SOLARWINDOW TECHNOLOGIES, INC. 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 theSecurities 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 toSolarWindow Technologies, Inc. , aNevada corporation. OverviewSolarWindow Technologies, Inc. is a developer of transparent electricity-generating coatings ("LiquidElectricity™ Coatings"). When applied in ultra-thin layers to rigid glass, and flexible glass and plastic surfaces our LiquidElectricity™ Coatings transform otherwise ordinary surfaces into photovoltaic devices capable of generating electricity from natural sun, artificial light, and low, shaded, or reflected light conditions while maintaining transparency. We have overcome major technical challenges and achieved many important milestones resulting in an expansion of the potential applications of LiquidElectricity™ Coatings. Potential applications of LiquidElectricity™ Coatings span multiple industries, including architectural, automotive, agrivoltaic, aerospace, commercial transportation and marine. Our LiquidElectricity™ Coatings and SolarWindow™ products are under development with support from commercial contract firms and at theU.S. Department of Energy's National Renewable Energy Laboratory , throughCooperative Research and Development Agreements. 13
Research and Related Agreements
We are a party to certain agreements related to the development of our technology.
OnMarch 18, 2011 , we entered into the NREL CRADA withAlliance for Sustainable Energy , the operator of the NREL under itsU.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 reimburseAlliance 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
· further improving our technology efficiency and transparency;
· optimizing electrical power (current and voltage) output;
· optimizing the application of the active layer coatings and application
processes which make it possible for LiquidElectricity™ Coatings to generate
electricity on glass surfaces;
· developing improved electricity-generating coatings by enhancing performance,
processing, reliability, and durability;
· optimizing LiquidElectricity™ Coating performance on flexible substrates; and
· developing high speed and large area roll-to-roll (R2R) and sheet-to-sheet
(S2S) coating application methods required for commercial-scale building
integrated photovoltaic ("BIPV") products and windows.
On December 28, 2015 , we entered into another modification to the NREL CRADA
(the "Modification"). Under the Modification, (i) the date of completion was
extended to December 2017 ; and (ii) the Company and the NREL will work jointly
towards achieving specific product development goals and objectives for the
purpose of preparing to commercialize our OPV-based transparent
electricity-generating coatings for various applications, including BIPV, glass
and flexible plastics.
Over the course of our collaborative research and development efforts with the
NREL under the CRADA, both parties have agreed to modifications to extend the
date of completion. The Company and NREL have entered into ten such No Cost Time
Extensions ("NCTE"). Under the terms of each NCTE, all terms and conditions of
the NREL CRADA remain in full force and effect without change. The current NCTE
was executed on December 6, 2021 and extends the date of completion to December
31, 2024 . As of November 30, 2021 , the Company had a capitalized asset balance
of $136,508 related to deferred research and development costs for advances to
Alliance for Sustainable Energy for work to be performed under the NREL CRADA.
14
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, 2021 may not be
indicative of the results that may be expected for the fiscal year ending August
31, 2022 because of the COVID-19 pandemic and other potential beneficial or
detrimental unforeseen occurrences. In addition, our quarterly results of
operations have varied in the past and are likely to do so again in the future.
As such, we believe that period-to-period comparisons of our results of
operations should not be relied upon as an indication of our future performance.
The following table presents the components of our consolidated results of operations for the periods indicated:
2021 compared to 2020
Three Months Ended November 30, Increase / Percentage
2021 2020 (Decrease) Change
Operating expenses:
Selling, general & administrative $ 730,301 $ 465,961 $ 264,340 57 %
Research and development 341,488 243,156 98,332 40 %
Stock compensation 278,863 1,838,532 (1,559,669 ) -85 %
Total Operating expense $ 1,350,652 $ 2,547,649 $ (1,196,997 ) -47 %
Comparison of the three months ended
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, 2021 compared to the three months ended November 30, 2020 ,
SG&A costs increased due primarily to a $188,298 increase in personnel costs and
$101,438 increase in professional fees offset by a decrease of $25,396 in other
administrative costs.
Research and Development
Research and Development ("R&D") costs represent costs incurred to develop our
SolarWindow™ technology and are incurred pursuant to our research agreements and
agreements with other third-party providers and certain internal R&D cost
allocations. Payments under these agreements include salaries and benefits for
R&D personnel, allocated overhead, contract services and other costs. R&D costs
are expensed when incurred, except for non-refundable advance payments for
future research and development activities which are capitalized and recognized
as expense as the related services are performed. During the three months ended
November 30, 2021 compared to the three months ended November 30, 2020 , R&D
costs increased as a result of a $9,706 increase in CRADA costs, $83,685
increase in personnel costs and $4,941 increase 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 decreased primarily due to current year expense excluding compensation related to the prior year which included expense related to 2,500,000 stock purchase options granted in the fourth quarter of fiscal year endedAugust 31, 2020 to each of Mr.Jatinder S. Bhogal , CEO and Chairman and Mr.John Rhee ,
President and Director. 15
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 ofNovember 30, 2021 , the Company had cash of$11,394,950 . 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 EndedNovember 30, 2021
2020 2021 compared to 2020
Net cash used in operating activities
146,129
Net cash used in investing activities 4,996,858 (5,025,565 ) (10,022,423 )
Effect of exchange rate changes on cash (3,921 ) 2,866 6,787
Net increase (decrease) in cash and cash
equivalents $ 4,267,494 $ (5,602,013 ) $ (9,869,507 )
Operating Activities
Operating activities consist of net loss adjusted for certain non-cash items, including depreciation, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of changes in working capital. The increase in cash used in operating activities over the prior period is mainly due to an increase in R&D Costs, personnel costs and professional fees offset by a decrease in other administrative costs.
Investing Activities
We have used cash primarily for liquid short-term investments, purchases of furniture, office equipment, leasehold improvements to our Korean offices and computers and software. Net investment activities for capital expenditures were$3,142 during the three months endedNovember 30, 2021 , compared to$27,726 during the three months endedNovember 30, 2020 . During 2021, we purchased a twelve-month term deposit in the amount of$5,000,000 which matured onOctober 1, 2021 . Indebtedness None.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Other Contractual Obligations InSeptember 2020 , the Company, through its wholly owned direct and indirect subsidiaries,SolarWindow Asia (USA) Corp. andSolarWindow Asia Co., Ltd. , entered a lease for office space inSouth Korea . The office lease expires onSeptember 23, 2022 . Monthly rent is approximately$1,200 . OnFebruary 26, 2021 ,SolarWindow Asia Co., Ltd. entered into an apartment lease for the purposes of housing foreign personnel. The apartment lease expires onMarch 7, 2022 . Monthly rent is approximately$950 . During fiscal 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. For additional information, see "Note 4 - Equipment" located in the footnotes to our financial statements. 16
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 withU.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 endedAugust 31, 2021 . Related Party Transactions
See Note 7 to our consolidated financial statements for a discussion of our related party transactions.
Corporate InformationSolarWindow Technologies, Inc. , aNevada corporation, was incorporated in 1998. The Company's executive offices are located at9375 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, theSecurities and Exchange Commission ("SEC"). The information accessible through our website is not a part of this Quarterly Report on Form 10-Q.
© Edgar Online, source
