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, 2021

 

☐

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)

 

430 Park Avenue, Suite 702, New York, NY 10022

(Former name, former address and former fiscal year, if changed since last report)

 

(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: 53,196,799 shares of common stock, par value $0.001, were outstanding on July 7, 2021.

 

 

SOLARWINDOW TECHNOLOGIES, INC.

FORM 10-Q

 

For the Quarterly Period Ended May 31, 2021

 

Table of Contents

 

PART I FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II OTHER INFORMATION
Item 1A.	Risk Factors	22
Item 6.	Exhibits	22
Signatures		23
Certifications

 

 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

 

		May 31, 2021				August 31, 2020
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	7,876,446			$	14,151,523
Short-term investments			5,000,000				-
Deferred research and development costs			187,756				574,731
Prepaid expenses and other current assets			148,510				56,147
Total current assets			13,212,712				14,782,401
Operating lease right-of-use asset			-				42,212
Property and Equipment, net of accumulated depreciation of $104,404 and $93,323, respectively			1,369,791				1,349,495
Security deposit			22,553				2,200
Total assets		$	14,605,056			$	16,176,308
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	138,802			$	53,428
Related party payables			65,550				113,186
Current maturities of operating lease			-				24,828
Total current liabilities			204,352				191,442
Non-current operating lease			-				17,737
Total long-term liabilities			-				17,737
Total liabilities			204,352				209,179
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, 53,196,799 and 52,959,323 shares issued and outstanding at May 31, 2021 and August 31, 2020, respectively			53,197				52,959
Additional paid-in capital			80,964,005				76,039,209
Accumulated other comprehensive income (loss)			1,247				-
Retained deficit			(66,617,745	)			(60,125,039	)
Total stockholders' equity			14,400,704				15,967,129
Total liabilities and stockholders' equity		$	14,605,056			$	16,176,308

 

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

 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

		Three Months Ended May 31,								Nine Months Ended May 31,
		2021				2020				2021				2020
Revenue		$	-			$	-			$	-			$	-
Operating expenses
Selling, general and administrative			1,394,977				521,523				5,180,785				1,707,446
Research and development			423,859				515,663				1,338,248				1,710,064
Total operating expenses			1,818,836				1,037,186				6,519,033				3,417,510
Loss from operations			(1,818,836	)			(1,037,186	)			(6,519,033	)			(3,417,510	)
Other income (expense)
Interest income			12,435				49,769				35,102				218,117
Loss on disposal of assets			-				-				(8,775	)			-
Total other income (expense)			12,435				49,769				26,327				218,117
Net loss		$	(1,806,401	)		$	(987,417	)		$	(6,492,706	)		$	(3,199,393	)
Basic and Diluted Loss per Common Share		$	(0.03	)		$	(0.02	)		$	(0.12	)		$	(0.06	)
Weighted average number of common shares outstanding - basic and diluted			53,196,799				52,959,323				53,076,883				52,959,323

 

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

 

 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 

		Three Months Ended May 31,								Nine Months Ended May 31,
		2021				2020				2021				2020
Net income (loss)		$	(1,806,401	)		$	(987,417	)		$	(6,492,706	)		$	(3,199,393	)
Other comprehensive income (loss):
Foreign currency translation adjustments, net (a)			8,014				-				1,247				-
Comprehensive income (loss)		$	(1,798,387	)		$	(987,417	)		$	(6,491,459	)		$	(3,199,393	)

 

^(a) Amounts include translation of subsidiary financial statements from South Korean Won to the U.S. dollar.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

 

										Additional								Accumulated Other				Total
FOR THE NINE MONTHS ENDED MAY 31, 2021		Common Stock								Paid-in				Retained				Comprehensive				Stockholders'
		Shares				Amount				Capital				Deficit				Income (Loss)				Equity
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				(62,662,074	)			3,277				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				(64,811,344	)			(6,767	)			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			$	(66,617,745	)		$	1,247			$	14,400,704

 

FOR THE NINE MONTHS ENDED MAY 31, 2020
Balance, August 31, 2019			52,959,323			$	52,959			$	71,166,300			$	(52,771,977	)		$	-			$	18,447,282
Stock based compensation due to common stock purchase options			-				-				420,970				-				-				420,970
Net loss for the three months ended November 30, 2019			-				-				-				(1,105,278	)			-				(1,105,278	)
Balance, November 30, 2019			52,959,323				52,959				71,587,270				(53,877,255	)			-				17,762,974
Stock based compensation due to common stock purchase options			-				-				434,656				-				-				434,656
Net loss for the three months ended February 29, 2020			-				-				-				(987,417	)			-				(987,417	)
Balance, February 29, 2020			52,959,323				52,959				72,021,926				(54,864,672	)			-				17,210,213
Stock based compensation due to common stock purchase options			-				-				434,654				-				-				434,654
Net loss for the three months ended May 31, 2020			-				-				-				(987,417	)			-				(987,417	)
Balance, May 31, 2020			52,959,323			$	52,959			$	72,456,580			$	(55,852,089	)		$	-			$	16,657,450

 

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

 

 

SOLARWINDOW TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

		Nine Months Ended May 31,
		2021				2020
Cash flows from operating activities
Net loss		$	(6,492,706	)		$	(3,199,393	)
Depreciation			21,637				18,684
Stock based compensation expense			4,205,634				1,290,280
Loss on disposal of assets			8,775				-
Changes in operating assets and liabilities:
Deferred research and development costs			386,975				(77,271	)
Prepaid expenses and other assets			(92,363	)			(43,040	)
Accounts payable and accrued expenses			85,338				(17,688	)
Operating lease assets and liabilities			(353	)			199
Related party payable			(47,636	)			134,870
Security deposits			(19,906	)			-
Net cash used in operating activities			(1,944,605	)			(1,893,359	)
Cash flows used in investing activity
Purchase of short-term investments			(5,000,000	)			-
Capital expenditures			(52,920	)			(5,031	)
Proceeds from the sale of assets			2,161				-
Net cash used in investing activity			(5,050,759	)			(5,031	)
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			887				-
Net increase (decrease) in cash and cash equivalents			(6,275,077	)			(1,898,390	)
Cash and cash equivalents at beginning of period			14,151,523				16,604,011
Cash and cash equivalents at end of period		$	7,876,446			$	14,705,621
Supplemental disclosure of cash flow information:
Interest paid in cash		$	-			$	-
Income taxes paid in cash		$	-			$	-

 

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

 

 

 

 

SOLARWINDOW TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – Basis of Presentation and Organization

 

Basis of Presentation

 

The accompanying unaudited interim consolidated financial statements of SolarWindow Technologies, Inc. and its controlled subsidiary companies (collectively, the “Company”) as of May 31, 2021, and for the three and nine months ended May 31, 2021 and 2020 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, 2020 included in our Annual Report on Form 10-K filed with the SEC on November 10, 2020.

 

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, 2021, results of operations, stockholders’ equity and cash flows for the three and nine months ended May 31, 2021 and 2020. 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.

 

Organization

 

SolarWindow Technologies, Inc. was incorporated in the State of Nevada on May 5, 1998. On August 24, 2020, the Company formed wholly owned SolarWindow Asia (USA) Corp. as the holding company for SolarWindow Asia Co. Ltd., (collectively “SolarWindow Asia”) a company formed in the Republic of Korea for the purpose of expansion into the Asian markets. SolarWindow™ technology harvests light energy from the sun and from artificial light sources, by generating electricity from a transparent coating of organic photovoltaic (“OPV”) solar cells, applied to glass and plastics, thereby creating a “photovoltaic” effect. 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 May 31, 2021, the Company had $12,876,446 of cash and cash equivalents and short-term investments on hand and working capital of $13,008,360. 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 – Summary of Significant Accounting Policies

 

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, 2020. 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 2021 and 2020 ended on May 31, 2021 and 2020, respectively.

 

Principles of consolidation

 

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.

 

The Consolidated Financial Statements above include the results of operations for SolarWindow Asia from the date of its operations beginning in September 2020. During our fiscal quarter ended November 30, 2020, the Company made its initial capital infusion of $831,000 to SolarWindow Asia.

 

Use of estimates

 

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.

 

Cash and Cash Equivalents and Highly Liquid Investments

 

Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less from the date of purchase.

 

		May 31, 2021				August 31, 2020
Cash and cash equivalents		$	7,876,446			$	14,151,523
Short-term investment			5,000,000				-
		$	12,876,446			$	14,151,523

 

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 May 31, 2021, the short-term investment consists of a fixed-term deposit with a twelve-month maturity at the time of purchase on October 1, 2020.

 

Recent accounting pronouncements not yet adopted

 

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 will be applied either prospectively or retrospectively. The adoption of ASU 2019-12 is not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. 

 

 

Recently adopted 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. The Company believes that none of the new standards will have a significant impact on the consolidated financial statements.

 

NOTE 3 – Property and Equipment

 

Property and equipment consists of the following:

 

		May 31, 2021				August 31, 2020				Increase / (Decrease)
Computers, office equipment and software		$	14,800			$	23,709			$	(8,909	)
Furniture and fixtures			19,316				12,634				6,682
Equipment			113,820				113,820				-
Leasehold improvements			33,604				-				33,604
In-process equipment			1,292,655				1,292,655				-
Total property and equipment			1,474,195				1,442,818				31,377
Accumulated depreciation			(104,404	)			(93,323	)			(11,081	)
Property and equipment, net		$	1,369,791			$	1,349,495			$	20,296

 

 

During the nine months ended May 31, 2021, furniture and fixtures and leasehold improvements increased $6,682 and $33,604, respectively, due to payments towards SolarWindow Asia office improvements.

 

As a result of the closure of the Vestal New York office, during our first fiscal quarter, the Company disposed of office equipment, computers and furniture with an historical cost totaling $21,543 and net book value of $10,936. The Company received $2,161 of proceeds from the sale of the assets resulting in a loss of $8,775.

 

During the three months ended May 31, 2021 and 2020, the Company recognized depreciation expense of $9,183 and $5,782, respectively. During the nine months ended May 31, 2021 and 2020, the Company recognized depreciation expense of $21,637 and $18,684, respectively.

 

 

NOTE 4 – Common Stock and Warrants

 

Common Stock

 

At May 31, 2021, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001 per share and 53,196,799 shares outstanding.

 

2006 Long-Term Incentive Plan

 

In 2006 the Company’s Board and stockholders adopted and approved 15,000,000 shares for grant under the 2006 Long-Term Incentive Plan (the “2006 Plan”). The 2006 Plan was extended by the Board on February 7, 2021 to expire two years hence. The 2006 Plan was adopted in order to attract and retain the best available personnel for positions of substantial authority and to provide additional incentive to employees and directors to promote the success of the Company’s business. The 2006 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, and other types of awards to employees, consultants, and directors. Stock option grants pursuant to the 2006 Plan vest from zero to five years and expire from six to ten years after the date of grant with the exercise price equal to the fair value of the underlying stock on the date of grant. All shares approved for grant and subsequently forfeited are available for future grant. The Company does not repurchase shares to fulfill the requirements of options that are exercised and therefore issues new shares when options are exercised. There are currently 7,040,527 shares reserved for issuance under the 2006 Plan, see “NOTE 5 - Stock Options” for additional information.

 

 

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, 2021 and August 31, 2020 is as follows:

 

		Shares of Common Stock Issuable from Warrants Outstanding as of								Weighted Average
		May 31,				August 31,				Exercise				Date of
Description		2021				2020				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			621,600				821,600			$	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			19,283,517				19,483,517

 

During the nine months ended May 31, 2021, 200,000 Series S Warrants were exercised for cash resulting in $684,000 of proceeds to the Company.

 

NOTE 5 - 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, 2021				May 31, 2020
Expected dividend yield		–			–
Expected stock price volatility		89.44%			82.94 – 86.23%
Risk-free interest rate		0.19%			1.40 – 1.69%
Expected term (in years)(simplified method)		4.00			4.5 – 5.75
Exercise price		$3.42			$2.32 and $3.54
Weighted-average grant date fair-value		$2.16			$1.61 and $1.55

 

 

 

 

A summary of the Company’s stock option activity for the nine months ended May 31, 2021 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, 2019			2,777,334				4.31
Grants			5,158,000				4.06
Forfeitures and cancellations			(130,600	)			3.54
Outstanding at August 31, 2020			7,804,734				4.16
Grants			50,000				3.42
Exercises			(56,667	)			4.95
Forfeitures and cancellations			(1,057,667	)			5.30
Outstanding at May 31, 2021			6,740,400				3.97				4.55				41,277,555
Exercisable at May 31, 2021			4,003,400				3.78				5.01				25,264,560

 

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, 2021. 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 $10.09 on May 31, 2021 and all outstanding options have an exercise price below $10.09 per share, as of May 31, 2021, there is $41,277,555 and $25,264,560 of intrinsic value in the Company’s outstanding stock options and vested options, respectively.

 

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.

 

Three and Nine Months Ended May 31, 2020

 

On October 9, 2019, the Company granted 153,000 options to an employee with a ten-year term, exercise price of $2.32 per share and vesting at the rate of 1/36th per month. Additionally, on September 16, 2019, the Board granted 5,000 options with a six-year term to a consultant with an exercise price of $3.54 per share and vesting at the rate of 1/20th per quarter.

 

 

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, 2021 and 2020:

 

		Three Months Ended May 31,								Nine Months Ended May 31,
		2021				2020				2021				2020
SG&A		$	761,654			$	172,218			$	3,617,132			$	516,658
R&D			141,544				262,436				588,502				773,622
Total		$	903,198			$	434,654			$	4,205,634			$	1,290,280

 

As of May 31, 2021, the Company had $1,401,989 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 3.25 years.

 

The following table summarizes information about stock options outstanding and exercisable at May 31, 2021:

 

					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				8.36				2.32				80,750				8.36				2.32
	2.60				2,500,000				5.09				2.60				1,250,000				5.09				2.60
	3.28				7,500				5.46				3.28				7,500				5.46				3.28
	3.42				50,000				5.39				3.42				12,500				5.39				3.42
	3.46				35,000				4.60				3.46				35,000				4.60				3.46
	3.54				1,337,400				7.13				3.54				1,160,150				7.58				3.54
	3.66				1,000,000				2.25				3.66				500,000				2.25				3.66
	4.87				157,500				6.59				4.87				157,500				6.59				4.87
	6.00				800,000				2.25				6.00				800,000				2.25				6.00
	8.00				700,000				2.25				8.00				-				2.25				8.00
	Total				6,740,400				4.55				3.97				4,003,400				5.01				3.78

 

NOTE 6 – Leases

 

On February 26, 2021, SolarWindow Asia entered into an apartment lease for the purposes of housing foreign personnel. The term of 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.

 

In September 2020, SolarWindow Asia entered a lease for office space in South Korea. The lease has a term of one year from September 23, 2020 through September 23, 2021 with monthly payments of approximately $1,200 and a security deposit of approximately $14,000.

 

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.

 

On May 1, 2019, the Company leased office space in Vestal, New York and entered into a Professional Building Lease Agreement (the “Lease”). The Lease has an initial term of three years through May 1, 2022 with monthly rent due of $2,200 for the first two years and $2,266 during year three. On November 30, 2020, the Company terminated the Lease and entered into a lease termination agreement (the “Termination Agreement”). Pursuant to the terms of the Termination Agreement, the Company made a payment of $26,400 and delivered the premises in good order including the removal of furniture and fixtures which the Company disposed, See “NOTE 3 – Property and Equipment” for additional information related to the disposal of the furniture and fixtures. All related assets and liabilities were written off with $418 of unrecognized interest expense charged to rent expense.

 

 

As of May 31, 2021, 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.

 

The components of Lease expenses are as follows:

 

		Three Months Ended May 31,								Nine Months Ended May 31,
		2021				2020				2021(a)				2020
Operating lease cost		$	6,672			$	6,666			$	46,952			$	19,998

 

^(a) Represents three months of rent expense at $2,222 per month, $26,400 lease termination fee, ($418) of unrecognized interest expense and $14,304 related to SolarWindow Asia.

 

Supplemental balance sheet information related to the Lease is as follows:

 

		May 31,				August 31,
		2021				2020
Operating lease right-of-use asset		$	-			$	42,212
Current maturities of operating lease		$	-			$	24,828
Non-current operating lease			-				17,736
Total operating lease liabilities		$	-			$	42,564
Weighted Average remaining lease term (in years):			-				1.67
Discount rate:			-				5.85	%

 

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”), pursuant to a Consulting Agreement dated February 1, 2014, as amended on November 11, 2016 and December 1, 2018 (Amendment No. 2) (collectively, the “Prior VAMI Agreements”). On July 1, 2020 the Company and VAMI entered into an Executive Consulting Agreement (the “ECA”), which supersedes the Consulting Agreements and pursuant to which Mr. Bhogal serves as a director of the Company and as its Chairman and Chief Executive Officer. Pursuant to the Consulting Agreements in effect prior to December 1, 2018, VAMI received compensation of $5,000 per month. Beginning with Amendment No. 2, VAMI received compensation of $18,750 per month and pursuant to the ECA, VAMI receives $34,167 per month. VAMI also incurs expenses on behalf of the Company which are reimbursed according to the Company’s expense report policy. In connection with the Prior VAMI Agreements and ECA, the Company recognized cash compensation expense of $102,500 and $56,250 during the three months ended May 31, 2021 and 2020, respectively, and $307,500 and $168,750 during the nine months ended May 31, 2021 and 2020, respectively. As of May 31, 2021, the Company recognized a related party payable to VAMI of $34,167.

 

From time-to–time, Talia Jevan Properties, Inc., a British Columbia corporation wholly-owned by our majority shareholder and former Chairman, Harmel S. Rayat would make interest-free advances to the Company. Advances received totaled $0 and $120,360 during the three months ended May 31, 2021 and 2020, respectively, and $0 and $206,718 during the nine months ended May 31, 2021 and 2020, respectively. On March 2, 2020, the Company repaid Talia Jevan Properties $50,000. On October 20, 2020, the Company repaid Talia Jevan Properties $53,251, the balance owing as of our fiscal year end August 2020. As of May 31, 2021, there were no balances owing to Talia Jevan Properties, Inc.

 

 

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 Mr. Sierchio was a Director totaled $43,750 and $116,667 during the three and nine months ended May 31, 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

 

In September 2020, and February 2021, SolarWindow Asia entered into leases for office space and an apartment in South Korea. See “Note 6 - Leases” for additional information.

 

During 2019 the Company made payments totaling $1,292,655 towards the purchase of manufacturing equipment with an estimated total cost of $1,803,000. The remaining $510,345 will be paid upon the completion of the equipment once the final specifications have been determined pending optimization of the Company’s product iteration specific to this equipment.

 

COVID-19

 

In December 2019, an outbreak of the COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization declared the COVID-19 virus a global pandemic and on March 13, 2020, President Donald J. Trump declared the virus a national emergency in the United States. This highly contagious disease has spread to most of the countries in the world and throughout the United States, creating a serious impact on customers, workforces and suppliers, disrupting economies and financial markets, and potentially leading to a world-wide economic downturn. It has caused a disruption of the normal operations of many businesses, including the temporary closure or scale-back of business operations and/or the imposition of either quarantine or remote work or meeting requirements for employees, either by government order or on a voluntary basis. The pandemic may adversely affect our operations, our employees and our employee productivity. It may also impact the ability of our subcontractors, partners, and suppliers to operate and fulfill their contractual obligations, and result in an increase in costs, delays or disruptions in performance. Our employees are working remotely and using various technologies to perform their functions. In reaction to the spread of COVID-19 in the United States, many businesses have instituted social distancing policies, including the closure of offices and worksites and deferring planned business activity. The disruption and volatility in the global and domestic capital markets may increase the cost of capital and limit our ability to access capital. Both the health and economic aspects of the COVID-19 virus are highly fluid and the future course of each is uncertain. For these reasons and other reasons that may come to light if the coronavirus pandemic and associated protective or preventative measures expand, we may experience a material adverse effect on our business operations, revenues and financial condition; however, its ultimate impact is highly uncertain and subject to change.

 

NOTE 9 - 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 periods presented:

 

		Three Months Ended May 31,								Nine Months Ended May 31,
		2021				2020				2021				2020
Basic and diluted EPS Computation
Numerator:
Loss available to common stockholders'		$	(1,806,401	)		$	(987,417	)		$	(6,492,706	)		$	(3,199,393	)
Denominator:
Weighted average number of common shares outstanding			53,196,799				52,959,323				53,076,883				52,959,323
Basic and diluted EPS Computation		$	(0.03	)		$	(0.02	)		$	(0.12	)		$	(0.06	)

 

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			6,740,400				2,935,334				6,740,400				2,935,334
Warrants			19,283,517				19,483,517				19,283,517				19,483,517
Total shares not included in the computation of diluted loss per share			26,023,917				22,418,852				26,023,917				22,418,852

 

NOTE 10 – Subsequent Events

 

Management has reviewed material events subsequent of the period ended May 31, 2021 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.

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

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 2019; 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 eight 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 September 15, 2020 and extends the date of completion to December 31, 2021. As of May 31, 2021, the Company had a capitalized asset balance of $187,756 related to deferred research and development costs for advances to Alliance for Sustainable Energy for work to be performed under the NREL CRADA.

 

U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy’s (EERE) Advanced Manufacturing Office (AMO) Cooperative Research and Development Agreement

 

On March 15, 2018 the Company was awarded it’s first-ever AMM CRADA by the DOE EERE AMO. SolarWindow was awarded the AMM CRADA after submitting a proposal outlining its coating technologies and fabrication methods to the DOE’s Roll-to-Roll Advanced Materials Manufacturing Consortium, led by ORNL and partnering with ANL, LBNL, and NREL. The AMM CRADA will be carried out with the DOE by SolarWindow, ANL, and NREL.

 

On September 15, 2020, we entered into NCTE that extends the date of completion to December 31, 2021 pursuant to which researchers work towards specific product development goals outlined in the AMM CRADA.

 

Through the developments of AMM CRADA, the Company accomplished initiatives to improve and optimize its laser patterning system and methods of fabrication for application of our electricity-generating coatings on flexible plastics. Once optimized for industry, this advancement is expected to reduce process time, improve device performance, and reduce the costs of LiquidElectricity™ Coating based plastic products. Another objective of the AMM CRADA is to develop and demonstrate a unique high-throughput process methodology for semitransparent OPV modules compatible with high process speeds for many different advanced material manufacturing systems.

 

 

Results of Operations

 

Our operating results for the fiscal quarter ended May 31, 2021 may not be indicative of the results that may be expected for the fiscal year ending August 31, 2021 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.

 

The following tables present the components of our consolidated results of operations for the periods indicated:

 

										2021 compared to 2020
		Three Months Ended May 31,								Increase /				Percentage
		2021				2020				(Decrease)				Change
Operating expenses:
Selling, general & administrative		$	633,323			$	349,305			$	284,018				81	%
Research and development			282,315				253,227				29,088				11	%
Stock compensation			903,198				434,654				468,544				108	%
Total Operating expense		$	1,818,836			$	1,037,186			$	781,650				75	%

 

										2021 compared to 2020
		Nine Months Ended May 31,								Increase /				Percentage
		2021				2020				(Decrease)				Change
Operating expenses:
Selling, general & administrative		$	1,563,653			$	1,190,788			$	372,865				31	%
Research and development			749,746				936,442				(186,696	)			-20	%
Stock compensation			4,205,634				1,290,280				2,915,354				226	%
Total Operating expense		$	6,519,033			$	3,417,510			$	3,101,523				91	%

 

Comparison of the three and nine months ended May 31, 2021, to the three and nine months ended May 31, 2020

 

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, 2021 compared to the three months ended May 31, 2020, SG&A costs increased due to an increase of $136,438 in personnel costs, $85,678 in professional fees and $61,902 in other administrative costs. During the nine months ended May 31, 2021, SG&A costs increased due to an increase of $193,151 in personnel costs and $193,245 in other administrative costs offset by a decrease of $13,531 in professional fees.

 

 

 

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, 2021 compared to the three months ended May 31, 2020, R&D costs increased as a result of an increase of $72,022 in CRADA costs and $1,748 in other R&D costs offset by a $44,682 decrease in personnel costs. During the nine months ended May 31, 2021 compared to the nine months ended May 31, 2020, R&D costs decreased as a result of a decrease of $15,754 in CRADA costs $99,963 in personnel costs $70,979 in other R&D related 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 increased due primarily to the Company entering into an Executive Consulting Agreement with each of Mr. Jatinder S. Bhogal, CEO and Chairman and Mr. John Rhee, President and Director, pursuant to which each party was granted 2,500,000 stock purchase options in the fourth quarter of fiscal year ended August 31, 2020.

 

Other Income (Expense)

 

A summary of our other income (expense) for the periods presented is as follows:

 

		Three Months Ended May 31,								2021 compared to
		2021				2020				2020
Other income (expense)
Interest income		$	12,435			$	49,769			$	(37,334	)
Total other income (expense)		$	12,435			$	49,769			$	(37,334	)

 

		Nine Months Ended May 31,								2021 compared to
		2021				2020				2020
Other income (expense)
Interest income		$	35,102			$	218,117			$	(183,015	)
Loss on disposal of assets			(8,775	)			-				(8,775	)
Total other income (expense)		$	26,327			$	218,117			$	(191,790	)

 

Interest income relates to the interest earned on our cash and cash equivalents and short-term investments. We experienced a decrease over the prior year primarily due to a decrease in the rate of interest earned and falling cash balances. The loss on disposal of fixed assets relates to the closing of the Vestal, New York office and related disposal of office equipment and furniture.

 

 

 

 

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 cash equivalents and short-term investments. As of May 31, 2021 and August 31, 2020, we had cash and cash equivalents and short-term investments of $12,876,446 and $14,151,523, respectively. We have financed our operations primarily from the sale of equity and debt securities. We expect the cost of funding the South Korea office to total approximately $850,000 over the twelve months ending August 31, 2021.

 

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

 

		Nine months Ended May 31,								2021 compared to
		2021				2020				2020
Net cash used in operating activities		$	(1,944,605	)		$	(1,893,359	)		$	(51,246	)
Net cash used in investing activities			(5,050,759	)			(5,031	)			(5,045,728	)
Net cash provided by financing activities			719,400				-				719,400
Effect of exchange rate changes on cash and cash equivalents			887				-				887
Net increase (decrease) in cash and cash equivalents		$	(6,275,077	)		$	(1,898,390	)		$	(4,376,687	)

 

Operating Activities

 

Operating activities consist of net loss adjusted for certain non-cash items, including depreciation, non-cash lease expense, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes. The decrease over the prior period is mainly due to the timing of working capital accounts.

 

Investing Activities

 

We have used cash primarily for short-term investments, investments in property and equipment, and, to a lesser extent, for the purchase of furniture, office equipment, leasehold improvements to our Korean offices and computers and software. Net investment activities for capital expenditures were $52,920 during the nine months ended May 31, 2021, compared to $5,031 during the nine months ended May 31, 2020. Also, during the nine months ended May 31, 2021, we purchased a twelve-month term deposit in the amount of $5,000,000.

 

Financing Activities

 

Cash flows from financing activities totaled $719,400 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

 

See Note 8 to our consolidated financial statements for a discussion of our contractual obligations

 

 

 

Recent accounting pronouncements not yet adopted

 

See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recent accounting pronouncements not yet adopted.”

 

Recently adopted accounting pronouncements

 

See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recently adopted 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, 2020.

 

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-A, 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. 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 Chief Executive Officer and 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 Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2021, that our disclosure controls and procedures were 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, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

 

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 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, 2020, 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, 2020.

 

Item 6. Exhibits

 

Exhibit No.	Description of Exhibit
31.1	Certification of 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*
31.2	Certification of 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	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase 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.

 

 

 

 

 

 

 

 

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.

 

 

Date:	July 8, 2021	/S/ Jatinder S. Bhogal
		Jatinder S. Bhogal
		Chief Executive Officer and Director
		(Principal Executive Officer)
Date:	July 8, 2021	/S/ Justin Frere
		Justin Frere, CPA
		Interim Chief Financial Officer
		(Principal Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

 

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