RESEARCH FRONTIERS INC, 10-K405, 1996-03-27

RESEARCH FRONTIERS INC
10-K405, 1996-03-27
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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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, 1995 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 Boston Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)

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 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]

As of March 27, 1996 there were 9,825,763 shares of Research Frontiers
Incorporated common stock outstanding (of which 1,305,294 shares were held,
either directly or indirectly, by affiliates of the Company), and the aggregate
market value of the common shares (based upon the closing trading price of these
shares on NASDAQ on March 27, 1996) held by non-affiliates was approximately
$75,619,162. In making this computation, all shares known to be owned by
directors and executive officers of the Company and all 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. 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."

Exhibit Index at pages 15-18

Page 1 of 34 pages<PAGE>

PART I

ITEM 1. BUSINESS

General

Research Frontiers Incorporated (the "Company") was incorporated in
New York in 1965 and reincorporated in Delaware in 1989. Since its
inception, the Company has primarily engaged in the development and
licensing of suspended particle technology and devices to control the
transmission of light. Such suspended particle devices, often referred to as
"SPDs" or "light valves" use a suspension of microscopic particles that is
either in the form of a liquid suspension or a film, which is usually enclosed
between two conductively-coated glass or plastic plates, at least one of which
is transparent. When an electrical voltage is applied, the microscopic
particles are aligned, thereby permitting a range of transparency within
which light transmission can be rapidly varied to any degree desired
depending upon the voltage applied. The first light valve of this type was
invented by Dr. Edwin Land of Polaroid Corporation in 1934. Since its
incorporation the Company has developed its own technology embodied in
patents, trade secrets and know how. Light valves using the Company's
proprietary suspensions and related technology may have wide commercial
applications in devices of many types where variable light transmission is
desired, such as "smart" windows, variable light transmission eyewear and
goggles, self-dimmable automotive sunroofs, sun visors and mirrors, and flat
panel information displays for use in computers, televisions, telephones and
other electronic instruments.

The Company expects to compete against various technologies that are
currently being used commercially. In particular, the Company expects to
compete on the basis of the performance characteristics of its products with
liquid crystal displays ("LCDs"). An LCD is generally similar in
construction to an SPD display, but instead of a fluid or film suspension,
utilizes an organic material called a liquid crystal which, although comprised
of molecules that flow like a liquid, has some of the characteristics of solid
crystals. Like SPD displays, LCDs are "passive" devices which do not
generate light, but merely reflect or modulate existing light. The current
market for flat panel LCDs was estimated by others to be approximately $10
billion, and market research studies project LCD sales of about $15.4 billion
per year by the year 1997. The Company believes that some of its licensees
using SPD displays may begin to challenge liquid crystal displays for part
of the LCD market during the next several years.

The Company believes that its SPD light valves and related technology
have significant advantages over existing display devices and related
technology. In comparison to existing twisted nematic type LCDs, the
Company's SPD displays are believed to have (i) higher contrast and
brightness, (ii) lower estimated production costs, (iii) a less complex
fabrication procedure, (iv) a wider angle of view, (v) the ability to function
over a wider temperature range, (vi) less stringent internal spacing
tolerances, (vii) the ability to make large area displays without using sheet
polarizers or alignment layers, and (viii) lower light loss and a corresponding
reduction in backlighting requirements. With respect to other types of
displays which emit their own light, such as light-emitting diodes (LEDs)
and cathode ray tubes (CRTs), the Company's SPD light valves should have
the advantages of lower power consumption and make possible larger
displays that are easier to read in bright light.

The Company also believes that its SPD light valve technology will
have certain advantages over other technologies in the production of so-called
"smart windows," windows which electrically vary the amount of light
passing through them, and in the production of self-dimmable automotive
rear-view mirrors. The differences between the competing technologies for
use in variable light transmission windows and mirrors should favor SPDs
in some important respects.

Variable light transmission technologies can be classified into two
basic types: "smart" technologies that can be controlled by the user either
automatically or manually, and passive technologies that can only react to
ambient environmental conditions. One type of passive variable light
transmission technology is photochromic technology; such devices change
their level of transparency in reaction to external radiation. As compared to
photochromic technology, the Company's technology permits the user to
adjust the amount of light passing through the viewing area of the device
rather than merely reacting to external radiation. In addition, the reaction
time necessary to change from light to dark with SPDs is almost
instantaneous, as compared to the much slower reaction time for
photochromic devices. Unlike SPD technology, photochromic technology
does not function well within the temperature range in which smart windows
are normally expected to operate.

Another category of variable light transmission window technology
comprises user-controllable "smart" technologies: These "smart"
technologies include electrochromic technology, liquid crystal technology,
and the Company's SPD technology.

Electrochromic Technology: When compared to electrochromic
windows and rear-view mirrors, which use a direct current voltage to alter
the molecular structure of electrochromic materials (which currently can be
in the form of either a liquid, gel or solid film) causing the material to
darken, SPDs have numerous potential performance, manufacturing and cost
advantages. In comparing the Company's SPD light valves to electrochromic
technologies, SPDs are expected to have some or all of the following
advantages: (i) faster response time, (ii) higher manufacturing yields, (iii) a
simpler manufacturing process requiring less expensive equipment, (iv)
lower estimated manufacturing costs, (v) more reliable performance over a
wider temperature range, (vi) capability of achieving darker off-states, (vii)
lower current drain, (viii) higher estimated battery life in applications where
batteries are used, (ix) no "iris effect" (where light transmission changes
first occur at the outside of a window or mirror and then work their way
toward the center) when changing from clear to dark and back again, and (x)
the ability to use SPDs in conjunction with plastic materials.

Liquid Crystal Technology: To date, the main type of liquid crystal
smart window was produced by Taliq Corp. (a subsidiary of Raychem Corp.
which has since discontinued its operations and licensed its technology to
others), Polytronix, Inc. and 3M. These windows are very expensive
(having an estimated installed cost of about $85-100 per square foot), and
only change from a cloudy opaque milky-white to a hazy clear state, with no
useful intermediate states. As compared to liquid crystal windows, SPD
smart windows should be substantially less expensive to produce, could be
viewed at wide angles without a light scattering haze effect when activated,
would operate over a wider temperature range, and would permit an infinite
number of intermediate states between a transparent state with no visible
haze to a dark blue state.

LCDs and other types of displays, as well as electrochromic self-dimmable
rear-view mirrors, are already on the market, whereas the performance and long-
term reliability of SPD light valves have not yet been fully ascertained. The
companies manufacturing LCD and other display devices, LCD windows, and
electrochromic self-dimmable rear-view mirrors, 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 light valves 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 technologically or otherwise obsolete.

In each of the last three fiscal years the Company has devoted
substantially all of its time to the development of one class of products and
therefore revenue analysis per class is not provided herein.

The Company does not believe that future sales will be seasonal in any
material respect. 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.

On March 27, 1996, the Company had eleven full-time employees, six
of whom are technical personnel, and five of whom perform legal, investor
relations, and administrative functions. The success of the Company is
dependent on, among other things, the services of its senior management,
the loss of whose services could have a material adverse effect upon the
prospects of the Company.

Licensing Activities

The Company's current marketing efforts have taken the form of
offering other companies (both domestic and foreign) the opportunity to
enter into license agreements with the Company for one or more specific
fields of use. The following table summarizes the Company's existing
license and option agreements:<PAGE>

Licensee or Optionee Products covered Territory

General Electric Company SPD film for other licensees and Worldwide
prospective licensees

Glaverbel, S.A. Automotive vehicle rear-view mirrors Worldwide

Glaverbel, S.A. Transportation vehicle sun visors Worldwide

Hankuk Glass Industries, Inc. Architectural Windows Korea
(with limited
export rights)

Japan Steel Works Ltd, and Architectural Windows Japan
Central Glass Company Ltd. (with limited
export rights)

Saint Gobain Vitrage, S.A. Architectural Windows Worldwide
(option) (except Korea
and South America)

Sanyo Electric Co., Ltd. Flat panel displays Worldwide

Licenses generally provide for a 3-5% royalty on the sale of licensed
products and may provide for minimum annual royalties. The Company's
license agreements typically allow the licensee to terminate the license after
some period of time, and give the Company only limited rights to terminate
prior to their expiration. The licenses granted to Glaverbel are exclusive
subject to these licenses becoming non-exclusive if certain future sales
milestones are not met, and the license granted to Hankuk is exclusive
within Korea through July 1998.

On August 2, 1995, the Company announced that it had entered into
a license agreement with General Electric Company. The agreement grants
GE a non-exclusive license to manufacture films incorporating the
Company's proprietary suspended particle device (SPD) light control
technology to a selected list of Research Frontiers' licensees and prospective
licensees for a variety of applications. SPD film permits light transmission
to be electrically controlled instantly either automatically or by the user.
Devices which can use SPD technology include variable light transmission
"smart" windows, variable light transmission eyewear and goggles,
self-dimmable automotive sunroofs, sun visors and rear-view mirrors, and
flat panel information displays for use in computers, television, telephones
and other electronic instruments. The Company believes that having a third
party which can provide high-quality SPD film for the Company's licensees
and prospective licensees is an important step towards the
commercialization of SPD technology. In addition, the Company believes
that some of the world's leading manufacturers prefer to purchase SPD film
from others, rather than making it internally, and that if SPD film is
commercially available, this would greatly enlarge the universe of potential
licensees and users for SPD technology.

In November 1995, the Company announced that Hankuk Glass
Industries, Inc. has been successfully developing SPD films for smart
windows and had reached an advanced stage of development. In January
1996, it was reported to the Company that Hankuk had recently demonstrated
publicly at the New Glass Forum in Tokyo a prototype SPD smart window
measuring approximately 2.5 feet by 3 feet in size. Hankuk's current license
with Research Frontiers only covers architectural smart windows. At
Hankuk's request, Research Frontiers and Hankuk have commenced
negotiations which are continuing which may lead to one or more additional
license agreements relating to the manufacture of SPD film and other SPD
products.

On April 30, 1992 the Company announced that The Japan Steel
Works, Ltd. had reported installing a wall of variable light transmission
"smart" windows in a newly-constructed office building near Tokyo. The
wall of "smart" windows, which serves as a conference room partition, is
comprised of a total of 50 windows, each about 1.5 feet square, arranged in
a pattern five windows high by 10 windows wide, which utilizes the
Company's liquid suspension light control technology. The Japan Steel
Works and Central Glass Company currently do not have licensed rights to
use the film form of the Company's SPD technology.

On May 25, 1994, the Company announced that it had signed an
option-license agreement with Saint-Gobain Vitrage International SA (now
known as Saint-Gobain Vitrage, SA). The agreement, as amended, gave
Saint-Gobain the option through December 31, 1995 (with the right to
further extend the option until August 31, 1996) to enter into a non-exclusive
license agreement with the Company which covers the manufacture and sale
of variable light transmission "smart" windows for architectural applications
using Research Frontiers' patented SPD technology. If Saint-Gobain
exercises the option and enters into the license agreement, Saint-Gobain
would pay Research Frontiers a royalty of five percent of net sales of
licensed products, subject to the payment of minimum annual royalties or an
up-front fee which, under the terms of the original option-license agreement,
remained to be negotiated. Because negotiations have now begun with
Saint-Gobain with respect to the fees or royalties payable under the license
agreement, Saint-Gobain and Research Frontiers mutually agreed to extend
the two expiration dates under the option agreement to June 30, 1996 and
December 31, 1996. In addition, discussions have commenced with Saint-Gobain
regarding the availability of SPD licenses for applications in addition
to architectural windows.

The Company's licensee, Glaverbel, S.A., has requested that Research
Frontiers grant to it additional non-exclusive licenses covering architectural
and automotive windows. Accordingly, the Company has commenced
negotiations with Glaverbel relating to a new license agreement that would
replace existing agreements and would encompass the aforesaid fields of use
as well as transportation vehicle rear-view mirrors and sun visors already
licensed by the Company to Glaverbel. The Company has briefly extended
certain time periods under Glaverbel's two existing license agreements to
permit these additional negotiations to be concluded. In addition, Glaverbel
has filed patent applications to protect several important inventions relating
to the production of simple low-cost electronics, the filling of cells, and
meeting government regulations relating to the reflectivity of rear-view
mirrors in the unactivated state. Glaverbel has also made very attractive
prototype SPD rear-view mirrors which have been demonstrated to
numerous potential customers. Notwithstanding these impressive
accomplishments, due to the complexity of developing, manufacturing and
marketing SPD mirror products and Glaverbel's limited technical, financial
and other resources, the Company believes that Glaverbel probably will
require or find it advantageous to have the assistance of others to produce
and sell SPD rear view mirrors. As a result, Glaverbel, Research Frontiers,
and one or more third parties such as a tier-one automotive industry supplier
may explore the possibility of a joint venture or other arrangement to
commercialize SPD rear-view mirror products. In comparing rear-view
mirrors using SPD technology to rear-view mirrors such as those currently
being produced for the automotive industry which use electrochromic
technology, SPD mirrors are expected to have the following advantages: (1)
a much faster response time promoting safer operation, and (2) ability to use
their virtually instantaneous reaction time, to feature "real-time" switching
in which the mirror can automatically adjust to an infinite number of
intermediate levels of glare reduction, rather than merely switching from
light to dark. In addition, self-dimmable SPD rear-view mirrors do not have
the yellow tint normally associated with most electrochromic mirrors.

While the Company believes based upon the status of current
negotiations that negotiations with Glaverbel, Hankuk Glass Industries, and
Saint-Gobain are likely to be concluded in the near future, there can be no
assurance that any such additional license agreements will be consummated,
or that any licensee of the Company will produce or sell commercial
products using the Company's technology.

The Company plans to continue to exploit its SPD light valve
technology by entering into additional license agreements with end-product
manufacturers such as manufacturers of flat glass, flat panel displays,
sunglasses and ski goggles, and with other interested companies who may
wish to acquire rights to manufacture and sell the Company's proprietary
fluid suspensions and films. The Company's plans also call for further
development of its SPD light valve technology and the provision of
additional technological assistance to its licensees to develop commercially
viable products. The Company cannot predict when or if new license
agreements will be entered into or if commercial products will result from
its existing or future licenses because of 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. To date, no licensed products have
been sold under any of the Company's license agreements.

Research and Development; Technological Developments

As a result of the Company's research and development efforts, the
Company believes that its SPD light valves will be usable in a number of
commercial products. Such products may include "smart" windows,
variable light transmission eyewear and goggles, self-dimmable automotive
sunroofs, sun visors and mirrors, 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 light valves, portable computer
displays and flat panel television displays. The Company believes that most
of its research and development efforts have applicability to products that
may incorporate the Company's technology. Although the Company
believes that the state of development of its technology is sufficiently
advanced that commercial products should be producible hereafter by its
licensees, such potential commercialization is beyond the control of the
Company. In addition, the Company intends to continue its research and
development efforts for the foreseeable future to improve its SPD light valve
technology and thereby assist in the potential commercialization of the
Company's SPD light valve technology by the Company's licensees.

The Company has devoted most of the resources it has heretofore
expended to research and development activities with the goal of producing
commercially viable light valves and already has developed working
prototypes of its SPD light valves for several different applications including
smart windows, eyewear, mirrors and flat panel displays. The Company
expended approximately $1,410,000, $1,396,000, and $1,301,000 during the
years ended December 31, 1995, 1994, and 1993, respectively, for research
and development. The Company plans to engage in substantial continuing
research and development activities. Six of the Company's eleven full-time
employees are principally engaged in the Company's research and
development activities. The Company's main goals in its research and
development will be (i) developing suspensions that change their
transparency with greater speed, (ii) increasing the light transmission range
obtainable from the Company's suspensions, (iii) developing particles to be
used in the suspensions that absorb different wavelengths of light so that
fluid suspensions and light valves can be produced in a variety of colors, and
(iv) reducing the voltage required to operate SPDs.

In June 1994, the Company announced that it had developed a new
prototype SPD flat panel display which operates at substantially lower
voltages than previous prototypes. In January 1995, the Company announced
that it had successfully developed, with the collaboration of London's
Imperial College of Science, Technology and Medicine, a new type of high-
information flat panel display using SPD technology which can offer display
manufacturers and users an attractive alternative to liquid crystal displays
(LCDs). SPD displays offer high information content as well as good
brightness and contrast with an excellent angle of view due to the
elimination of light-absorbing sheet polarizers. This should make SPD
displays simpler than LCDs to construct and could also reduce backlighting
requirements. Such SPD displays are intended for use in computers, flat
television sets, telephones and other electronic instruments, and will be
demonstrated to the Company's existing and prospective licensees for these
applications. With further development, the Company believes that larger
size high information content display prototypes using the Company's
suspensions and having color capability will be demonstrable.

In March 1989, the Company announced that it had successfully
developed and tested a prototype pair of electrically controllable variable
light transmission sunglasses. Eyewear products incorporating the
Company's technology should have the advantage of having a fast response
time. Sunglasses and ski goggles incorporating the Company's technology
should have the additional advantage of being controllable by the user as
well as merely reacting to external radiation. Although in recent years the
Company has concentrated its efforts in the flat panel display, smart
window, and automotive application areas, the Company has recommenced
work on producing more advanced eyewear prototypes using SPD film. The
Company believes that advanced eyewear prototypes, if successfully
developed, will aid the Company's efforts to license its SPD light valve
technology for eyewear.

In June 1991, the Company announced the development of a film form
of its fluid suspensions for SPD light valves. In September 1992, the
Company announced a dramatically improved film which had reduced haze
to less than one-sixth of former levels and demonstrated remarkable clarity.
In January 1993, the Company announced a further improvement in its film
which substantially reduced the voltage necessary to operate film SPD light
valves. The Company's low-haze film is expected to reduce manufacturing
costs, eliminate the risk of leakage, and facilitate the use of SPD light valves
in large sizes and unusual shapes. The low-voltage film should further
simplify the manufacturing and operation of products using this technology.

Patents and Proprietary Information

The Company has 19 United States patents in force. Seven United
States patent applications are pending. The Company's United States
patents expire at various dates from 1997 through 2013. The Company has
approximately 23 issued patents and a substantial number of patent
applications pending in foreign countries. The Company's foreign patents
expire at various dates from 1998 through 2014. The Company believes that
its SPD light valve 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. To a lesser
extent, the Company 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 1993, the Company's Board of Directors declared a
dividend distribution of one Right for each outstanding share of Company
common stock to stockholders of record at the close of business on April 12,
1993. If a person or group has acquired beneficial ownership of, or
commences a tender or exchange offer for, 20% 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 $90 worth of Common Stock for $45. 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 $90 worth of common stock of the acquiring
company for $45. The Rights will expire at the close of business on
February 16, 2003, unless earlier redeemed by the Company at a price of
$.0000424 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 a copy of the
Rights Plan is available from the Company upon request.

ITEM 2. PROPERTIES

The Company currently occupies approximately 8,100 square feet of
space at a minimum annual rental of approximately $97,000 for its executive
office and research facility at 240 Crossways Park Drive, Woodbury, New
York 11797 under a lease expiring January 31, 1999. The Company believes
that its space, including its laboratory facilities, is adequate for its present
needs.

ITEM 3. LEGAL PROCEEDINGS

There are no legal proceedings pending by or against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

(a) Market Information

(1) The Company's common stock is primarily traded on the
NASDAQ SmallCap Market and is also traded on the Boston Stock
Exchange. As of March 27, 1996, there were 9,825,763 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, 1994 7.500 11.250
June 30, 1994 6.875 10.500
September 30, 1994 6.875 8.750
December 31, 1994 4.625 7.375
March 31, 1995 5.125 8.000
June 30, 1995 5.750 8.750
September 30, 1995 6.875 16.875
December 31, 1995 8.500 15.000

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 27, 1996, there were 616 holders of record of the Company's
common stock.

The Company did not pay dividends on its common stock in 1995 and
does not expect to pay any cash dividends in the foreseeable future. There
are no restrictions on the payment of dividends.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected data regarding the Company's
operating results and financial position. The data should be read in
conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements and notes
thereto, all of which are contained in this Annual Report on Form 10-K.

Year Ended December 31,
1995 1994 1993 1992 1991
Statement of
Operations Data:
Fee Income $ 1,500 $574,965 $206,607 $278,393 $ 352,000
Operating expenses 1,226,691 1,325,761 1,005,107 812,199 549,161
Research and development1,410,443 1,395,942 1,300,726 1,049,369 861,228
2,637,134 2,721,703 2,305,833 1,861,568 1,410,389
Operating Loss (2,635,634)(2,146,738)(2,099,226)(1,583,175)(1,058,389)
Net investment income (14,988) 91,816 257,842 284,334 15,155
Unrealized gain (loss)
on investments (268,100) (868,786) 24,089 (55,206) --
Net loss (2,918,722)(2,923,708)(1,817,295)(1,354,047)(1,043,234)
Net loss per share (1) (.32) (.33) (.24) (.19) (.20)
Dividends per share -- -- -- -- --

As of December 31,
1995 1994 1993 1992 1991

Balance Sheet Data:
Total current assets $9,871,002 $7,232,454 $9,883,504 $3,860,355 $4,759,080
Total assets 10,026,113 7,425,278 10,047,596 4,012,287 4,923,753
Long-term debt,
including accrued
interest -- -- -- -- 10,381
Total shareholders'
equity $9,783,060 $7,234,613 $8,103,776 $3,824,023 $4,723,993

(1) Per share figures have been restated to reflect the 50% common stock
dividend paid by the Company on July 15, 1993 and the 25% common stock
dividend paid by the Company on February 15, 1994.<PAGE>

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

Results of Operations

Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994

The Company earned $1,500 in fee income for the year ended
December 31, 1995 compared to $574,965 for the year ended December 31,
1994. This was a result of income which was recognized by the Company
in 1994 in connection with an option agreement entered into between the
Company and Saint-Gobain Vitrage S.A. as well as the renegotiation by the
Company of certain license agreements, including the levels of minimum
annual royalties payable thereunder.

Operating expenses decreased by approximately $99,000 to
$1,226,691 for the year ended December 31, 1995 from $1,325,761 for the
year ended December 31, 1994. This decrease was primarily a result of
decreased travel and public relations costs, office supplies and depreciation
expense, partially offset by an increase in salaries, utilities and insurance
costs.

Research and development expenditures increased to $1,410,443 for
the year ended December 31, 1995 from $1,395,942 for the year ended
December 31, 1994, primarily as a result of increased salaries, consultant
fees, and related expenses as well as higher costs for materials used in
research. Management estimates that research and development costs for
1996 will reflect a modest increase over 1995 levels. Such costs, however,
cannot be predicted with any significant degree of accuracy since they will
be based on future staffing levels, which in turn will be dependent upon new
developments and the degree of support necessary to assist existing and
prospective licensees.

Net investment income decreased by approximately $107,000 from
$91,816 for the year ended December 31, 1995 to a net investment loss of
$14,988 for the year ended December 31, 1995. This decrease was a result
of higher realized losses incurred by the Company on its investments in
1995, partially offset by higher interest and dividend income. The
unrealized loss on investments decreased to $268,100 for the year ended
December 31, 1995 from $868,786 for the year ended December 31, 1994.
This decrease was primarily the result of the sale of securities resulting in
realized losses in 1995 as opposed to unrealized losses in 1994.

The net loss was $2,918,722 ($.32 per share) for the year ended
December 31, 1995 as compared to $2,923,708 ($.33 per share) for the year
ended December 31, 1994. The decrease in the net loss was a result of the
combined effect of the factors discussed above, with realized and unrealized
investment losses accounted for over 31% of the Company's total losses.
Because the Company invested a large part of the cash it received from the
sale of common stock and the exercise of options and warrants in short-term
U.S. Treasury securities, the Company expects significant reductions in its
realized and unrealized losses on investments in 1996.

Year Ended December 31, 1994 Compared to the Year Ended December 31, 1993

Fee income increased to $574,965 for the year ended December 31,
1994 from $206,607 for the year ended December 31, 1993. This increase
is primarily the result of income which was recognized by the Company in
1994 in connection with an option agreement entered into between the
Company and Saint-Gobain Vitrage S.A.

Operating expenses increased to $1,325,761 for the year ended
December 31, 1994 from $1,005,107 in 1993. This increase was primarily
the result of increased salaries and public relations costs, as well as
increased rent due to an expansion of the Company's facilities.

Research and development costs increased to $1,395,942 for the year
ended December 31, 1994 from $1,300,726 for 1993, primarily as a result
of increased salaries and consultant fees and related expenses as well as
higher costs for materials used in research and the purchase of new
laboratory equipment.

Net investment income decreased by approximately $166,000 from
$257,842 in 1993 to $91,816 in 1994. This decrease was a result of higher
realized losses incurred by the Company on its investments in 1994,
partially offset by greater interest and dividend income. The unrealized loss
on investments was $868,786 for 1994 due to a significant decline in the
market value of certain of the Company's investments, mainly caused by a
decline in the U.S. and global bond markets.

The net loss was $2,923,708 ($.33 per share) for 1994 as compared to
$1,817,295 ($.24 per share) for 1993. The increase in the net loss was a
result of the combined effect of the factors discussed above, with realized
and unrealized investment losses accounting for over 47% of the Company's
total losses.

Financial Condition, Liquidity and Capital Resources

During the year ended December 31, 1995, the Company's cash and
marketable investment securities balance increased by approximately
$2,610,000 from $7,155,204 for the year ended December 31, 1994 to
$9,764,881 for the year ended December 31, 1995. This increase was
primarily due to the proceeds from the issuance of common stock
($5,474,242); partially offset by (i) the Company's loss from operations
($2,635,634); and (ii) its unrealized loss on investments ($268,100). At
December 31, 1995, the Company had working capital of $9,627,949 and
its stockholders' equity was $9,783,060.

The Company expects to use its cash and short-term investments to
fund its research and development of SPD light valves 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 would provide additional working capital, 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 expenditures, assumed ten percent annual increases
therein, existing cash reserves and budgeted revenues, the Company believes
that it would not require additional funding for the next three to four years.
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.

Inflation

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

Impact of New Accounting Standards

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (Statement 123). Statement 123 establishes
financial accounting and reporting standards for stock-based employee
compensation plans. The Statement also applies to transactions in which an
entity issues its equity instruments to acquire goods or services from
nonemployees. Statement 123 encourages a fair value based method of
accounting for employee stock options or similar equity instruments.
Entities electing not to adopt a fair value method must make proforma
disclosures of net income and earnings per share as if a fair value based
method had been applied. The Statement requires a fair value method for
stock options or similar equity instruments issued to nonemployees. The
Statement is effective for fiscal year 1996. The Company does not expect
that it will adopt a fair value based method and therefore does not expect that
the adoption of Statement 123 will have a material impact on its financial
position or results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements listed in Item 14(a)(1) and (2) are included in
this Report beginning on page F-1.

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The 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 29, 1996, in connection with the Company's
Annual Meeting of Stockholders scheduled to be held on June 13, 1996.

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 29, 1996, in connection with the Company's
Annual Meeting of Shareholders scheduled to be held on June 13, 1996.
Notwithstanding anything to the contrary set forth herein or in any of the
Company's past or future filings with the Securities and Exchange
Commission 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

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 29, 1996, in connection with the Company's
Annual Meeting of Stockholders scheduled to be held on June 13, 1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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 29, 1996, in connection with the Company's
Annual Meeting of Stockholders scheduled to be held on June 13, 1996.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

The following financial statements of Research Frontiers Incorporated,
the related notes thereto, together with the report thereon of KPMG Peat
Marwick LLP are filed under Item 8 of this Report.

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . F-1

Financial Statements:

Balance Sheets,
December 31, 1995 and 1994. . . . . . . . . . . . . . . . . F-2

Statements of Operations,
Years Ended December 31, 1995, 1994 and 1993. . . . . . . . F-3

Statements of Shareholders' Equity,
Years Ended December 31, 1995, 1994 and 1993. . . . . . . . F-4

Statements of Cash Flows,
Years Ended December 31, 1995, 1994 and 1993. . . . . . . . F-5

tes to Financial Statements. . . . . . . . . . . . . . . . . . . . F-6

All schedules are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.

(a)(3) Exhibits Page

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 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.

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.

4.2 Rights Agreement dated as of February 16, 1993 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 16, 1993, and incorporated herein by reference.

10.1* 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.

10.2* Amended and Restated 1983 Stock Option Plan. Previously filed
as Exhibit 4.1 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.

10.3* Amended and Restated 1986 Stock Option Plan. Previously filed
as Exhibit 4.2 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.

10.4* 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.

10.5* 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.

10.6 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.

10.6.1 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.

10.6.2 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.

10.7 License Agreement dated February 16, 1989 among the
Company, the Japan Steel Works, Ltd. and the Central Glass
Company, Ltd. Previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1988 and incorporated herein by reference.

10.8 License Agreement dated June 15, 1990 between the Company
and Hankuk Glass Industry Co., Ltd. and related Korean
government approval of the agreement dated July 4, 1990, with
English translation attached. Previously filed as an Exhibit to
Amendment No. 1 to the Company's Registration Statement on
Form S-2 (Reg. No. 33-35130) declared effective by the
Commission on August 7, 1990, and incorporated herein by
reference.

10.9 Financial Consulting Agreement between the Company and
Paulson Investment Company, Inc. Previously filed as an Exhibit
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, and incorporated herein by reference.

10.10 License Agreement dated April 23, 1992 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, 1992, and incorporated herein by reference.

10.10.1 Amendment Agreement effective as of May 14, 1993 amending
License Agreement dated April 23, 1992 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 June 30, 1993 and incorporated herein by reference.

10.11 License Agreement effective as of March 2, 1994 between the
Company and Glaverbel, S.A. Previously filed as an Exhibit to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 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 Option Agreement effective as of June 1, 1994 between the
Company and Saint-Gobain Vitrage International SA (now known
as Saint-Gobain Vitrage SA). Previously filed as an Exhibit to the
Company's Current Report on Form 8-K dated June 9, 1994 and
incorporated herein by reference.

10.13 License Agreement effective as of February 17, 1995 between the
Company and Sanyo Electric Co., Ltd. Previously filed as an
Exhibit to the Company's Current Report on Form 8-K/A dated
April 17, 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.

10.14 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.

22 Subsidiaries of the Registrant - None

23 Consent of KPMG Peat Marwick LLP - Filed herewith.
_____________

* Executive Compensation Plan or Arrangement.

(b) Reports on Form 8-K:

No reports on Form 8-K have been filed by the Registrant during the
last quarter of the period covered by this report.

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

By: /s/Robert L. Saxe
Robert L. Saxe, President
and Treasurer
(Principal Executive, Financial,
and Accounting Officer)

Dated: March 27, 1996

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/Robert M. Budin Director March 27,1996
Robert M. Budin

/s/Bernard D. Gold Director March 27,1996
Bernard D. Gold

/s/Joseph M. Harary Director March 27,1996
Joseph M. Harary

/s/Robert L. Saxe Director, President March 27, 1996
Robert L. Saxe and Treasurer

/s/Robert I. Thompson Director March 27, 1996
Robert I. Thompson<PAGE>

Independent Auditors' Report

The Stockholders and Board of Directors
Research Frontiers Incorporated:

We have audited the accompanying balance sheets of Research Frontiers
Incorporated as of December 31, 1995 and 1994, and the related statements
of operations, shareholders' equity and cash flows for each of the years in
the three-year period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Research Frontiers
Incorporated at December 31, 1995 and 1994 and the results of its
operations and cash flows for each of the years in the three-year period
ended December 31, 1995 in conformity with generally accepted accounting
principles.

As discussed in notes 2 and 3 to the financial statements, the Company
changed its method of accounting for investments to adopt the provisions of
Financial Accounting Standards Board's Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" in 1994.

/s/ KPMG PEAT MARWICK LLP

Jericho, New York
February 16, 1996<PAGE>

RESEARCH FRONTIERS INCORPORATED

Balance Sheets

December 31, 1995 and 1994

Assets 1995 1994

Current assets:
Cash $ 3,827,573 219,771
Marketable investment securities (note 3) 5,937,308 6,935,433
Accrued interest and dividends receivable 82,422 61,402
Prepaid expenses and other current assets 23,699 15,848
Total current assets 9,871,002 7,232,454

Fixed assets, net (note 5) 96,491 138,204
Deposits and other assets 58,620 54,620

Total assets $ 10,026,113 7,425,278

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payabl 113,120 116,690
Accrued expenses 129,933 73,975

Total liabilities 243,053 190,665

Shareholders' equity (note 7):
Capital stock, par value $0.0001 per share;
authorized 100,000,000 shares, issued and
outstanding 9,830,761 and 9,121,060 shares
for 1995 and 1994 983 912
Additional paid-in capital 28,399,562 23,232,108
Accumulated deficit (18,035,485) (15,116,763)
10,365,060 8,116,257

Notes receivable from officers (note 4) (582,000) (881,644)

Total shareholders' equity 9,783,060 7,234,613

Commitments (note 9)

Total liabilities and shareholders' equity $ 10,026,113 7,425,278

See accompanying notes to financial statements.<PAGE>

RESEARCH FRONTIERS INCORPORATED

Statements of Operations

Years ended December 31, 1995, 1994 and 1993

1995 1994 1993

Fee income (note 8) $ 1,500 574,965 $ 206,607

Operating expenses 1,226,691 1,325,761 1,005,107
Research and development 1,410,443 1,395,942 1,300,726
2,637,134 2,721,703 2,305,833

Operating loss (2,635,634)(2,146,738) (2,099,226)

Net investment income (loss) (14,988) 91,816 257,842

Unrealized gain (loss) on investments (268,100) (868,786) 24,089

Net loss $(2,918,722)(2,923,708) $(1,817,295)

Net loss per share $ (.32) (.33) $ (.24)

Weighted average number of
common shares outstanding 9,196,479 8,768,801 7,438,657

See accompanying notes to financial statements.

<PAGE>

RESEARCH FRONTIERS INCORPORATED
Statements of Shareholders' Equity
Years ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
Common Stock Additional Accumulated Treasury Notes
Shares Amount Paid in Capital Deficit Stock, at cost Receivable Total

<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 3,857,095 $ 482,137 14,092,880 (10,375,760) -- (375,234) 3,824,023

Repayment of notes by officers -- -- -- -- (70,876) 70,876 --
Three for two stock split 1,958,377 244,797 (244,797) -- -- -- --
Issuance of common stock, 1,061,891 132,736 6,167,075 -- (167,763) -- 6,132,048
net of shares tendered
Issuance of common
stock warrants -- -- 15,000 -- -- -- 15,000
Retirement of treasury stock (22,476) (2,810) (235,829) -- 238,639 -- --
Net loss -- -- -- (1,817,295) -- -- (1,817,295)
Loans to officers -- -- -- -- -- (50,000) (50,000)

Balance, December 31, 1993 6,854,887 856,860 19,794,329 (12,193,055) -- (354,358) 8,103,776

Five for four stock split 1,718,244 214,781 (214,781) -- -- -- --
Adjustment of par value -- (1,070,784) 1,070,784 -- -- -- --
Issuance of common stock 590,429 59 2,915,115 -- -- -- 2,915,174
Purchase of treasury stock -- -- -- -- (333,343) -- (333,343)
Retirement of treasury stock (42,500) (4) (333,339) -- 333,343 -- --
Net loss -- -- -- (2,923,708) -- -- (2,923,708)
Repayment of note by officer -- -- -- -- -- 1,858 1,858
Loans to officers -- -- -- -- -- (529,144) (529,144)

Balance, December 31, 1994 9,121,060 912 23,232,108 (15,116,763) -- (881,644) 7,234,613

Issuance of common stock 755,246 76 5,474,166 -- -- -- 5,474,242
Retirement of treasury stock (45,545) (5) (306,712) -- 306,717 -- --
Net loss -- -- -- (2,918,722) -- -- (2,918,722)
Repayment of note by officer -- -- -- -- (306,717) 299,644 (7,073)

Balance, December 31, 1995 9,830,761 $ 983 28,399,562 (18,035,485) -- (582,000) 9,783,060
</TABLE>
See accompanying notes to financial statements.<PAGE>

RESEARCH FRONTIERS INCORPORATED
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993

1995 1994 1993
Cash flows from operating activities:
Net loss $(2,918,722)(2,923,708)(1,817,295)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 58,178 105,046 50,405
Interest received on officer note receivable (7,073) -- --
Issuance of common stock warrants -- -- 15,000
Unrealized loss (gain) on investments 268,100 868,786 (24,089)
(Increase) decrease in accounts
receivable, licensee -- 30,000 (30,000)
Increase in accrued interest and
dividends receivable (21,020) (27,409) (9,180)
(Increase) decrease in prepaid expenses and
other current assets (7,851) (7,596) 8,934
Increase in deposits and other assets (4,000) (9,800) (1,451)
Increase (decrease) in accounts payable
and accrued expenses 52,388 (68,770) 120,278
Increase (decrease) in deferred revenue -- -- (49,107)
Net sales (purchases) of investments 730,025 (2,361,560)(1,796,966)

Net cash used in operating activities (1,849,975)(4,395,011)(3,533,471)

Cash flows from investing activities:
Purchases of fixed assets (16,465) (123,978) (61,114)
Increase (decrease) in accounts payable
for purchase of investments -- (1,684,385) 1,684,385

Net cash provided by (used in)
investing activities (16,465)(1,808,363) 1,623,271

Cash flows from financing activities:
Decrease (increase) in notes receivable
from officers -- (527,286) 20,876
Proceeds from issuances of common stock 5,474,242 2,915,174 6,061,172
Purchase of treasury stock -- (333,343) --

Net cash provided by financing activities 5,474,242 2,054,545 6,082,048

Net increase (decrease) in cash 3,607,802 (4,148,829) 4,171,848

Cash at beginning of year 219,771 4,368,600 196,752

Cash at end of year $ 3,827,573 219,771 4,368,600

Supplemental schedule of non-cash financing $ 306,717 1,858 70,876
activities: Common stock received in payment
of officer loan and interest

See accompanying notes to financial statements.<PAGE>

RESEARCH FRONTIERS INCORPORATED

Notes to Financial Statements

December 31, 1995, 1994 and 1993

(1) Business

Research Frontiers Incorporated (the Company) is primarily 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 microscopic particles either in the form of a
liquid suspension or a film which is enclosed between two glass or plastic
plates, at least one of which is transparent.

The Company has historically utilized its cash and short-term investments
to fund its research and development of SPD light valves 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 would provide
additional working capital, 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 expenditures,
assumed ten percent annual increases therein, existing cash reserves and
budgeted revenues, the Company believes that it would not require
additional funding for the next three to four years. 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.

(2) Summary of Significant Accounting Policies

(a) Marketable Investment Securities

In 1994, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt
and Equity Securities" (Statement 115). Prior to 1994, the Company carried
its marketable investment securities at the lower of aggregate cost or market.
Under Statement 115, the Company classifies its debt and marketable equity
securities in one of three categories: trading, available-for-sale, or held-to-
maturity. Trading securities are bought and held principally for the purpose
of selling them in the near term. Held-to-maturity securities are those
securities in which the Company has the ability and intent to hold the
security until maturity. All other securities not included in trading or held-
to-maturity are classified as available-for-sale.

Trading and available-for-sale securities are recorded at fair value. Held-to-
maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains
and losses on trading securities are included in earnings. Unrealized holding
gains and losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component
of stockholders' equity until realized. Transfers of securities between
categories are recorded at fair value at the date of transfer. Unrealized
holding gains and losses are recognized in earnings for transfers into
trading securities.

Dividend and interest income are recognized when earned. Cost is
maintained on a specific identification basis for purposes of determining
realized gains and losses on sales of investments.

(b) 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.

Fee income represents amounts earned by the Company under various
license and other agreements (note 8) relating to technology developed by
the Company.

(d) Loss Per Share

Loss per share is computed based upon the weighted average number of
common shares outstanding Common share equivalents were not included
in the computation as their effect would be to decrease net loss per share.

(e) Research and Development Costs

Research and development costs are charged to expense as incurred.

(f) Patent Costs

The Company expenses costs relating to the development of patents.

(g) Use of Estimates

Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.

(h) Fair Value of Financial Instruments

The fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing
parties.

The carrying amounts of cash, prepaid expenses, accounts payable and
accrued liabilities approximate fair value because of the short maturity of
those instruments.

The fair value of the long-term notes receivable from officers approximates
the carrying value as their stated interest rate, the broker call rate, is
similar to other rates currently offered by local brokerage institutions for
loans of similar terms to individuals with comparable credit risk.

(3) Marketable Investment Securities

Marketable investment securities at December 31, 1995 consist of the
following:

Trading securities at fair value $ 5,937,308

Fair value of corporate equity securities, U.S. government obligations and
other securities are based upon quoted market prices. The gross unrealized
holding losses and fair values of trading securities by major type at
December 31, 1995 and 1994 were as follows:

1995 1994
Gross Fair Gross Fair
unrealized value unrealized Value
holding of holding of
gain (loss) investment gain (loss) investment

Fidelity Short-Term
World Income Fund $ (892) 8,801 (997) 8,696
U.S. government obligations (7,340) 3,158,250 (39,791) 2,725,961
First Australia Prime
Income Fund (354,931) 2,590,257 (786,793) 2,605,812
WRT Energy Convertible
Preferred Stock (804,840) 180,000 (72,347) 1,579,200
Other -- -- 25 15,764

$(1,168,003) 5,937,308 (899,903) 6,935,433

Maturities of investment securities were as follows at December 31, 1995:

Due in less than one year $ 2,141,370
Due after one year through five years 1,016,880
Investments in common and preferred equities 2,779,058

$ 5,937,308

(4) Notes Receivable from Officers

In 1987, the Company loaned one of its officers $412,500, of which
$302,500 in principal remained outstanding after the officer repaid $134,085 in
cash in December 1989. On January 3, 1996 this loan was repaid in full
principally through the surrender of 49,528 shares of the Company's common
stock. In 1992, the Company loaned this officer $72,133 which was repaid in
1993 and 1994, principally through the surrender of shares of the Company's
common stock by the officer.

In 1993, the Company loaned another officer $50,000, and in 1994 the
Company loaned several officers an aggregate of $529,144. In January
1995, one officer repaid in full two of these loans with an aggregate
principal balance of $299,644 principally through the surrender of 45,545
shares of the Company's common stock. In connection with this repayment,
the Company recorded $7,073 of interest income. Each of the
aforementioned loans are due in January 1998, relate to the purchase of
common stock of the Company, are collateralized by the pledge of shares of
common stock of the Company, may be prepaid in part or in full without
notice or penalty, are represented by a promissory note which bears interest
at a rate per annum equal to the broker call rate (7.5% at December 31,
1995) in effect on the first day of each calendar quarter, and permit
repayment of the loan by delivery of securities of the Company having a fair
market value equal to the balance of the loan outstanding.

It is the Company's policy to record interest income on these notes as
received.

(5) Fixed Assets

Fixed assets, together with their estimated useful lives, are as follows:

1995 1994 Estimated useful life

Equipment $ 511,399 495,621 5 years
Leasehold improvements 83,974 83,287 Life of lease or
estimated life,
if shorter
595,373 578,908

Less accumulated depreciation
and amortization 498,882 440,704

$ 96,491 138,204

(6) Income Taxes

The Company utilizes the asset and liability method as required by
Statement of Financial Accounting Standard No. 109 "Accounting for
Income Taxes". Under the asset and liability method of Statement 109,
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. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be recovered or settled. Under Statement 109, 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.

There was no income tax expense for the years ended December 31, 1995,
1994 and 1993 due to losses incurred by the Company.

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1995 and
1994 are presented below.

1995 1994
Deferred tax assets:
Net operating loss carryforward $ 5,700,000 4,600,000
Research and other credits 160,000 160,000
Total gross deferred tax assets 5,860,000 4,760,000

Less valuation allowance 5,860,000 4,760,000
-- --

The Company has recorded a valuation allowance against the deferred tax
assets which will not be realized unless the Company achieves profitable
operations in the future.

At December 31, 1995, the Company had a net operating loss carryforward
for federal income tax purposes of approximately $15,600,000 expiring by
2010. Research and other credit carryforwards of $160,000 are available to
the Company to reduce income taxes payable in future years principally
through 2009.

(7) Shareholders' Equity

(a) Sale of Common Stock and Warrants

During 1993, the Company received approximately $6,132,000 as net
proceeds from the issuance of 1,296,508 shares of common stock from a
private placement, and the exercise of warrants and options.

During 1994, the Company received approximately $2,915,000 as net
proceeds from the issuance of 587,607 shares of common stock from the
exercise of options, warrants and unit purchase warrants held by the
underwriter of the Company's 1991 public offering.

During 1995, the Company received approximately $5,474,000 as net
proceeds from the issuance of 755,246 shares of common stock from a
private placement, and the exercise of warrants and options.

(b) Options, Warrants and Unit Purchase Warrants

(i) Options

In 1983, the shareholders approved a stock option plan which provides for
the granting of incentive stock options at the fair market value at the date of
grant to full-time employees (as defined) of the Company. The Company has
reserved 375,000 of its stock for issuance under this plan.

In 1986, the shareholders approved a second stock option plan. This plan
provides for the granting of both incentive stock options and nonqualified
options at the fair market value at the date of grant to employees including
both officers and members of the Board of directions. The Company
originally reserved 262,500 shares of its stock for issuance under this plan.
The plan was amended in 1990 to increase the number of authorized shares
to 450,000.

In 1992, the shareholders approved a third stock option 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 or below the fair market value
at the date of grant to employees or non-employees who, in the
determination of the Board, have made or may make significant
contributions to the Company in the future. The Company has reserved
468,750 shares of its stock for issuance under this plan. In 1994, the
Company's shareholders approved an additional 300,000 shares for
issuance under this plan.

At the discretion of the Board, options expire in ten years or less from the
date of grant and are generally fully exercisable upon grant. 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. During 1995
and 1993, 21,012 and 30,257 shares, respectively, were received as payment
for the exercise price of options. These shares were subsequently retired by
the Company.

Summarized below are the changes in the number of options granted and
available for grant during 1993, 1994 and 1995:

Number of shares Exercise
Granted Available price

Balance at December 31, 1992 463,183 391,686 $1.13-4.93
Granted 114,188 (114,188) 7.27-7.99
Cancelled (24,146) 24,146 --
Exercised (181,167) -- 1.13-4.44

Balance at December 31, 1993 372,058 301,644 $1.13-7.99
Shares authorized -- 300,000 --
Granted 410,125 (410,125) 5.88-10.29
Exercised (61,500) -- 1.65-4.93

Balance at December 31, 1994 720,683 191,519 $1.13-9.35
Granted 190,100 (190,100) 7.31-14.85
Cancelled (21,012) 21,012 --
Exercised (124,831) -- 1.25-9.35

Balance at December 31, 1995 764,940 22,431 $1.13-14.85

At December 31, 1995, the number of options exercisable was 659,440. All
share and price data have been restated to reflect the three for two stock split
of June 1993 and the five for four stock split of January 1994.

(ii) Warrants

Summarized below are the changes in the number of shares underlying
warrants granted from January 1, 1993 to December 31, 1995:

Number of shares Exercise
Underlying warrants granted price

Balance at December 31, 1992 1,626,612 $1.33-6.00
Exercised (1,074,393) 1.47-6.00
Issued 55,125 (a) 6.00-7.27

Balance at December 31, 1993 607,344 1.33-7.27
Exercised (526,107) 1.33-6.00
Redeemed (12,069)(b) --
Issued 188,812 (c) 5.88-9.35

Balance at December 31, 1994 257,980 1.33-9.35
Exercised (27,168) 1.33-2.13
Issued 31,600 (d) 7.31-13.50

Balance at December 31, 1995 262,412 $1.47-13.50

(a) Represents warrants to purchase 37,500 shares at $6.00 per share
relating to rights issued to the underwriter of the Company's December
1991 public offering, warrants to purchase 13,125 shares at $6.43 per
share to a public relations firm performing services for the Company and
warrants to purchase 4,500 shares at $7.27 per share to two directors of
the Company. In connection with the warrants granted to the public
relations firm, the Company has charged $15,500 to its 1993 statement
of operations representing the estimated value of the warrants granted.

(b) Represents the redemption of remaining public warrants at $0.50
per warrant pursuant to a call feature.

(c) Represents warrants to purchase 25,000 shares at $7.25 per share and
10,000 shares at $7.50 per share relating to finders fees; warrants to
purchase 25,312 shares at $6.00 per share relating to the exercise of
unit purchase warrants issued to the underwriter of the Company's
December 1991 public offering; warrants to purchase 100,000 shares at
$5.875 per share to an employee if certain contingencies occur; and
warrants to purchase 11,000 shares at $5.875 per share, 12,500 shares
at $9.35 per share and 5,000 shares at $8.1875 per share to two
directors of the Company. In connection with the warrants granted as
finders fees, only an immaterial amount are vested. The remaining
warrants are contingent upon the occurrence of certain future events
(generally, the execution of license agreements with new licensees), and
therefore, the Company will charge operations for the related value in
the period in which the warrants vest.

(d) Represents warrants to purchase 6,000 shares at $7.3125 per share
and 18,600 shares at $13.50 per share to two directors of the
Company and warrants to purchase 7,000 shares at $7.9875 per
share to a consultant if certain contingencies occur.

Warrants generally expire from five to ten years from the date of issuance.

(iii) Unit Purchase Warrants

In connection with the 1991 public offering of the company's common
stock, 7,800 unit purchase warrants rights remain outstanding. Such unit
purchase warrants enable the holders to purchase 29,250 shares at an
effective exercise price of $5.40 per share.

(i) In July 1993, the Company issued 1,958,377 shares of common
stock in connection with a three for two stock split payable in the
form of a 50% stock dividend to shareholders of record on June 30,
1993. The stock split was accounted for by transferring
approximately $245,000 from additional paid-in capital to common
stock.

(ii) In February 1994, the Company issued 1,718,244 shares of
common stock in connection with a five for four stock split payable
in the form of a 25% stock dividend to shareholders of record on
January 31, 1994.

All references to earnings per share, stock options and warrants data in
the accompanying financial statements have been adjusted to give effect
to these stock splits.

(d) Treasury Stock

During 1994, the Company purchased and subsequently retired 42,500
shares of Treasury Stock with an aggregate cost of approximately $333,000.

(e) Par Value and Authorized Shares

During 1994 pursuant to shareholder approval, the Company adjusted the
par value of its common stock from $0.125 per share to $0.0001 per share.
Common stock and additional paid-in capital have been adjusted to effect
this new par value. In addition, the Company's shareholders approved an
increase in the number of shares authorized from 20,000,000 to
100,000,000.

(f) New Accounting Standards

(8) License and Other Agreements

The Company has entered into a number of license agreements and one
option agreement covering potential products using the Company's SPD
technology. Although the Company may receive minimum annual royalties
under certain of these licenses, to date no products have been sold resulting
in earned royalties under these license agreements.

The following table summarizes the license and other agreements in effect
as of December 31, 1995:

Licensee or Optionee Products covered Territory

General Electric Company SPD film for other licensees and Worldwide
prospective licensees

Glaverbel, S.A. Automotive vehicle rear-view mirrors Worldwide

Glaverbel, S.A. Transportation vehicle sun visors Worldwide

Hankuk Glass Industries,Inc. Architectural Windows Korea

Japan Steel Works Ltd, and Windows Japan
Central Glass Company Ltd.

Saint Gobain Vitrage, S.A. Architectural Windows Worldwide
(except Korea
and South America)

Sanyo Electric Co., Ltd. Flat panel displays Worldwide

On February 17, 1995, the Company entered into a license agreement with
Sanyo Electric Co., Ltd. (Sanyo). The license gives Sanyo the non-exclusive
right to manufacture and sell flat panel displays worldwide using the
Company's SPD Technology. Terms of the license agreement require Sanyo
to pay a royalty of five percent of net sales of licensed products.

On July 28, 1995, the Company entered into a license agreement with
General Electric Company (GE). The license gives GE the non-exclusive
right to manufacture films incorporating the Company's proprietary
suspended particle device (SPD) light control technology for sale to a
selected list of the Company's licensees and prospective licensees.

(9) Commitments

The Company has an employment agreement with one of its officers which
provides for an annual salary of $263,553 through December 31, 1996.

The Company occupies premises under an operating lease agreement which
expires on January 31, 1999 and requires minimum annual rent of $97,296
plus certain expenses. Rent expense, including other expenses, amounted to
$125,000, $135,000 and $100,300 for 1995, 1994 and 1993, respectively.

The Company has no commitment to provide post-retirement or post-employment
retirement benefits to any of its employees.

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Research Frontiers Incorporated

We consent to incorporation by reference in the Registration Statements (No. 33-
53030 and 33-86910) on Form S-8 of Research Frontiers Incorporated of our report
dated February 16,1996, relating to the balance sheets of Research Frontiers
Incorporated as of December 31, 1995 and 1994 and the related statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, which report appears in the December
31, 1995 annual report on Form 10-K of Research Frontiers Incorporated.

/s/ KPMG PEAT MARWICK LLP

Jericho, New York
March 27, 1996

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN THE MOST RECENT ANNUAL REPORT ON FORM 10-K OF RESEARCH
FRONTIERS INCORPORATED FOR THE YEAR ENDING DECEMBER 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,827,573
<SECURITIES> 5,937,308
<RECEIVABLES> 82,422
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,871,002
<PP&E> 96,491
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<TOTAL-ASSETS> 10,026,113
<CURRENT-LIABILITIES> 243,053
<BONDS> 0
0
0
<COMMON> 9,830,761
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,026,113
<SALES> 1,500
<TOTAL-REVENUES> 1,500
<CGS> 0
<TOTAL-COSTS> 2,637,134
<OTHER-EXPENSES> 283,088
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,918,722)
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<EPS-PRIMARY> (0.32)
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