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, 2002 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

          None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $0.0001 Par value
                                (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]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act).
Yes __ No   X

As of March 27, 2003 there were 12,247,879 shares of Research
Frontiers Incorporated common stock outstanding.  The
aggregate market value of the voting and non-voting common
equity held by non-affiliates was $171,786,056 computed in
accordance with the rules of the SEC by reference to the closing
price of the Company's common stock as of June 28, 2002.  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."

                              PART I

ITEM 1.                      BUSINESS

General

     Research Frontiers Incorporated ("Research Frontiers" or the
"Company") was incorporated in New York in 1965 and
reincorporated in Delaware in 1989.  Research Frontiers' business
is to develop and license our suspended particle technology for
controlling the amount of light passing through a device. Such
suspended particle devices are often referred to as "SPDs," "light
valves," or "SPD-Smart " products.

     SPDs use microscopic light-absorbing particles that are either
in a liquid suspension or a film. The microscopic particles align
when an electrical voltage is applied.  This permits light to pass
through the device, and allows the amount of light to be controlled.
The first light valve of this type was invented by Dr. Edwin Land,
founder of Polaroid Corporation, in the 1930s.  Since 1965,
Research Frontiers has been actively working to develop and
license its own 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 365 patents and pending
patent applications throughout the world protecting its technology.

     As a result of our efforts over the years, Research Frontiers
Incorporated has become the world's leader in suspended-particle-
device development and research, and licenses its light-control
technology to other companies. Currently, our 21 licensees are
categorized into three main areas: emulsion, film, and end-product.
Our emulsion makers produce the basic chemicals-the SPD
particles and the various special polymers that work in conjunction
with such particles. The film makers use a thin layer of emulsion
which is coated and cured between two sheets of plastic film to
form an SPD film that allows users to control the amount of light
passing through such film. The end-product licensees then
incorporate such SPD light-control film into a variety of SPD-
Smart products.

     The past two years have been important for Research
Frontiers as we moved from being a company with a technology
under development to a company with products using our
technology being sold by our licensees. Awareness of SPD
technology is at an all-time high. The technology has also recently
received some prestigious awards, including the Best of What's
New Award  for home technology products from Popular Science
and being named one of the top new technologies for 2002 by the
Society of Automotive Engineers.

     In the preceding year, SPD-Smart windows were installed in
business and commercial aircraft, as well as in architectural,
automotive and appliance glass projects. SPD technology is a
horizontal "enabling" technology cutting across many industries
which has wide commercial applications in many types of products
where variable light transmission is desired, such as:

--"smart" windows, skylights and sunshades for the architectural,
   aircraft, marine, automotive and appliance industries;
-- variable light transmission sunglasses, goggles and other eyewear;
-- self-dimmable automotive sunroofs, sunvisors and rear-view mirrors; and
-- flat panel information displays for use in billboards, scoreboards,
   point-of-purchase advertising displays, traffic signs,
   computers, televisions, telephones, PDAs and other electronic instruments.

     Various licensees of Research Frontiers have developed SPD-
Smart windows and other products.  Several of our licensees have
already sold aircraft, architectural, and automotive windows, as
well as glass doors for appliances using SPD technology. Also,
prototypes of flat panel displays, eyewear, and self-dimming
automotive rear-view mirrors have been developed.  These
prototypes demonstrate the feasibility and operation of the
products they relate to, but they may need additional product
design, engineering or testing before commercial products are
introduced. In April 2001, Hankuk Glass Industries, Inc., a
licensee of the Company, announced that its subsidiary devoted
exclusively to the production of SPD film and end-products, SPD
Inc., had acquired a factory in Incheon, Korea.  SPD Inc.
announced in January 2002 that this factory had begun production
of SPD film and end-products made from SPD film. Some of our
licensees consider the exact stage of development, product
introduction strategies and timetables, and other plans to be
proprietary or secret, and as such cannot be disclosed by the
Company until such licensees make their own public
announcements or product launches. During 2002, marketing
campaigns and product launches by our licensees have been
announced under the indicated trademarks for their SPD-Smart
products:

Licensee                           Trademark
Cricursa Cristales Curvados        Cri-Regulite (tm)
InspecTech Aero Service            SPD-Equipped(tm) , I-Shade (tm)
Razor's Edge Technologies          New-View(tm), Smart-Shade(tm)
SPD Systems Inc.                   Health Smart(tm),VectorLux(tm),InstaTint(tm)
ThermoView Industries              Alter-Lite)tm)

In addition, Research Frontiers introduced various marketing
programs under the following trademarks:  SPD-Smart(tm), The
View of the Future - Everywhere you Look(tm), Powered by SPD(tm),
and Visit SmartGlass.com - to change your view of the World(tm).

     Our licensee InspecTech Aero Service Inc. reported that they
have received FAA certification for, and have already installed
SPD-Smart windows on various aircraft. InspecTech reports
having installed or currently engineering  SPD-Smart windows for
the following aircraft:

--Airbus A320/380
--Bell/Textron 430 Helicopter
--Boeing 747, 757, BBJ 737
--Bombardier Global Ex
--Cessna Citations 525,525A, 550,  Excel, and CX
--Gulfstream (all models)
--Learjet 20/30 Series
--Piaggio P-180 Avanti, and Pilatus PC-12
--Raytheon King Air, Hawker, Beechjets and other models

     The following table summarizes Research Frontiers' existing
license agreements and lists the year these agreements were
entered into:

Licensee                 Products Covered                              Territory

American Glass Products  Architectural and automotive windows (2002)   Worldwide
                                                                  (except Korea)
AP Technoglass Co.       Sunroof glass for other licensees (2001)      Worldwide

Avery Dennison Corp.     SPD displays (2001)                           Worldwide

BOS GmbH                 Variable light transmission SPD sunshades     Worldwide
                         and sunvisors.  (2002)

BRG Group, Ltd.          Architectural and automotive windows (2002)   Worldwide
                                                                  (except Korea)

Cricursa Cristales Curvados Architectural and automotive windows(2002) Worldwide
                                                                  (except Korea)

Dainippon Ink and        SPD emulsions for other licensees (1999)      Worldwide
Chemicals Incorporated

Film Technologies Int'l  SPD film for other licensees and              Worldwide
                         prospective licensees (2001)

General Electric Company SPD film for other licensees and              Worldwide
                         prospective licensees (1995)

Glaverbel, S.A.          Automotive vehicle rear-view mirrors,         Worldwide
                         transportation vehicle sunvisors, and    (except  Korea
                         architectural and automotive windows(1996) for windows)

Global Mirror GmbH       Rear-view mirrors and sunvisors (1999)        Worldwide

Hankuk Glass Industries Inc. Broad range of SPD light control products Worldwide
                        including windows, flat panel displays,
                        automotive vehicle rear-view mirrors and
                        sunvisors (installed as original equipment
                        on Korean-made cars), and sunroofs; SPD film
                        for licensees and prospective licensees (1997)

Hitachi Chemical Co.,Ltd SPD emulsions and films for
                         other licensees(1999)                         Worldwide

InspecTech Aero Service,Inc. Aircraft windows and cabin dividers(2001) Worldwide
                                                                  (except Korea)

Isoclima S.p.A.       Architectural and automotive windows; SPD        Worldwide
                      emulsion and film for other licensees (2002)(except Korea)

Laminated Technologies Inc. SPD film lamination for
                            other licensees (2002)                     Worldwide

N.V. Bekaert S.A (acquired   Architectural and automotive windows,     Worldwide
from Material Sciences Corp.)SPD film for other licensees, prospective
                             licensees and architectural and automotive
                             window companies (1997)

Polaroid Corporation  SPD emulsions and films for other licensees(2000)Worldwide

Razor's Edge Technologies     Architectural windows (2002)             Worldwide
                                                                  (except Korea)

SPD Systems, Inc.    Architectural, appliance and marine windows (2002)Worldwide
                                                                  (except Korea)

ThermoView Industries, Inc.   Architectural windows (2000)             Worldwide
                                                                  (except Korea)

     Licensees of Research Frontiers who incorporate SPD
technology into end-products will pay Research Frontiers a royalty
of 5-10% of net sales of licensed products under license
agreements currently in effect, and may also be required to pay
Research Frontiers minimum annual royalties.  Licensees who sell
products or components to other licensees of Research Frontiers do
not pay a royalty on such sale and Research Frontiers will collect
such royalty from the licensee incorporating such products or
components into their 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. The license granted to Hankuk Glass Industries is
exclusive within Korea for certain applications through December
2004.  Global Mirror's license restricts new licenses from being
granted in the truck mirror original equipment market for a period
of time if certain sales milestones are met with respect to
commercial vehicles in Classes 5 through 8 with gross vehicle
weights in excess of 16,000 pounds.

     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 the
extent that any current or future 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 and other
agreements with end-product manufacturers such as manufacturers
of flat glass,  flat panel displays, automotive products, and with
other interested companies who may wish to acquire rights to
manufacture and sell the Company's proprietary emulsions and
films.  The Company's plans also call for further development of
its SPD light valve technology and the provision of additional
technological and marketing assistance to its licensees to develop
commercially viable products using SPD technology 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
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.

     On March 27, 2003, the Company had thirteen full-time
employees, six of whom are technical personnel, and the rest of
whom perform legal, marketing, investor relations, and
administrative functions.  Of these employees, two have obtained
a doctorate in chemistry, one has a masters in chemistry, two have
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
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.

     The Company believes that its SPD light valve technology
has certain performance advantages over other technologies for so-
called "smart windows," windows which electrically vary the
amount of light passing through them, and automatically self-
dimmable automotive rear-view mirrors.

     Variable light transmission technologies can be classified into
two basic types: "smart" 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 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
can be almost instantaneous, as compared to the much slower
reaction time for photochromic devices.  Unlike SPD technology,
photochromic technology does not function well at the high and
low ends of the temperature range in which smart windows are
normally expected to operate.

     The active, user-controllable technologies are sometimes
referred to as "smart" technologies. These active technologies are
far more useful because they can be controlled electrically by a
user with  a manual adjustment or automatically when coupled
with a timer or sensing device such as a photocell, motion detector
or thermostat. There are three main types of active devices which
are compared below:

--Electrochromic devices (EC)
--Liquid crystal devices (LC)
--Suspended-particle devices (SPD)

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
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:

--faster response time;
--lower estimated costs;
--more reliable performance over a wider temperature range;
--capability of achieving darker off-states;
--lower current drain;
--higher estimated battery life in applications where batteries are used;
--no "iris effect" (where light transmission changes first occur at
  the outer edges of a window or mirror and then work their way
  toward the center) when changing from clear to dark and back again;
--SPD technology is a film-based technology that can be applied
  to plastic as well as glass, and which can be applied to curved as
  well as flat surfaces.

Many companies with substantially greater resources than
Research Frontiers such as 3M, Asahi Glass, Gentex Corp.,
Pilkington, PPG Industries, and other large corporations have
pursued or are pursuing projects in the electrochromic area.  Many
of these companies listed have reported discontinuing or
substantially curtailing their work on electrochromics due to
technical problems and issues relating to the expense of these
technologies.

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),
Nippon Sheet Glass, Saint  Gobain Glass, Polytronix, Inc. and 3M
(which has also reportedly discontinued its liquid crystal film
making operations).  These windows are very expensive (having
an estimated installed cost of about $200-250 per square foot
where SPD windows have been sold for a fraction of this price),
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 less expensive to produce;
--have less haze;
--operate over a wider temperature range;
--use less power;
--permit an infinite number of intermediate states between a transparent state
  and a dark blue state, rather than being just "on"or "off" like LC windows.

     In the flat panel display market, the Company also expects to
compete against various display technologies that are currently
being used commercially.  In particular, the Company expects its
SPD technology to compete on the basis of the performance
characteristics with liquid crystal displays ("LCDs") and organic
light emitting diodes ("OLEDs").  An LCD is generally similar in
construction to an SPD display, but instead of a liquid 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. OLEDs emit light
rather than transmit it, and unlike LCDs but similar to SPD
displays, OLEDs promise to have wide viewing angles and low
power consumption. However, several technological and
manufacturing hurdles remain in the production of OLEDs
including limited life expectancy, sensitivity to degradation from
exposure to air and water, and cost.  The market for flat panel
displays was estimated by others to have been approximately
$28.8 billion for 2002.  The Company believes that some of its
licensees may begin to challenge OLEDs and liquid crystal
displays with SPDs for part of the flat panel display market during
the next several years.

     The Company believes that its SPD light valves and related
technology has 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:

--higher contrast and brightness;
--a wider angle of view;
--lower estimated production costs;
--a less complex fabrication procedure;
--the ability to function over a wider temperature range;
--the ability to make displays without using sheet polarizers or
  alignment layers;
--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.

     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 have only begun to appear in the marketplace, so long-
term durability and performance 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, although there may be backlogs of orders at
licensees which are currently being filled now that SPD Inc.'s
factory has commenced production of SPD film and end products
using such film.

     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.

Research and Development

     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 one or
more of the following fields: "smart" windows, variable light
transmission eyewear such as sunglasses and goggles, self-dimmable
automotive sunroofs, sunvisors 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.  Based upon the current
SPD-Smart products being sold by various of its licensees, the
Company believes that the state of development of its technology is
sufficiently advanced, but that further improvements will result in
accelerated market penetration.  The Company intends to continue
its research and development efforts for the foreseeable future to
improve its SPD light valve technology and thereby assist our
licensees in the product development, sales and marketing of various
existing and new SPD-Smart products.

     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, mirrors and flat
panel displays.

Research Frontiers' main goals in its research and development are:

--developing wider ranges of light transmission and quicker switching speeds;
--developing different colored particles;
--reducing the voltage required to operate SPDs; and
--obtaining data and developing improved materials regarding
  environmental stability and longevity.

Research Frontiers incurred about $1,859,000, $2,223,000, and
$2,271,000 during the years ended December 31, 2002, 2001, and
2000, respectively, for research and development.  Research
Frontiers plans to engage in substantial continuing research and
development activities.

Patents and Proprietary Information

     The Company has 27 United States patents in force. Three
United States and eight international patent applications are pending.
The Company's United States patents expire at various dates from
2006 through 2021.  The Company has approximately 170 issued
patents and a substantial number of patent applications pending in
foreign countries.  The Company's foreign patents expire at various
dates from 2002 through 2019. 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 2003, the Company's Board of Directors adopted
a Stockholders' Rights Plan and 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 March 3, 2003.
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 $120 worth of common stock for $60.
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 $120
worth of common stock of the acquiring company for $60.  The
Rights will expire at the close of business on February 18, 2013,
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 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 $143,500
for its executive office and research facility at 240 Crossways Park
Drive, Woodbury, New York 11797 under a lease expiring January
31, 2004. 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 traded on the NASDAQ National Market.
As of March 27, 2003, there were 12,247,879 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, 2001                10.50          24.25
          June 30, 2001                 17.00          30.00
          September 30, 2001             9.00          29.00
          December 31, 2001             13.15          19.00
          March 31, 2002                15.31          21.00
          June 30, 2002                 11.09          18.60
          September 30, 2002             6.35          15.25
          December 31, 2002              7.81          11.76

         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, 2003, there were 624 holders of record of the Company's
common stock.   The Company estimates that there are approximately 9,800
beneficial holders of the Company's common stock.

(c)  Dividends

     The Company did not pay dividends on its common stock in 2002 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
consolidated financial statements and notes thereto, all of which
are contained in this Annual Report on Form 10-K.

                                               Year ended December 31,
                               2002        2001     2000         1999     1998
Statement of Operations Data:
 Fee income                  $217,519   $142,002 $ 333,652 $ 128,096  $ 108,735
 Operating expenses (1)     2,631,139  3,155,305 3,375,638 2,008,611  1,750,674
 Research and development(1)1,859,030  2,223,425 2,270,584 1,567,758  1,527,953
 Non-recurring non-cash
  compensation expense (2)       --         --  3,133,748    671,052         --
                          4,490,169  5,378,730  8,779,970  4,247,421  3,278,627
 Operating loss          (4,272,650)(5,236,728)(8,446,318)(4,119,325)(3,169,892)
 Net investment income(3)   321,534    696,058    878,518    386,303    460,572
 Other income                    --         --         --         --     91,379

 Net loss                (3,951,116)(4,540,670)(7,567,800)(3,733,022)(2,617,941)
 Basic and diluted net
  loss per common share        (.33)      (.38)      (.63)      (.34)      (.24)
 Dividends per share             --         --         --         --          --

                                              As of December 31,
                            2002        2001        2000       1999      1998
Balance Sheet Data:
Total current assets    $5,293,629 $8,272,677 $15,358,819 $9,695,137 $6,728,453
Total assets             6,267,051  9,324,902  15,729,127 10,037,063  7,021,291
Long-term debt, including
    accrued interest            --         --          --         --         --
Total shareholders'equity5,974,466  9,049,920  14,737,917  9,507,736  6,740,489


(1)  Research and development expenses for 1999 include $289,177
     paid by the Company for 74 patents and patent applications
     acquired from Glaverbel, SA. During 2002, the Company
     reclassified costs associated with patents and patent applications
     from research and development expenses to operating expenses.
     The amount of patent costs reclassified from research and
     development expense to operating expense for the years ended
     December 31, 2001, 2000, 1999 and 1998 was approximately
     $411,000, $348,000, $404,000 and $119,000, respectively.

(2)  During 1999, the Company granted 237,800 contingent
     performance options to employees, which vested only if a certain
     performance milestone in the price of the Company's common stock
     was achieved during 2000. The charges recorded as a result of
     the issuance of these performance options were calculated based
     upon changes in the Company's stock price as of the end of each
     quarter until the vesting date, and are non-cash compensation charges.

(3)  Net investment income for 2002, 2001, 2000, 1999, and 1998
     includes $64,608, $0, $0, $95,001, and $50,968, respectively, of
     interest income received from officers of the Company upon
     payment of notes receivable.

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

     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."

  We have entered into a number of license agreements
covering potential products using the Company's SPD technology.
Under these agreements, we generally recognize income from
royalties when earned in accordance with the terms of the
agreements.

  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.

  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 accordance with Emerging Issues Task
Force Issue 96-18, "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 date that such options or warrants vest
as determined using a Black-Scholes option pricing model.
Depending upon the difference between the exercise price and the
market price of the Company's common stock on the date that
such options or warrants vest, the amount of non-cash expenses
that could be recorded as a result of the vesting of such options or
warrants can be material.

  The Company applies the cost method of accounting for its
minority equity interest in SPD Inc., a subsidiary of Hankuk Glass
Industries, Inc.  Because no public market exists for the common
stock of SPD Inc., the Company reviews the operating
performance, financing and forecasts for such entity in assessing
the net realizable value of this investment.  As a result, any
significant change in the above could lead to an impairment charge
in future periods.

  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.

Controls and Procedures

  We maintain a system of controls and procedures designed to
provide reasonable assurance as to the reliability of the financial
statements and other disclosures included in this report, as well as
to safeguard assets from unauthorized use or disposition. We
evaluated the effectiveness of the design and operation of our
disclosure controls and procedures under the supervision and with
the participation of management, including our Chief Executive
Officer, within 90 days prior to the filing date of this report. Based
upon that evaluation, our Chief Executive Officer  concluded that
our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in
our periodic Securities and Exchange Commission filings. No
significant changes were made to our internal controls or other
factors that could significantly affect these controls subsequent to
the date of their evaluation.

Results of Operations

Year ended December 31, 2002 Compared to the Year ended December 31, 2001

  The Company's fee income from licensing activities for 2002
was $217,519, as compared to $142,002 for 2001.  This increase
in fee income was primarily the result of new license agreements
entered into in 2002 and minimum annual royalties paid by end-
product licensees. In addition, the Company recorded a small
amount of royalty income related to sales of licensed products by
its licensees in the fourth quarter of 2002 which exceeded their
minimum annual royalty payments. 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, 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.

  Operating expenses decreased by $524,166 for 2002 to
$2,631,139 from $3,155,305 for  2001. This decrease was
primarily the result of lower payroll, patent, insurance, office,
public relations, and directors expenses, offset somewhat by
increased legal, consulting and marketing expenses.

  Research and development expenditures decreased by
$364,395 to $1,859,030 for  2002 from $2,223,425 for 2001. This
decrease was primarily the result of lower payroll expenses and
materials costs.

  Operating expenses and research and development expenses
listed above included amounts paid under a performance bonus
plan of $496,790 and $288,710, respectively, during  2001. No
amounts were accrued under a similar bonus plan with respect to
2002.

  The Company's net gain from its investing activities for 2002
was $256,926  as compared to a net gain from its investing
activities of $696,058 for 2001. This difference was primarily due
to a lower level of average investment balances in 2002 compared
to 2001, lower prevailing interest rates, and a decline in the market
value of an equity security. In addition, during 2002 the Company
recorded $64,608 of interest income on notes receivable from its
officers which were repaid in the fourth quarter.

  As a consequence of the factors discussed above, the
Company's net loss was $3,951,116 ($0.33 per share) for 2002 as
compared to  $4,540,670 ($0.38 per share) for 2001.

Year ended December 31, 2001 Compared to the Year ended December 31, 2000

  The Company's fee income from licensing activities for 2001
was $142,002 as compared to $333,652 for 2000.  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, 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.

  Operating expenses decreased by $220,333 for 2001 to
$3,155,305 from $3,375,638 for 2000. This decrease was primarily
the result of a lower non-cash accounting charge of $43,596 which
was recorded by the Company during 2001 compared to a non-
cash accounting charge of $598,758 which was recorded by the
Company during 2000, relating to the vesting of warrants based
upon performance criteria being achieved or services performed,
which expense was based upon the fair value of such warrants on
the date the warrants vested as determined using a Black-Scholes
option pricing model.  Partially offsetting this decrease were
increases with respect to  payroll, marketing, public relations,
patent and insurance expenses.

  Research and development expenditures decreased modestly
in 2001 to $2,223,425 from $2,270,584 for 2000. This decrease
was primarily the result of lower costs of materials and lower
consulting expenses, offset partially by higher payroll and
insurance expenses.

  Operating expenses and research and development expenses
listed above included amounts paid under a performance bonus
plan of $496,790 and $288,710, respectively during 2001 and
$477,500 and $277,500, respectively during 2000.  The Company
also recorded a non-cash compensation charge of $3,133,748
during 2000 which did not recur during 2001 which is related to
the non-recurring grant of certain contingent performance options
issued to employees and directors during 1999.  Because of the
performance milestones which must have been achieved in order
for these options to vest, the Company was required to account for
these options as variable plan under APB Opinion No. 25.

  The Company's net gain from its investing activities for 2001
was $696,058, as compared to a net gain from its investing
activities of $878,518 for 2000. This difference was primarily due
to a lower level of average investment balances in 2001 compared
to 2000, and lower prevailing interest rates.

  As a consequence of the factors discussed above, the
Company's net loss was $4,540,670 ($0.38 per share) for 2001 as
compared to $7,567,800 ($0.63 per share) for 2000. Without
taking into account the non-cash accounting charge associated
with the contingent performance options described above and the
performance warrants described above, the Company's net loss
would have been $4,497,074 ($0.37 per share) for 2001 as
compared to $3,835,294 ($0.32 per share) for 2000.

Financial Condition, Liquidity and Capital Resources

  During 2002, the Company's cash and cash equivalent
balance increased by $4,264,361,  principally as a result of
proceeds received from sale of $6,991,771 of available-for-sale
securities, and $3,175,362 of proceeds received, net of expenses,
from the issuance of common stock upon the exercise of options
and warrants, and the repayment by two executive officers in cash
of $217,569 in principal and interest on loans previously made to
such officers, offset by cash used to fund the Company's operating
activities of $3,730,366, and the repurchase and subsequent
retirement of $2,354,608 worth of the Company's common stock
in the open market. At December 31, 2002, the Company had
working capital of $5,001,044 and its shareholders' equity was
$5,974,466.

  The Company occupies premises under an operating lease
agreement which expires on January 31, 2004 and requires
minimum annual rent which rises over the term of the lease to
approximately $143,500.

  On October 1, 1998, the Company announced that Ailouros
Ltd., a London-based institutional money management fund, has
committed to purchase up to $15 million worth of  common stock
of the Company through December 31, 2001.  This commitment
is in the form of a Class A Warrant issued to Ailouros Ltd. which
gives the Company the option in any three-month period to deliver
a put notice to Ailouros requiring them to purchase an amount of
common stock specified by the Company at a price equal to the
greater of (A) 92% of the seven-day average trading price per
share of common stock, or (B) a minimum or "floor" price per
share set by the Company from time to time.  The pricing was
initially subject to an overall cap of $15 per share, which cap has
now been eliminated by mutual agreement so that the Company
may put stock to Ailouros at selling prices in excess of $15 per
share.  However, the Company is not required to sell any shares
under the agreement. Before the beginning of each of a series of
three-month periods specified by the Company, the Company
determines the amount of common stock that the Company wishes
to issue during such three-month period.  The Company also sets
the minimum selling or "floor" price, which can be reset by the
Company in its sole discretion prior to the beginning of any
subsequent three-month period.  Therefore, at the beginning of
each three-month period, the Company will determine how much
common stock, if any, is to be sold  (the amount of which can
range from $0 to $1.5 million during such three-month period),
and the minimum selling price per share. In March 2000, Ailouros
agreed to expand its commitment beyond the original $15 million,
thereby giving the Company the right to raise additional funds
from Ailouros so long as the Company does not have to issue more
shares than were originally registered with the Securities and
Exchange Commission, and in December 2001 the expiration date
of the Class A Warrant was extended to December 31, 2003. As of
March 27, 2003, 456,717 shares remained registered for future
issuance under the Class A Warrant.

  During the second quarter of 2001, the Company, through its
wholly-owned subsidiary, SPD Enterprises, Inc., invested
approximately $750,000 for a minority equity interest in SPD Inc.,
a subsidiary of Hankuk Glass Industries Inc., Korea's largest glass
manufacturer, which is dedicated exclusively to the production of
suspended particle device (SPD) light-control film and a wide
variety of end-products using SPD film.

  In December 2000, the Company's Board of Directors
approved a performance bonus plan which provides for a bonus to
be paid on or after July 2, 2001 and on or after January 2, 2002
equal to 1% of the increase, if any, in the Company's market value
during the first and second halves of 2001.  Bonuses were capped
at a recipient's salary in the case of employees of the Company,
and were capped at $60,000 in the case of non-employee directors
and certain employees of the Company. The Company's Board of
Directors approved a similar bonus plan for 2002 but with higher
thresholds to be met before a bonus is payable under such plan. In
addition to the payment caps described above, under the 2002
bonus plan, in order to insure that bonuses are not paid based upon
temporary fluctuations in the market value of the Company,
bonuses under the 2002 bonus plan would only be paid to the
various participants under this plan if and when the market value
of the Company exceeds $280,489,009 (and in the case of any
bonus paid to Robert L. Saxe, if and when the market value of the
Company exceeds $304,207,362). No bonuses were paid in 2002
in connection with these plans, and on November 6, 2002, the
Company's Board of Directors voted to terminate this bonus plan
with respect to 2003 and replace it with a general bonus plan under
which bonuses are awarded to employees of the Company for
outstanding achievement including technical accomplishments,
sales and revenue growth, and other performance milestones. All
employees of the Company are eligible to receive bonuses under
this plan and the bonuses shall not exceed $300,000 in the
aggregate for 2003.

     The Company expects to use its cash and the proceeds from
maturities of its 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, 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 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 15 months (without giving effect to
any new financing raised).  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.

New Accounting Standards

     In July 2002, the Financial Accounting Standards Board
issued Statement No. 146, Accounting for Costs Associated with
Exit or Disposal Activities ("SFAS No. 146").  SFAS No. 146 will
spread out the reporting of expenses relating to restructurings
initiated after 2002, because commitment to a plan to exit an
activity or dispose of long-lived assets will no longer be enough to
record a liability for the anticipated costs.  Instead, companies will
record exit and disposal costs when they are "incurred" and can be
measured at fair value, and they will subsequently adjust the
recorded liability for changes in estimated cash flows. The
Company is required to adopt the provisions of SFAS No. 146 as
of January 1, 2003.  The Company does not believe that the
adoption of SFAS No. 146 will have any impact on the Company's
consolidated financial statements as no planned restructuring
charges currently exist.

Related Party Transactions

     Statement of Financial Accounting Standards No. 57,
"Related Party Disclosures" requires the Company to identify and
describe material transactions involving related persons or entities
and to disclose information necessary to understand the effects of
such transactions on our consolidated financial statements. The
Company loaned two officers an aggregate of $152,961. Each of
the aforementioned loans were made in April 1997 or prior thereto;
were due in January 2003; relate to the purchase of common stock
of the Company; were collateralized by the pledge of shares of
common stock of the Company; could be prepaid in part or in full
without notice or penalty; were represented by a promissory note
which bears interest at a rate per annum equal to the broker call
rate in effect on the first day of each calendar quarter; and
permited repayment of the loan by delivery of securities of the
Company having a fair market value equal to the balance of the
loan outstanding. On November 8, 2002, one of these officers,
Joseph M. Harary, paid the Company $192,171 in cash in payment
in full of all principal and accrued interest on the loans made by
the Company to Mr. Harary. On December 16, 2002, the other
officer, Robert L. Saxe, paid the Company $25,398 in cash in
payment in full of all principal and accrued interest on the loans
made by the Company to Mr. Saxe.

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

     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 two years or less.  Although the rate
of interest paid on such investments may fluctuate over time, each
of the Company's investments, other than in money market funds
whose interest yield varies, 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 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 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 30, 2003, in
connection with the Company's Annual Meeting of Stockholders
scheduled to be held on June 12, 2003.

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, 2003, in
connection with the Company's Annual Meeting of Stockholders
scheduled to be held on June 12, 2003.  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 30, 2003, in
connection with the Company's Annual Meeting of Stockholders
scheduled to be held on June 12, 2003.

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 30, 2003, in
connection with the Company's Annual Meeting of Stockholders
scheduled to be held on June 12, 2003.

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

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

Consolidated Financial Statements:

    Consolidated Balance Sheets,
         December 31, 2002 and 2001. . . . . . . . . . . . . . . . .      F-2

    Consolidated Statements of Operations,
         Years ended December 31, 2002, 2001 and 2000                     F-3

    Consolidated Statements of Shareholders' Equity,
         Years ended December 31, 2002, 2001 and 2000                     F-4

    Consolidated Statements of Cash Flows,
         Years ended December 31, 2002, 2001 and 2000                     F-5

Notes to Consolidated 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 consolidated 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.

 4.2.1  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.

 4.2.2  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 24, 2003, and incorporated herein by reference.

    4.3 Subscription Agreement between Research Frontiers and
        Ailouros Ltd. dated as of October 1, 1998, and related
        Class A Warrant and Class B Warrant between Research
        Frontiers and Ailouros Ltd. dated as of October 1, 1998.
        Previously filed as an Exhibit to the Company's
        Registration Statement on Form S-3 (No. 333-65219)
        dated October 1, 1998, 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 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.

 10.4*  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.

 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.

 10.6   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.

 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.

 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.  Filed herewith with
        portions of this document 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.  Filed herewith with portions of this document
        omitted pursuant to the Registrant's request for
        confidential treatment and filed separately with the
        Securities and Exchange Commission, and incorporated
        herein by reference.

10.25   License Agreement effective as of October 7, 2002
        between the Company and American Glass Products
        (Glass Technology Investment Ltd.).  Filed herewith with
        portions of this document 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.  Filed
        herewith with portions of this document 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.  Filed herewith with portions of this document
        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.  Filed
        herewith with portions of this document 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.
        Filed herewith with portions of this document omitted
        pursuant to the Registrant's request for confidential
        treatment and filed separately with the Securities and
        Exchange Commission, and incorporated herein by reference.

21      Subsidiaries of the Registrant - SPD Enterprises, Inc.

23      Consent of KPMG LLP - Filed herewith.

*    Executive Compensation Plan or Arrangement.

     (b)  Reports on Form 8-K:

     A Current Report on Form 8-K was filed by the Registrant on
February 24, 2003 regarding the adoption of the Company's
Current Stockholder Rights Plan.

                                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, Chairman and Treasurer
     (Principal Executive, Financial, and Accounting Officer)

     Dated:  March 27, 2003

     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, 2003
   Robert M. Budin

/s/Joseph M. Harary           Director           March 27, 2003
   Joseph M. Harary

/s/Victor F. Keen             Director           March 27, 2003
   Victor F. Keen

/s/Albert P. Malvino          Director           March 27, 2003
   Albert P. Malvino

/s/Robert L. Saxe             Director, Chairman March 27, 2003
   Robert L. Saxe             and Treasurer



                   CERTIFICATION

I, Robert L. Saxe, the Chief Executive Officer and Chief
Accounting Officer of Research Frontiers Incorporated ("RFI")
certify that;

1. I have reviewed this Annual Report on Form 10-K of RFI for the
fiscal year ended December 31, 2002 (the "Report"),


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 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 RFI as of, and for, the periods presented in this
Report;


4.I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for RFI and I have:

a) designed such disclosure controls and procedures to ensure
that material information relating to RFI, including its
consolidated subsidiary, is made known to me by others
within those entities, particularly during the period in which
this Report is being prepared;


b) evaluated the effectiveness of RFI's disclosure controls and
procedures as of a date within 90 days prior to the filing date
of this Report (the "Evaluation Date"); and


c) presented in this Report my conclusions about the
effectiveness of the disclosure controls and procedures based
on my evaluation as of the Evaluation Date;


5. I have disclosed, based on our most recent evaluation, to RFI's
auditors and audit committee of RFI's Board of Directors:


a) all significant deficiencies in the design or operation of
internal controls which could adversely affect RFI's ability
to record, process, summarize and report financial data and
have identified for RFI's auditors any material weaknesses
in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in RFI's
internal controls; and

6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of my most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.



Dated: March 27, 2003

/s/ Robert L. Saxe
    Robert L. Saxe
    Chairman and Chief Executive Officer,
    Treasurer and Principal Accounting Officer

EXHIBIT 99.1
                    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 fiscal year
ended December 31, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Robert
L. Saxe, Chairman of the Board and Chief  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/ Robert L. Saxe
    Robert L. Saxe
    Chairman of the Board and Chief Executive Officer
    March 27, 2003


                       Independent Auditors' Report



The Shareholders and Board of Directors
Research Frontiers Incorporated:


We have audited the accompanying consolidated balance sheets of
Research Frontiers Incorporated and subsidiary as of December 31,
2002 and 2001, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the
years in the three-year period ended December 31, 2002.  These
consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America.  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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Research Frontiers Incorporated and subsidiary at December 31,
2002 and 2001 and the results of their operations and their cash
flows for each of the years in the three-year period ended
December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.


                              /s/ KPMG LLP


Melville, New York
February 21, 2003

                     RESEARCH FRONTIERS INCORPORATED

                       Consolidated Balance Sheets

                        December 31, 2002 and 2001

                         Assets                                2002        2001
Current assets:
 Cash and cash equivalents                          $     5,117,571    853,210
 Marketable investment securities-available for sale         11,250  7,083,606
 Receivable from warrant exercise pending settlement             --    164,311
 Royalty receivables                                        138,147     37,500
 Prepaid expenses and other current assets                   26,661    134,050
              Total current assets                        5,293,629  8,272,677

Investment in SPD Inc., at cost                             750,002    750,002
Fixed assets, net                                           200,815    279,618
Deposits and other assets                                    22,605     22,605
              Total assets                          $     6,267,051  9,324,902

          Liabilities and Shareholders' Equity

Current liabilities:
 Accounts payable                                   $        88,609     79,197
 Deferred revenue                                            12,000     37,500
 Accrued expenses and other                                 191,976    158,285
              Total liabilities                             292,585    274,982

Shareholders' equity:
 Common stock, par value $0.0001 per share; authorized
  100,000,000 shares, issued and outstanding 12,215,879
  and 12,108,195 shares for 2002 and 2001                     1,222       1,211
 Additional paid-in capital                              52,124,811  51,359,036
 Accumulated other comprehensive income (loss)               (1,250)     41,835
 Accumulated deficit                                    (46,150,317)(42,199,201)
                                                          5,974,466   9,202,881

 Notes receivable from officers                                  --    (152,961)

              Total shareholders' equity                  5,974,466   9,049,920

Commitments and contingency

              Total liabilities and shareholders' equity $6,267,051   9,324,902

See accompanying notes to consolidated financial statements.






                     RESEARCH FRONTIERS INCORPORATED

                  Consolidated Statements of Operations

               Years ended December 31, 2002, 2001 and 2000



                                         2002        2001           2000

Fee income                      $     217,519     142,002        333,652

Operating expenses                  2,631,139   3,155,305      3,375,638
Research and development            1,859,030   2,223,425      2,270,584
Non-recurring non-cash
compensation expense                       --          --      3,133,748
                                    4,490,169   5,378,730      8,779,970

       Operating loss              (4,272,650) (5,236,728)    (8,446,318)

Net investment income                 256,926     696,058        878,518

Interest income on notes
receivable from officers               64,608          --             --

        Net loss               $   (3,951,116) (4,540,670)    (7,567,800)

Basic and diluted net loss
per common share               $        (0.33)      (0.38)         (0.63)

Weighted average number of
common shares outstanding          12,152,506  12,085,609     12,096,108

  See accompanying notes to consolidated financial statements.


                                RESEARCH FRONTIERS INCORPORATED
                               Statements of Shareholders' Equity
                        Years ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>                                                                           Accumulated
                            Common Stock      Additional  Accumulated    Treasury   Other Compre-
Notes
                         Shares     Amount  Paid in Capital Deficit   Stock,at Cost hensive Income(Loss)
Receivable  Total

<S>                         <C>        <C>        <C>          <C>      <C>  <C>          <C>        <C>

Balance,December 31,1999 11,523,900 $1,152 39,750,276 (30,090,731)      --    --     (152,961)
9,507,736
Issuance of common stock    758,945     76 12,172,093          --       --    --           -- 12,172,169
Purchase of treasury stock       --     --         --          --(3,314,169)  --           -- (3,314,169)
Retirementof treasury stock(182,600)   (18)(3,314,151)         -- 3,314,169   --           --         --
Issuance of performance options  --     --  3,133,748          --        --   --           --  3,133,748
Comprehensive loss:
 Net loss                        --     --         --  (7,567,800)       --   --           -- (7,567,800)
Unrealized loss on available-
 for-sale securities             --     --         --          --        --(46,094)        --    (46,094)
   Total Comprehensive Loss                                                                   (7,613,894)
Issuance of warrants
 for services performed       3,438     --    852,327          --        --   --           --    852,327
Balance,December 31,2000 12,103,683 $1,210 52,594,293 (37,658,531)       --(46,094)
(152,961)14,737,917
Issuance of common stock    407,175     41  6,778,991          --       --    --           --  6,779,032
Purchase of treasury stock       --     --         --          --(8,144,693)  --           -- (8,144,693)
Retirementof treasury stock(407,065)   (40)(8,144,653)         -- 8,144,693   --           --         --
Comprehensive loss:
 Net loss                        --     --         --  (4,540,670)       --   --           -- (4,540,670)
Unrealized gain on available-
 for-sale securities             --     --         --          --        -- 87,929         --     87,929
   Total Comprehensive Loss                                                                   (4,452,741)
Issuance of warrants
 for services performed       4,402     --    130,405          --        --   --           --    130,405
Balance,December 31,2001 12,108,195  1,211 51,359,036 (42,199,201)      -- 41,835    (152,961)
9,049,920
Issuance of common stock    297,875     30  3,011,021          --       --    --           --  3,011,051
Purchase of treasury stock       --     --         --          -- (2,354,608)   --         -- (2,354,608)
Retirement of treasury stock(190,441)  (19)(2,354,589)         --  2,354,608    --         --         --
Comprehensive loss:
Net loss                         --     --         --  (3,951,116)      --      --         -- (3,951,116)
Unrealized loss on available-
 for-sale securities             --     --         --          --        -- (43,085)       --    (43,085)
   Total Comprehensive Loss                                                                   (3,994,201)
Loan repayment from officers     --     --         --          --        --    --     152,961    152,961
Issuance of stock, options and warrants
 for services performed         250     --    109,343          --        --    --          --    109,343
Balance,December 31,2002 12,215,879 $1,222 52,124,811 (46,150,317)       --(1,250)         --
5,974,466
</TABLE>

See accompanying notes to financial statements.

               RESEARCH FRONTIERS INCORPORATED
               Consolidated Statements of Cash Flows
           Years ended December 31, 2002, 2001 and 2000

                                                   2002        2001        2000
Cash flows from operating activities:
 Net loss                                   $(3,951,116) (4,540,670) (7,567,800)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depreciation and amortization                114,170     118,657     109,137
   Expense relating to issuance of stock,options
    and warrants for services performed         109,343     112,817     852,327
   Impairment loss on marketable securities      37,500          --          --
   Expense relating to issuance of
    contingent performance options                   --          --   3,133,748
   Marketable securities received as license fee     --          --     (50,000)
   Cashless exercise of options and warrants         --      17,588          --
   Changes in assets and liabilities:
    Salary advance to officer                        --          --      66,445
    Royalty receivables                        (100,647)    (37,500)         --
    Prepaid expenses and other current assets   107,389     106,939    (223,498)
    Deferred revenue                            (25,500)         (2)     (8,652)
    Accounts payable and accrued expenses        43,103    (716,226)    470,535
       Net cash used in operating activities (3,665,758) (4,938,397) (3,217,758)

Cash flows from investing activities:
 Proceeds from sale and maturity
  of held-to-maturity securities                     --   1,319,572   2,526,363
 Proceeds from sale of
  available-for-sale securities               6,991,771   2,996,409          --
 Purchases of held-to-maturity
  treasury securities                                --          -- (12,588,032)
 Investment in SPD, Inc., at cost                    --    (750,002)         --
 Purchases of fixed assets                      (35,367 )   (50,572)   (137,519)
         Net cash provided by (used in)
         investing activities                 6,956,404   3,515,407 (10,199,188)

Cash flows from financing activities:
 Repayment of principal on officer's loans      152,961          --          --
 Proceeds from issuances of
  common stock and warrants                   3,175,362   6,614,721  12,394,718
 Purchase of treasury stock                  (2,354,608) (8,144,693) (3,314,169)

         Net cash provided by (used in)
         financing activities                   973,715  (1,529,972)  9,080,549

Net increase (decrease) in
cash and cash equivalents                     4,264,361  (2,952,962) (4,336,397)
Cash and cash equivalents at beginning of year  853,210   3,806,172   8,142,569
Cash and cash equivalents at end of year     $5,117,57      853,210   3,806,172

See accompanying notes to consolidated financial statements.

                RESEARCH FRONTIERS INCORPORATED
           Notes to Consolidated Financial Statements
                December 31, 2002, 2001 and 2000

(1)     Business

Research Frontiers Incorporated (the "Company" or "Research
Frontiers") 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.

During the second quarter of 2001, the Company, through its wholly-
owned subsidiary, SPD Enterprises, Inc., invested $750,002 for a
minority equity interest in SPD Inc., a subsidiary of Hankuk Glass
Industries Inc., Korea's largest glass manufacturer, which is
dedicated exclusively to the production of suspended particle device
(SPD) light-control film and a wide variety of end-products using SPD film.

The Company has historically utilized its cash and the proceeds from
maturities of its 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 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.

(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, 2002 and 2001.

   (b)  Marketable Investment Securities

Marketable investment securities at December 31, 2002 consisted of
an equity security, and at December 31, 2001 consisted of U.S.
Treasury and an equity security.  The Company classifies its
securities into available-for-sale which are recorded at fair value with
unrealized holding gains and losses excluded from earnings and are
reported as a separate component of shareholders' equity until
realized. 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.  A
decline in the market value of any available-for-sale security below
cost that is deemed to be other than temporary results in a reduction
in carrying amount to fair market value.  The impairment is charged
to earnings and a new cost basis for this security is established.
During the fourth quarter, the Company reduced the carrying amount
of its equity security by $37,500 because of a sustained reduction in
the market price of the stock.

   (c)  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.

   (d)  Fee Income

Fee income represents amounts earned by the Company under
various license and other agreements (note 10) relating to technology
developed by the Company. During fiscal 2002, four licensees of the
Company accounted for 23%, 23%, 17% and 11%, respectively of fee
income recognized during the year.  During fiscal 2001, three licensees
of the Company accounted for 35%, 26% and 26%, respectively of fee
income recognized during the year.  During fiscal 2000, four licensees
of the Company accounted for 56%, 15%, 15% and 14%, respectively
of fee income recognized during the year.

   (e)  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 earnings (loss) per share equals basic
earnings (loss) per share for each of the years in the three-year period
ended December 31, 2002 because all common stock equivalents
(i.e., options and warrants) were antidilutive in those periods.  The
number of options and warrants that was not included because their
effect is antidilutive was 2,667,701, 2,542,576, and 2,224,201  for
2002, 2001 and 2000, respectively.

   (f)  Research and Development Costs

Research and development costs are charged to expense as incurred.

   (g)  Patent Costs

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

   (h)  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.  Significant
items subject to such estimates and assumptions include the
recoverability of patent costs and the valuation of deferred income
tax assets.  Actual results could differ from those estimates.

   (i)  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.

   (j)  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.

The fair value of the 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.

   (k)  Stock Option Plan

The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25
"Accounting for Stock Issued to Employees," and related
interpretations, including FASB Interpretation No. 44, Accounting for
Certain Transactions Involving Stock Compensation, an
Interpretation of APB Opinion No. 25, issued in March 2000, to
account for its fixed-plan stock options.  Under this method,
compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise
price. SFAS No. 123, Accounting for Stock Based Compensation,
established accounting and disclosure requirements using a fair-
value-based method of accounting for stock-based employee
compensation plans. As allowed by SFAS No. 123, the Company has
elected to continue to apply the intrinsic-value-based method of
accounting described above, and has adopted only the disclosure
requirements of SFAS No. 123.  The following table illustrated the
effect on net income if the fair-value-based method had been applied
to all outstanding and unvested awards in each period.

                                               2002          2001         2000
Net loss, as reported                  $ (3,951,116)  $(4,540,670) $(7,567,800)

Add:Stock-based employee compensation
    expense included in reported net loss        --            --    3,133,748

Deduct:Total stock-based employee
       compensation determined under fair-
       value based method for all awards$(5,393,206)   (2,011,685)  (3,509,064)

                        Pro forma      $ (9,344,322)  $(6,552,355) $(7,843,116)

Basic and diluted net loss
per common share  As reported          $      (0.33)  $     (0.38) $     (0.63)
                  Pro forma            $      (0.77)  $     (0.54) $     (0.65)

The per share weighted average fair value of warrants issued to
directors and stock options granted during 2002, 2001, and 2000 was
approximately $7.41, $12.41, and $9.00,  respectively, on the date of
grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:

                Expected    Risk-Free     Expected Stock  Expected Life
Grant Date   Dividend Yield Interest Rate   Volatility     in Years
December 2002       0 %       3.268%          78.340%        3.77
September 2002      0 %       3.268%          78.340%        3.77
June 2002           0 %       3.754%          78.280%        3.77
September 2001      0 %       3.787%          90.190%        3.62
June 2001           0 %       4.768%          85.170%        3.62
December 2000       0 %       5.200%          64.659%        3.62
October 2000        0 %       5.760%          65.076%        3.62
June 2000           0 %       6.290%          64.532%        3.62
February 2000       0 %       6.600%          56.400%        3.62

     (l)  Accumulated Other Comprehensive Income (loss)


The change in accumulated other comprehensive income (loss)
relating to available-for-sale securities of $43,085 for the year ended
December 31, 2002 is comprised of reclassification adjustments for
gains realized in net income of $80,585 and an impairment loss in the
amount of $37,500 for a decline in value that is other than temporary.
The unrealized gains on available-for-sale securities of $87,929 for
the year ended December 31, 2001 is comprised of $168,985 of
unrealized holding gains arising during the period less
reclassification adjustments for gains realized in net income of
$81,056 during the period.

    (m)  Revenue Recognition

The Company has entered into a number of license agreements
covering potential products.  The Company receives minimum annual
royalties under certain license agreements and records fee income for
the amounts earned by the Company.  Certain of the fees are paid to
the Company in advance of the period in which they are earned
resulting in deferred revenue.

     (n)  Reclassifications

During 2002, the Company has reclassified costs associated with
patents and patent applications from research and development
expenses to operating expenses.  The amount of patent costs for the
year  ended December 31, 2002 was approximately $372,000.  The
reclassification was also reflected in the consolidated statement of
operations for the years ended December 31, 2001 and 2000 to
conform to the current period's presentation.  The amount of patent
costs reclassified from research and development expense to
operating expense for the years ended December 31, 2001 and 2000
was approximately $411,000 and $348,000 respectively.

     (o)  Recently Issued Accounting Standards

In June 2002, the Financial Accounting Standards Board issued
Statement No. 146, Accounting for Costs Associated with Exit or
Disposal Activities ("SFAS No. 146").  SFAS No. 146 will spread out
the reporting of expenses relating to restructurings initiated after
2002, because commitment to a plan to exit an activity or dispose of
long-lived assets will no longer be enough to record a liability for the
anticipated costs.  Instead, companies will record exit and disposal
costs when they are "incurred" and can be measured at fair value, and
they will subsequently adjust the recorded liability for changes in
estimated cash flows. The Company is required to adopt the
provisions of SFAS No. 146 as of January 1, 2003.  The Company
does not believe that the adoption of SFAS No. 146 will have any
impact on the Company's consolidated financial statements as no
restructurings are planned.

In December 2002, the Financial Accounting Standards Board issued
Statement No. 148, Accounting for Stock-Based Compensation-
Transition and Disclosure, an Amendment of FASB Statement No.
123 ("SFAS No. 148"). SFAS No. 148 amends Financial Accounting
Standards Board Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-
based employee compensation.  In addition, SFAS No. 148 amends
the disclosure requirements of FASB Statement No. 123 to require
prominent disclosures in both annual and interim financial
statements.  Certain of the disclosure modifications are required for
fiscal years ending after December 15, 2002 and are included in the
notes to these consolidated financial statements.

     (p)  Impairment of Long-Lived Assets

The Company adopted on January 1, 2002 Financial Accounting
Standards Board  Statement No. 144, Accounting for the Impairment
of Long-Lived Assets ("SFAS No. 144"),which addresses financial
accounting and reporting for the impairment or disposal of long-lived
assets.  This statement supersedes Financial Accounting Standards
Board  Statement No. 121, Accounting  for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS
No. 121"), while retaining the fundamental recognition and
measurement provisions of that statement.  SFAS No. 144 requires
that a long-lived asset to be abandoned, exchanged for a similar
productive asset or distributed to owners in a spinoff to be considered
held and used until it is disposed of.  However, SFAS No. 144
requires that management consider revising the depreciable life of
such long-lived asset.  The implementation of SFAS No. 144 had no
impact on the Company's  financial position or results of operations.

      (q)  Supplemental Cash Flow Information

 The following is supplemental information relating to the Company's
 consolidated statement of cash flows:

                                                 2002        2001     2000
Non-cash financing activities:
 Receivable from warrant exercise            $     --     164,311       --

(3)     Marketable Investment Securities

The fair value of marketable investment securities is based upon
quoted market prices.  The amortized cost, gross unrealized holding
gains and fair value for the Company's securities at December 31,
2002 and 2001 were as follows:

                             Amortized Cost Gross Unrealized Holding  Fair Value
                                              Gains     (Losses)
At December 31, 2002:

Available-for-sale securities:
 Equity securities                   12,500      --      (1,250)          11,250

At December 31, 2001:

Available-for-sale securities:
U.S. treasury securities         $6,991,771  80,960          --        7,072,731
Equity securities                    50,000      --     (39,125)          10,875

Maturities of all U.S. treasury securities were less than
two years at December 31, 2001.

(4)  Notes Receivable from Officers

During the fourth quarter of 2002, executive officers Joseph M.
Harary and Robert L. Saxe repaid loans made previously by the
Company in the principal amount of $152,961, plus all accrued
interest through the date of payment.  These loans were repaid in
cash by these individuals. In connection with the aforementioned
loan repayments, the Company recorded $64,608 in interest income
in 2002. It is the Company's policy to record interest income on these
notes when repaid.

(5)  Fixed Assets

Fixed assets and their estimated useful lives, are as follows:

                                      2002       2001      Estimated useful life

Equipment and furniture        $ 1,084,708  1,057,126     5 years
Leasehold improvements             277,145    269,360     Life of lease or esti-
                                 1,361,853  1,326,486     mated life if shorter
Less accumulated depreciation
       and amortization          1,161,038  1,046,868
                               $   200,815    279,618

(6)   Accrued Expenses and Other

Accrued expenses consist of the following at December 31, 2002 and 2001:



                                               2002             2001
Payroll, bonuses and related benefits      $ 85,974           91,942
Professional services                        91,846           34,285
Other                                        14,156           32.058
                                           $191,976          158,285

(7)     Income Taxes

There was no income tax expense in 2002, 2001 and 2000 due to
losses incurred by the Company.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 2002 and 2001 are
presented below.

                                                   2002           2001
Deferred tax assets:
 Net operating loss carryforwards           $14,334,000     12,922,000
 Research and other credits                     873,000        860,000
        Total gross deferred tax assets      15,207,000     13,782,000
 Less valuation allowance                    15,207,000     13,782,000
                                                     --             --

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

At December 31, 2002, the Company had a net operating loss
carryforward for federal income tax purposes of approximately
$35,836,000, varying amounts of which will expire in each year from
2003 through 2022. Research and other credit carryforwards of
$873,000 are available to the Company to reduce income taxes
payable in future years principally through 2022. Net operating loss
carryforwards of $758,695 and research and other credit carryforwards
of $0 are scheduled to expire during fiscal 2003, if not utilized.

(8)     Shareholders' Equity

   (a)  Sale of Common Stock and Warrants

During 2000, the Company received $12,172,169 of net cash
proceeds from the issuance of 758,945 shares of common stock from
the exercise of options and warrants, as follows: the issuance of
95,962 shares of common stock issued upon the exercise of options
resulting in net proceeds of $706,299 and the issuance of 662,983
shares of common stock issued upon the exercise of warrants,
principally related to the Class A Warrant, resulting in net proceeds
of $11,465,870.  In addition, 3,438 shares were issued to a director
in payment of $68,000 in directors fees.

During 2001, the Company received $6,614,721 of net cash proceeds
from the issuance of 407,175 shares of common stock from the
exercise of options and warrants, as follows: (i) the issuance of
48,175 shares of common stock issued upon the exercise of options
resulting in net proceeds of $385,472 and (ii) 359,000 shares of
common stock issued upon the exercise of warrants, principally
related to the Class A Warrant,  resulting in net proceeds (inclusive
of a receivable described below of $164,311) of $6,393,560.  In
addition, 3,715 shares were issued to directors in payment of $69,221
in directors fees, and 687 shares were issued through the cancellation
of 1,000 warrants, resulting in non-cash consulting expense of
$17,588 being recorded.

The Company recorded a receivable of $164,311 representing a
warrant exercise that occurred prior to the end of 2001, that was
scheduled to settle in January 2002.  The Company received the cash
for the settlement of this warrant in January 2002.

During 2002, the Company received $3,175,362 of net cash proceeds
from (i) the issuance of 33,875 shares of common stock issued upon
the exercise of options resulting in net proceeds of $243,767; (ii)
253,500 shares of common stock issued upon the exercise of
warrants, principally related to the Class A Warrant, resulting in net
proceeds of $2,728,084; and (iii) $164,311 of cash received in early
January for the settlement of a warrant exercised in late December
2001. In addition, 2,816 shares with a value of $39,200 were
delivered to the Company and immediately retired in payment of the
exercise price of options to purchase 10,500 shares, and 250 shares
of common stock were issued in connection with the acquisition by
the Company of the domain name "SmartGlass.com" resulting in
non-cash marketing expenses of $1,518.

   (b)  Options and Warrants

   (i)  Options

In 1992, the shareholders approved a stock option plan (1992 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
of Directors, have made or may make significant contributions to the
Company in the future.  The Company initially reserved 468,750
shares of its common stock for issuance under this plan.  In 1994 and
1996, the Company's shareholders approved an additional 300,000
shares and 450,000 shares, respectively, for issuance under this plan.
As of December 31, 2001, no options were available for issuance
under this Plan and this Plan expired during 2002.

In 1998, the shareholders approved a stock option plan (1998 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
of Directors, have made or may make significant contributions to the
Company in the future.  The Company may also award stock
appreciation rights or restricted stock under this plan. The Company
initially reserved 540,000 shares of its common stock for issuance
under this plan.  In 1999, the Company's shareholders approved an
additional 545,000 shares for issuance under this Plan, and in 2000,
the Company's shareholders approved an additional 600,000 shares
for issuance under this Plan. As of December 31, 2002, awards for
28,322 shares of common stock were available for issuance under
this Plan.

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.  When an employee exercises a
stock option through the surrender of options held, rather than of cash
for the option  exercise price, compensation expense is recorded in
accordance with APB Opinion No. 25.  Accordingly, compensation
expense is recorded for the difference between the quoted market
value of the Company's common stock at the date of exchange and
the exercise price of the option.

Activity in stock options is summarized below:

                              Number of Shares       Weighted Average
                              Subject to Option      Exercise Price

Balance at December 31, 1999       1,718,663            $  7.98
  Granted                            332,500             $19.80
  Cancelled                           (6,700)            $14.85
  Exercised                          (95,962)           $  7.36

Balance at December 31, 2000       1,948,501             $10.00
  Granted                            416,550             $20.20
  Cancelled                               --                 --
  Exercised                          (48,175)            $ 8.00

Balance at December 31, 2001       2,316,876             $11.88
  Granted                            168,000             $12.76
  Cancelled                               --                 --
  Exercised                          (44,375)            $ 6.38

Balance at December 31, 2002       2,440,501             $12.04

The following table summarizes information about
stock options at December 31, 2002:

                               Weighted
                               Average      Weighted             Weighted
                               Remaining    Average              Average
Range of         Options       Contractual  Exercise Share       Exercise
Exercise Price   Outstanding   Life (Years) Price    Exercisable Price
$3.00 to $6.00    109,802         3.92      $ 5.97      109,802  $  5.97
$6.01 to $7.50    671,326         4.88      $ 7.29      671,326  $  7.29
$7.51 to $9.00    552,501         5.72      $ 8.35      552,501  $  8.35
$9.01 to $12.00   317,025         5.81      $ 9.87      298,025  $  9.80
$12.01 to $15.00  338,547         7.64      $13.52      171,797  $ 14.24
$15.01 to $19.00  113,000         7.92      $18.99      106,000  $ 19.00
$19.01 to $37.03  338,300         8.21      $27.70      308,300  $ 26.79
                2,440,501         6.13      $12.04    2,217,751  $ 11.63

Options to purchase 186,750 shares become exercisable during 2003.

During 2002, the Company issued options to its five Advisory Board
members to purchase a total of 5,000 shares of common stock at an
exercise price of $12.775 per share. The Company recorded $37,050
of non-cash expense based on the fair value of these options
determined using a Black-Scholes option pricing model. In addition,
the Company issued options to purchase 1,250 shares of common
stock in connection with the acquisition by the Company of the
domain name "SmartGlass.com,"and for web design services,
resulting in non-cash marketing expense of $6,775.

During 2000, the Company granted 14,000 options to consultants
which vested immediately. The Company recorded consulting
expenses of $246,961 based upon the fair value of such options on
the date the options vested as determined using a Black-Scholes
option pricing model.

During 1999, the Company granted 237,800 contingent performance
options to employees, which vested only, if a certain performance
milestone in the price of the Company's common stock was achieved
during 2000.  This milestone was achieved during 2000 and these
options vested. The Company is required to account for these options
as a variable plan under APB Opinion No. 25.  Accordingly, from the
point in time that it appears probable that such milestone will be
achieved, the Company is required to recognize non-cash
compensation expense each period from the date of grant through the
vesting date based on the quoted market price of the stock at the end
of each period.  Non-cash compensation expense recognized during
1999 and 2000 in connection with these options was $671,052 and
$3,133,748, respectively. The charges recorded as a result of the
issuance of these performance options are calculated based upon
changes in the Company's stock price as of the end of each quarter,
and are non-cash compensation charges.

  (ii)    Warrants

Activity in warrants is summarized below, excluding the effect of the
warrants discussed in Note 8(d)):

                                  Number of Shares                 Exercise
                              Underlying Warrants Granted           Price


Balance at December 31, 1999             276,700               $  5.88-21.00
  Exercised                               (1,000)                 9.00-10.00
  Terminated                                  --                          --
  Issued                                      --                          --

Balance at December 31, 2000             275,700               $  5.88-21.00
  Exercised                              (30,000)                 7.99-11.00
  Terminated                             (20,000)                16.00-21.00
  Issued                                      --                          --

Balance at December 31, 2001             225,700               $  5.88-13.50
  Exercised                               (8,500)                 7.99- 8.98
  Terminated                                  --                          --
  Issued                                  10,000                       12.19
Balance at December 31, 2002             227,200                  5.88-13.50

Warrants generally expire from two to ten years from the date of
issuance. At December 31, 2002 the number of warrants exercisable
was 222,200 at a weighted average exercise price of $8.31 per share.

During 2002, the Company issued warrants to SPD Inc. to purchase
10,000 shares of common stock at an exercise price of $12.19 per
share as an award for being the first licensee of the Company to
produce and sell commercial quantities of SPD film. The Company
recorded $64,000 of non-cash expense in connection with the issuance
of these warrants.

During 2001 and 2000, certain warrants granted to consultants in 1995
and 1994 to purchase 7,000 and 25,000 shares, respectively of
common stock became vested due to services performed and
performance criteria being met. The Company recorded consulting
expense of $43,596 and $528,198, respectively, based upon the fair
value of such warrants on the date the warrants vested as determined
using a Black-Scholes option pricing model.

  (c)  Treasury Stock

During 2002, the Company purchased in the open market and
subsequently retired 187,625 shares of treasury stock with an
aggregate cost of $2,315,408. In addition, 2,816 shares with a value of
$39,200 was delivered to the Company and immediately retired in
payment of the exercise price of options to purchase 10,500 shares.
During 2001, the Company purchased in the open market and
subsequently retired 407,065 shares of treasury stock with an
aggregate cost of $8,144,693. During 2000, the Company purchased
in the open market and subsequently retired 182,600 shares of treasury
stock with an aggregate cost of $3,314,169.

  (d)  Class A and Class B Warrants

On October 1, 1998, the Company announced that Ailouros Ltd., a
London-based institutional money management fund, has committed
to purchase up to $15 million worth of  common stock of the Company
through December 31, 2001.  This commitment is in the form of a
Class A Warrant issued to Ailouros Ltd. which gives the Company the
option in any three-month period to deliver a put notice to Ailouros
requiring them to purchase an amount of common stock specified by
the Company at a price equal to the greater of (A) 92% of the seven-
day average trading price per share of common stock, or (B) a
minimum or "floor" price per share set by the Company from time to
time.  The pricing was initially subject to an overall cap of $15 per
share, which cap has now been eliminated by mutual agreement so that
the Company may put stock to Ailouros at selling prices in excess of
$15 per share.  However, the Company is not required to sell any
shares under the agreement. Before the beginning of each of a series
of three-month periods specified by the Company, the Company
determines the amount of common stock that the Company wishes to
issue during such three-month period.  The Company also sets the
minimum selling or "floor" price, which can be reset by the Company
in its sole discretion prior to the beginning of any subsequent three-
month period.  Therefore, at the beginning of each three-month period,
the Company will determine how much common stock, if any, is to be
sold  (the amount of which can range from $0 to $1.5 million during
such three-month period), and the minimum selling price per share. In
March 2000, Ailouros agreed to expand its commitment beyond the
original $15 million, thereby giving the Company the right to raise
additional funds from Ailouros so long as the Company does not have
to issue more shares than were originally registered with the Securities
and Exchange Commission, and in December 2001 the expiration date
of the Class A Warrant was extended to December 31, 2003. As of
March 27, 2003, 456,717 shares remained registered for future
issuance under the Class A Warrant.

In connection with the financing, the Company also issued Ailouros
Ltd. a Class B Warrant which expires on September 30, 2008.  The
Class B Warrant is exercisable at $8.25 per share which represents
120% of  average of the closing bid and ask price of the Company's
common stock on the date of the Class B Warrant's issuance.  The
Class B Warrant is exercisable into 65,500 shares.  Ailouros paid the
Company $10,000 upon issuance of the Class A Warrant and the Class
B Warrant.

(9)  License and Other Agreements

The Company has entered into a number of license agreements
covering various products using the Company's SPD technology.
Licensees of Research Frontiers who incorporate SPD technology into
end products will pay Research Frontiers an earned royalty of 5-10%
of net sales of licensed products under license agreements currently in
effect, and may also be required to pay Research Frontiers minimum
annual royalties.  To the extent that products have been sold resulting
in earned royalties under these license agreements in excess of these
minimum advance royalty payments, the Company has recorded
additional royalty income.  Licensees who sell products or components
to other licensees of Research Frontiers do not pay a royalty on such
sale and Research Frontiers will collect such royalty from the licensee
incorporating such products or components into their 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.

    (10)   Commitments

The Company has an employment agreement with one of its officers
which provides for an annual base salary of $420,000 through
December 31, 2003.

In December 2000, the Company's Board of Directors approved a
performance bonus plan which provides for a bonus to be paid on or
after July 2, 2001 and on or after January 2, 2002 equal to 1% of the
increase, if any, in the Company's market value during the first and
second halves of 2001.  Bonuses were capped at a recipient's salary in
the case of employees of the Company, and were capped at $60,000
in the case of non-employee directors and certain employees of the
Company. The Company's Board of Directors approved a similar
bonus plan for 2002 but with higher thresholds to be met before a
bonus is payable under such plan. In addition to the payment caps
described above, under the 2002 plan, in order to insure that bonuses
are not paid based upon temporary fluctuations in the market value of
the Company, bonuses under this plan will only be paid to the various
participants under this plan if and when the market value of the
Company exceeds $280,489,009 (and in the case of any bonus paid to
the Company's Chief Executive Officer, if and when the market value
of the Company exceeds $304,207,362). The Company recorded $0
and $785,500 of expenses in connection with these plans for the years
ended December 31, 2002 and 2001, respectively. On November 6,
2002, the Company's Board of Directors voted to terminate this bonus
plan with respect to 2003 and replace it with a general bonus plan
under which bonuses are awarded to employees of the Company for
outstanding achievement including technical accomplishments, sales
and revenue growth, and other performance milestones.  All
employees of the Company are eligible to receive bonuses under this
plan and the bonuses shall not exceed $300,000 in the aggregate for 2003.

The Company occupies premises under an operating lease agreement
which expires on January 31, 2004 and requires minimum annual rent
which rises over the term of the lease to approximately $143,500. Rent
expense, including other expenses, amounted to approximately
$148,000, $152,000, and $142,000, for 2002, 2001, and 2000, respectively.

(11)   Rights Plan

In February 2003, the Company's Board of Directors adopted a
Stockholders' Rights Plan and 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 March 3, 2003.
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 $120 worth of common stock for $60.  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 $120 worth of common
stock of the acquiring company for $60.  The Rights will expire at the
close of business on February 18, 2013, 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.

(12) Selected Quarterly Financial Data (Unaudited)

                                               Quarter

2002                             First      Second       Third      Fourth
Fee income                    $ 53,125    $ 28,125    $ 31,519   $ 104,750
Operating loss              (1,029,689) (1,160,201) (1,083,823)   (998,937)
Net loss                      (920,867) (1,041,761) (1,031,318)   (957,170)
Basic and diluted net loss
    per common share (1)          (.08)       (.09)       (.08)       (.08)

2001                             First      Second       Third      Fourth
Fee income                    $ 68,752    $ 12,500$     28,656   $  32,094
Operating loss              (1,187,734)  (1,909,782)(1,177,408)   (961,804)
Net loss                      (993,822)  (1,748,444)  (985,529)   (812,875)
Basic and diluted net loss
    per common share (1)          (.08)        (.14)      (.08)       (.07)

  (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.