# SolarWindow Technologies, Inc.: Form 10-Q for the period ended Nov 30, 2022

- Company: [SolarWindow Technologies, Inc.](/companies/wndw.md) (CIK 1071840)
- Form: 10-Q
- Filed: 2023-10-10
- Accepted by EDGAR: Oct 10, 2023, 16:21 ET
- Period: 2022-11-30
- Accession: 0001171843-23-006173
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1071840/000117184323006173/f10q_100423.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1071840/000117184323006173/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-11-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2022-09-01 to 2022-11-30 | $232.8k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-09-01 to 2022-11-30 | $535.4k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-09-01 to 2022-11-30 | −$768.2k | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2022-09-01 to 2022-11-30 | −$726.2k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-09-01 to 2022-11-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-09-01 to 2022-11-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-09-01 to 2022-11-30 | 53,198,399 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-09-01 to 2022-11-30 | −$469.4k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2022-11-30 | $7.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-11-30 | $7.8m | us-gaap:AssetsCurrent |
| Total assets | at 2022-11-30 | $9.2m | us-gaap:Assets |
| Current liabilities | at 2022-11-30 | $228.1k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-11-30 | $228.1k | us-gaap:Liabilities |
| Shareholders' equity | at 2022-11-30 | $8.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 14,980 characters.

### 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 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.

### 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:

| Operating expenses: | Three Months Ended November 30, 2022 | 2021 | 2022 compared to 2021 Increase / (Decrease) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| 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.

### 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 | 2021 | 2022 compared 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.

### 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.

## Market risk

As filed, 327 characters.

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.

## Controls and procedures

As filed, 7,060 characters.

### 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.

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.

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.

## Risk factors

As filed, 475 characters.

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.

Filed Oct 10, 2023.
Source: SEC EDGAR, the filing index for accession 0001171843-23-006173. Last ingested by Listed: Oct 24, 2026, 15:03 ET. No prices; not investment advice.