restated Employment Contract effective January 1, 1989 between the Company and Robert L. Saxe. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and incorporated herein by reference.

 
10.1B*

Employment Agreement effective as of January 1, 2009 between the Company and Joseph M. Harary. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated April 30, 2009 and incorporated herein by reference.

 
10.1C*

Employment Agreement effective as of January 1, 2014 between the Company and Seth L. Van Voorhees (filed herewith).

 
10.2*

Amended and Restated 1992 Stock Option Plan. Previously filed as Exhibit 4 to the Company’s Registration Statement on Form S-8 (Reg. No. 33-86910) filed with the Commission on November 30, 1994, and incorporated herein by reference.

 
10.3*

1998 Stock Option Plan, as amended. Previously filed as an Exhibit to the Company’s Definitive Proxy Statement dated April 30, 1998 filed with the Commission on April 29, 1998, 1994, and incorporated herein by reference.

 
10.31*

2008 Equity Incentive Plan. Previously filed as an Exhibit to the Company’s Definitive Proxy Statement dated April 30, 2008 filed with the Commission on April 29, 2008, and incorporated herein by reference.

 
10.4*

Form of Stock Option Agreement between the Company and recipients of stock options issued pursuant to the Company’s Stock Option Plans. Previously filed as part of Exhibits 4.1, 4.2, and 4.3 to the Company’s Registration Statement on Form S-8 (Reg. No. 33-53030) filed with the Commission on October 6, 1992, and incorporated herein by reference.

 
10.5

Lease Agreement dated November 7, 1986, between the Company and Industrial & Research Associates Co. Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1986 and incorporated herein by reference.

 
10.5.1

First Amendment to Lease dated November 26, 1991 between the Company and Industrial and Research Associates Co. Previously filed as an Exhibit to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (Reg. No. 33-43768) declared effective by the Commission on December 17, 1991, and incorporated herein by reference.

43



10.5.2 Second Amendment to Lease dated March 11, 1994 between the Company and Industrial and Research Associates Co. Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and incorporated herein by reference.
             
10.5.3 Third Amendment to Lease dated July 14, 1998 between the Company and Industrial and Research Associates Co. Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference.
 
10.5.4 Fourth Amendment to Lease dated January 13, 2004 between the Company and Industrial and Research Associates Co. Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference.
 
10.5.5 Fifth Amendment to Lease dated February 21, 2014 between the Company and CLK-HP 230-240 CROSSWAYS PARK LLC and LAKE PARK 230-240 CROSSWAYS PARK LLC. (filed herewith).
 
10.6 License Agreement effective as of August 2, 1995 between the Company and General Electric Company. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated August 2, 1995 with portions omitted pursuant to the Registrant’s request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.7 License Agreement effective as of April 29, 1996 between the Company and Glaverbel, S.A. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.8 License Agreement effective as of January 18, 1997 between the Company and Material Sciences Corporation. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated March 3, 1997 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.9 License Agreement effective as of March 31, 1997 between the Company and Hankuk Glass Industries, Inc. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.10 License Agreement effective as of August 8, 1997 between the Company and Orcolite, a Unit of Monsanto Company. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

44



10.11 License Agreement effective as of June 25, 1999 between the Company and Dainippon Ink and Chemicals, Incorporated. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
             
10.12 License Agreement effective as of August 9, 1999 between the Company and Hitachi Chemical Co., Ltd. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.13 License Agreement effective as of December 3, 1999 between the Company and Global Mirror GmbH & Co. KG. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.14 License Agreement effective as of December 13, 1999 between the Company and Global Mirror GmbH & Co. KG. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.15 License Agreement effective as of March 21, 2000 between the Company and ThermoView Industries, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.16 License Agreement effective as of May 23, 2000 between the Company and Polaroid Corporation. Previously filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.17 License Agreement effective as of February 16, 2001 between the Company and AP Technoglass Co. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

45



10.18         License Agreement effective as of March 21, 2001 between the Company and InspecTech Aero Service, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.19 License Agreement effective as of March 28, 2001 between the Company and Film Technologies International, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.20 License Agreement effective as of November 29, 2001 between the Company and Avery Dennison Corporation. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.21 License Agreement effective as of February 4, 2002 between the Company and BOS GmbH & Co. KG. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.22 License Agreement effective as of March 11, 2002 between the Company and Isoclima S.p.A. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.23 License Agreement effective as of July 2, 2002 between the Company and Isoclima S.p.A. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.24 License Agreement effective as of August 19, 2002 between the Company and Razor’s Edge Technologies, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

46



10.25         License Agreement effective as of October 7, 2002 between the Company and American Glass Products (Glass Technology Investment Ltd.). Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.26 License Agreement effective as of October 7, 2002 between the Company and SPD Systems, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.27 License Agreement effective as of October 24, 2002 between the Company and Cricursa Cristales Curvados S.A. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.28 License Agreement effective as of December 9, 2002 between the Company and BRG Group, Ltd. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.29 License Agreement effective as of December 13, 2002 between the Company and Laminated Technologies Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.30 License Agreement effective as of April 17, 2003 between the Company and Custom Glass Corporation. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.31 License Agreement effective as of May 2, 2003 between the Company and Air Products and Chemicals, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

47



10.32         License Agreement effective as of May 30, 2003 between the Company and Kerros Limited. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.33 License Agreement effective as of June 6, 2003 between the Company and Traco, Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.34 License Agreement effective as of June 16, 2003 between the Company and Saint-Gobain Glass France S.A. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.35 License Agreement effective as of August 1, 2003 between the Company and Vision (Environmental Innovation) Limited. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.36 License Agreement effective as of November 13, 2003 between the Company and Innovative Glass Corporation. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.37 License Agreement effective as of December 11, 2003 between the Company and Leminur Limited. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.38 License Agreement effective as of March 25, 2004 between the Company and Pilkington plc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

48



10.39         License Agreement effective as of April 5, 2004 between the Company and SmartGlass Ireland Ltd. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.40 License Agreement effective as of April 8, 2004 between the Company and Prelco Inc. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.41 License Agreement effective as of April 13, 2004 between the Company and E. I. Dupont De Nemours and Company. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.42 License Agreement effective as of September 3, 2004 between the Company and Nippon Sheet Glass Co., Ltd. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.43 License Agreement effective as of October 25, 2005 between the Company and SPD Control Systems Corporation. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated October 31, 2005 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.44 License Agreement effective as of March 30, 2006 between the Company and Dainippon Ink and Chemicals. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated April 4, 2006 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.45 License Agreement effective as of May 11, 2006 between the Company and Asahi Glass Company. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated May 15, 2006 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.46 License Agreement effective as of March 19, 2007 between the Company and SmartGlass International Ltd. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated March 19, 2007 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

49



10.47         License Agreement effective as of October 16, 2007 between Research Frontiers Incorporated and Glass Wholesalers, Ltd. d/b/a Craftsman Fabricated Glass, Ltd. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated October 18, 2007, and incorporated herein by reference.
 
10.48 License Agreement effective as of December 14, 2007 between Research Frontiers Incorporated and AGC Flat Glass Europe SA. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated December 17, 2007 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.49 License Agreement effective as of February 21, 2008 between Research Frontiers Incorporated and GKN Aerospace Transparency Systems Inc. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated March 5, 2008 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.50 License Agreement effective as of September 29, 2008 between Research Frontiers Incorporated and PPG Industries, Inc. (now known as Pittsburgh Glass Works, LLC). Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated October 6, 2008 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.51 License Agreement effective as of September 10, 2009 between Research Frontiers Incorporated and Pilkington Group Ltd. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated September 15, 2009 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.52 License Agreement effective as of January 25, 2010 between Research Frontiers Incorporated and Vision Systems. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated January 25, 2010 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.53 License Agreement effective as of February 8, 2010 between Research Frontiers Incorporated and ID Research Pty Ltd. (iGlass). Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated February 16, 2010 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.

50



10.54         License Agreement effective as of December 13, 2010 between Research Frontiers Incorporated and Diamond Sea-Glaze Manufacturing Ltd. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated December 14, 2010 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.55 License Agreement effective as of December 22, 2010 between Daimler AG, Research Frontiers Incorporated and SPD Control Systems Corp. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated February 9, 2011 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.56 License Agreement effective as of February 19, 2013 between Tint-It JSC and Research Frontiers Incorporated. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated March 5, 2013 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
10.57 License Agreement effective as of August 6, 2012 between Advnanotech LLC and Research Frontiers Incorporated. Previously filed as an Exhibit to the Company’s Current Report on Form 8-K dated March 12, 2013 with portions omitted pursuant to the Registrant's request for confidential treatment and filed separately with the Securities and Exchange Commission, and incorporated herein by reference.
 
14 Code of Ethics of Research Frontiers Incorporated. Previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and incorporated herein by reference.
 
21 Subsidiaries of the Registrant - SPD Enterprises, Inc.
 
23 Consent of BDO USA, LLP - Filed herewith.
 
31.1 Rule 13a-14(a)/15d-14(a) Certification of Joseph M. Harary - Filed herewith.
 
31.2 Rule 13a-14(a)/15d-14(a) Certification of Seth L. Van Voorhees - Filed herewith.
 
32.1 Section 1350 Certification of Joseph M. Harary - Filed herewith.
 
32.2 Section 1350 Certification of Seth L. Van Voorhees - Filed herewith.
     
EX-101.INS       XBRL INSTANCE DOCUMENT
     
EX-101.SCH   XBRL TAXONOMY EXTENSION SCHEMA
     
EX-101.PRE   XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
     
EX-101.LAB   XBRL TAXONOMY EXTENSION LABEL LINKBASE
     
EX-101.CAL   XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
     
EX-101.DEF   XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
____________________

*        Executive Compensation Plan or Arrangement.

51



SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RESEARCH FRONTIERS INCORPORATED
       (Registrant)
 
/s/ Joseph M. Harary
Joseph M. Harary, President and CEO
(Principal Executive Officer)
 
/s/ Seth L. Van Voorhees
Seth L. Van Voorhees, Vice President, CFO and Treasurer
(Principal Financial and Accounting Officer)

Dated: March 10, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature Position Date
/s/Darryl Daigle       Director       March 10, 2014
Darryl Daigle  
 
/s/Gregory G. Grimes Director March 10, 2014
Gregory G. Grimes  
 
/s/Joseph M. Harary Director, President, CEO March 10, 2014
Joseph M. Harary
 
/s/ Alexander Kaganowicz Director March 10, 2014
Alexander Kaganowicz
 
/s/Robert L. Saxe Director, Chairman March 10, 2014
Robert L. Saxe
 
/s/Seth L. Van Voorhees Vice President, CFO, Treasurer March 10, 2014
Seth L. Van Voorhees

52



Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors
Research Frontiers Incorporated
Woodbury, New York

We have audited the accompanying consolidated balance sheets of Research Frontiers Incorporated as of December 31, 2013 and 2012 and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2013. In connection with our audits of the consolidated financial statements, we have also audited the schedule as listed in the accompanying index. These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Research Frontiers Incorporated at December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Research Frontiers Incorporated’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 10, 2014 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

Melville, New York
March 10, 2014

F-1



RESEARCH FRONTIERS INCORPORATED
Consolidated Balance Sheets
December 31, 2013 and 2012

Assets       2013       2012
Current assets:  
       Cash and cash equivalents $ 5,866,123 $ 8,390,233
       Short-term investments 5,076,930 5,052,921
       Royalty receivables, net of reserves of $173,921 in 2013
              and 92,723 in 2012 867,162 688,318
       Prepaid expenses and other current assets 135,080 201,949
 
              Total current assets 11,945,295 14,333,421
 
Fixed assets, net 64,365 59,041
Deposits and other assets 22,605 22,605
              Total assets $       12,032,265 $       14,415,067
 
Liabilities and Shareholders’ Equity
 
Current liabilities:
       Accounts payable $ 56,603 $ 72,269
       Accrued expenses and other 80,725 145,123
       Deferred revenue 25,000 25,000
              Total current liabilities 162,328 242,392
 
Commitments (note 8) - -
 
Shareholders’ equity:
       Common stock, par value $0.0001 per share;
       authorized 100,000,000 shares, issued and outstanding
       23,109,665 and 22,646,782 shares for 2013 and 2012 2,311 2,265
       Additional paid-in capital 105,184,600 101,642,297
       Accumulated deficit (93,316,974 ) (87,471,887 )
              Total shareholders’ equity 11,869,937 14,172,675
 
              Total liabilities and shareholders’ equity $ 12,032,265 $ 14,415,067

See accompanying notes to consolidated financial statements.

F-2



RESEARCH FRONTIERS INCORPORATED
Consolidated Statements of Operations
Years ended December 31, 2013, 2012 and 2011

      2013       2012       2011
Fee income $      2,161,359 $      1,957,336 $      845,982
 
Operating expenses 5,841,268 3,995,633 3,618,635
Research and development 2,203,326 1,671,872 1,390,689
       Total expenses 8,044,594 5,667,505 5,009,324
   
       Operating loss (5,883,235 ) (3,710,169 ) (4,163,342 )
 
Net investment income 38,148 33,171 29,274
       Loss before income tax benefit (5,845,087 ) (3,676,998 ) (4,134,068 )
   
Income tax benefit - 613,397 -
       Net loss $ (5,845,087 ) $ (3,063,601 ) $ (4,134,068 )
 
Basic and diluted net loss
       per common share $ (0.25 ) $ (0.15 ) $ (0.22 )
 
Weighted average number of
       common shares outstanding 22,946,019 20,125,309 18,538,041

See accompanying notes to consolidated financial statements.

F-3



RESEARCH FRONTIERS INCORPORATED
Consolidated Statements of Shareholders’ Equity
Years ended December 31, 2013, 2012 and 2011

      Common Stock Additional Accumulated
Shares       Amount       Paid-in Capital       Deficit       Total
Balance, January 1, 2011   18,281,973   $       1,828   $       87,744,842   $       (80,274,218 ) $       7,472,452
 
Exercise of options and warrants 60,382 6 65,971 - 65,977
Share-based compensation 202,000 20 702,817 - 702,837
Net loss - - - (4,134,068 ) (4,134,068 )
Balance, December 31, 2011 18,544,355 1,854 88,513,630 (84,408,286 ) 4,107,198
 
Issuances of common stock 3,739,227 374 12,250,126 - 12,250,500
Share-based compensation 363,200 37 878,541 - 878,578
Net loss - - - (3,063,601 ) (3,063,601 )
Balance, December 31, 2012        22,646,782 2,265 101,642,297 (87,471,887 ) 14,172,675
 
Exercise of options and warrants 179,983 18 822,951 - 822,969
Share-based compensation 282,900 28 2,719,352 - 2,719,380
Net loss - - - (5,845,087 ) (5,845,087 )
Balance, December 31, 2013 23,109,665 $ 2,311 $ 105,184,600 $ (93,316,974 ) $ 11,869,937

See accompanying notes to consolidated financial statements.

F-4



RESEARCH FRONTIERS INCORPORATED
Consolidated Statements of Cash Flows
Years ended December 31, 2013, 2012 and 2011

      2013       2012       2011
Cash flows from operating activities:
Net loss $      (5,845,087 ) $      (3,063,601 ) $      (4,134,068 )
       Adjustments to reconcile net loss to net cash
              used in operating activities:  
              Depreciation and amortization 45,212 34,963 39,857
              Stock based compensation 2,719,380 878,578 702,837
              Bad debts 81,198 - -
              Recovery of uncollectible receivables - - (70,000 )
       Change in assets and liabilities:
              Royalty receivables (260,042 ) (354,268 ) 116,127
              Prepaid expenses and other current assets 94,544 (107,218 ) (5,037 )
              Accounts payable and accrued expenses (80,064 ) (67,547 ) (2,300 )
  - - -
              Net cash used in operating activities (3,244,859 ) (2,679,093 ) (3,352,584 )
 
Cash flows from investing activities:
       Purchases of fixed assets (50,536 ) (11,576 ) (12,517 )
       Purchase of investments (24,009 ) (3,797,865 ) (2,255,056 )
       Proceeds from sale of investment - - 1,000,000
       Note and interest receivable on SPD Control Systems - 224,903 -
              Net cash used in investing activities (74,545 ) (3,584,538 ) (1,267,573 )
 
Cash flows from financing activities:
       Net proceeds from issuances of common stock and
       exercise of options and warrants 795,294 12,250,500 65,977
              Net cash provided by financing activities 795,294 12,250,500 65,977
 
Net (decrease) increase in cash and cash equivalents (2,524,110 ) 5,986,869 (4,554,180 )
 
Cash and cash equivalents at beginning of year 8,390,233 2,403,364 6,957,544
Cash and cash equivalents at end of year $ 5,866,123 $ 8,390,233 $ 2,403,364
 
Non Cash Financing and Investing Activities:
       Cashless Exercise of Stock Options $ 27,675 $ - $ 276,750

See accompanying notes to consolidated financial statements.

F-5



RESEARCH FRONTIERS INCORPORATED
Notes to Consolidated Financial Statements

(1) 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; 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 historically utilized its cash, cash equivalents, short-term investments, and the proceeds from the sale of its investments 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. There can be no assurance 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. 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.

(2) Summary of Significant Accounting Policies

     (a) Cash and Cash Equivalents

     The Company considers securities purchased with original maturities of three months or less to be cash equivalents. Cash equivalents consist of short-term investments in money market accounts at December 31, 2013 and 2012.

     Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible non-interest bearing accounts. Beginning 2013, insurance coverage reverted back to $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. Amounts on deposit in excess of federally insured limits at December 31, 2013 is approximately $5.6 million.

F-6



     (b) Short-term Investments

     The Company classifies investments in marketable securities as trading, available-for-sale or held-to-maturity at the time of purchase and periodically re-evaluates such classifications. Trading securities are carried at fair value, with unrealized holding gains and losses included in earnings. Held-to-maturity securities are recorded at cost and are adjusted for the amortization or accretion of premiums or discounts over the life of the related security. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized. In determining realized gains and losses, the cost of securities sold is based on the specific identification method. Interest and dividends on the investments are accrued at the balance sheet date. At December 31, 2013 and 2012 all investments were classified as held to maturity and consisted of the following:

December 31, 2013 December 31, 2012
Certificates of Deposit Maturity Value of Held to Maturity Value of Held to Maturity
Investment       Date       Investments (based on cost)       Investments (based on cost)
$ 2,011,967 10/16/14   $ 2,011,967 $ 2,000,000
$ 2,007,997   10/16/14 $ 2,007,997   $ 2,000,000
$ 502,821 06/29/14 $ 502,821 $ 500,940
$ 301,692 04/06/14 $ 301,692 $ 300,564
$ 252,453 03/29/14 $ 252,450 $ 251,417
$ 5,076,927 $ 5,052,921

     (c) Royalties Receivable

     Royalties receivable are recorded at the amounts specified within the license agreements when the collectability of the receivable is reasonably assured. The receivables do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing royalties receivable. The Company determines the allowance based on historical write off experience. The Company reviews its allowance for doubtful accounts periodically. Past due accounts are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

     (d) Fixed Assets

     Fixed assets are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

     (e) Revenue Recognition/Fee Income

     The Company has entered into a number of license agreements covering its light control technology. The Company receives minimum annual royalties under certain license agreements and records fee income on a ratable basis each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognizes fee income as the amounts have been earned. 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. Such excess amounts are recorded as deferred revenue and recognized into income in future periods as earned.

F-7



     Fee income represents amounts earned by the Company under various license and other agreements (note 7) relating to technology developed by the Company. During 2013 five licensees accounted for 40%, 12%, 6% and 6%, and 5% respectively of fee income recognized for the year. During 2012, four licensees accounted for 62%, 6%, 5% and 5% respectively of fee income recognized during the year.

     (f) Basic and Diluted Loss Per Common Share

     Basic earnings (loss) per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive earnings (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company’s dilutive loss per share equals basic loss per share for each of the years in the three-year period ended December 31, 2013 because all common stock equivalents (i.e., options and warrants) were antidilutive in those periods. The number of options and warrants that were not included because their effect is antidilutive was 2,860,219, 2,630,002 and 1,973,906, for 2013, 2012, and 2011, respectively.

     (g) Research and Development Costs

     Research and development costs are charged to expense as incurred.

     (h) Patent Costs

     The Company expenses costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items.

     (i) Use of Estimates

     The preparation of the Company’s consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during this period. Actual results could differ from those estimates.

     (j) Income Taxes

     Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

F-8



     In accordance with ASC Topic 740 (FIN 48), we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. We classify accrued interest and penalties related to any unrecognized tax benefits in our income tax provision. At December 31, 2013 and 2012, we do not have accrued interest and penalties related to any unrecognized tax benefits. We do not believe we have any uncertain tax positions as of December 31, 2013 and 2012.

     The tax years subject to examination by major tax jurisdictions include the years 2009 and forward by the U.S. Internal Revenue Service and certain states. The Company is not currently being audited by any tax jurisdiction.

     (k) Fair Value of Financial Instruments

     The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of all financial instruments classified as a current asset or current liability are deemed to approximate fair value because of the short maturity of those instruments.

     (l) Equity-Based Compensation

     We recognize all stock-based compensation as an expense in the financial statements and such costs are measured at the fair value of the award at the date of grant. In addition to reflecting compensation expense for new share-based payment awards, expense is also recognized to reflect the remaining vesting period of awards that had been granted in prior periods. Tax benefits related to stock option exercises are reflected as financing cash inflows instead of operating cash inflows.

     The exercise price for stock options granted are generally set at the average for the high and low trading prices of the Company’s common stock on the trading date immediately prior to the date of grant, and the related number of shares granted are fixed at the date of grant.

     In order to determine the fair value of stock options and warrants on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, option term, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public sources, the expected stock-price volatility and option term assumptions require a greater level of judgment.

     In connection with the employee stock options and restricted stock grants, the Company charged $2,545,060, $873,888, and $719,811 to operations during the years ended December 31, 2013, 2012, and 2011, respectively. In lieu of higher cash compensation, the Company has granted warrants and non-employee options to consultants. These warrants and non-employee options vest ratably over various terms ranging from 24 to 59 months. Non-employee options covering 60,000 shares were granted to consultants during 2012. These non-employee options, as well as previously granted warrants, were valued at fair value at the time that the related services are provided using the Black Scholes method and marked to market quarterly using the Black Scholes method. The Company incurred a charge (benefit) to operations of $174,320, $4,690, and ($16,974) for 2013, 2012, and 2011, respectively in connection with these warrants and non-employee options.

F-9



     (m) Restricted Stock

     Compensation cost for restricted stock is measured using the quoted market price of the Company's common stock at the date the common stock is granted. The compensation cost is recognized over the period between the issue date and the date any restrictions lapse. Restricted stock is included in total common shares outstanding upon the lapse of any restrictions.

     (n) Impairment of Long-Lived Assets

     The Company reviews long-lived assets to determine whether an event or change in circumstances indicates the carrying value of the asset may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets and any historical or future profitability measurements, as well as other external market conditions or factors that may be present.

     (o) Fair Value Measurements

     Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”) establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC Topic 820 applies under other previously issued accounting pronouncements that require or permit fair value measurements but does not require any new fair value measurements.

     ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

     We value financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices for similar assets or liabilities in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

     Financial assets accounted for at fair value on a recurring basis at December 31, 2013 and 2012, include cash and cash equivalents of approximately $5.9 million and $8.4 million, respectively, as well as short term investments of $5.1 million and $5.1 million in 2013 and 2012, respectively. The carrying value of these assets approximates fair value due to the short-term maturity of these instruments.

F-10



     (p) Recent Accounting Pronouncements

New Accounting Standards

New accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt according to the various timetables the FASB specifies. The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

(3) Fixed Assets

     Fixed assets and their estimated useful lives as of December 31, 2013 and 2012 are as follows:

2013       2012       Estimated useful life
Equipment and furniture $       1,351,877 $       1,301,341 5 years
 
Life of lease or estimated
Leasehold Improvements 437,745 437,745 life of asset if shorter
1,789,622 1,739,086
 
Less accumulated depreciation
and amortization (1,725,257 ) (1,680,045 )
$ 64,365 $ 59,041

The Company incurred depreciation expense of $45,212, $34,963 and $39,857 for 2013, 2012, and 2011, respectively in connection with these fixed assets.

F-11



(4) Accrued Expenses and Other

     Accrued expenses consist of the following at December 31, 2013 and 2012:

2013       2012
Payroll, bonuses and related benefits $       75,966 $       110,621
Professional services 4,400 23,450
Deferred rent -- 10,691
Other 359 361
$ 80,725 $ 145,123

(5) Income Taxes

     Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carryforwards and deferred items have been fully reserved since it was not more likely than not that the Company would achieve profitable operations.

     The Company applied for state research and development refundable credits for the years ended December 31, 2006 through 2009. In April 2012, the Company received $613,397 relating to these credits for the years 2006 through 2009, which is reflected as an income tax benefit in the accompanying statement of operations for the year ended December 31, 2012. The Company currently does not expect to collect additional credits for years subsequent to 2009. In addition, $61,340 is included in operating expenses on the accompanying statement of operations for the year ended December 31, 2012 relating to professional fees paid in connection with securing these refundable credits.

     The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2013 and 2012 are presented below.

2013       2012
Deferred tax assets:
       Depreciation $       104,000 $       95,000
       Allowance for bad debts 70,000 37,000
       Net operating loss carryforwards 23,116,000 22,516,000
       Stock option expense 1,347,000 1,051,000
       Research and other credits 972,000 977,000
       Other temporary differences 15,000 15,000
              Total gross deferred tax assets 25,624,000 24,700,000
       Less valuation allowance (25,624,000 ) (24,700,000 )
$ -- $ --

     In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets, as they will not be realized until the Company achieves profitable operations in the future.

     At December 31, 2013, the Company had a net operating loss carryforward for federal income tax purposes of approximately $58,000,000, varying amounts of which will expire in each year from 2014 through 2033. Research and other credit carryforwards of approximately $972,000 are available to the Company to reduce income taxes payable in future years principally through 2033. Net operating loss carryforwards of approximately $3,227,000 and research and other credit carryforwards of approximately $84,000 are scheduled to expire during fiscal 2014, if not utilized.

F-12



(6) Shareholders’ Equity

     (a) Common Stock and Warrants

     During 2013, the Company received proceeds of $822,969 in connection with the exercise of options and warrants representing 179,983 shares of common stock.

     During 2012 the Company sold, pursuant to the Company’s effective registration statement filed with the SEC, equity in the Company as follows:

Date Shares issued       Warrants issued       Unit price       Proceeds
July 30, 2012   589,227 117,846 $       2.97 $       1,745,549 *
August 28, 2012                   1,900,000 380,000 $ 2.97 $ 5,229,201 **
October 3, 2012 1,250,000 250,000 $ 4.49 $ 5,275,750 ***
Total 3,739,227 747,846 $ 12,250,500
____________________
 
(*) Net of fees of $4,455
(**) Net of fees of $413,719
(***)       Net of fees of $336,750

     Shares and warrants issued in the July 30, 2012 and August 28, 2012 sales were sold pursuant to the Company’s currently effective shelf registration. Warrants issued in the July 30, 2012 and August 28, 2012 sales’ are exercisable for a period of five years beginning on the closing date of the offering at an exercise price of $4.45 per share (150% of the aggregate offering price for a share of common stock and corresponding warrant).

     The warrants issued in connection with the October 3, 2012 sale are exercisable for a period of five years beginning on the six-month anniversary of the closing date at an exercise price of $6.73 per share (approximately 150% of the aggregate offering price). The securities issued in the October 3, 2012 sale were not registered under the Securities Act of 1933, as amended, or any state securities laws, and were issued and sold in a private placement pursuant to Regulation D of the Securities Act. The Company subsequently filed a Form S-3 registration with the US Securities and Exchange Commission which was declared effective on December 26, 2012 that covers the resale of the shares by the purchaser and the shares issuable upon exercise of the warrants.

     (b) Options and Warrants

     (i) Employee Options

     In 2008, the shareholders approved the Company’s 2008 Equity Incentive Plan which provides for the granting of both incentive stock options at the fair market value at the date of grant and nonqualified stock options at the fair market value at the date of grant to employees or non-employees who, in the determination of the Board of Directors, have made or may make significant contributions to the Company in the future. The Company may also award stock appreciation rights, restricted stock, or restricted stock units under this plan. The Company initially reserved 750,000 shares of its common stock for issuance under this plan, and 611,692 options and other awards were available for issuance under this plan as of December 31, 2013.

F-13



     At the discretion of the Board of Directors, options expire in ten years or less from the date of grant and are generally fully exercisable upon grant but in some cases may be subject to vesting in the future. Full payment of the exercise price may be made in cash or in shares of common stock valued at the fair market value thereof on the date of exercise, or by agreeing with the Company to cancel a portion of the exercised options.

     The Company granted no employee options during 2012 and 2011. The Company granted 499,700 fully vested options during 2013 and recorded share-based compensation of $1,431,620. The Company valued these 2013 grants using the Black-Scholes option pricing model with the following weighted average assumptions:

Fair value on grant date $       2.86
Expected dividend yield --
Expected volatility 64 %
Risk free interest rate 1.62 %
Expected term of the option 5 years

Activity in stock options is summarized below:

Weighted
Weighted Average
Number of Average Remaining Aggregate
Subject to Exercise Contractual Intrinsic
       Option        Price        Term (Years)        Value
Balance at January 1, 2011        1,734,199 $       11.64 4.3 $ 281,600
 
       Granted - $ 20.43
       Cancelled (379,550 ) $ 3.72
       Exercised (85,000 ) $ 9.48
Balance at December 31, 2011 1,269,649 $ 11.64 4.2 $ -
 
       Granted (151,750 ) $ 12.76
       Cancelled - $ -
       Exercised - $ -
Balance at December 31, 2012 1,117,899 $ 9.03 3.7 $ 4,250
 
       Granted 499,700 $ 5.26
       Cancelled (64,500 ) $ 12.81
       Exercised (72,500 ) $ 4.83
Balance at December 31, 2013 1,480,599 $ 7.80 5.2 $ 399,000

All options are exercisable at December 31, 2013.

F-14



During 2011 an employee was to make a payment of $276,750 for exercising 75,000 options but instead he forfeited 29,270 options which would have been exercisable at a fair market value of $276,896 and delivered the difference in cash.

During 2013 and 2011, the Company received $322,475 and $39,744, respectively in net proceeds from the exercise of options.

(ii) Warrants and Non-Employee Options

     Activity in warrants is summarized below:

Number of Shares Underlying
Warrants and Non-Employee Weighted Average
       Options Granted        Exercise Price
Balance at January 1, 2011 708,909 $ 5.00 - 9.00
 
       Exercised (4,652 ) 5.64
       Terminated - -
       Issued - -
Balance at December 31, 2011 704,257 $ 5.00 - 9.00
 
       Exercised - -
       Terminated - -
       Issued 807,846 5.12
Balance at December 31, 2012 1,512,103 $ 5.56
 
       Exercised (107,483 ) 4.45
       Terminated (25,000 ) 9.00
       Issued - -
Balance at December 31, 2013 1,379,620 $ 5.58

Warrants and non-employee options generally expire from five to ten years from the date of issuance. At December 31, 2013, the number of warrants exercisable was 1,365,870 at a weighted average exercise price of $5.60 per share.

The Company granted a total of 60,000 non-employee options to two consultant’s during 2012 at a weighted average exercise price of $3.95. These grants vest ratably over 24 months from the date of grant. These non-employee options and previously granted warrants were valued at fair value at the time that the related services are provided using the Black-Scholes method and marked to market quarterly using the Black Scholes method. The Company incurred a charge (benefit) of $174,320 $4,690 and ($16,974), for 2013, 2012, and 2011, respectively in connection with these non-employee options.

F-15



During 2013 and 2011, the Company received $472,819 and $26,233 in net proceeds from the exercise of warrants.

     (c) Restricted Stock Grants

     During 2013, the Company granted 282,900 shares of restricted stock to its directors and employees. Directors received 91,500 of these shares of restricted common stock. All the shares granted to the directors, as well as 3,400 shares granted to employees vested immediately upon grant. The remaining 188,000 shares vest ratably over the 36 months following grant. The market value per share on the date of grant was $3.70.

     During, 2012 the Company granted 363,200 shares of common stock to its directors and employees. All of the 96,500 shares granted to the directors, as well as 5,100 shares granted to employees, vested immediately upon grant. The remaining 261,600 shares issued to employees vest ratably over 36 months following grant. The market value per share on the date of grant was $3.38.

     During 2011, the Company granted 63,000 and 139,000 shares of common stock to directors and employees respectively. The market price of each share on the date of grant was $5.20. All of the shares granted to the directors, as well as 3,000 shares granted to certain employees, vested immediately upon grant. The remaining 136,000 shares issued vest ratably over the next 36 months.

     In connection with these grants, as well as prior grants that are not yet fully vested, the Company charged $2,545,060, $873,888 and $719,811 to operations during 2013, 2012 and 2011 respectively.

     At December 31, 2013, 2012 and 2011, 611,692, 218,733 and 90,667 respectively, of these grants remain unvested. In addition, at December 31, 2013, $758,000 remains to be charged to operations over the next 24 months relating to these grants.

(7) License and Other Agreements

     The Company has entered into a number of license agreements covering various products using the Company’s SPD technology. Some of these license agreements are limited to specific countries and/or markets. Licensees of Research Frontiers who incorporate SPD technology into end products pay Research Frontiers an earned royalty of 5-15% of net sales of licensed products under license agreements currently in effect, and may also be required to pay Research Frontiers fees and minimum annual royalties. Licensees who sell products or components to other licensees of Research Frontiers do not pay a royalty on such sale; Research Frontiers will collect such royalty from the licensee incorporating such products or components into its own end-products. Research Frontiers’ license agreements typically allow the licensee to terminate the license after some period of time, and give Research Frontiers only limited rights to terminate before the license expires. Most licenses are non-exclusive and generally last as long as our patents remain in effect.

(8) Commitments

     The Company has an employment agreement with three of its officers which provides for an annual base salary of $450,000, $402,000 and $220,000 respectively for calendar year 2014. Each of these employment agreements have an evergreen provision that extend the term by one year on the anniversary date unless either the Company or the employee has given notice that they will not be renewing the agreement upon the expiration of its term.

     The Company has a defined contribution profit sharing (401K) plan covering employees who have completed one year of service. Contributions are made at the discretion of the Company. The Company did not make any contributions to this plan for 2013, 2012, or 2011.

F-16



     The Company occupies premises under an operating lease agreement which expires on March 31, 2014. During February 2014, the Company entered into a new lease expiring on March 31, 2025. As of December 31, 2013, the approximate minimum annual future rental commitments under the expiring and new lease agreements for the next five years are as follows:

                   2014:             $       163,000
2015: $ 168,000
2016:   $ 174,000
2017: $ 180,000
2018: $ 186,000
Thereafter: $ 1,294,000

     Rent expense, including other occupancy related expenses, amounted to approximately $187,000, $200,000, and $172,000, for 2013, 2012, and 2011, respectively.

(9) Rights Plan

     In February 2013, the Company’s Board of Directors adopted a Stockholders’ Rights Plan (the “Rights Plan”) and declared a dividend distribution of one right (a “Right”) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (“Record Time”) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time.

     “Separation Time” shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Person’s becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.

     Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15% or more of the Company’s common stock, unless redeemed by the Company’s Board of Directors, each Right entitles the holder (other than the acquiring person) to purchase from the Company $80 worth of common stock for $40. If the Company is merged into, or 50% or more of its assets or earning power is sold to, the acquiring company, the Rights will also enable the holder (other than the acquiring person) to purchase $80 worth of common stock of the acquiring company for $40. The Rights will expire at the close of business on February 11, 2023, unless the Rights Plan is extended by the Company’s Board of Directors or unless the Rights are earlier redeemed by the Company at a price of $.0001 per Right. The Rights are not exercisable during the time when they are redeemable by the Company.

     The above description highlights some of the features of the Company’s Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request.

F-17



(10) Selected Quarterly Financial Data (Unaudited)

Quarter
2013                  
Fee Income $       707,231 $       521,844 $       506,692 $       425,592
Operating loss (2) (1,597,036 ) (790,636 ) (869,483 ) (2,626,080 )
Net loss (2) (1,589,184 ) (779,480 ) (859,954 ) (2,616,469 )
Basic and diluted net loss
       per common share (1) (0.07 ) (0.03 ) (0.04 ) (0.11 )

Quarter
2012 First       Second       Third       Fourth
Fee income $       482,578 $       450,828 $       471,886 $       552,044
Operating loss (2) (1,434,553 ) (793,041 ) (869,788 ) (612,787 )
Net loss (2) (803,339 ) (789,551 ) (866,464 ) (604,247 )
Basic and diluted net loss
       per common share (1) (0.04 ) (0.04 ) (0.04 ) (0.03 )
____________________

     (1) Since per share information is computed independently for each quarter and the full year, based on the respective average number of common shares outstanding, the sum of the quarterly per share amounts does not necessarily equal the per share amounts for the year.

     (2) The Company incurred higher costs in the first and fourth quarter of 2013 and the first quarter of 2012 relating primarily to: (i) $1,841,000 and $424,000 of stock and option compensation charges in the 2013 and 2012, respectively, relating to common stock and options granted to directors, employees and consultants, and (ii) $175,000 in the first quarter of 2013 and 2012, respectively, in directors’ fees.

F-18



SCHEDULE II

RESEARCH FRONTIERS INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2013, 2012, and 2011

      Balance at       Charged to      
beginning of costs and
period expenses Deductions       Balance
Description
 
Allowance for uncollectible
royalty receivables:
 
December 31, 2013 $       92,723 $       81,198 $       - $       173,921
 
December 31, 2012 $ 92,723 $ - $ - $ 92,723
 
December 31, 2011 $ 162,723 $ - $ 70,000 * $ 92,723
____________________

*Recovery of previously reserved receivables.

F-19


(Back To Top)

Section 2: EX-10.1C (EMPLOYMENT AGREEMENT EFFECTIVE AS OF JANUARY 1, 2014)


Exhibit 10.1C

EMPLOYMENT AGREEMENT

     AGREEMENT, dated as of January 1, 2014, between Research Frontiers Incorporated, a Delaware corporation with principal executive offices at 240 Crossways Park Drive, Woodbury, New York 11797-2033 (the “Company”), and Seth L. Van Voorhees, residing at (“Employee”).

W I T N E S S E T H

     WHEREAS, the Company desires to employ Employee upon the terms and subject to the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises, the mutual promises, covenants, and conditions herein contained and for other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:

     Section 1. Employment.

     The Company hereby agrees to continue to employ Employee, and Employee hereby agrees to continue to serve the Company, all upon the terms and subject to the conditions set forth in this Agreement.

     Section 2. Capacity and Duties.

          (a) Employee is and shall be employed in the capacity of Vice President and Chief Financial Officer of the Company and shall have the duties, responsibilities, and authorities normally performed by the vice president and chief financial officer of a company, including responsibility for the overall and day-to-day financial operation of the Company, and such other duties, responsibilities, and authorities as are assigned to him by the Chief Executive Officer (“CEO”) or the Board of Directors of the Company (the “Board”) so long as such additional duties, responsibilities, and authorities are consistent with Employee’s position and level of authority as Vice President and Chief Financial Officer of the Company. Employee shall also serve as Treasurer, President of the Company’s VariGuard business unit and Vice President of Business Development of the Company (or any combination of the foregoing) if requested to do so by the CEO or the Board. Employee in carrying out his duties under this Agreement shall report to the CEO and the Board. Notwithstanding the foregoing, after a Non-Extension Notice (as hereinafter defined) is delivered, Employee shall (i) resign from such offices then held by Employee with the Company or its subsidiaries as shall be requested by the CEO or the Board and shall no longer have the duties, responsibilities, and authorities associated with the offices from which he has resigned, (ii) report to such person or persons as the CEO or the Board may specify, and (iii) perform such transitional duties, responsibilities, and authorities as may be reasonably assigned to him by the CEO or the Board.



          (b) Employee shall devote substantially all of his business time and attention to promote and advance the business of the Company, except that Employee shall be permitted to (i) serve on the boards of directors of other corporations not engaged in competition with the Company and the boards of trade associations and charitable organizations, (ii) engage in charitable activities and community affairs, (iii) manage his personal investments and affairs, and (iv) teach or lecture; provided in each case that (A) such activities do not materially interfere with the proper performance of Employee’s duties and responsibilities as the Company’s Vice President and Chief Financial Officer and (B) in the case of each activity described in clauses (i), (ii), and (iv), such activity is approved in advance by the CEO or the Board, such approval not to be unreasonably withheld, except that, if all of activities described in clauses (i), (ii), and (iv) involve in the aggregate less than ten hours per month of Employee’s time, such advance approval shall not be required but Employee shall promptly notify the CEO or the Board of the nature of such activities.

          (c) If (i) Employee is serving on the Board on the date a Non-Extension Notice is delivered or at a time that he is no longer employed by the Company and (ii) (A) a Change of Control (as hereinafter defined) has not occurred or (B) Employee’s employment has been terminated by the Company pursuant to Section 9(c) or Employee, in breach of this Agreement, has terminated his employment prior to the Scheduled Date of Termination (as hereinafter defined) other than pursuant to Section 9(d), Employee shall promptly resign from the Board if he is requested to do so by the Board.

     Section 3. Term of Employment.

     The term of employment of Employee by the Company pursuant to this Agreement shall be for the period (the “Employment Period”) commencing as of the date hereof and ending on December 31, 2016, unless further extended or sooner terminated in accordance with the provisions of this Agreement. On December 31, 2016, and on each subsequent December 31, the Employment Period shall be automatically extended for one additional year unless, not later than 90 days prior to such date, the Company shall have delivered to Employee or Employee shall have delivered to the Company written notice (a “Non-Extension Notice”) that the Employment Period shall not be further extended.

     Section 4. Compensation.

     During the Employment Period, subject to all the terms and conditions of this Agreement and as compensation for all services to be rendered by Employee under this Agreement, the Company shall pay to or provide Employee with the following:

          (a) Base Salary. The Company shall pay to Employee a base salary at the annual rate of at least $220,000, payable at such intervals (at least monthly) as salaries are paid generally to other executive officers of the Company.

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          (b) Bonus. Employee shall be eligible for a potential annual bonus in an aggregate amount of at least $130,000 upon the achievement of realistic and achievable goals. Not later than March 15 of 2014, and not later than March 15 of each subsequent year, the Board shall determine in good faith, after consultation with Employee, the goals for that year’s bonus, which goals shall be specified in writing. The Board may, in its sole discretion, provide for a series of separate and independent goals to be met during the year, each of which is associated with its own potential bonus. Any bonus (including any bonus associated with a separate and independent goal) for any year shall be payable to Employee as soon as practicable after it is determined whether the applicable goals have been achieved.

          (c) Equity Incentive Awards. In addition to any equity awards heretofore granted to the Employee under the Company’s 2008 Equity Incentive Plan (the “Plan”), the committee established by the Board to administer the Plan may grant Employee additional equity incentive awards under the Plan or otherwise from time to time based upon his performance. Any such additional equity incentive awards shall be of a type and amount commensurate with Employee’s position and consistent with the type and amount of equity incentive awards granted to the Company’s other officers, directors, and employees.

          (d) Vacation. Employee shall be entitled to annual paid vacation of 20 business days, which shall accrue in accordance with the policies of the Company in effect from time to time. Vacation days not used in the year earned may be carried into the first quarter of the subsequent year. For any vacation day not used prior to the end of the first quarter of the year subsequent to the year earned, Employee shall be paid an amount equal to his annual base salary in the year earned divided by 260.

          (e) Employee Benefit Plans. Employee shall be entitled to participate in all employee benefit plans maintained by the Company for its senior executives or employees for which he is eligible.

          (f) Withholding. Employee authorizes the Company to make any and all applicable tax withholdings from any compensation payable or provided to Employee hereunder.

          (g) Disability Payments. Any compensation payable or provided to Employee hereunder shall be reduced by the sum of the amounts, if any, payable to Employee under disability benefit plans of the Company.

     Section 5. Expenses.

     The Company shall reimburse Employee for all reasonable expenses (including, but not limited to, business travel and entertainment expenses) incurred by him in connection with his employment hereunder in accordance with the written policy and guidelines established by the Company for executive officers.

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     Section 6. Patents.

          Any interest in patents, patent applications, inventions, trademarks, trademark applications, copyrights, developments, processes, or other intellectual property (“Inventions”) which Employee now or hereafter during the period he is employed by the Company under this Agreement or otherwise may own or develop relating to the fields in which the Company may then be engaged shall belong to the Company; and forthwith upon request of the Company Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to the Inventions free and clear of all liens, charges, and encumbrances.

     Section 7. Non-Competition, Non-Solicitation.

          Employee agrees that he will not during the period he is employed by the Company under this Agreement or otherwise and for a period of two years thereafter, directly or indirectly, (a) solicit the employment of, or, except for terminations of employees in the ordinary course of business during the period Employee is employed by the Company under this Agreement or otherwise, encourage to leave the employment of the Company or any of its subsidiaries, any person employed by the Company or any of its subsidiaries, (b) hire any employee or former employee of the Company or any of its subsidiaries, (c) compete with or be engaged in the same business as the Company or any of its subsidiaries, (d) be employed by, or act as consultant or lender to, or be a director, officer, or employee of, any business or organization which, during the period Employee is employed by the Company under this Agreement or otherwise, directly or indirectly competes with or is engaged in the same business as the Company or any of its subsidiaries, or (e) have a greater than one percent interest as owner, member, or partner of any business or organization which, during the period Employee is employed by the Company under this Agreement or otherwise, directly or indirectly competes with or is engaged in the same business as the Company or any of its subsidiaries.

     Section 8. Confidential Information.

          All confidential information which Employee may now possess, may obtain during or after the Employment Period, or may create prior to the end of the period he is employed by the Company under this Agreement or otherwise relating to the business of the Company or of any its licensees, customers, or suppliers shall not be published, disclosed, or made accessible by him to any other person, firm, or corporation either during or after the termination of his employment or used by him except during the Employment Period in the business and for the benefit of the Company, in each case without prior written permission of the Company. Employee shall return all tangible evidence of such confidential information to the Company prior to or at the termination of his employment.

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     Section 9. Early Termination.

     Employee’s employment hereunder may be terminated prior to December 31, 2016 or, if the Employment Period has been extended to a date later than December 31, 2016, prior to such later date (December 31, 2016 or such later date is hereinafter referred to as the “Scheduled Date of Termination”), without such termination constituting a breach of this Agreement only under the following circumstances:

          (a) Death. Employee’s employment hereunder shall terminate upon his death.

          (b) Disability. If, as a result of Employee’s incapacity due to physical or mental illness, Employee shall have been absent from his duties hereunder on a full-time basis for at least 16 consecutive weeks and does not return to the performance of his duties on a full-time basis within ten days after receipt of written notice from the Company, the Company may terminate Employee’s employment hereunder.

          (c) Cause. The Company may terminate Employee’s employment hereunder for Cause. For purposes of this Agreement, “Cause” shall mean (i) gross negligence or willful misfeasance demonstrated by Employee in the performance of his material duties to the Company, (ii) refusal by Employee to perform reasonable material lawful duties which are consistent with Employee’s position and role and are assigned to him by the Board, which refusal continues uncured for 30 days after receipt of written notice from the Company, (iii) Employee’s engaging in any act of fraud, dishonesty, or moral turpitude that has or is likely to have a material adverse affect on the business of the Company or the reputation of the Company or Employee, (iv) Employee’s breaching in any material respect any material provision of this Agreement, the Research Frontiers Incorporated Employee Proprietary Information & Invention Agreement executed by Employee when he was first retained by the Company as a consultant (the “2010 Agreement”), or the employee policies and procedures of the Company, which breach is not cured within 30 days after receipt of written notice from the Company, (v) Employee’s conviction of, or entering into a plea of guilty or nolo contendere (or its equivalent) to, a felony, or (vi) Employee’s material violation of any federal, state, or local law applicable to the Company or any of its subsidiaries or their respective businesses; provided that (A) no act, or failure to act, by Employee that is specifically authorized pursuant to a resolution duly adopted by the Board shall constitute Cause and (B) Cause will not exist unless and until the Company has delivered to Employee a copy of a resolution duly adopted by at least two-thirds of the Board (excluding Employee) at a meeting of the Board called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee and his counsel to be heard before the Board) finding that, in the good faith opinion of the Board, an event described in one or more of clauses (i) through (vi) above has occurred and specifying the particulars thereof in detail.

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          (d) Good Reason. Employee may terminate his employment hereunder for Good Reason. For purposes of this Agreement, “Good Reason” shall mean (i) the Company’s breaching in any material respect any material provision of this Agreement (and it is agreed that Sections 2(a) and 11(a) are each a material provision of this Agreement for these purposes), (ii) a change in Employee’s daily work location to a place that is greater than 50 miles from both (A) Employee’s place of residence on the date hereof and (B) the Company’s place of business on the date hereof in Woodbury, New York, other than such a change that occurs after a Non-Extension Notice is delivered, or; provided in each case that Employee shall have provided written notice to the Company of the existence of such breach, change, or failure and the Company shall not have remedied such breach, change, or failure within 30 days of receipt of such notice.

          (e) Notice of Early Termination. Any termination of Employee’s employment by the Company pursuant to Section 9(b) or 9(c) or by Employee pursuant to Section 9(d) shall be communicated by a Notice of Early Termination to the other party hereto. For purposes of this Agreement, a “Notice of Early Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for early termination under the provision so indicated.

          (f) Date of Early Termination. “Date of Early Termination” shall mean (i) if Employee’s employment is terminated pursuant to Section 9(a), the date of his death, (ii) if Employee’s employment is terminated pursuant to Section 9(b), 9(c), or 9(d), the date specified in the Notice of Early Termination, which shall not be earlier than the date on which the Notice of Early Termination is given, or (iii) if, in breach of this Agreement, Employee’s employment is terminated prior to the Scheduled Date of Termination for any other reason, the date on which Employee’s employment is terminated.

     Section 10. Compensation Upon Early Termination or Expiration of the Employment Period.

          (a) If Employee’s employment is terminated pursuant to Section 9(a), Employee’s devisee, legatee, or other designee or, if there be no such devisee, legatee, or other designee, Employee’s estate (such devisee, legatee, designee, or estate is hereinafter referred to as “Employee’s Beneficiary”) shall be entitled to receive (i) Employee’s base salary and benefits accrued and unpaid through the Date of Early Termination, (ii) any unpaid bonus that Employee is eligible to receive on his Date of Early Termination, (iii) any reimbursement Employee is entitled to receive for expenses incurred prior to the Date of Early Termination, and (iv) any benefits to which Employee or Employee’s Beneficiary is entitled pursuant to any insurance or other benefit or incentive plan or arrangement of the Company (collectively, “Accrued Obligations”). In addition, (v) the Company shall pay to Employee’s Beneficiary Employee’s base salary for the period commencing on the Date of Early Termination and ending on the four month anniversary of the Date of Early Termination, payable in the manner it would have been paid if Employee had not died, and (vi) if on his Date of Early Termination Employee is not eligible to receive a bonus (including any bonus associated with a separate and independent goal) for any year but has made substantial progress towards earning such bonus, the Board will in good faith determine if Employee’s Beneficiary should be paid all or a portion of such bonus.

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          (b) If Employee’s employment is terminated by the Company pursuant to Section 9(b), the Company shall pay to Employee the Accrued Obligations. In addition, (i) the Company shall pay to Employee the amount, if any, by which (A) his base salary for the period commencing on the Date of Early Termination and ending on the four month anniversary of the Date of Early Termination exceeds (B) the sum of (I) the amount of base salary received by Employee with respect to the period he was disabled and (II) the sum of the amounts, if any, payable to Employee under disability benefit plans of the Company, which amount shall be payable in equal installments over the period commencing on the Date of Early Termination and ending on the four month anniversary of the Date of Early Termination at such intervals (at least monthly) as salaries are paid generally to executive officers of the Company and (ii) if on his Date of Early Termination Employee is not eligible to receive a bonus (including any bonus associated with a separate and independent goal) for any year but has made substantial progress towards earning such bonus, the Board will in good faith determine if Employee should be paid all or a portion of such bonus.

          (c) If Employee’s employment is terminated by the Company pursuant to Section 9(c) or if Employee, in breach of this Agreement, shall terminate his employment prior to the Scheduled Date of Termination other than pursuant to Section 9(d), the Company shall pay to Employee the Accrued Obligations.

          (d) If the Company, in breach of this Agreement, shall terminate Employee’s employment prior to the Scheduled Date of Termination other than pursuant to Section 9(b) or 9(c) or if Employee shall terminate his employment pursuant to Section 9(d), then

(i) the Company shall pay to Employee the Accrued Obligations;
 
(ii) if on his Date of Early Termination Employee is not eligible to receive a bonus (including any bonus associated with a separate and independent goal) for any year but has made substantial progress towards earning such bonus, the Board will in good faith determine if Employee should be paid all or a portion of such bonus;
 
           (iii)       the Company shall pay as severance pay to Employee his base salary for the period commencing on the Date of Early Termination and ending on the Scheduled Date of Termination, payable in the manner it would have been paid if his employment had not so terminated; provided that (A) except as set forth in clause (B) below, in no event shall the Company pay such severance pay to Employee for less than three months or more than three years and (B) if the Date of Early Termination occurs within three months prior to, or 12 months following, a Change of Control, the Company shall pay such severance pay to Employee for the period commencing on the Date of Early Termination and ending on the later of (I) the Scheduled Date of Termination and (II) the third anniversary of the Date of Early Termination; and
 
(iv) any restricted period shall lapse with respect to all equity incentive awards granted to Employee under the Plan or otherwise shall immediately become fully vested.

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For purposes of this Agreement, a “Change in Control” shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 5.01 of Current Report on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (or any successor form), other than a change of control resulting in control of the Company by Employee or a group including Employee.

          (e) If the Scheduled Date of Termination occurs as a result of a Non-Extension Notice delivered by the Company to Employee and Employee is not otherwise employed by the Company after the Scheduled Date of Termination, the Company shall pay Employee (i) Employee’s base salary and benefits accrued and unpaid through the Scheduled Date of Termination, (ii) any unpaid bonus that Employee is eligible to receive on the Scheduled Date of Termination, (iii) any reimbursement Employee is entitled to receive for expenses incurred prior to the Scheduled Date of Termination, and (iv) any benefits to which Employee is entitled pursuant to any insurance or other benefit or incentive plan or arrangement of the Company (collectively, “Scheduled Date of Termination Accrued Obligations”). In addition, (v) the Company shall pay as severance pay to Employee his base salary for the period commencing on the Scheduled Date of Terminations and ending on the three month anniversary of the Scheduled Date of Termination, payable in the manner it would have been paid if his employment had not so terminated, and (vi) if on the Scheduled Date of Termination Employee is not eligible to receive a bonus (including any bonus associated with a separate and independent goal) for any year but has made substantial progress towards earning such bonus, the Board will in good faith determine if Employee should be paid all or a portion of such bonus.

          (f) If the Scheduled Date of Termination occurs as a result of a Non-Extension Notice delivered by Employee to the Company and Employee is not otherwise employed by the Company after the Scheduled Date of Termination, the Company shall pay Employee the Scheduled Date of Termination Accrued Obligations.

          (g) Notwithstanding anything in the foregoing to the contrary,

           (i)       it is intended that the amounts payable to Employee under Sections 10(d)(iii) and 10(e) shall be exempt from Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), or satisfy the safe harbor set forth in Treasury Regulations section 1.409A- 1(b)(9)(iii) to the maximum extent permitted. To the extent such amounts payable under Sections 10(d)(iii) and 10(e) are not exempt and exceed the applicable safe harbor amount, the excess amount shall be treated as deferred compensation under Section 409A and as such shall be payable to Employee in the manner it would have been paid if his employment had not terminated. Employee and the Company agree that any such amounts and excess amounts are intended to be paid in compliance with Section 409A, Treasury Regulations section 1.409A-1(b)(9)(iii), and any future guidance issued thereunder; and

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           (ii)       if, at the time of Employee’s termination of employment with the Company, Employee is considered a “specified employee” (as such term is defined in Treasury Regulations section 1.409A-1(i)(1)) and it is necessary to postpone the commencement of any payments or benefits otherwise payable under this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A, then the Company will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee), until the first date that occurs after the date that is six months following Employee’s separation of service with the Company (or Employee’s death, if earlier).

          (h) Except as provided in this Section 10 and Section 22, Employee shall not be entitled to any payments or benefits from the Company upon the termination of this Agreement (i) prior to the Scheduled Date of Termination, whether such termination is pursuant to Section 9 or in breach of this Agreement, or (ii) on the Scheduled Date of Termination, whether the Scheduled Date of Termination occurs as a result of a Non-Extension Notice delivered by the Company to Employee or delivered by Employee to the Company. Without limiting the generality of the foregoing, the payments and other benefits provided for in Section 10(d) shall be Employee’s sole remedy for any breach or alleged breach of this Agreement by the Company. Nothing contained herein shall preclude the Company from pursuing, either during or after the Employment Period, any remedy for any breach or alleged breach of this Agreement by Employee.

          (i) Notwithstanding anything herein to the contrary, in the event that Employee would otherwise have received any payments or distributions, whether payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, that constitute “parachute payments” within the meaning of Section 280G of the Code (the “Parachute Payments”), Employee shall receive the greater net after-tax amount (taking into account all applicable taxes payable by the Executive, including any excise tax imposed under Section 4999 of the Code (the “Excise Tax”)) of (i) the Parachute Payments and (ii) an amount equal to the Parachute Payments reduced by the smallest amount necessary to take the Parachute Payments under the Excise Tax threshold.

          (j) Upon the termination of this Agreement for any reason, if Employee does not continue to be employed by the Company after such termination, Employee shall be under no obligation to seek other employment and there shall be no offset against any amounts due to him under this Agreement on account of any remuneration or benefits provided to him as the result of employment by another employer which complies with the provisions of Section 7.

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     Section 11. Successors; Binding Agreement.

          (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and reasonably substance satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 11(a) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) Employee’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, such rights shall not be subject to commutation, encumbrance, or the claims of Employee’s creditors, and any attempt to do any of the foregoing shall be void. The provisions of this Agreement shall be binding upon and inure to the benefit of Employee and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees, and shall be binding upon and inure to the benefit of the Company and its successors under Section 11(a). If Employee should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee’s Beneficiary.

     Section 12. No Third Party Beneficiaries.

     This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 11).

     Section 13. Equitable and Other Relief.

     Since a breach of the provisions (the “Subject Provisions”) of Section 6, 7, or 8 or of the 2010 Agreement could not adequately be compensated by money damages, the Company shall be entitled, in addition to any other right and remedy available to it, to an injunction restraining such breach or a threatened breach, and in either case no bond or other security shall be required in connection therewith, and Employee hereby consents to the issuance of such injunction. Employee agrees that the Subject Provisions are necessary and reasonable to protect the Company in the conduct of its business. If any restriction contained in any of the Subject Provisions shall be deemed to be invalid, illegal, or unenforceable by reason of the extent, duration, or geographical scope thereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope, or other provisions thereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated thereby. If Employee breaches any of his material obligations under the Subject Provisions in any material respect, which breach is not cured within 30 days after receipt of written notice from the Company, notwithstanding anything to the contrary contained herein, the Company shall have no further compensation or benefit obligations to Employee pursuant to this Agreement. The Subject Provisions shall survive any termination of this Agreement.

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     Section 14. Representations and Warranties of Employee.

     Employee represents and warrants to the Company that (a) Employee is under no contractual or other restriction or obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder and (b) Employee is under no physical or mental disability that would hinder his performance of duties under this Agreement.

     Section 15. Life Insurance.

     If requested by the Company, Employee shall submit to such physical examinations and otherwise take such actions and execute and deliver such documents as may be reasonably necessary to enable the Company, at its expense and for its own benefit, to obtain life insurance on the life of Employee.

     Section 16. Modification.

     This Agreement and the 2010 Agreement set forth the entire understanding of the parties with respect to the subject matter hereof, supersede all existing agreements between them concerning such subject matter (other than previously existing equity awards made by the Company to Employee, except as any such award may be modified by this Agreement), and may be modified only by a written instrument duly executed by each party.

     Section 17. Notices.

     Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 17). Notice to the estate of Employee shall be sufficient if addressed to Employee as provided in this Section 17. Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof.

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     Section 18. Waiver.

     Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing.

     Section 19. Headings.

          The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

     Section 20. Counterparts; Governing Law.

          This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. It shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflict of laws.

     Section 21. Section 409A Compliance.

          This Agreement is intended to comply with the requirements of Section 409A and the regulations issued thereunder. To the extent of any inconsistencies with the requirements of Section 409A, this Agreement shall be interpreted and amended in order to meet such Section 409A requirements. Notwithstanding anything contained in this Agreement, it is the intent of the Company to have this Agreement interpreted and construed to comply with any and all provisions of Section 409A, including any subsequent amendments, rulings, or interpretations from appropriate governmental agencies. If, however, any benefit or payment under this Agreement is deemed to not comply with Section 409A, the Company and Employee agree to renegotiate in good faith any such benefit or payment (including, without limitation, as to the timing of any severance payments payable hereunder) so that either (a) Section 409A will not apply or (b) compliance with Section 409A will be achieved.

     Section 22. Indemnification.

          The Company shall indemnify and make permitted advances to Employee on the same basis as it indemnifies and makes permitted advances to its other directors and officers. The Company shall not modify in a manner that is materially adverse to Employee the basis on which it is obligated on the date hereof to indemnity and advance expenses to Employee unless the Company is legally required to do so. In addition, Employee shall be entitled to the full protection of any insurance policies which the Employer may elect to maintain generally for the benefit of its directors and officers.

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          IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

Research Frontiers Incorporated
 
 
By:    /s/ Joseph M. Harary
Joseph M. Harary, President and CEO
 
 
  /s/ Seth L. Van Voorhees
Seth L. Van Voorhees

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Section 3: EX-10.5.5 (FIFTH AMENDMENT TO LEASE DATED FEBRUARY 21, 2014)


Exhibit 10.5.5

FIFTH AMENDMENT TO LEASE

     This FIFTH AMENDMENT TO LEASE (this “Agreement”), made as of the 21st day of February, 2014 (the “Effective Date”), by and between CLK-HP 230-240 CROSSWAYS PARK LLC (“CLK-HP-230-240”) and LAKE PARK 230-240 CROSSWAYS PARK LLC (“LP-230-240” and, together with CLK-HP-230-240, as tenants-in-common, “Landlord”), having an address c/o RXR Realty LLC, 625 RXR Plaza, Uniondale, New York 11556, and RESEARCH FRONTIERS INCORPORATED, a Delaware corporation (“Tenant”), having its principal business address at 240 Crossways Park Drive, Woodbury, New York 11797.

RECITALS

     WHEREAS, Industrial & Research Associates Co. (a predecessor-in-interest to Landlord, and hereinafter referred to as “IRACO”), as landlord, and Tenant, as tenant, entered into that certain Agreement of Lease, made the 7th day of November 1986 (the “Original Lease”), pursuant to which Tenant leased from IRACO, as landlord, that certain 5,984 rentable square foot premises (the “Original Premises”) within the building located at 240 Crossways Park Drive, Woodbury, New York (the “Building”);

     WHEREAS, IRACO and Tenant entered into a First Amendment to Lease, made the 26th day of November , 1991 (the “First Amendment”), pursuant to which, among other things, the term of the Original Lease was extended;

     WHEREAS, IRACO and Tenant entered into a Second Amendment to Lease, made the 11th day of March , 1994 (the “Second Amendment”), pursuant to which, among other things, Tenant leased an additional 2,124 rentable square feet of space in the Building (the “2,124 Expansion Premises”);

     WHEREAS, IRACO and Tenant entered into a Third Amendment to Lease, made the 14th day of July, 1998 (the “Third Amendment”), pursuant to which, among other things, the term of the Original Lease was further extended;

     WHEREAS, IRACO and Tenant entered into a Fourth Amendment to Lease, made the 13th day of January , 2004 (the “Fourth Amendment” and, together with the Original Lease, the First Amendment, the Second Amendment and the Third Amendment, sometimes hereinafter collectively referred to as the “Existing Lease”), pursuant to which, among other things, Tenant leased an additional 1,395 rentable square feet of space in the Building (the “1,395 Expansion Premises” and, together with the Original Premises and the 2,124 Expansion Premises, sometimes hereinafter collectively referred to as the “Demised Premises”);

1



Exhibit 10.5.5

     WHEREAS, Landlord and Tenant desire to amend the Existing Lease so as to, among other things, provide for an extension of the term of the Existing Lease to and including March 31, 2025; all subject to and in accordance with the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, the parties agree as follows:

ARTICLE I
Definitions

     1.1 The recitals are specifically incorporated into the body of this Agreement and shall be binding upon the parties hereto.

     1.2 Unless expressly set forth to the contrary and except as modified by this Agreement, all capitalized or defined terms shall have the meanings ascribed to them in the Existing Lease.

     1.3 As used herein, the term “Lease” shall be deemed to mean and refer to the Existing Lease, as modified and amended by this Agreement.

ARTICLE II
Lease Modifications

The Existing Lease is and shall be deemed to have been modified and amended as follows:

     2.1 Demised Premises; Proportionate Share. Landlord and Tenant hereby stipulate and agree that the Demised Premises is deemed to consist of 9,503 rentable square feet in the aggregate and that Tenant’s proportionate share (as such term is used throughout the Lease) is deemed to mean 57.63%.

     2.2 Term. Article II of the Original Lease, as previously modified and amended, shall be deemed to have been further modified and amended so as to extend the term of the Existing Lease to and including March 31, 2025. Accordingly, unless otherwise indicated by the context of its usage, each reference in the Existing Lease or this Agreement to the scheduled date for expiration of the term of the Lease shall be deemed to mean and refer to March 31, 2025.

     2.3 Annual Basic Rent.

          (A) Through December 31, 2013, the Annual Basic Rent shall continue to have been payable in equal monthly installments of $11,522.39.

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Exhibit 10.5.5

          (B) Effective as of January 1, 2014, Section 3.01 of the Original Lease, as previously modified and amended, shall be deemed to have been further modified and amended so as to provide that, during the period from January 1, 2014 through and including March 31, 2025, the Annual Basic Rent shall be payable in accordance with the following schedule:

During the period from January 1, 2014 through and including January 31, 2014, the Annual Basic Rent shall be payable for said period in a single monthly installment of $13,858.54.

During the period from February 1, 2014 through and including March 31, 2014, the Annual Basic Rent shall be payable for said period in equal monthly installments of $13,558.54.

During the period from April 1, 2014 through and including March 31, 2015, the Annual Basic Rent shall be $162,702.48, payable for said period in equal monthly installments of $13,558.54.

During the period from April 1, 2015 through and including August 31, 2015, the Annual Basic Rent shall be payable for said period in equal monthly installments of $13,974.30.

During the period from September 1, 2015 through and including March 31, 2016, the Annual Basic Rent shall be payable for said period in equal monthly installments of $14,274.30.

During the period from April 1, 2016 through and including March 31, 2017, the Annual Basic Rent shall be $176,430.36, payable for said period in equal monthly installments of $14,702.53.

During the period from April 1, 2017 through and including March 31, 2018, the Annual Basic Rent shall be $181,723.20, payable for said period in equal monthly installments of $15,143.60.

During the period from April 1, 2018 through and including March 31, 2019, the Annual Basic Rent shall be $187,174.92, payable for said period in equal monthly installments of $15,597.91.

During the period from April 1, 2019 through and including March 31, 2020, the Annual Basic Rent shall be $192,790.20, payable for said period in equal monthly installments of $16,065.85.

During the period from April 1, 2020 through and including March 31, 2021, the Annual Basic Rent shall be $198,573.84, payable for said period in equal monthly installments of $16,547.82.

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Exhibit 10.5.5

During the period from April 1, 2021 through and including March 31, 2022, the Annual Basic Rent shall be $204,531.12, payable for said period in equal monthly installments of $17,044.26.

During the period from April 1, 2022 through and including March31, 2023, the Annual Basic Rent shall be $210,667.08, payable for said period in equal monthly installments of $17,555.59.

During the period from April 1, 2023 through and including March 31, 2024, the Annual Basic Rent shall be $216,987.00, payable for said period in equal monthly installments of $18,082.25.

During the period from April 1, 2024 through and including March 31, 2025, the Annual Basic Rent shall be $223,496.64, payable for said period in equal monthly installments of $18,624.72.

          (C) Notwithstanding anything to the contrary contained in Section 2.2(B) above, provided the Lease then remains in full force and effect, and further provided that Tenant is not then in default under the Lease (beyond any applicable notice and grace period provided in the Lease for the cure thereof), Tenant shall be entitled to an Annual Basic Rent credit in the aggregate amount of $183,499.58, to be applied in accordance with the following schedule:

               (i) in twelve (12) equal and consecutive monthly installments of $6,929.27, against the monthly installments of Annual Basic Rent due and payable for each of the months of April, 2014 through and including March, 2015;

               (ii) in twelve (12) equal and consecutive monthly installments of $7,137.15 against the monthly installments of Annual Basic Rent due and payable for each of the months of April, 2015 through and including March, 2016; and

               (iii) in two (2) equal and consecutive monthly installments of $7,351.27 against the monthly installments of Annual Basic Rent due and payable for each of the months of April, 2016 through and including May, 2016.

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Exhibit 10.5.5

     2.4 Taxes. With respect to all periods from and after January 1, 2014, sections 3.02 through and including 3.06 of the Original Lease (together with all prior modifications made thereto) shall be deemed to have been deleted in the entirety and replaced with the following:

          Section 3.02

          (A) As used in and for the purposes of this Section 3.02, the following definitions shall apply:

               (i) “Taxes” shall be the real estate taxes, assessments, special or otherwise, sewer rents, rates and charges, and any other governmental charges, general, specific, ordinary or extraordinary, foreseen or unforeseen, levied on a calendar year or fiscal year basis against the Real Property (hereinafter defined). If at any time during the term the method of taxation prevailing at the date hereof shall be altered so that there shall be levied, assessed or imposed in lieu of, or as in addition to, or as a substitute for, the whole or any part of the taxes, levies, impositions or charges now levied, assessed or imposed on all or any part of the Real Property (a) a tax, assessment, levy, imposition or charge based upon the rents received by Landlord, whether or not wholly or partially as a capital levy or otherwise, or (b) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Real Property and imposed on Landlord, or (c) a license fee measured by the rent payable by Tenant to Landlord, or (d) any other tax, levy, imposition, charge or license fee however described or imposed; then all such taxes, levies, impositions, charges or license fees or any part thereof, so measured or based, shall be deemed to be Taxes.

               (ii) “Base Year Taxes” shall mean (x) with respect to Taxes imposed on a fiscal year basis, the Taxes actually due and payable with respect to the 2014/2015 fiscal tax year, as finally determined, and (y) with respect to Taxes imposed on a calendar year basis, the Taxes actually due and payable with respect to the 2014 calendar year, as finally determined.

               (iii) “Escalation Year” shall mean (x) with respect to Taxes imposed on a fiscal year basis, any fiscal tax year after the 2014/2015 fiscal tax year which shall include any part of the Term, and (y) with respect to Taxes imposed on a calendar year basis, any calendar year after the 2014 calendar year which shall include any part of the term.

               (iv) “Real Property” shall be the land upon which the Building stands and any part or parts thereof utilized for parking, landscaped areas or otherwise used in connection with the Building, and the Building and other improvements appurtenant thereto.

          (B) The Tenant shall pay to Landlord Tenant’s proportionate share of increases in Taxes levied against the Real Property as follows: If the Taxes actually due and payable with respect to the Real Property in any Escalation Year shall be increased above the Base Year Taxes, then the Tenant shall pay to the Landlord, as additional rent for such Escalation Year, a sum equal to Tenant’s proportionate share of said increase (“Tenant’s Tax Payment” or “Tax Payment”).

5



Exhibit 10.5.5

          (C) Landlord shall render to Tenant a statement containing a computation of Tenant’s Tax Payment (“Landlord’s Statement”). Within fifteen (15) days after the rendition of the Landlord’s Statement, Tenant shall pay to Landlord the amount of Tenant’s Tax Payment. On the first day of each month following the rendition of each Landlord’s Statement, Tenant shall pay to Landlord, on account of Tenant’s next Tax Payment, a sum equal to one-twelfth (1/12th) of Tenant’s last Tax Payment due hereunder, which sum shall be subject to adjustment for subsequent increases in Taxes.

          (D) If during the term Taxes are required to be paid as a tax escrow payment to a mortgagee, then, at Landlord’s option, the installments of Tenant’s Tax Payment shall be correspondingly accelerated so that Tenant’s Tax Payment or any installment thereof shall be due and payable by Tenant to Landlord at least thirty (30) days prior to the date such payment is due to such mortgagee but in no event earlier than upon thirty (30) days’ written notice to Tenant.

          (E) Tenant shall not, without Landlord’s prior written consent, institute or maintain any action, proceeding or application in any court or body or with any governmental authority for the purpose of changing the Taxes. If the Taxes for any tax period upon which Base Year Taxes were calculated (any such tax period being herein referred to as a “Base Year”), and/or for any Escalation Year on account of which Tenant has previously paid the corresponding Tenant’s Tax Payment, are modified by final determination of legal proceedings, settlement or otherwise, then the Tenant’s Tax Payment either for all prior Escalation Years (if any Base Year is affected) or only the affected Escalation Year(s) (if no Base Year is affected) shall be recalculated so as to account for the subject modification; it being acknowledged and agreed that, in so recalculating Tenant’s Tax Payment for any Escalation Year, Landlord shall be entitled to include in the recalculation of Taxes for that Escalation Year an allocable portion of the reasonable legal fees and expenses incurred by Landlord in connection with the subject proceedings and, if applicable, settlement. If, as a result of such recalculation, the revised Tenant’s Tax Payment applicable to a subject Escalation Year is less than the Tenant’s Tax Payment actually theretofore paid by Tenant with respect to that Escalation Year, then Landlord shall pay or credit to Tenant the entire amount of such difference. However, if, as a result of such recalculation, the revised Tenant’s Tax Payment applicable to a subject Escalation Year is greater than the Tenant’s Tax Payment actually theretofore paid by Tenant with respect to that Escalation Year, then Tenant shall pay to Landlord, as additional rent, the entire amount of such difference within thirty (30) days following written demand therefor. In addition, in the event Landlord incurs legal fees and/or expenses in connection with any proceeding(s) and/or negotiations for the reduction of Taxes where, as a result of which, no modification is effected, then Landlord shall be entitled to include in the calculation of Taxes for each Escalation Year with respect to which the subject proceeding(s) or negotiations were conducted an allocable portion of the reasonable legal fees and/or expenses so incurred.

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Exhibit 10.5.5

          (F) Landlord’s failure to render a Landlord’s Statement with respect to any Escalation Year shall not prejudice Landlord’s right to render a Landlord’s Statement with respect to any Escalation Year. The obligations of Tenant under the provisions of this Section 3.02 with respect to any additional rent for any Escalation Year shall survive the expiration or any sooner termination of the term of this Lease for a period of one (1) year from the expiration or earlier termination of the Lease.

     2.5 Insurance. With respect to all periods from and after January 1, 2014, Section 7.01(A) of the Original Lease shall be deemed to have been modified and amended so as to increase the minimum Commercial General Liability insurance coverage amount to a combined single limit of $5,000,000 with respect to each occurrence (which limit may be satisfied by Tenant through a combination of a base CGL policy and a follow-form excess or umbrella liability policy or policies).

     2.6 Assignment. Effective as of the Effective Date of this Agreement, the following is hereby inserted as a new Section 8.05 of the Lease:

     Section 8.05 Tenant, without Landlord’s consent (but upon prior written notice to Landlord), may assign or transfer its entire interest in this Lease and the leasehold estate hereby created to an “Affiliate” of Tenant or to a “Successor” to Tenant, as such terms are hereinafter defined, provided that (x) Tenant is not then in monetary default under this Lease (beyond any applicable notice and grace period provided in this lease for the cure thereof); (y) the assignee agrees, in a signed writing in form and substance reasonably acceptable to Landlord, to assume all obligations and liabilities of Tenant under this Lease; and (z) the assignor shall not be released or relieved from or of any liabilities or obligations of Tenant under this Lease, whether relating to actions, omissions or events occurring prior to or after the effective date of the assignment. As used herein, an “Affiliate” of Tenant shall mean any corporation which directly or indirectly controls or is controlled by or is under common control with Tenant. For purposes of this definition, “control” (including “controlling,” “controlled by” and “under common control with”) as used with respect to any corporation, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, or by contract or otherwise. A “Successor” shall mean (1) a corporation into which or with which Tenant, its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions for the merger or consolidation of corporations, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation the liabilities of the corporations participating in such merger or consolidation are assumed by the corporation surviving such merger or consolidation, or (2) a corporation acquiring this Lease and the term hereby demised, the goodwill and all or substantially all of the other property and assets of Tenant, its corporate successors or assigns, and assuming all or substantially all of the liabilities of Tenant, its corporate successors and assigns, or (3) any corporate successor to a successor corporation becoming such by either of the methods described in Clauses (1) and (2). The acquisition by Tenant, its corporate successors or assigns, of all or substantially all of the assets, together with the assumption of all or substantially all of the obligations and liabilities of any corporation, shall be deemed to be a merger of such corporation into Tenant for the purpose of this provision. As used in this provision, the words “corporation”, “corporate” and similar words shall include other business forms such as limited liability companies, and the words “voting stock” and “voting securities” shall include other forms of ownership such as limited liability company membership interests.

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Exhibit 10.5.5

     2.7 Maintenance. With respect to all periods from and after the Effective Date of this Agreement, Section 23.01 of the Original Lease (as same may have been previously modified and amended) shall be deemed to have been modified and amended so as to: (i) delete the current text in the entirety, save only for the first sentence of said Section 23.01, and (ii) add an obligation of Landlord to provide Landlord’s standard cleaning services (as more particularly described in Schedule “B” to this Agreement) to the office area portions of the Demised Premises only, together with an obligation of Landlord to empty the wastepaper baskets of paper waste in the R&D portions of the Demised Premises. Notwithstanding the foregoing, Tenant shall (a) at all times throughout the balance of the Term, continue to be responsible for the removal from the Demised Premises (and the real property of which same forms a part) of all non-office waste generated at or from the Demised Premises and (b) through August 31, 2015, continue to be responsible for the provision, servicing and emptying of its own exterior trash (standard office waste) dumpster and exterior recycling bin at the Building.

     2.8 Alterations.

          (A) Effective as of the Effective Date of this Agreement, Article XXV of the Original Lease shall be deemed to have been modified and amended as follows: (i) Landlord may, in its sole and absolute discretion, condition or withhold its consent to any alteration proposed by Tenant if and to the extent such alteration is structural in nature, would adversely effect the proper functioning of any Building system and/or would extend beyond the boundaries of the Demised Premises or otherwise be readily visible from outside the Demised Premises; (ii) Landlord shall have the right and option to require Tenant to engage Landlord’s designated general contractor for performance of any alterations in or about the Demised Premises, provided the fees of Landlord’s designated contractor shall be reasonably competitive, given the then current Nassau County commercial construction market; and (iii) should Landlord permit Tenant to engage a general contractor other than Landlord’s designated general contractor for performance of any alteration in or about the Demised Premises, then Landlord shall be entitled to payment by Tenant of a construction inspection fee in an amount equal to five (5%) percent of the total cost of the subject alteration (it being acknowledged and agreed by the parties that, in receiving such fee, Landlord assumes no responsibility for the quality or manner [including, without limitation, the means, methods and/or techniques] in which such work is or has been performed.

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Exhibit 10.5.5

          (B) Subject to Landlord’s review and approval of the timing thereof and formal plans and specifications to be prepared and submitted by Tenant therefor, Landlord shall permit Tenant to cause licensed, reputable and insured contractors engaged by Tenant to perform the following work at the Building (collectively, the “Pre-Approved Alterations”): (i) replace the exterior windows and doors of the Demised Premises with exterior windows and doors featuring Tenant’s SPD light control technology and (ii) install solar panels on the roof of the Building, together with the protective matting necessary to preserve Landlord’s roof warranty; provided that (a) the Pre-Approved Alterations shall be performed at no cost or expense to Landlord; (b) the Pre-Approved Alterations shall be performed subject to and in accordance with all terms, conditions, requirements and restrictions of the Lease governing alterations by or on behalf of Tenant; (c) following the installation thereof, Tenant shall be responsible for the maintenance, repair and testing of the Pre-Approved Alterations throughout the Term; (d) unless otherwise hereafter specifically directed by Landlord in a written notice delivered to Tenant, Tenant shall be required to remove the Pre-Approved Alterations, and restore the affected areas to good condition (including the installation of new, Building-standard exterior windows), by the expiration or sooner termination of the Lease; and (e) the indemnification obligations of Tenant under the Lease shall specifically extend to the performance of the Pre-Approved Alterations and all activities and events related to the maintenance, repair, testing and removal of the Pre-Approved Alterations throughout the balance of the Term of the Lease. Supplementing the provisions of Section 2.8(B)(ii)(d) above, if so requested in writing by Tenant at the time of Tenant’s submission to Landlord of plans and specifications for the Pre-Approved Alterations, Landlord will advise Tenant, in a written notice delivered prior to the commencement of Tenant’s performance of the Pre-Approved Alterations, as to whether or not Tenant shall indeed be required to remove the Pre-Approved Alterations, and restore the affected areas to good condition (including the installation of new, Building-standard exterior windows), by the expiration or sooner termination of the Lease.

     2.9 Holding Over. Effective as of the Effective Date of this Agreement, the second sentence of Section 32.01 shall be replaced with the following: If the Tenant retains possession of the Demised Premises or any part thereof after the termination of the term, then (i) Tenant shall pay Landlord as use and occupancy for use of the Demised Premises, as applicable (x) for each of the first and second months (or any portion thereof) of the holdover, an amount equal to 150% of the amount of the unabated monthly installment of Annual Basic Rent that was payable by Tenant for the last full month prior to the date of expiration or termination of this lease and (y) for the third and each subsequent month (or any portion thereof) of the holdover, an amount equal to 200% of the amount of the unabated monthly installment of Annual Basic Rent that was payable by Tenant for the last full month prior to the date of expiration or termination of this lease; and (ii) in all events, Tenant shall otherwise observe, fulfill and perform all of its obligations under this Lease, including but not limited to, those pertaining to the payment of additional rent, in accordance with its terms; and (iii) only if the subject holdover extends beyond sixty (60) days, be liable to Landlord for any payment or rent concession which Landlord may be required to make to any tenant in order to induce such tenant not to terminate an executed lease covering all or any portion of the Demised Premises by reason of the holdover by Tenant

9



Exhibit 10.5.5

     2.10 Security Deposit. Landlord and Tenant hereby stipulate and agree that Landlord is currently holding a $16,755.18 security deposit under the Lease. Effective as of the Effective Date of this Agreement, the amount of the security deposit required of Tenant under the Lease shall be deemed to have been increased to $27,717.08. Accordingly, upon the execution and delivery of this Agreement by Tenant, Tenant shall pay to Landlord the entire $10,961.90 amount by which the new security deposit requirement exceeds the amount of the security deposit currently being held by Landlord under the Lease. In addition, the last sentence of Section 33.01 of the Original Lease shall be deemed to have been deleted ab initio.

     2.11 Mutual Indemnity. Effective as of the Effective Date of this Agreement, the following is hereby inserted as a new Article XXXVIII of the Lease:

ARTICLE XXXVIII MUTUAL INDEMNITY

     Section 38.1 Tenant shall, to the extent not caused by the negligence or willful misconduct of Landlord or its contractors or agents or employees, indemnify, defend and hold harmless Landlord and Landlord’s Others In Interest (hereinafter defined), if any, from and against (a) all claims arising from any negligence or willful misconduct of Tenant, its contractors, agents or employees, and (b) all claims arising from any accident, injury or damage to any person or property in the Demised Premises during the term or when Tenant is in possession and control of the Demised Premises. As used herein, the term “Landlord’s Others In Interest” shall mean Landlord’s managing agent, Landlord’s property manager, Landlord’s asset manager and the holder of any mortgage on the Building or real property. Tenant’s obligations under this Section 38.1 shall survive the expiration or earlier termination of the Term of this lease.

     Section 38.2 Landlord shall, to the extent not caused by the negligence or willful misconduct of Tenant or its contractors or agents, indemnify, defend and hold harmless Tenant, if any, from and against (a) all claims arising from any negligence or willful misconduct of Landlord, its contractors, agents and/or employees, and (b) all claims arising from the negligence or willful misconduct with respect to any accident, injury or damage to any person or property in the common areas of the real property and/or Building during the Term or when Tenant is in possession of the Demised Premises. Landlord’s obligations under this Section 38.2 shall survive the expiration or earlier termination of the Term of this lease.

10



Exhibit 10.5.5

     Section 38.3 The agreements to indemnify, defend and hold harmless contained in this Article XXXVIII hereof are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Landlord or Tenant, respectively, pursuant to this lease to the extent that such policies cover the results of such acts or omissions.

     2.12 Renewal Option. Effective as of the Effective Date of this Agreement, the following is hereby inserted as a new Article XXXIX of the Lease:

ARTICLE XXXIX – RENEWAL OPTION

     Section 39.01 Provided Tenant is not then in default under this Lease (beyond any applicable notice and grace period provided in the Lease for the cure thereof), Tenant shall have the option to renew this lease for one (1) additional five (5) year period (the “Renewal Term”), commencing on April 1, 2025 and ending on March 31, 2030, upon the following terms and conditions:

          (a) Tenant shall give notice to Landlord, in writing, no later than June 30, 2024 (time being of the essence), that such option is being exercised. The parties agree to then negotiate the Annual Basic Rent for the Renewal Term (the “Minimum Annual Renewal Rent”). The Minimum Annual Renewal Rent is intended to be calculated using the then current fair market annual rental rate per square foot per year for the Demised Premises as of April 1, 2025, taking into account all relevant factors. Upon timely and proper delivery of the written notice of exercise of this renewal option by Tenant, this Lease shall be renewed for the Renewal Term on the then current terms, covenants and conditions of this Lease (excluding any leasing incentives), except that (i) the Minimum Annual Renewal Rent shall be fixed in accordance with the provisions of this Section 39.01, (ii) the Demised Premises shall be delivered in its “as is” condition as of the first day of the Renewal Term and (iii) there shall be no further option to renew.

          (b) If Landlord and Tenant have not mutually agreed upon the Minimum Annual Renewal Rent by October 1, 2024, they shall each select one real estate appraiser, each of whom shall conduct a real estate appraisal and furnish a report to indicate their opinion of the fair market rental of the Demised Premises.

11



Exhibit 10.5.5

          (c) If, after a review of the appraisal reports prepared and  submitted in accordance with Section 39.01(b), above, Landlord and Tenant have not agreed on the Minimum Annual Renewal Rent by November 15, 2024, then the matter shall immediately be submitted to arbitration before the American Arbitration Association (“AAA”), and shall be determined by a single arbitrator in accordance with the provisions of this Lease and the then applicable local rules of the AAA at the AAA located nearest the Building. The arbitrator shall, in determining the Minimum Annual Renewal Rent, take into consideration the then existing current fair market rental value of similar premises in the vicinity and all other relevant factors. The arbitrator shall then, on an expedited basis, choose one of the determinations of the two appraisers originally selected by the parties. The parties agree that the decision and determination to be made by the arbitrator with respect to the Minimum Annual Renewal Rent shall be final and binding upon Landlord and Tenant.

          (d) Notwithstanding anything to the contrary contained in this Section 39.01, in no event shall the Minimum Annual Renewal Rent be calculated at a rate less than the unabated minimum annual rental rate applicable under this Lease to the twelve full calendar months immediately preceding the Renewal Term.

          (e) Landlord and Tenant shall each separately pay their respective designated appraisers. The expenses, fees and charges in connection with the arbitration process set forth in clause (c), above, shall be borne equally between Landlord and Tenant.

          (f) Upon agreement as to the Minimum Annual Renewal Rent by the parties hereto or upon the Minimum Annual Renewal Rent being fixed by the arbitrator, as the case may be, the parties hereto shall enter into a supplementary agreement extending the term of this Lease as hereinabove provided. In the event of no agreement between the parties or no decision by arbitration prior to April 1, 2025, Tenant shall pay an interim fixed rental at the minimum annual rental rate last in effect until the arbitration shall have been completed, after which Landlord and Tenant shall make appropriate adjustment of such interim rent, such adjustment to be as of the commencement date of the Renewal Term. Time is of the essence with respect to all dates and time periods referenced in this Section 39.01.

     Section 39.02 This option to renew shall be personal to Research Frontiers Incorporated (including any Affiliate of, or Successor to [as such terms are defined in Section 8.05 of the Lease], Research Frontiers Incorporated to which this Lease is assigned) and shall not be otherwise transferrable by operation of law or otherwise.

12



Exhibit 10.5.5

     2.13 Right of First Offer. Effective as of the Effective Date of this Agreement, the following is hereby inserted as a new Article XL of the Lease:

ARTICLE XL RIGHT OF FIRST OFFER

     Section 40.01 At any time where there then remains not less than two (2) years on the term of this Lease where any space, located immediately adjacent and contiguous to the Demised Premises, is or becomes vacant and available for lease (any such space being hereinafter referred to as “Offer Premises”), Tenant shall have a right of offer to lease the entire subject Offer Premises. Landlord shall provide Tenant with written notice (“Landlord’s Offer Notice”) of the availability or anticipated (within twelve months) availability of any such Offer Premises; provided, however, that Landlord shall not be liable to Tenant for any costs, expenses, damages or liabilities that are or may be incurred by Tenant by reason of Landlord’s unintentional failure to so notify Tenant, unless Tenant had expressed to Landlord, in a signed written notice, during the preceding twelve (12) months, a general intention and desire to expand its Demised Premises at the Building. In any event, Tenant shall exercise such right of offer, if at all, in strict accordance with the following terms and conditions:

          (i) At the time Tenant intends to exercise its right of offer hereunder, and as of the effective date of Tenant’s leasing of the subject Offer Premises, Tenant shall be occupying substantially all of the Demised Premises and no event of default shall have occurred and be continuing under this Lease beyond any applicable notice and grace period provided in the Lease for the cure thereof;

          (ii) Tenant shall give written notice to Landlord (“Tenant’s Offer Notice”), expressing unequivocally the fact the Tenant has exercised its right of offer to lease the subject Offer Premises; it being acknowledged and agreed that any written communication purporting to serve as Tenant’s Offer Notice, but containing language of equivocation, shall be deemed a counteroffer by Tenant and shall constitute the election by Tenant not to exercise its right of offer with respect to the subject Offer Premises. If Landlord does deliver a Landlord’s Offer Notice, then such Tenant’s Offer Notice must be delivered, if at all, within twelve (12) business days following such delivery of Landlord’s Offer Notice;

          (iii) The Annual Basic Rent for the Offer Premises shall be equal to the then current fair market rental value for the subject Offer Premises (the “Offer Rent”), taking into consideration all relevant factors. In the event Landlord and Tenant have not mutually agreed upon the Offer Rent within fifteen (15) days following delivery of the Tenant’s Offer Notice, then the matter shall immediately be submitted to arbitration before the AAA, and shall be determined in accordance with the guidelines included herein by a single arbitrator in accordance with the provisions of this Lease and the then applicable local rues of the AAA at the AAA located nearest the Building. The arbitrator shall, in determining the Offer Rent, take into consideration the then existing current fair market rental value of similar premises in the vicinity and all other relevant factors. The arbitrator shall then, on an expedited basis, choose one of the determinations of the two appraisers originally selected by the parties. The parties agree that the decision and determination to be made by the arbitrator with respect to the Offer Rent shall be final and binding upon Landlord and Tenant

13



Exhibit 10.5.5

          (iv) Landlord and Tenant shall each separately pay their respective designated appraisers. The expenses, fees and charges in connection with the arbitration process set forth in clause (iii), above, shall be borne equally between Landlord and Tenant.

          (v) Unless otherwise mutually agreed by the parties (and reflected in the Offer Rent), Tenant shall accept the subject Accepted Offer Premises in its then “as is” condition, and Landlord shall not be required to perform any work to or make any installations in the subject Accepted Offer Premises in order to prepare same for occupancy by Tenant. If the Offer Premises is not then directly metered for gas and electricity service, then Landlord shall cause same to be directly metered or, if not practicable, submetered (with Tenant to make consumption payments to Landlord based upon such submeter readings), in either case at Tenant’s sole cost and expense;

          (v) If Tenant timely delivers the Tenant’s Offer Notice, then the subject Offer Premises shall be incorporated into the Demised Premises under all of the terms of this Lease, except as otherwise set forth in clauses (iii) and (v) above and except for other changes made necessary by reason of the increased size of the Demised Premises (e.g., Tenant’s proportionate share).

          (vi) If Tenant timely delivers the Tenant’s Offer Notice, then Landlord shall lease to Tenant and Tenant shall lease from Landlord the subject Offer Premises; subject to the following provisions of this Article. If requested by either party, however, then Landlord and Tenant shall enter into an amendment of this Lease (the “Offer Agreement”), which shall reflect the necessary modifications set forth in clauses (i) through (v) above.

     Section 40.02 In the event Tenant fails to execute the Offer Agreement within twenty (20) days of presentment thereof by Landlord, Tenant’s right of offer will be automatically voidable at the election of Landlord and, if so voided, will be deemed to have lapsed and Landlord shall be free to lease the Offer Premises or any portion thereof to any third party upon any terms.

14



Exhibit 10.5.5

     Section 40.03 If and when so requested by Tenant, from time to time throughout the Term of this Lease, Landlord shall advise Tenant of any Offer Premises that is then vacant and available for lease or that Landlord reasonably anticipates will be becoming vacant and available for lease within a reasonable period thereafter.

     Section 40.06 Time is of the essence with respect to all dates and time periods referenced in this Article. This right of offer is (i) personal to Research Frontiers Incorporated (including any Affiliate of, or Successor to [as such terms are defined in Section 8.05 of the Lease], Research Frontiers Incorporated to which this Lease is assigned) and shall not be otherwise transferable by operation by law or otherwise, and (ii) subject and subordinate to the rights of existing tenants.

     2.14 Cancellation Option. Effective as of the Effective Date of this Agreement, the following is hereby inserted as a new Article XLI of the Lease:

ARTICLE XLI CANCELLATION OPTION

     Section 41.01 Provided Tenant is not then in default under this Lease (beyond any applicable notice and grace period provided in the Lease for the cure thereof), Tenant shall have the one time right and option (this “Cancellation Option”) to cancel this lease effective as of September 30, 2021 (the “Cancellation Date”). Tenant shall exercise this Cancellation Option, if at all, by written notice (the “Cancellation Notice”) delivered to Landlord no later than December 31, 2020 (the “Cancellation Option Election Deadline”), accompanied by payment (in immediately available funds) of a cancellation fee (the “Cancellation Fee”) in the amount of the Cancellation Fee Amount (hereinafter defined).

     Section 41.02 As used herein, the term “Cancellation Fee Amount” shall mean the sum of $265,172.50.

     Section 41.03 Upon satisfaction by Tenant of each of the above conditions, and upon the Demised Premises having been surrendered to Landlord and vacated by Tenant on or before the Cancellation Date as if that date were the Expiration Date under this Lease, this Lease shall be deemed canceled and terminated as of the Cancellation Date. Time is of the essence with respect to all dates and time periods referenced in this Article. In the event that Tenant does not deliver the Cancellation Notice with the Cancellation Fee payment by the Cancellation Option Election Deadline, then this Cancellation Option shall be deemed to have lapsed and been rendered of no further force or effect whatsoever. If Tenant does timely and properly exercise this Cancellation Option, but thereafter fails to fully vacate and surrender the Demised Premises by the Cancellation Date, then, at Landlord’s option, Tenant shall either be deemed to (i) have revoked and rescinded its exercise of this Cancellation Option, in which event the Cancellation Fee shall be returned to Tenant, or (ii) be holding over in the Demised Premises beyond the expiration of the Term, without the acquiescence of Landlord, subject to the applicable terms and conditions of this Lease. In addition, Tenant acknowledges and agrees that (a) following exercise of this Cancellation Option by Tenant, Tenant may not revoke such cancellation without the prior written consent of Landlord (which may be granted or withheld in Landlord’s sole discretion); (b) this Cancellation Option, and the ability of Tenant to exercise same, shall be rendered null and void upon Tenant leasing any additional space in the Building, whether pursuant to the exercise of a right or option under this Lease, through negotiation or otherwise; and (c) the delivery of the Cancellation Notice shall render null and void the ability of Tenant to exercise any right or option, if any, of Tenant to lease additional space in the Building.

15



Exhibit 10.5.5

     2.15 Notices to Landlord. Notwithstanding anything to the contrary contained in the Existing Lease, effective immediately, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under the Lease to Landlord shall be in writing and shall be addressed as follows:

CLK-HP 230-240 Crossways Park LLC and
     Lake Park 230-240 Crossways Park LLC
c/o RXR Realty LLC
625 RXR Plaza
Uniondale, New York 11556
Attn: Managing Director

with a copy sent simultaneously to:

RXR Realty LLC
625 RXR Plaza
Uniondale, New York 11556
Attn: Legal Department,

or to such other or additional address(es) as Landlord may designate as its new address(es) for such purpose by notice given in accordance with the provisions of the Lease.

     2.16 Condition of Demised Premises.

          (A) Tenant hereby acknowledges and agrees that Landlord has performed all work and made all installations required of Landlord under the Existing Lease, that Tenant is accepting the Demised Premises in its current “as is” condition, and that, except as otherwise expressly set forth in Section 2.16(B) of this Agreement, and that Landlord shall not be required to perform any work, make any installations or incur any expense in or to the Demised Premises in order to prepare same for continued occupancy by Tenant.

16



Exhibit 10.5.5

          (B)     (i) Notwithstanding anything to the contrary contained in Section 2.16(A) of this Agreement, Landlord, at its expense (except as otherwise provided in Section 2.16(B)(ii), below, except as pursuant to any extra work orders or change orders authorized by Tenant and except as may be otherwise noted on Exhibit “1” annexed hereto or on the final construction drawings prepared in connection with the Extension Work), shall cause its designated contractor (the “Contractor”) to perform and make certain work and certain installations in and to the Demised Premises in order to prepare same for continued occupancy by Tenant and in and to certain portions of the common areas of the Building; such work and installations to be performed in accordance with final construction drawings to be developed by Landlord or the Contractor on the basis of the specifications shown and described, and subject to the terms and conditions set forth, in and on the Concept Plan that has been annexed hereto as Exhibit “1” (such work and installations sometimes herein referred to as the “Extension Work”). The parties acknowledge and agree that the Exhibit “1” Concept Plan shall be deemed to have been supplemented and clarified by the set of General Notes that has been annexed hereto as an Exhibit “1-A” to this Agreement. In the event that there is a conflict or inconsistency between the provisions of this Agreement (including the Exhibit annexed hereto) and the work set forth on the final construction drawings to be prepared by Landlord or the Contractor for the Extension Work and approved by Landlord and Tenant after the date hereof, such final construction drawings shall be controlling. Tenant shall be responsible for moving and relocating all personnel and all furniture, equipment and other items of personal property in and about the Demised Premises in order to accommodate performance of the Extension Work, including, without limitation, all necessary disconnection, moving and re-connection of computer, data and telecommunications wiring and equipment in order to accommodate performance of the Extension Work. Tenant acknowledges and agrees that the Extension Work may be performed generally during a period while Tenant remains in use and occupancy of the Demised Premises, and that Landlord shall not be liable for any inconvenience to Tenant or for interference with Tenant’s business or use of the Demised Premises or any portion thereof during the performance of the Extension Work, although Landlord shall use its reasonable efforts to have the Contractor cooperate with Tenant to avoid unreasonably disrupting the conduct of Tenant’s business in the Demised Premises (provided, however, that such efforts shall not be construed as to require any aspect of the Extension Work to be performed on an overtime basis, unless Tenant specifically requests same and agrees to reimburse Landlord for the incremental cost increase associated with the performance of the subject work item on an overtime basis [as compared to performance thereof on a straight-time basis]).

17



Exhibit 10.5.5

                    (ii) In order to defray the anticipated costs to Landlord associated with certain upgraded finishes that have been selected by Tenant in connection with the Extension Work, Tenant shall pay to Landlord or Landlord’s designee the sum of $83,178.00 (the “Tenant’s EW Contribution”). The Tenant’s EW Contribution shall be payable in the following two (2) installments: (i) $41,589.00 upon execution and delivery of this Agreement by Tenant, and (ii) $41,589.00 within ten (10) days following the issuance of an invoice therefor by Landlord or Landlord’s designated contractor (which invoice may not be issued prior to the date on which the Extension Work has been progressed to the point where the only work items that then remain to be completed are punch-list items [i.e., minor or insubstantial items of cosmetic or mechanic adjustment, the incompletion of which would not have a material adverse impact upon the ability of Tenant to continue to use the Demised Premises for the conduct of its business]).

                    (iii) Also notwithstanding anything to the contrary contained in Section 2.16(A) of this Agreement, Landlord, at its expense (except as pursuant to any extra work orders or change orders authorized by Tenant and except as may be otherwise noted on Exhibit “2” annexed hereto or on the final construction drawings, if any, prepared in connection with the Building Work), shall cause the Contractor to perform and make certain work and certain installations in and to the Building in order to prepare same for continued occupancy by Tenant; such work and installations to be performed in accordance with final construction drawings to be developed by Landlord or the Contractor on the basis of the specifications described, and subject to the terms and conditions set forth, in the Building Work description that has been annexed hereto as Exhibit “2” (such work and installations sometimes herein referred to as the “Building Work”). In the event that there is a conflict or inconsistency between the provisions of this Agreement (including the Exhibits annexed hereto) and the work set forth on the final construction drawings, if any, to be prepared by Landlord or the Contractor for the Building Work and approved by Landlord and Tenant after the date hereof, such final construction drawings shall be controlling. Tenant acknowledges and agrees that the Building Work may be performed generally during a period while Tenant remains in use and occupancy of the Demised Premises, and that Landlord shall not be liable for any inconvenience to Tenant or for interference with Tenant’s business or use of the Demised Premises or any portion thereof during the performance of the Building Work, although Landlord shall use its reasonable efforts to have the Contractor cooperate with Tenant to avoid unreasonably disrupting the conduct of Tenant’s business in the Demised Premises (provided, however, that such efforts shall not be construed as to require any aspect of the Building Work to be performed on an overtime basis, except as otherwise expressly provided herein or unless Tenant specifically requests same and agrees to reimburse Landlord for the incremental cost increase associated with the performance of the subject work item on an overtime basis [as compared to performance thereof on a straight-time basis]).

18



Exhibit 10.5.5

          (C) Landlord and Tenant have incorporated into this Agreement, as a Schedule “A” hereto, an estimated project schedule (the “Project Schedule”) for performance and completion of the individual aspects of the Extension Work and the Building Work (each such individual aspect being sometimes hereinafter generically referred to as a “Landlord Work Item”). Notwithstanding anything to the contrary contained herein, if Landlord has not achieved substantial completion of a subject Landlord Work Item by the date that is one (1) month following the estimated completion date set forth with respect to that Landlord Work Item on the Project Schedule, and provided that such delay is not attributable to circumstances outside of the reasonable control of Landlord, then (i) if so requested by Tenant in writing, Landlord shall incur overtime expenses to finalize the subject Landlord Work item and, in addition (ii) at Tenant’s option, Tenant may deliver to Landlord written notice (the “Applicable Self Help Notice”) of its intent to exercise its Applicable Self Help Remedy (as defined below). If Tenant delivers the Applicable Self-Help Notice and Landlord has still not achieved substantial completion subject Landlord Work Item by the thirtieth (30th) day following effective delivery of the Applicable Self Help Notice, then Tenant may deliver to Landlord written demand to cease performance of the subject Landlord Work Item, together with Tenant’s written election to undertake the Applicable Self Help Remedy. The “Applicable Self Help Remedy” shall be the empowerment of Tenant to engage its own licensed, insured and reputable contractors and subcontractors for the purpose of completing the subject Landlord Work Item, under the direction of Tenant and subject to and in accordance with all terms, conditions, requirements and restrictions of the Lease governing alterations by or on behalf of Tenant. However, Tenant acknowledges and agrees that, with respect to any subject Landlord Work Item that would affect, touch or concern the Building structure or any Building system, Tenant shall only engage a contractor(s) or subcontractor(s) approved by Landlord for the performance of the subject work, provided the fees of such contractor(s) or subcontractor(s), as applicable, shall be reasonably competitive, given the then current Nassau County commercial construction market. In exercising the Applicable Self Help Remedy, Tenant shall be required to engage a licensed architect for the purpose of performing an independent review and approval of the construction drawings for the subject Landlord Work Item. If Tenant exercises the Applicable Self Help Remedy, then upon Tenant having achieved substantial completion of the subject Landlord Work Item, and the transfer to Landlord of all customary warranties relating to the subject Landlord Work Item, Landlord shall pay to Tenant the entire positive difference (if any) between the aggregate amount of reasonable out-of-pocket expenses actually incurred by Tenant directly in connection with performance of the subject Landlord Work Item and the aggregate amount of such expenses that would have been incurred by Tenant (if any) but for the exercise of the Applicable Self Help Remedy by Tenant. Also if Tenant exercises the Self Help Remedy, Tenant shall cause its contractors and subcontractors to use commercially reasonable efforts to minimize any interference with the operation of any other tenant’s business at the Building.

     2.17 Notice of Intent to Sell. If, at any time during the Term of the Lease, Landlord desires to sell, transfer or convey its fee simple ownership interest in the Building or the real property of which the Building forms a part to an unaffiliated third party (other than in connection with (i) a multi-property sale, transfer or conveyance by and among Landlord and its affiliate(s) and (ii) a transfer or conveyance to an industrial development agency or other governmental or quasi-governmental entity), Landlord shall use good faith efforts to endeavor to provide Tenant with written notice of such desire prior to consummating the subject third party sale, transfer or conveyance; provided, however, that Landlord shall not be liable to Tenant for any costs, expenses, damages or liabilities that are or may be incurred by Tenant by reason of any failure by Landlord to so notify Tenant.

19



Exhibit 10.5.5

ARTICLE III
Broker

     3.1 Each of Landlord and Tenant represents to the other that this Agreement was brought about by Newmark Grubb Knight Frank (the “Broker”), as broker, and that all negotiations with respect to this Agreement were conducted exclusively among Landlord, Tenant and the Broker. Each of Landlord and Tenant covenants that if any claim is made for commissions by any broker (other than the Broker) in connection with this Agreement on account of the actions of a covenanting party, then that covenanting party will hold the other party free and harmless from any and all liabilities and expenses in connection therewith, including such other party’s reasonable attorney’s fees.

ARTICLE IV
Ratification

     4.1 Each of Landlord and Tenant represents and warrants that, to its knowledge, the Existing Lease is presently in full force and effect.

     4.2 The parties hereby ratify and confirm all of the terms, covenants and conditions of the Existing Lease, except to the extent that those terms, covenants and conditions are amended, modified or varied by this Agreement. If there is a conflict between the provisions of the Existing Lease and the provisions of this Agreement, then the provisions of this Agreement shall control.

     4.3 This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and/or assigns.

     4.4 Promptly following the full execution and delivery of this Agreement, Landlord and Tenant shall reconcile (in the form of a payment or credit by Landlord for the benefit of Tenant) the net amount of any overpayment of Annual Basic Rent and Additional Rent made by Tenant with respect to the period commencing January 1, 2014 and ending as of the last day of the calendar month in which the Effective Date of this Agreement occurs, after giving effect to the retroactive nature of the Existing Lease modifications made pursuant to this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

20



Exhibit 10.5.5

     IN WITNESS WHEREOF, the parties have executed this Fifth Amendment to Lease as of the day and year first above written.

CLK-HP 230-240 CROSSWAYS PARK DRIVE LLC
 
 
By:  
Name:
Title: Authorized Person
 
 
LAKE PARK 230-240 CROSSWAYS PARK DRIVE LLC
 
 
By:  
Name:
Title: Authorized Person
 
 
RESEARCH FRONTIERS INCORPORATED
 
 
By:  
Name:   Seth L. Van Voorhees
Title: Chief Financial Officer

21


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Section 4: EX-23 (CONSENT OF BDO USA, LLP - FILED HEREWITH)


Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Research Frontiers Incorporated:

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-184785, 333-179099, 333-133858, 333-40369, 333-115052, 333-65219 and 333-159093) and Form S-8 (No. 333-80575, 333-179097, 33-53030, 33-86910, 333-08623, 333-34163, 333-80575, 333-63374, 333-106754 and 333-159094) of Research Frontiers Incorporated and Subsidiary of our reports dated March 10, 2014, relating to the consolidated financial and the effectiveness of Research Frontiers Incorporated’s internal control over financial reporting, which appear in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 10, 2014 relating to the financial statement schedule, which appears in this Form 10-K.

 

/s/ BDO USA, LLP
Melville, NY

March 10, 2014


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Section 5: EX-31.1 (RULE 13A-14(A)/15D-14(A) CERTIFICATION OF JOSEPH M. HARARY)


EXHIBIT 31.1              CERTIFICATION

I, Joseph M. Harary, certify that:

1. I have reviewed this annual report on Form 10-K of Research Frontiers Incorporated (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer’s and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a)      

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer’s and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

      a)      

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: March 10, 2014 /s/ Joseph M. Harary
Joseph M. Harary
President, Chief Executive Officer


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Section 6: EX-31.2 (RULE 13A-14(A)/15D-14(A) CERTIFICATION OF SETH L. VAN VOORHEES)


EXHIBIT 31.2              CERTIFICATION

I, Seth L. Van Voorhees, certify that:

1. I have reviewed this annual report on Form 10-K of Research Frontiers Incorporated (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer’s and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a)      

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer’s and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

      a)      

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: March 10, 2014 /s/ Seth L. Van Voorhees
Seth L. Van Voorhees
Vice President, Chief Financial Officer,
Treasurer and Principal Accounting Officer


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Section 7: EX-32.1 (SECTION 1350 CERTIFICATION OF JOSEPH M. HARARY)


EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       In connection with the Annual Report of Research Frontiers Incorporated (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph M. Harary, President and Chief Executive Officer and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.        The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
 
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Joseph M. Harary
Joseph M. Harary
President, Chief Executive Officer and Principal Executive Officer
March 10, 2014


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Section 8: EX-32.2 (SECTION 1350 CERTIFICATION OF SETH L. VAN VOORHEES)


EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Research Frontiers Incorporated (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Seth L. Van Voorhees, Vice President, Chief Financial Officer, Treasurer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
      
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Seth L. Van Voorhees
Seth L. Van Voorhees
Vice President, Chief Financial Officer,
Treasurer and Principal Accounting Officer
March 10, 2014


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