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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 31, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission file number 333-127953

 

SOLARWINDOW TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada  

59-3509694

(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
9375 E. Shea Blvd., Suite 107-B    
Scottsdale, AZ   85260
(Address of principal executive offices)   (Zip Code)

 

(800) 213-0689

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
     

 

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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

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

 

Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act).

Yes ☐ No

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

 

As of July 11, 2022, the most recent practicable date, the number of Common Shares outstanding was 53,198,399.

 

 

 

SOLARWINDOW TECHNOLOGIES, INC.

FORM 10-Q

 

For the Quarterly Period Ended May 31, 2022

 

Table of Contents

 

PART I FINANCIAL INFORMATION  
     
Item 1. Consolidated Financial Statements  
     
  Consolidated Balance Sheets 1
     
  Consolidated Statements of Operations 2
     
  Consolidated Statements of Stockholders’ Equity 3
     
  Consolidated Statements of Cash Flows 4
     
  Notes to Consolidated Financial Statements 5
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
     
Item 4. Controls and Procedures 17
     
PART II OTHER INFORMATION  
     
Item 1. Legal Proceedings 18
     
Item 1A. Risk Factors 19
     
Item 6. Exhibits 19
     
Signatures 20
     
Certifications  

 

 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

 

         
   May 31,  August 31,
   2022  2021
ASSETS  (Unaudited)   
Current assets          
Cash and cash equivalents  $8,632,495   $7,127,456 
Short-term investments   -    5,000,000 
Deferred research and development costs   130,970    122,332 
Prepaid expenses and other current assets   115,975    68,649 
Total current assets   8,879,440    12,318,437 
           
Property and Equipment, net of accumulated depreciation of $114,030 and $110,271, respectively   1,327,195    1,387,342 
Security deposit   -    21,598 
Total assets  $10,206,635   $13,727,377 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities          
Accounts payable and accrued expenses  $43,391   $55,402 
Related party payables   29,583    114,750 
Total current liabilities   72,974    170,152 
Total liabilities   72,974    170,152 
           
Commitments and contingencies          
           
Stockholders' equity          
Preferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding   -    - 
Common stock: $0.001 par value; 300,000,000 shares authorized, 53,198,399 shares issued and outstanding at May 31, 2022 and August 31, 2021   53,198    53,198 
Additional paid-in capital   82,453,847    81,551,840 
Accumulated other comprehensive income (loss)   -    (14,872)
Retained deficit   (72,373,384)   (68,032,941)
Total stockholders' equity   10,133,661    13,557,225 
Total liabilities and stockholders' equity  $10,206,635   $13,727,377 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

 

 1 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

                 
   Three Months Ended May 31,  Nine Months Ended May 31,
   2022  2021  2022  2021
             
Revenue  $-   $-   $-   $- 
                     
Operating expenses                    
Selling, general and administrative   776,707    1,394,977    2,900,575    5,180,785 
Research and development   191,439    423,859    797,295    1,338,248 
Total operating expenses   968,146    1,818,836    3,697,870    6,519,033 
Loss from operations   (968,146)   (1,818,836)   (3,697,870)   (6,519,033)
                     
Other income (expense)                    
Interest income   5,861    12,435    18,066    35,102 
Loss on disposal of assets   -    -    -    (8,775)
Impairment of assets   (674,200)   -    (674,200)   - 
Other income   -    -    13,560    - 
Total other income (expense)   (668,339)   12,435    (642,574)   26,327 
Net loss   (1,636,485)   (1,806,401)   (4,340,444)   (6,492,706)
Other comprehensive income (loss)                    
Foreign currency translation gain/(loss)   33,728    8,014    14,872    1,247 
Comprehensive income (loss)  $(1,602,757)  $(1,798,387)  $(4,325,572)  $(6,491,459)
                     
Basic and Diluted Loss per Common Share  $(0.03)  $(0.03)  $(0.08)  $(0.12)
                     
Weighted average number of common shares outstanding - basic and diluted   53,198,399    53,196,799    53,198,399    53,076,883 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

 2 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

 

                               
   Common Stock  Additional
Paid-in
  Accumulated
Other
Comprehensive
  Retained  Total
Stockholders'
FOR THE NINE MONTHS ENDED MAY 31, 2022  Shares  Amount  Capital  Income (Loss)  Deficit  Equity
Balance, August 31, 2021   53,198,399   $53,198   $81,551,840   $(14,872)  $(68,032,941)  $13,557,225 
Stock based compensation due to common stock purchase options   -    -    278,863    -    -    278,863 
Foreign currency translation adjustments   -    -    -    (5,160)   -    (5,160)
Net loss for the three months ended November 30, 2021   -    -    -    -    (1,326,124)   (1,326,124)
Balance, November 30, 2021   53,198,399    53,198    81,830,703    (20,032)   (69,359,065)   12,504,804 
Stock based compensation due to common stock purchase options   -    -    410,789    -    -    410,789 
Foreign currency translation adjustments   -    -    -    (13,696)   -    (13,696)
Net loss for the three months ended February 28, 2022   -    -    -    -    (1,377,834)   (1,377,834)
Balance, February 28, 2022   53,198,399    53,198    82,241,492    (33,728)   (70,736,899)   11,524,063 
Stock based compensation due to common stock purchase options             212,355              212,355 
Foreign currency translation adjustments                  33,728         33,728 
Net loss for the three months ended May 31, 2022        -               (1,636,485)   (1,636,485)
Balance, May 31, 2022   53,198,399   $53,198   $82,453,847   $-   $(72,373,384)  $10,133,661 
                               
FOR THE NINE MONTHS ENDED MAY 31, 2021                              
                               
Balance, August 31, 2020   52,959,323   $52,959   $76,039,209   $-   $(60,125,039)  $15,967,129 
Stock based compensation due to common stock purchase options   -    -    1,838,532    -    -    1,838,532 
Foreign currency translation adjustments   -    -    -    3,277    -    3,277 
Net loss for the three months ended November 30, 2020   -    -    -    -    (2,537,035)   (2,537,035)
Balance, November 30, 2020   52,959,323    52,959    77,877,741    3,277    (62,662,074)   15,271,903 
Exercise of warrants   200,000    200    683,800    -    -    684,000 
Exercise of stock options   37,476    38    35,362    -    -    35,400 
Stock based compensation due to common stock purchase options   -    -    1,463,904    -    -    1,463,904 
Foreign currency translation adjustments   -    -    -    (10,044)   -    (10,044)
Net loss for the three months ended February 28, 2021   -    -    -    -    (2,149,270)   (2,149,270)
Balance, February 28, 2021   53,196,799    53,197    80,060,807    (6,767)   (64,811,344)   15,295,893 
Stock based compensation due to common stock purchase options             903,198              903,198 
Foreign currency translation adjustments                  8,014         8,014 
Net loss for the three months ended May 31, 2021        -               (1,806,401)   (1,806,401)
Balance, May 31, 2021   53,196,799   $53,197   $80,964,005   $1,247   $(66,617,745)  $14,400,704 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

 3 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

         
   Nine Months Ended May 31,
   2022  2021
Cash flows from operating activities          
Net loss  $(4,340,444)  $(6,492,706)
Depreciation   18,865    21,637 
Stock based compensation expense   902,007    4,205,634 
Loss on disposal of assets   -    8,775 
Impairment of assets   674,200    - 
Changes in operating assets and liabilities:          
Deferred research and development costs   (8,638)   386,975 
Prepaid expenses and other current assets   (48,699)   (92,363)
Security deposits   20,142    (19,906)
Accounts payable and accrued expenses   (11,102)   85,338 
Operating lease assets and liabilities   -    (353)
Related party payable   (85,167)   (47,636)
Net cash used in operating activities   (2,878,836)   (1,944,605)
           
Cash flows used in investing activity          
Purchase of short-term investments   -    (5,000,000)
Redemption of short-term investments   5,000,000    - 
Capital expenditures   (601,598)   (52,920)
Proceeds from the sale of assets   -    2,161 
Net cash provided by (used in) investing activities   4,398,402    (5,050,759)
           
Cash flows from financing activities          
Proceeds from the issuance of equity securities   -    719,400 
Net cash from financing activities   -    719,400 
Effect of exchange rate changes on cash and cash equivalents   (14,527)   887 
Net increase (decrease) in cash and cash equivalents   1,505,039    (6,275,077)
Cash  and cash equivalents at beginning of period   7,127,456    14,151,523 
Cash and cash equivalents at end of period  $8,632,495   $7,876,446 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 4 

 

SOLARWINDOW TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – Organization

 

Organization

 

SolarWindow Technologies, Inc. was incorporated in the State of Nevada on May 5, 1998 (“SWT,” and together with its controlled subsidiary companies, collectively, the “Company”). SolarWindow® technology harvests light energy from the sun and from artificial light sources using a transparent and ultra-lightweight coating of organic photovoltaic (“OPV”) solar cells applied to glass and plastics, thereby generating electricity. The Company’s ticker symbol is WNDW.

 

On August 24, 2020, the SolarWindow Technologies, Inc. formed wholly owned SolarWindow Asia (USA) Corp., a Nevada Corporation, as the holding company for SolarWindow Asia Co. Ltd., (the “Korean Subsidiary”) a company formed in the Republic of Korea for the purpose of expansion into the Asian markets.

 

During the three months ended May 31, 2022, the Company recognized an impairment of all assets related to the Korean Subsidiary totaling $674,200. The impairment was recognized due to the Company’s inability to obtain from the management of the Korean Subsidiary the complete financial statements and related documentation for the three months ended May 31, 2022 thereby placing into doubt the recoverability of assets located in South Korea. Any amounts that become recoverable will be recognized accordingly. For additional information see Note 4 below. SWT has retained counsel in South Korea to provide legal services on behalf of SWT with respect to the recovery of these assets.

 

Liquidity and Management’s Plan

 

The Company has not generated any revenue since inception and has sustained recurring losses and negative cash flows from operations since inception. We expect to incur losses as we continue to develop and further refine and promote our technologies and potential product applications. As of May 31, 2022, the Company had $8,632,495 of cash and cash equivalents on hand and working capital of $8,806,466. The Company believes that it currently has sufficient cash to meet its funding requirements over the next twelve months following the issuance of this Quarterly Report on Form 10-Q. However, the Company has experienced and continues to experience negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment. The Company expects that it may need to raise additional capital to accomplish its business plan. If additional funding is required, the Company expects to seek to obtain that funding through financial or strategic investors. There can be no assurance as to the availability or terms upon which such financing and capital might be available.

 

NOTE 2 – Interim Statement Presentation

 

Basis of Presentation and Use of Estimates

 

The accompanying unaudited interim consolidated financial statements of the Company as of May 31, 2022, and for the three and nine months ended May 31, 2022 and 2021 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on November 4, 2021.

 

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Actual results may differ from those estimates. The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial position as of May 31, 2022, results of operations, stockholders’ equity and cash flows for the three and nine months ended May 31, 2022 and 2021. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

 

 5 

 

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. The Company considers its accounting policies relating to stock-based compensation to be the most significant accounting policy that involves management estimates and judgments. The Company has made accounting estimates based on the facts and circumstances available as of the reporting date. Actual amounts could differ from these estimates, and such differences could be material.

 

These consolidated financial statements presented are those of SolarWindow Technologies, Inc. and its wholly owned subsidiaries, SolarWindow Asia (USA) Corp., and SolarWindow Asia Co. Ltd. All significant intercompany balances and transactions have been eliminated.

 

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended August 31, 2021. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Financial Statements” in the Annual Report.

 

Fiscal quarter

 

The Company’s quarterly periods end on November 30, February 28, May 31, and August 31. The Company’s third quarter in fiscal 2022 and 2021 ended on May 31, 2022 and 2021, respectively.

 

Cash and Highly Liquid Investments

 

As of May 31, 2022, the Company’s cash, includes $1,192,917 in domestic bank accounts and $7,439,578 held in Canadian bank accounts.

 

  May 31,  August 31,
   2022  2021
Cash  $8,632,495   $7,127,456 
Short-term investments   -    5,000,000 
Cash and cash equivalents  $8,632,495   $12,127,456 

 

Short-term investments

 

The Company determines the balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. Money market funds, certificates of deposit, and time deposits with maturities of greater than three months but no more than twelve months are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets in short-term investments. As of August 31, 2021, the short-term investments consist of a fixed-term deposit with a twelve-month maturity at the time of purchase which matured on October 1, 2021.

 

Accounting Pronouncements

 

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion.

 

 6 

 

Recent accounting pronouncements not yet adopted

 

None.

 

Recently adopted accounting pronouncements

 

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intra period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others. This guidance is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and applied either prospectively or retrospectively. The Company adopted ASU 2019-12 beginning September 1, 2021 with no impact on its Financial Statements. 

 

NOTE 3 - Net Income (Loss) Per Share

 

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).

 

Following is the computation of basic and diluted net loss per share for the three and nine months ended May 31, 2022 and 2021:

 

                
   Three Months Ended May 31,  Nine Months Ended May 31,
   2022  2021  2022  2021
Basic and diluted EPS Computation            
Numerator:            
Loss available to common stockholders'  $(1,636,485)  $(1,806,401)  $(4,340,444)  $(6,492,706)
Denominator:                    
                     
Weighted average number of common shares outstanding   53,198,399    53,196,799    53,198,399    53,076,883 
Basic and diluted EPS Computation  $(0.03)  $(0.03)  $(0.08)  $(0.12)
                     
The shares listed below were not included in the computation of diluted losses per share because to do so would be antidilutive for the periods presented:                    
Stock options   6,781,800    6,740,400    6,781,800    6,740,400 
Warrants   19,281,917    19,283,517    19,281,917    19,283,517 
Total shares not included in the computation of diluted loss per share   26,063,717    26,023,917    26,063,717    26,023,917 

 

 7 

 

NOTE 4 – Property and Equipment

 

Property and equipment consists of the following:

 

  May 31,  August 31,
   2022  2021
Computers, office equipment and software  $17,387   $14,800 
Furniture and fixtures   -    47,660 
Equipment   131,183    113,820 
Leasehold improvements   -    28,678 
In-process equipment   1,292,655    1,292,655 
Total property and equipment   1,441,225    1,497,613 
Accumulated depreciation   (114,030)   (110,271)
Property and equipment, net  $1,327,195   $1,387,342 

 

During the nine months ended May 31, 2022 and 2021, the Company purchased $601,598 and $71,647 of property and equipment, respectively. During the three months ended May 31, 2022 and 2021, the Company recognized straight-line depreciation expense of $3,057 and $9,183, respectively. During the nine months ended May 31, 2022 and 2021, the Company recognized straight-line depreciation expense of $18,865 and $21,637, respectively.

 

During the year ended August 31, 2019, the Company made deposits for in-process equipment totaling $1,292,655 towards the purchase of manufacturing equipment with an estimated total cost of $1,803,000. Due to the termination of the Triview Process Integration and Production Agreement on September 27, 2019, subsequent COVID-19 pandemic and move into the Asian markets, the Company placed on hold finalizing the equipment. The Company is currently evaluating configuration options in order to optimize the equipment for manufacturing of the Company’s initial product. Completion of the equipment will require additional payments up to approximately $510,000.

 

During the quarter ended February 28, 2022, the Company’s Korean subsidiary agreed to purchase equipment consisting of a roll-2-roll coating system for use in Korea. In February 2022, the Company paid approximately $581,000 as a deposit. During the quarter ended May 31, 2022, the Company impaired the value of all property and equipment recorded on the books of the Korean Subsidiary, including $58,122 of furniture and fixtures and leasehold improvements net of accumulated depreciation, and $558,344 related to the roll-2-roll equipment deposit.

 

NOTE 5 – Common Stock and Warrants

 

Common Stock

 

At May 31, 2022, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001 per share, and 53,198,399 shares of common stock outstanding.

 

Warrants

 

Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. Other than the Series O Warrants and Series P Warrants, all of the following warrants may be exercised on a cashless basis. A summary of the Company’s warrants outstanding and exercisable as of May 31, 2022 and August 31, 2021 is as follows:

 

                     
   Shares of Common Stock
Issuable from Warrants
Outstanding as of
  Weighted
Average
      
   May 31,  August 31,  Exercise  Date of   
Description  2022  2021  Price  Issuance  Expiration
Series M   246,000    246,000   $2.34   December 7, 2015  December 31, 2022
Series N   767,000    767,000   $3.38   December 31, 2015  December 31, 2022
Series P   213,500    213,500   $3.70   March 25, 2016  December 31, 2022
Series R   468,750    468,750   $4.00   June 20, 2016  December 31, 2022
Series S-A   300,000    300,000   $2.53   July 24, 2017  December 31, 2022
Series S   620,000    620,000   $3.42   September 29, 2017  September 29, 2022
Series T   16,666,667    16,666,667   $1.70   November 26, 2018  November 26, 2025
Total   19,281,917    19,281,917            

 

 8 

 

NOTE 6 - Stock Options

 

The Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on a straight-line basis over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions:

 

 

  Nine Months Ended May 31,
   2022  2021
Expected dividend yield        
Expected stock price volatility   103.31%   89.44%
Risk-free interest rate   1.16%   0.19%
Expected term (in years)(simplified method)   5.75    4.00 
Exercise price  $6.21   $3.42 
Weighted-average grant date fair-value  $4.92   $2.16 

 

A summary of the Company’s stock option activity for the nine months ended May 31, 2022 and related information follows:

 

Schedule of stock option activity                    
   Number of
Shares Subject to
Option Grants
  Weighted
Average
Exercise
Price ($)
  Weighted
Average
Remaining
Contractual
Term (years)
  Aggregate
Intrinsic
Value ($)
Outstanding at August 31, 2021   6,740,400    3.97           
Grants   140,000    6.21           
Forfeitures and cancellations   (98,600)   4.43           
Outstanding at  May 31, 2022   6,781,800    4.01    3.64    122,430 
Exercisable at  May 31, 2022   6,590,600    4.00    3.58    115,843 

 

The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of the period covered by this report and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all in-the-money option holders exercised their vested options on May 31, 2022. The intrinsic value of the option changes based upon the fair market value of the Company’s common stock. Since the closing stock price was $2.63 on May 31, 2022 and 2,653,000 outstanding options have an exercise price below $2.63 per share, as of May 31, 2022, there is $122,430 and $115,843 of intrinsic value in the Company’s outstanding stock options and vested options, respectively.

 

Three and nine Months Ended May 31, 2022

 

Grants - On October 27, 2021, the Company’s Board granted 140,000 options to its officers and directors, with an exercise price of $6.21, exercisable on a cashless basis any time prior to the Company’s listing of any of its securities for trading on a national stock exchange, ten-year term and vesting as to 50% of the options on the six-month anniversary of the date of grant and as to the remaining 50% of the options on the twelve-month anniversary from the date of grant.

 

Forfeitures and cancellations - As a result of his resignation from the Board on November 10, 2021, Mr. Gary Parmar forfeited 58,600 unvested stock options, including 30,000 options granted on October 27, 2021.

 

 9 

 

Three and nine Months Ended May 31, 2021

 

Grants - Pursuant to his appointment to the Board, on October 19, 2020, the Company’s Board granted 50,000 options to Joseph Sierchio, director, with an exercise price of $3.42, exercisable on a cashless basis any time prior to the Company’s listing of any of its securities for trading on a national stock exchange, six-year term and vesting at the rate of 12,500 on the date of grant and 12,500 each anniversary thereafter.

 

Exercises – upon the exercise of 56,667 stock options by three individuals between December 18, 2020 and February 23, 2021, the Company received $35,400 and issued 37,476 shares of restricted common stock. Of the 56,667 options exercised, 10,000 were exercised for cash at an exercise price of $3.54 and 46,667 were exercised on a cashless basis resulting in the issuance of 27,476 shares of restricted common stock.

 

Forfeitures and cancellations – On December 18, 2020, Mr. John Conklin and the Company entered into an Amendment to the Separation, Consulting and Release of Claims Agreement dated November 24, 2020. Pursuant to the Amendment, no further payments are due to Mr. Conklin and all stock options granted under his employment agreement totaling 1,008,000 were cancelled. In addition, 37,500 unvested options granted to Mr. Conklin on July 5, 2019 were also cancelled. 16,667 options expired and 4,500 options that were previously canceled as a result of an employee reduction in hours were reinstated due to the continuation of that employee’s services.

 

The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in the Company’s Statements of Operations for the three and nine months ended May 31, 2022 and 2021:

 

Schedule of share-based compensation                
   Three Months Ended May 31,  Nine Months Ended May 31,
Stock compensation expense:  2022  2021  2022  2021
Selling, general and administrative  $191,122   $761,654   $838,309   $3,617,132 
Research and development   21,233    141,544    63,698    588,502 
Total  $212,355   $903,198   $902,007   $4,205,634 

 

As of May 31, 2022, the Company had $391,608 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 2.525 years.

 

The following table summarizes information about stock options outstanding and exercisable at May 31, 2022:

 

                              
   Stock Options Outstanding  Stock Options Exercisable
Range of
Exercise
Prices
  Number of
Shares
Subject to
Outstanding
Options
  Weighted
Average
Contractual
Life
(years)
  Weighted
Average
Exercise
Price ($)
  Number
of Shares
Subject To
Options
Exercise
  Weighted
Average
Remaining
Contractual
Life (Years)
  Weighted
Average
Exercise
Price ($)
2.32   153,000    7.36    2.32    131,750    7.36    2.32 
2.60   2,500,000    4.09    2.60    2,500,000    4.09    2.60 
3.42   50,000    4.39    3.42    12,500    4.39    3.42 
3.46   35,000    3.60    3.46    35,000    3.60    3.46 
3.54   1,283,800    6.25    3.54    1,206,350    6.45    3.54 
3.66   1,000,000    1.25    3.66    1,000,000    1.25    3.66 
4.87   150,000    5.48    4.87    150,000    5.48    4.87 
6.00   800,000    1.25    6.00    800,000    1.25    6.00 
6.21   110,000    9.41    6.21    55,000    9.41    6.21 
8.00   700,000    1.25    8.00    700,000    1.25    8.00 
Total   6,781,800    3.64    4.01    6,590,600    3.58    4.00 

 

 

 10 

 

NOTE 7 - Transactions with Related Persons

 

A related party with respect to the Company is generally defined as any person (i) (and, if a natural person, inclusive of his or her immediate family) that holds 10% or more of the Company’s securities, (ii) that is part of the Company’s management, (iii) that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

 

On August 7, 2017, the Company appointed Jatinder Bhogal to the Board of directors. Mr. Bhogal has provided consulting services to the Company through his wholly owned company, Vector Asset Management, Inc. (“VAMI”). On July 1, 2020 the Company and VAMI entered into an Executive Consulting Agreement (the “ECA”) pursuant to which Mr. Bhogal served as a director of the Company and as its Chairman and Chief Executive Officer. Effective January 18, 2022, Mr. Bhogal resigned all positions he held in the Company. Pursuant to the ECA, VAMI received $34,167 per month and was eligible for an annual bonus. VAMI also incurred expenses on behalf of the Company which are reimbursed according to the Company’s expense reimbursement policy. In connection with the ECA and the Separation and Release of Claims Agreement dated January 18, 2022 by and among the Company, VAMI and Mr. Bhogal, the Company recognized cash compensation expense of $0 and $102,500 during the three months ended May 31, 2022 and 2021, respectively, and $524,505 (includes bonus of $368,000) and $307,500 during the nine months ended May 31, 2022 and 2021, respectively. As of May 31, 2022, all amounts owed to VAMI are paid.

 

Joseph Sierchio, one of the Company’s directors, has maintained his role as the Company’s General Counsel since its inception as Principal of the law firm of Sierchio & Partners, LLP, and then as a Partner with Satterlee Stephens LLP and beginning in August 2020, as Principal of Sierchio Law, LLP pursuant to an engagement letter which provides for an annual fee of $175,000 in exchange for general counsel services. Mr. Sierchio resigned from the Board effective October 22, 2018, and was reappointed on October 1, 2020. Fees for legal services billed by Sierchio Law, LLP while serving as a director totaled $43,750 and $43,750 for the three months ended May 31, 2022 and 2021, respectively and $131,250 and $116,667 during the nine months ended May 31, 2022 and 2021, respectively. As of May 31, 2022, the Company recognized a related party payable related to legal services of $14,583.

 

All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.

 

NOTE 8 – Commitments and Contingencies

 

In September 2020, and February 2021, the Korean Subsidiary entered into leases for office space and an apartment in South Korea. See “Note 9 - Leases” for additional information.

 

On June 9, 2022, the Company was served the Notice of Civil Claim dated May 16, 2022, and related Notice of Application and Order Made After Application. See Part II, Item 1. Legal Proceedings to this quarterly report for additional information.

 

COVID-19 

 

A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there was no material adverse impact on the Company’s results of operations and financial position as of May 31, 2022. The full extent of the future impact of COVID-19 on the Company’s plan of operations is uncertain. A prolonged outbreak could have a material adverse impact on the Company’s ability to identify and implement business opportunities or continue to effectuate its business plan.

 

NOTE 9 – Leases

 

On February 26, 2021, the Korean Subsidiary entered into an apartment lease for the purposes of housing foreign personnel. The apartment lease provided for a term of one year beginning March 7, 2021, and was renewed on March 7, 2022 for an additional year. Monthly rent is approximately $950. The Company paid a security deposit of approximately $8,700.

 

 11 

 

In September 2020, the Korean Subsidiary entered a lease for office space in South Korea. The office lease provided for an initial term of one-year from September 23, 2020 through September 23, 2021, which was renewed for an additional year, monthly rent of approximately $1,200 and a security deposit of approximately $13,000.

 

The Company’s policy is to record all leases with a term of less than one year as an operating lease with rent expensed recorded on a straight-line basis and to not recognize lease assets or lease liabilities.

 

As of May 31, 2022, the Company has not entered into any leases other than those described above which have not yet commenced and would entitle the Company to significant rights or create additional obligations.

 

NOTE 10 – Subsequent Events

 

Management has reviewed material events subsequent of the period ended May 31, 2022 and through the date of filing of financial statements in accordance with FASB ASC 855 “Subsequent Events.” In managements opinion, no material subsequent events have occurred as of the date of this quarterly report.

 

On June 9, 2022, the Company was served the Notice of Civil Claim dated May 16, 2022, and related Notice of Application and Order Made After Application. See Part II, Item 1. Legal Proceedings to this quarterly report for additional information.

 

 

 12 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Report on Form 10-Q contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, and are generally identifiable by use of words such as “may,” “will,“ “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project,” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

 

Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows, (b) our growth strategies, (c) expectations from our ongoing research and development activities, (d) anticipated trends in the technology industry, (e) our future financing plans, and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our filings with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.

 

Except where the context otherwise requires and for purposes of this Form 10-Q only, the terms “we,” “us,” “our,” “Company” “our Company,” and “SolarWindow” refer to SolarWindow Technologies, Inc., a Nevada corporation.

 

Overview

 

SolarWindow Technologies, Inc. is a developer of transparent electricity-generating coatings (“LiquidElectricity™ Coatings”). When applied in ultra-thin layers to rigid glass, and flexible glass and plastic surfaces our LiquidElectricity™ Coatings transform otherwise ordinary surfaces into photovoltaic devices capable of generating electricity from natural sun, artificial light, and low, shaded, or reflected light conditions while maintaining transparency.

 

We have overcome major technical challenges and achieved many important milestones resulting in an expansion of the potential applications of LiquidElectricity™ Coatings. Potential applications of LiquidElectricity™ Coatings span multiple industries, including architectural, automotive, agrivoltaic, aerospace, commercial transportation and marine. Our LiquidElectricity™ Coatings and SolarWindow™ products are under development with support from commercial contract firms and at the U.S. Department of Energy’s National Renewable Energy Laboratory, through Cooperative Research and Development Agreements.

 

 13 

 

During the three months ended May 31, 2022, the Company recognized an impairment of all assets related to the Korean Subsidiary totaling $674,200. The impairment was recognized due to the Company’s inability to obtain from the management of the Korean Subsidiary the complete financial statements and related documentation for the three months ended May 31, 2022 thereby placing into doubt the recoverability of assets located in South Korea. Any amounts that become recoverable will be recognized accordingly. SWT has retained counsel in South Korea to provide legal services on behalf of SWT with respect to the recovery of these assets.

 

Research and Related Agreements

 

We are a party to certain agreements related to the development of our technology.

 

Stevenson-Wydler Cooperative Research and Development Agreement with the Alliance for Sustainable Energy

 

On March 18, 2011, we entered into the NREL CRADA with Alliance for Sustainable Energy, the operator of the NREL under its U.S. Department of Energy contract to advance the commercial development of our technology. Under terms of the NREL CRADA, NREL researchers make use of our exclusive intellectual property (“IP”), newly developed IP, and NREL’s background IP in order to work towards specific product development goals, established by the Company. Under the terms of the NREL CRADA, we agreed to reimburse Alliance for Sustainable Energy for filing fees associated with all documented, out-of-pocket costs directly related to patent application preparation and filings, and maintenance of the patent applications.

 

On March 6, 2013, we entered into Phase II of our NREL CRADA. Under the terms of the agreement, researchers will additionally work towards:

 

·further improving our technology efficiency and transparency;
·optimizing electrical power (current and voltage) output;
·optimizing the application of the active layer coatings and application processes which make it possible for LiquidElectricity™ Coatings to generate electricity on glass surfaces;
·developing improved electricity-generating coatings by enhancing performance, processing, reliability, and durability;
·optimizing LiquidElectricity™ Coating performance on flexible substrates; and
·developing high speed and large area roll-to-roll (R2R) and sheet-to-sheet (S2S) coating application methods required for commercial-scale building integrated photovoltaic (“BIPV”) products and windows.

 

On December 28, 2015, we entered into another modification to the NREL CRADA (the “Modification”). Under the Modification, (i) the date of completion was extended to December 2017; and (ii) the Company and the NREL will work jointly towards achieving specific product development goals and objectives for the purpose of preparing to commercialize our OPV-based transparent electricity-generating coatings for various applications, including BIPV, glass and flexible plastics.

 

Over the course of our collaborative research and development efforts with the NREL under the CRADA, both parties have agreed to modifications to extend the date of completion. The Company and NREL have entered into ten such No Cost Time Extensions (“NCTE”). Under the terms of each NCTE, all terms and conditions of the NREL CRADA remain in full force and effect without change. The current NCTE was executed on December 6, 2021 and extends the date of completion to December 31, 2024. As of May 31, 2022, the Company had a capitalized asset balance of $130,970 related to deferred research and development costs for advances to Alliance for Sustainable Energy for work to be performed under the NREL CRADA.

 

Results of Operations

 

Our quarterly periods end on November 30, February 28, May 31, and August 31. Our operating results for the fiscal quarter ended May 31, 2022 may not be indicative of the results that may be expected for the fiscal year ending August 31, 2022 because of the COVID-19 pandemic and other potential beneficial or detrimental unforeseen occurrences. In addition, our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

 

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The following table presents the components of our consolidated results of operations for the periods indicated:

 

         2022 compared to 2021
   Three Months Ended May 31,  Increase /  Percentage
   2022  2021  (Decrease)  Change
Operating expenses:                    
Selling, general & administrative  $585,585   $633,323   $(47,738)   -8%
Research and development   170,206    282,315    (112,109)   -40%
Stock compensation   212,355    903,198    (690,843)   -76%
Total Operating expense  $968,146   $1,818,836   $(850,690)   -47%

 

         2022 compared to 2021
   Nine Months Ended May 31,  Increase /  Percentage
   2022  2021  (Decrease)  Change
Operating expenses:                    
Selling, general & administrative  $2,062,266   $1,563,653   $498,613    32%
Research and development   733,597    749,746    (16,149)   -2%
Stock compensation   902,007    4,205,634    (3,303,627)   -79%
Total Operating expense  $3,697,870   $6,519,033   $(2,821,163)   -43%

 

Comparison of the three and nine months ended May 31, 2022 to the three and nine months ended May 31, 2021

 

Selling, General and Administrative

 

Selling, general and administrative (“SG&A”) costs include all expenditures incurred other than research and development related costs, including costs related to personnel, professional fees, travel and entertainment, public company costs, insurance and other office related costs. During the three months ended May 31, 2022 compared to the three months ended May 31, 2021, SG&A costs decreased due primarily to a $57,206 decrease in professional fees and $3,740 decrease in personnel costs offset by an increase of $13,208 in other administrative costs. During the nine months ended May 31, 2022 compared to the nine months ended May 31, 2021, SG&A costs increased due primarily to a $426,931 increase in personnel costs and $120,877 increase in professional fees offset by a decrease of $49,194 in other administrative costs.

 

Research and Development

 

Research and Development (“R&D”) costs represent costs incurred to develop our SolarWindow™ technology and are incurred pursuant to our research agreements and agreements with other third-party providers and certain internal R&D cost allocations. Payments under these agreements include salaries and benefits for R&D personnel, allocated overhead, contract services and other costs. R&D costs are expensed when incurred, except for non-refundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed. During the three months ended May 31, 2022 compared to the three months ended May 31, 2021, R&D costs decreased as a result of a $61,205 decrease in CRADA costs, $38,284 decrease in personnel costs and $12,619 decrease in other R&D related costs. During the nine months ended May 31, 2022 compared to the nine months ended May 31, 2021, R&D costs decreased as a result of an $80,614 decrease in CRADA costs and $12,514 decrease in other R&D related costs offset by a $76,979 increase in personnel costs.

 

Stock Based Compensation

 

The Company grants stock options to its directors, employees and consultants. Stock compensation represents the expense associated with the amortization of our stock options. Expense associated with equity-based transactions is calculated and expensed in our financial statements as required pursuant to various accounting rules and is non-cash in nature. Stock based compensation expense decreased primarily due to current year expense excluding compensation related to the prior year which included expense related to 2,500,000 stock purchase options granted in the fourth quarter of fiscal year ended August 31, 2020 to each of Mr. Jatinder S. Bhogal, former CEO and Chairman and Mr. John Rhee, former President, CEO and Chairman.

 

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Liquidity and Capital Resources

 

Our primary cash needs are for personnel, professional and R&D related fees and other administrative costs. Our principal source of liquidity is cash. As of May 31, 2022, the Company had cash of $8,632,495 and the potential to recover the $558,344 deposit made by the Korean Subsidiary for roll-to-roll equipment which has been impaired. We have financed our operations primarily from the sale of equity and debt securities.

 

The following table presents a summary of our cash flows for the periods indicated:

 

 

   Nine Months Ended May 31,  2022
compared to
   2022  2021  2021
Net cash used in operating activities  $(2,878,836)  $(1,944,605)  $(934,231)
Net cash used in investing activities   4,398,402    (5,050,759)   9,449,161 
Net cash provided by financing activities   -    719,400    (719,400)
Effect of exchange rate changes on cash   (14,527)   887    (15,414)
Net increase (decrease) in cash and cash equivalents  $1,505,039   $(6,275,077)  $7,780,116 

 

Operating Activities - Operating activities consist of net loss adjusted for certain non-cash items, including depreciation, stock-based compensation expense, realized gains or losses on disposal of property and equipment, impairments and the effect of changes in working capital. The increase in cash used in operating activities over the prior period is mainly due to an approximate increase in cash layouts related to R&D Costs of $392,000 and $542,000 related to general and administrative costs.

 

Investing Activities - We have used cash primarily for liquid short-term investments, purchases of furniture, equipment, leasehold improvements and computers. Excluding the effects of the short term, $5,000,000 investment, the Company used $652,357 related to investing activities, primarily consisting of equipment and leasehold improvements at our South Korean Subsidiary.

 

Financing Activities - Cash flows from financing activities totaled $719,400 in 2021 as a result of the exercise of 200,000 Series S Warrants with a strike price of $3.42 per share and the exercise of 10,000 stock options at a strike price of $3.54 per share.

 

Indebtedness

 

None.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Other Contractual Obligations

 

In September 2020, the Company, through its wholly owned direct and indirect subsidiaries, SolarWindow Asia (USA) Corp. and SolarWindow Asia Co., Ltd., entered a lease for office space in South Korea. The office lease expires on September 23, 2022. Monthly rent is approximately $1,200.

 

On February 26, 2021, SolarWindow Asia Co., Ltd. entered into an apartment lease for the purposes of housing foreign personnel. The apartment lease expired on March 7, 2022, and was renewed on March 7, 2022 for an additional year. Monthly rent is approximately $950. The Company paid a security deposit of approximately $8,700.

 

 

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Recent accounting pronouncements not yet adopted

 

See Note 2 to our consolidated financial statements, “Interim Statement Presentation – Accounting Pronouncements.”

 

Recently adopted accounting pronouncements

 

See Note 2 to our consolidated financial statements, “Interim Statement Presentation – Accounting Pronouncements.”

 

Critical Accounting Policies and Significant Judgments’ and Use of Estimates

 

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021.

 

Related Party Transactions

 

See Note 7 to our consolidated financial statements for a discussion of our related party transactions.

 

Corporate Information

 

SolarWindow Technologies, Inc., a Nevada corporation, was incorporated in 1998. The Company’s executive offices are located at 9375 E Shea Blvd., Suite 107-B, Scottsdale AZ 85260. The Company’s telephone number is (800) 213-0689. Our Internet address is www.solarwindow.com. We make available through our Internet website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). The information accessible through our website is not a part of this Quarterly Report on Form 10-Q.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Interim Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Interim Chief Financial Officer concluded that as of May 31, 2022, that our disclosure controls and procedures were not effective such that the information required to be disclosed in our SEC filings is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

 

There was a lapse in our internal control environment and operating procedures in that our operating procedures require the cooperation of all of the Company’s executive officers and directors, as well as the cooperation of the executive officers and directors of the Company’s subsidiaries.

 

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During the three months ended May 31, 2022, the Company recognized an impairment of all assets related to the Korean Subsidiary totaling $674,200. The impairment was recognized due to the Company’s inability to obtain from the management of the Korean Subsidiary the complete financial statements and related documentation for the three months ended May 31, 2022 thereby placing into doubt the recoverability of assets located in South Korea. Any amounts that become recoverable will be recognized accordingly. SWT has retained legal counsel in South Korea to provide legal services on behalf of SWT with respect to the recovery of these assets.

 

Based on the historical quarterly operations of the Korean Subsidiary, the Company expensed to SG&A $217,543 during the three months ended May 31, 2022 compared to $201,105 and $209,982 during the three months ended February 28, 2022 and November 30, 2022, respectively, and impaired $674,200 which consisted primarily of a deposit to WI-A, an equipment manufacturing firm for the prior planned purchase of equipment.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

On June 9, 2022, the Company was served the Notice of Civil Claim dated May 16, 2022 (the “Notice of Claim”), and related Notice of Application (the “Application”) and Order Made After Application (the “Order”) copies of which are referenced in this report as Exhibit 99.0. The Notice of Claim, the Application and Order are collectively referred to herein as the “Complaint.” Please refer to our Form 8-K filed on June 15, 2022 and Exhibit 99.0 hereto.

 

The Company has engaged counsel to review and represent the Company in connection with the Complaint so as to determine what response, if any, it is or may be required to submit and to more fully assess the liability exposure the Company may have as a result.

 

Please refer to Exhibit 99.0 hereto for the full text of the Complaint.

 

 

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Item 1A. Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2021, which could materially affect our business, financial condition, financial results, or future performance. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended August 31, 2021.

 

Item 6. Exhibits

 

Exhibit No.  Description of Exhibit
    
10.1  Separation and Release of Claims Agreement dated January 18, 2022 by and among SolarWindow Technologies, Inc., Vector Asset Management, Inc. and Jatinder S. Bhogal (incorporated by reference to the Company’s Form 8-K filed on January 24, 2022).
    
10.2  Form of Equipment Purchase Agreement dated February 10, 2022 between SolarWindow Asia Co., Ltd and WI-A Corporation (incorporated by reference to the Company’s From 10-Q filed on April 8, 2022).
    
17.0  Termination Notice dated May 8, 2022 (incorporated by reference to the Company’s From 8-K filed on May 13, 2022).
    
99.0  Notice of Civil Claim, Endorsement on Originating Pleading or Petition for Service Outside British Columbia Notice of Application - Without Notice; Affidavit (incorporated by reference to the Company’s Form 8-K filed on June 15, 2022)
    
31.1  Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
    
32.1  Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
    
101.INS  Inline XBRL Instance Document**
101.SCH  Inline XBRL Taxonomy Extension Schema Document**
101.CAL  Inline XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF  Inline XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB  Inline XBRL Taxonomy Extension Label Linkbase Document**
101.PRE  Inline XBRL Taxonomy Extension Presentation Linkbase Document**
104  Cover Page Interactive Data File (embedded within the Inline XBRL Document)

__________________

*Filed herewith

 

** Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURE

 

Pursuant to the requirements 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.

 

SolarWindow Technologies, Inc.

 

 

 

 

By: /S/ Justin Frere  
  Justin Frere, CPA  
  Interim Chief Financial Officer  
  (Acting Principal Executive Officer and Principal Financial Officer)  
Date: July 20, 2022  

 

 

 

 

 

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