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SolarWindow Technologies, Inc. - Quarter Report: 2022 November (Form 10-Q)

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 November 30, 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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 53,198,399 shares of common stock, par value $0.001, were outstanding on October 4, 2023.

 

 

 

 

 

SOLARWINDOW TECHNOLOGIES, INC.

FORM 10-Q

 

For the Quarterly Period Ended November 30, 2022

 

Table of Contents

 

PART I FINANCIAL INFORMATION  
   
Item 1. Consolidated Financial Statements  
   
Consolidated Balance Sheets 1
   
Consolidated Statements of Operations and Comprehensive Loss 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 12
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
   
Item 4. Controls and Procedures 16
   
   
PART II OTHER INFORMATION  
   
   
Item 1A. Risk Factors 18
   
Item 6. Exhibits 18
   
Signatures 19
   
Certifications  

 

 

 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

       
SOLARWINDOW TECHNOLOGIES, INC.      
CONSOLIDATED BALANCE SHEETS      
       
   November 30,  August 31,
   2022  2022
ASSETS  (Unaudited)   
Current assets          
Cash and cash equivalents  $7,607,902   $8,077,849 
Deferred research and development costs   159,126    153,799 
Prepaid expenses and other current assets   62,737    130,831 
Total current assets   7,829,795    8,362,479 
Property and Equipment, net of accumulated depreciation of $114,345 and $110,418, respectively   1,326,065    1,329,992 
Total assets  $9,155,830   $9,692,471 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities          
Accounts payable and accrued expenses  $161,364   $118,376 
Related party payables   66,759    - 
Total current liabilities   228,123    118,376 
Total liabilities   228,123    118,376 
           
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 November 30, 2022 and August 31, 2022   53,198    53,198 
Additional paid-in capital   82,661,202    82,576,002 
Accumulated other comprehensive income (loss)   (79,062)   (73,631)
Retained deficit   (73,707,631)   (72,981,474)
Total stockholders' equity   8,927,707    9,574,095 
Total liabilities and stockholders' equity  $9,155,830   $9,692,471 

 

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

 

 1 

 

 

       
SOLARWINDOW TECHNOLOGIES, INC.      
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPRENENSIVE LOSS (UNAUDITED)
    
   Three Months Ended November 30,
   2022  2021
       
Revenue  $-   $- 
           
Operating expenses          
Selling, general and administrative   535,360    987,932 
Research and development   232,819    362,720 
Total operating expenses   768,179    1,350,652 
Loss from operations   (768,179)   (1,350,652)
           
Other income (expense)          
Interest income   42,022    10,968 
Other income   -    13,560 
Total other income (expense)   42,022    24,528 
Net loss   (726,157)   (1,326,124)
Other comprehensive income (loss)          
Foreign currency translation gain/(loss)   (5,431)   (5,160)
Comprehensive income (loss)  $(731,588)  $(1,331,284)
           
Basic and Diluted Loss per Common Share  $(0.01)  $(0.02)
           
Weighted average number of common shares outstanding - basic and diluted   53,198,399    53,198,399 

 

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

 

 

 

 

 

 2 

 

 

                               
SOLARWINDOW TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
 
   Common Stock            
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2022  Shares  Amount  Additional Paid-in Capital  Accumulated Other Comprehensive Income (Loss)  Retained Deficit  Total Stockholders' Equity
Balance, August 31, 2022   53,198,399   $53,198   $82,576,002   $(73,631)  $(72,981,474)  $9,574,095 
Stock based compensation due to common stock purchase options   -    -    85,200    -    -    85,200 
Foreign currency translation adjustments   -    -    -    (5,431)   -    (5,431)
Net loss for the three months ended November 30, 2022   -    -    -    -    (726,157)   (726,157)
Balance, November 30, 2022   53,198,399   $53,198   $82,661,202   $(79,062)  $(73,707,631)  $8,927,707 
                               
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2021                              
                               
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   $81,030,703   $(20,032)  $(69,359,065)  $12,504,804 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 3 

 

 

       
SOLARWINDOW TECHNOLOGIES, INC.      
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)      
       
   Three Months Ended November 30,
   2022  2021
Cash flows from operating activities          
Net loss  $(726,157)  $(1,326,124)
Depreciation   3,927    8,642 
Stock based compensation expense   85,200    278,863 
Changes in operating assets and liabilities:          
Deferred research and development costs   (5,327)   (14,176)
Prepaid expenses and other assets   68,051    43,461 
Accounts payable and accrued expenses   39,895    88,897 
Related party payable   64,964    194,994 
Net cash used in operating activities   (469,447)   (725,443)
           
Cash flows from investing activities          
Redemption of short-term investments   -    5,000,000 
Capital expenditures   -    (3,142)
Net cash provided by investing activities   -    4,996,858 
Effect of exchange rate changes on cash and cash equivalents   (500)   (3,921)
Net increase (decrease) in cash and cash equivalents   (469,947)   4,267,494 
Cash  and cash equivalents at beginning of period   8,077,849    7,127,456 
Cash and cash equivalents at end of period  $7,607,902   $11,394,950 

 

(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.

 

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 November 30, 2022, the Company had $7,607,902 of cash and cash equivalents on hand and working capital of $7,601,642. 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 SolarWindow Technologies, Inc. and its controlled subsidiary companies (collectively, the “Company”) as of November 30, 2022, and for the three months ended November 30, 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, 2022 included in our Annual Report on Form 10-K filed with the SEC on August 30, 2023.

 

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 November 30, 2022, results of operations, stockholders’ equity and cash flows for the three months ended November 30, 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.

 

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.

 

 5 

 

 

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. (the “Korean Subsidiary”). 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, 2022. 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 first quarter in fiscal 2023 and 2022 ended on November 30, 2022 and 2021, respectively.

 

Cash and Highly Liquid Investments

 

Cash includes cash on hand and highly liquid investments with original maturities of three months or less from the date of purchase. The Company had $7,677,119 of cash as of November 30, 2022, including $349,513 held in the US with $250,000 covered by FDIC insurance, and $7,528,335 held in Canadian bank accounts with $7,428,335 in excess of Canadian Deposit Insurance Corporation insured limits.

 

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.

 

Recent accounting pronouncements not yet adopted

 

None.

 

Recently adopted accounting pronouncements

 

None.

 

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).

 

 6 

 

 

Following is the computation of basic and diluted net loss per share for the three months ended November 30, 2022 and 2021:

 

          
   Three Months Ended November 30,
   2022  2021
Basic and diluted EPS Computation          
Numerator:          
Loss available to common stockholders'  $(726,157)  $(1,326,124)
Denominator:          
Weighted average number of common shares outstanding   53,198,399    53,198,399 
Basic and diluted EPS Computation  $(0.01)  $(0.02)
           
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   6,707,400    6,821,800 
Warrants   18,661,917    19,281,917 
Total shares not included in the computation of diluted loss per share   25,369,317    26,103,717 

 

NOTE 4 – Property and Equipment

 

Property and equipment consists of the following:

 

          
   November 30,  August 31,
   2022  2022
Computers, office equipment and software  $14,102   $14,102 
Equipment   133,653    133,653 
In-process equipment   1,292,655    1,292,655 
Total property and equipment   1,440,410    1,440,410 
Accumulated depreciation   (114,345)   (110,418)
Property and equipment, net  $1,326,065   $1,329,992 

 

During the three months ended November 30, 2022 and 2021, the Company recognized straight-line depreciation expense of $3,927 and $8,642, 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 may require additional payments of up to approximately $510,000.

 

NOTE 5 – Common Stock and Warrants

 

Common Stock

 

At November 30, 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 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 November 30, 2022 and August 31, 2022 is as follows:

 

 7 

 

 

                     
   Shares of Common Stock Issuable from Warrants Outstanding as of        
   November 30,  August 31,  Weighted Average  Date of 
Description  2022  2022  Exercise 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   $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   18,661,917    19,281,917            

 

During the three months ended November 30, 2022, Series S Warrants for the purchase of 620,000 shares of common stock at an exercise price of $3.42 per share expired unexercised.

 

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:

 

          
   Three Months Ended November 30,
   2022  2021
Expected dividend yield   -    - 
Expected stock price volatility   -    103.31%
Risk-free interest rate   -    1.16%
Expected term (in years)(simplified method)   -    5.75 
Exercise price   -   $6.21 
Weighted-average grant date fair-value   -   $4.92 

 

A summary of the Company’s stock option activity for the three months ended November 30, 2022 and related information follows:

 

            
   Number of Shares Subject to Option Grants  Weighted Average Exercise Price ($)  Weighted Average Remaining Contractual Term (years)  Aggregate Intrinsic Value ($)
Outstanding at August 31, 2022   6,761,400    4.01           
Forfeitures and cancellations   (54,000)   4.53           
Outstanding at  November 30, 2022   6,707,400    4.00    3.13    - 
Exercisable at  November 30, 2022   6,636,750    4.01    3.13    - 

 

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 November 30, 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 $2.01 on November 30, 2022 and no outstanding options have an exercise price below $2.01 per share, as of November 30, 2022, there is no intrinsic value in the Company’s outstanding stock options and vested options.

 

 8 

 

 

Three Months Ended November 30, 2021

 

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. 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.

 

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 months ended November 30, 2022 and 2021:

 

          
   Three Months Ended November 30,
Stock compensation expense:  2022  2021
Selling, general and administrative  $70,810   $257,631 
Research and development   14,390    21,232 
Total  $85,200   $278,863 

 

As of November 30, 2022, the Company had $143,128 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 1.75 years.

 

The following table summarizes information about stock options outstanding and exercisable at November 30, 2022:

 

                  
   Stock Options Outstanding  Stock Options Exercisable
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    6.86    2.32    153,000    6.86    2.32 
 2.60    2,500,000    3.59    2.60    2,500,000    3.59    2.60 
 3.42    50,000    3.89    3.42    37,500    3.89    3.42 
 3.46    35,000    5.10    3.46    35,000    3.10    3.46 
 3.54    1,249,400    5.84    3.54    1,191,250    6.99    3.54 
 3.66    1,000,000    0.75    3.66    1,000,000    0.75    3.66 
 4.87    110,000    4.98    4.87    110,000    4.98    4.87 
 6.00    800,000    0.75    6.00    800,000    0.75    6.00 
 6.21    110,000    8.91    6.21    110,000    8.91    6.21 
 8.00    700,000    0.75    8.00    700,000    0.75    8.00 
 Total    6,707,400    3.13    4.00    6,613,350    3.13    4.01 

 

NOTE 7 - Transactions with Related Persons

 

A related party with respect to the Company is generally defined as any person (and, if a natural person, inclusive of his or her immediate family) (i) 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.

 

 9 

 

 

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 and executed a Separation and Release of Claims Agreement by and among the Company, VAMI and Mr. Bhogal. 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. The Company recognized cash compensation expense of $0 and $266,500 during the three months ended November 30, 2022 and 2021, respectively related to the ECA.

 

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 November 30, 2022 and 2021, respectively.

 

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

 

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.

 

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, monthly rent of approximately $950 and a security deposit of approximately $8,700. This lease was terminated in November 2022.

 

In September 2020, the Korean Subsidiary entered a lease for office space. The office lease provided for an initial term of one-year from September 23, 2020 through September 23, 2021, which was been renewed for an additional year, monthly rent of approximately $1,200 and a security deposit of approximately $13,000. This lease was terminated in December 2022.

 

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 November 30, 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 November 30, 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.

 

 10 

 

 

On December 31, 2022, certain of the Companys outstanding common stock purchase warrants expired unexercised, including 246,000 Series M warrants, 767,000 Series N warrants, 213,500 Series P warrants, 468,750 Series R warrants, 300,000 Series S-A warrants, and 620,000 Series S warrants.

 

On January 13, 2023, the Board determined that it is in the best interests of the Company to discontinue operations in South Korea and to dissolve the Korean Subsidiary.

 

On March 17, 2023 the 2006 Long-Term Incentive Plan expired.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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

 

We are a developer of transparent electricity-generating coatings, and methods for their application to various materials (collectively, “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 which span multiple industries, including architectural, automotive, agrivoltaic, aerospace, commercial transportation and marine. Our LiquidElectricity® Coatings 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.

 

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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 executed 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 eleven 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 November 30, 2022, the Company had a capitalized asset balance of $159,126 related to deferred research and development costs for advances to Alliance for Sustainable Energy for work to be performed under the NREL CRADA.

 

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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 November 30, 2022 may not be indicative of the results that may be expected for the fiscal year. 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.

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

 

         2022 compared to 2021
  

Three Months Ended

November 30,

  Increase /  Percentage
   2022  2021  (Decrease)  Change
Operating expenses:                    
Selling, general & administrative  $464,550   $730,301   $(265,751)   36%
Research and development   218,429    341,488    (123,059)   36%
Stock compensation   85,200    278,863    (193,663)   69%
Total Operating expense  $768,179   $1,350,652   $(582,473)   43%

 

Comparison of the three months ended November 30, 2022 to the three months ended November 30, 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 November 30, 2022, compared to the three months ended November 30, 2021, SG&A costs decreased due to the closure of our South Korean office ($63,000), decrease in personnel costs ($188,000), decrease in professional fees ($16,000), offset by net increases in in other administrative costs ($1,000).

 

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 November 30, 2022, compared to the three months ended November 30, 2021, R&D costs decreased primarily as a result of a decrease in personnel ($87,000), and Korea based R&D costs ($44,000), offset by net increases in the CRADA and other costs ($8,000).

 

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 expense related to the 2,500,000 stock purchase options granted in the fourth quarter of fiscal year ended August 31, 2020, to 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 sources of liquidity are cash and short-term investments. As of November 30, 2022, the Company had cash of $7,677,119. 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:

 

   Three Months Ended November 30,  2022 compared
   2022  2021  to 2021
Net cash used in operating activities  $(469,447)  $(725,443)  $255,996 
Net cash provided by (used) in investing activities   -    4,996,858    (4,996,858)
Effect of exchange rate changes on cash   (500)   (3,921)   3,421 
Net increase (decrease) in cash and cash equivalents  $(469,947)  $4,267,494   $(4,737,441)

 

Operating Activities - Operating activities consist of net loss adjusted for certain non-cash items, including depreciation, stock-based compensation expense, and the effect of changes in working capital. The decrease in cash used in operating activities over the prior period is mainly due to an approximate decrease in cash layouts related to the Korea office ($106,000), US based personnel ($275,000), and professional fees ($16,000), offset by working capital and other general costs ($141,000).

 

Investing Activities - We have used cash primarily for liquid short-term investments, purchases of furniture, office equipment, leasehold improvements, and computers. During 2021, we purchased a twelve-month term deposit in the amount of $5,000,000 which matured on October 1, 2021.

 

Indebtedness

 

None.

 

Other Contractual Obligations

 

None.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

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 this Quarterly Report on Form 10-Q for the three months ended November 30, 2022.

 

 15 

 

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 free of charge 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

 

We maintain a system of disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, which are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours is designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Under supervision and with the participation of management, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the Company and its subsidiaries as of November 30, 2022. Based on that evaluation, our Acting Principal Executive officer and Principal Financial Officer concluded that our disclosure controls and procedures at the subsidiary level were not effective at a reasonable assurance level as of November 30, 2022, as discussed below.

 

Management’s Report on Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with US GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 16 

 

As of November 30, 2022, our Acting Principal Executive Officer and Principal Financial Officer assessed the effectiveness of our internal control over financial reporting using the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management concluded that our internal control over financial reporting was not effective at November 30, 2022 because of the material weaknesses described below.

 

Management identified control deficiencies at the subsidiary level that constituted material weaknesses. A “material weakness”, as defined by COSO, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is more than a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following material weaknesses in our internal control over financial reporting as of November 30, 2022:

 

The degree of compliance with established policies and procedures had deteriorated at the Korean Subsidiary. Due to jurisdictional challenges of operating the Korean Subsidiary from the U.S., the Company relied upon the cooperation of the Korean Subsidiaries management to maintain adherence to and comply with the documented internal control procedures, including the dissemination of its financial results and support thereof to SolarWindow Technologies, Inc, the parent company, for purposes of consolidating the Company’s financial results. Management is unable to assess compliance with the Korean Subsidiary’s documented and established policies and procedures due to the management of the Korean Subsidiary failing to provide the financial information required for consolidation thereby resulting in the inability of the Company’s auditors to complete their review procedures of the Korean Subsidiary.

 

Also, due to reductions in staffing at the Korean Subsidiary, there was inadequate segregation of duties consistent with control objectives. The Korean Subsidiary’s management is comprised of a single individual resulting in a situation where limitations of segregation of duties exist.

 

Accordingly, because of identifying the above material weaknesses we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.

 

Management believes that the material weaknesses set forth above are intrinsic to our small size and that these weaknesses are limited to the Korean Subsidiary.

 

Remedies Employed as of November 30, 2022

 

Management has retained counsel in South Korea to provide legal services with respect to the recovery of assets.

 

Remedies Employed as of the Date of this Quarterly Report

 

Management has retained counsel in South Korea to provide legal services with respect to the recovery of assets, and with the dissolution of the Korean Subsidiary as resolved by the Board on January 13, 2023.

 

On April 25, 2023, management formally removed the Korean Subsidiary management and installed persons affiliated with the Company thus providing management with the authority, not previously held, to direct and oversee the Korean Subsidiary.

 

On May 25, 2023, management engaged a Korean accounting firm to provide accounting services, financial reporting and assist with the dissolution of the Korean subsidiary.

 

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.

 

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We are not required by current SEC rules to include an auditor's attestation report. Our registered public accounting firm has not attested to Management's reports on our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

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, 2022, 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, 2022.

 

Item 6. Exhibits

 

Exhibit No.Description of Exhibit
  
31.1Certification of the Acting Principal Executive 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*

 

31.2Certification of the 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*

 

32.1Certification of the Acting 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.PREInline XBRL Taxonomy Extension Presentation Linkbase Document**
104Cover 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.

 

 18 

 

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/Amit Singh  
   Amit Singh
   Vice President
   (Acting Principal Executive Officer)
Date:  October 10, 2023
    
    
By:  /S/ Justin Frere  
   Justin Frere, CPA
   Interim Chief Financial Officer
   (Principal Financial Officer)
Date:  October 10, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

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