NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1 – Organization
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 February 28, 2022, the Company had $9,371,030
of cash and cash equivalents on hand and working
capital of $9,607,036.
The Company believes that it currently has sufficient cash to meet its funding requirements over the next twelve months following the
issuance of this Quarterly Report on Form 10-Q. However, the Company has experienced and continues to experience negative cash flows
from operations, as well as an ongoing requirement for substantial additional capital investment. The Company expects that it may need
to raise additional capital to accomplish its business plan. If additional funding is required, the Company expects to seek to obtain
that funding through financial or strategic investors. There can be no assurance as to the availability or terms upon which such financing
and capital might be available.
NOTE
2 – Interim Statement Presentation
Basis
of Presentation and Use of Estimates
The
accompanying unaudited interim consolidated financial statements of SolarWindow Technologies, Inc. and its controlled subsidiary companies
(collectively, the “Company”) as of February 28, 2022, and for the three and six months ended February 28, 2022 and
2021 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for
quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting
principles (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should therefore
be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2021 included
in our Annual Report on Form 10-K filed with the SEC on November 4, 2021.
The
accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management
to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures.
Actual results may differ from those estimates. The accompanying unaudited interim consolidated financial statements have been prepared
on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) that are,
in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial position as of February
28, 2022, results of operations, stockholders’ equity and cash flows for the three and six months ended February 28, 2022 and 2021.
The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations
for any interim period are not necessarily indicative of the results of operations for the entire year.
The
preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the accounting period. The Company considers its accounting
policies relating to stock-based compensation to be the most significant accounting policy that involves management estimates and judgments. The
Company has made accounting estimates based on the facts and circumstances available as of the reporting date. Actual amounts could differ
from these estimates, and such differences could be material.
These
consolidated financial statements presented are those of SolarWindow Technologies, Inc. and its wholly owned subsidiaries, SolarWindow
Asia (USA) Corp., and SolarWindow Asia Co. Ltd. All significant intercompany balances and transactions have been eliminated.
Information
regarding the Company’s significant accounting policies is contained in Note 2, “Summary of significant accounting policies,”
to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended August 31, 2021.
Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Financial
Statements” in the Annual Report.
Fiscal
quarter
The
Company’s quarterly periods end on November 30, February 28, May 31, and August 31. The Company’s second quarter
in fiscal 2022 and 2021 ended on February 28, 2022 and 2021, respectively.
Cash
and Highly Liquid Investments
As
of February 28, 2022, the Company’s cash, includes $718,163
in domestic bank accounts $118,965
in our Korean subsidiary bank account and $8,533,902 held
in Canadian bank accounts in excess of Canadian Deposit Insurance Corporation insured limits.
Schedule
of Cash and Cash Equivalents | |
February
28, | |
August
31, |
| |
2022 | |
2021 |
Cash | |
$ | 9,371,030 | | |
$ | 7,127,456 | |
Short-term
investments | |
| - | | |
| 5,000,000 | |
Cash
and cash equivalents | |
$ | 9,371,030 | | |
$ | 12,127,456 | |
Short-term
investments
The
Company determines the balance sheet classification of its investments at the time of purchase and evaluates the classification at each
balance sheet date. Money market funds, certificates of deposit, and time deposits with maturities of greater than three months
but no more than twelve months are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets
in short-term investments. As of August 31, 2021, the short-term investments consists of a fixed-term deposit with a twelve-month maturity
at the time of purchase which matured on October 1, 2021.
Accounting
Pronouncements
The
Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of
the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit
further discussion.
Recent
accounting pronouncements not yet adopted
None.
Recently
adopted accounting pronouncements
In
December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income
Taxes – Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions for recognizing deferred taxes
for equity method investments, performing intra period allocation, and calculating income taxes in interim periods. The ASU also adds
guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of
a consolidated group, among others. This guidance is effective for interim and annual reporting periods beginning after December
15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements
have not yet been issued. The transition requirements are dependent upon each amendment within this update and applied either prospectively
or retrospectively. The Company adopted of ASU 2019-12 beginning September 1, 2021 with no impact on its Financial Statements.
NOTE
3 - Net Income (Loss) Per Share
The
computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding
during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted
EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming
the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income
per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings
per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion
in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method
only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they
are in the money).
Following
is the computation of basic and diluted net loss per share for the three and six months ended February 28, 2022 and 2021:
Schedule
of Computation of basic and diluted net loss per share | |
| | | |
| | | |
| | | |
| | |
| |
Three
Months Ended February 28, | |
Six
Months Ended February 28, |
| |
2022 | |
2021 | |
2022 | |
2021 |
Basic
and diluted EPS Computation | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Loss
available to common stockholders' | |
$ | (1,377,834 | ) | |
$ | (2,149,270 | ) | |
$ | (2,703,958 | ) | |
$ | (4,686,305 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted
average number of common shares outstanding | |
| 53,198,399 | | |
| 53,072,574 | | |
| 53,198,399 | | |
| 53,015,949 | |
Basic
and diluted EPS Computation | |
$ | (0.03 | ) | |
$ | (0.04 | ) | |
$ | (0.05 | ) | |
$ | (0.09 | ) |
| |
| | | |
| | | |
| | | |
| | |
The
shares listed below were not included in the computation of diluted losses per share because to do so would be antidilutive for the
periods presented: | |
Stock
options | |
| 6,781,800 | | |
| 6,740,400 | | |
| 6,781,800 | | |
| 6,740,400 | |
Warrants | |
| 19,281,917 | | |
| 19,283,517 | | |
| 19,281,917 | | |
| 19,283,517 | |
Total
shares not included in the computation of diluted loss per share | |
| 26,063,717 | | |
| 26,023,917 | | |
| 26,063,717 | | |
| 26,023,917 | |
NOTE
4 – Property and Equipment
Property and equipment
consists of the following:
Schedule
of Property and Equipment | |
February
28, | |
August
31, |
| |
2022 | |
2021 |
Computers,
office equipment and software | |
$ | 17,387 | | |
$ | 14,800 | |
Furniture
and fixtures | |
| 47,064 | | |
| 47,660 | |
Equipment | |
| 113,820 | | |
| 113,820 | |
Leasehold
improvements | |
| 27,580 | | |
| 28,678 | |
In-process
equipment | |
| 1,868,428 | | |
| 1,292,655 | |
Total
property and equipment | |
| 2,074,279 | | |
| 1,497,613 | |
Accumulated
depreciation | |
| (125,680 | ) | |
| (110,271 | ) |
Property
and equipment, net | |
$ | 1,948,599 | | |
$ | 1,387,342 | |
During
the six months ended February 28, 2022 and 2021, the company purchased $584,235
and $71,647
of property and equipment, respectively. During
the three months ended February 28, 2022 and 2021, the Company recognized straight-line depreciation expense of $7,167
and $6,673,
respectively. During the six months ended February 28, 2022 and 2021, the Company recognized straight-line depreciation expense of $15,809
and $12,455,
respectively.
During
the year ended August 31, 2019, the Company made deposits for in-process equipment totaling $1,292,655 towards the purchase of manufacturing
equipment with an estimated total cost of $1,803,000.
Due to the termination of the Triview Process Integration and Production Agreement on September 27, 2019, subsequent COVID-19 pandemic
and move into the Asian markets, the Company placed on hold finalizing the equipment. The Company is currently evaluating its options,
including completing the equipment which continues to be contingent upon management’s determination of the equipment engineering
and performance specifications required in order to optimize the equipment for manufacturing of the Company’s initial product and
other factors. Completion of the equipment will require additional payments totaling approximately $510,000.
During
the quarter ended February 28, 2022, the Company’s Korean subsidiary committed to purchase in-process equipment consisting of a
roll-2-roll coating system for use in Korea, with a total cost of approximately $1,930,000 of which the Company paid approximately $581,000
as a deposit with the balance due upon completion
of the equipment sometime in August 2022.
NOTE
5 – Common Stock and Warrants
Common
Stock
At
February 28, 2022, the Company had 300,000,000 authorized
shares of common stock with a par value of $0.001
per share, and 53,198,399
shares of common stock outstanding.
Warrants
Each
of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant
share held. Other than the Series O Warrants and Series P Warrants, all of the following warrants may be exercised on a cashless basis.
A summary of the Company’s warrants outstanding and exercisable as of February 28, 2022 and August 31, 2021 is as follows:
Warrants
outstanding and exercisable | |
| | | |
| | | |
| | | |
| |
|
| |
Shares
of Common Stock Issuable from Warrants Outstanding as of | |
| |
| |
|
Description | |
February
28,
2022 | |
August
31,
2021 | |
Weighted
Average Exercise Price | |
Date
of | |
Expiration |
Series
M | |
| 246,000 | | |
| 246,000 | | |
$ | 2.34 | | |
December
7, 2015 | |
December
31, 2022 |
Series N | |
| 767,000 | | |
| 767,000 | | |
$ | 3.38 | | |
December
31, 2015 | |
December
31, 2022 |
Series P | |
| 213,500 | | |
| 213,500 | | |
$ | 3.70 | | |
March
25, 2016 | |
December
31, 2022 |
Series R | |
| 468,750 | | |
| 468,750 | | |
$ | 4.00 | | |
June
20, 2016 | |
December
31, 2022 |
Series S-A | |
| 300,000 | | |
| 300,000 | | |
$ | 2.53 | | |
July
24, 2017 | |
December
31, 2022 |
Series S | |
| 620,000 | | |
| 620,000 | | |
$ | 3.42 | | |
September
29, 2017 | |
September
29, 2022 |
Series
T | |
| 16,666,667 | | |
| 16,666,667 | | |
$ | 1.70 | | |
November
26, 2018 | |
November
26, 2025 |
Total | |
| 19,281,917 | | |
| 19,281,917 | | |
| | | |
| |
|
NOTE
6 - Stock Options
The
Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on
a straight-line basis over the requisite service period for awards expected to vest. The Company estimated the grant date fair value
of stock options using a Black-Scholes valuation model using the following weighted-average assumptions:
Assumptions | |
| | | |
| | |
| |
Six
Months Ended February 28, |
| |
2022 | |
2021 |
Expected
dividend yield | |
| – | | |
| – | |
Expected
stock price volatility | |
| 103.31 | % | |
| 89.44 | % |
Risk-free
interest rate | |
| 1.16 | % | |
| 0.19 | % |
Expected
term (in years)(simplified method) | |
| 5.75 | | |
| 4.00 | |
Exercise price | |
$ | 6.21 | | |
$ | 3.42 | |
Weighted-average
grant date fair-value | |
$ | 4.92 | | |
$ | 2.16 | |
A
summary of the Company’s stock option activity for the six months ended February 28, 2022 and related information follows:
Stock
option activity | |
| | | |
| | | |
| | | |
| | |
| |
Number
of Shares Subject to Option Grants | |
Weighted
Average Exercise Price ($) | |
Weighted
Average Remaining Contractual Term (years) | |
Aggregate
Intrinsic Value ($) |
Outstanding at
August 31, 2021 | |
| 6,740,400 | | |
| 3.97 | | |
| | | |
| | |
Grants | |
| 140,000 | | |
| 6.21 | | |
| | | |
| | |
Forfeitures
and cancellations | |
| (98,600 | ) | |
| 4.43 | | |
| | | |
| | |
Outstanding at February 28,
2022 | |
| 6,781,800 | | |
| 4.01 | | |
| 3.89 | | |
| 918,330 | |
Exercisable at February 28,
2022 | |
| 6,513,200 | | |
| 3.99 | | |
| 3.78 | | |
| 897,590 | |
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 February 28, 2022. The intrinsic value of the option changes based upon the fair market value of the Company’s
common stock. Since the closing stock price was $2.93
on February 28, 2022 and 2,653,000
outstanding options have an exercise price below
$2.93
per share, as of February 28, 2022, there is
$918,330
and $897,590
of intrinsic value in the Company’s outstanding
stock options and vested options, respectively.
Three
and Six Months Ended February 28, 2022
Grants
- On October 27, 2021, the Company’s Board granted 140,000
options to its officers and directors, with an
exercise price of $6.21,
exercisable on a cashless basis any time prior to the Company’s listing of any of its securities for trading on a national stock
exchange, ten-year term and vesting as to 50% of the options on the six-month anniversary of the date of grant and as to the remaining
50% of the options on the twelve-month anniversary from the date of grant.
Forfeitures
and cancellations - As a result of his resignation from the Board on November 10, 2021, Mr. Gary Parmar forfeited 58,600
unvested stock options, including 30,000
options granted on October 27, 2021.
Three
and Six Months Ended February 28, 2021
Grants -
Pursuant to his appointment to the Board, on October 19, 2020, the Company’s Board granted 50,000
options to Joseph Sierchio, Director, with an
exercise price of $3.42,
exercisable on a cashless basis any time prior to the Company’s listing of any of its securities for trading on a national stock
exchange, six-year term and vesting at the rate of 12,500 on the date of grant and 12,500 each anniversary thereafter.
Exercises –
upon the exercise of 56,667
stock options by three individuals between December
18, 2020 and February 23, 2021, the Company received $35,400
and issued 37,476
shares of restricted common stock. Of
the 56,667 options exercised, 10,000 were exercised for cash at an exercise price of $3.54 and 46,667 were exercised on a cashless basis
resulting in the issuance of 27,476 shares of restricted common stock.
Forfeitures
and cancellations – On December 18, 2020, Mr. John Conklin and the Company entered into an Amendment to the Separation,
Consulting and Release of Claims Agreement dated November 24, 2020. Pursuant to the Amendment, no further payments are due to Mr. Conklin
and all stock options granted under his employment agreement totaling 1,008,000
were cancelled. In addition, 37,500
unvested options granted to Mr. Conklin on July
5, 2019 were also cancelled. 16,667
options expired and 4,500
options that were previously canceled as a result
of an employee reduction in hours were reinstated due to the continuation of that employee’s services.
The
following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and
vesting over time, that were recorded in the Company’s Statements of Operations for the three months ended February 28, 2022 and
2021:
Share-based
compensation cost | |
| | | |
| | | |
| | | |
| | |
| |
Three
Months Ended February 28, | |
Six
Months Ended February 28, |
Stock
compensation expense: | |
2022 | |
2021 | |
2022 | |
2021 |
Selling,
general and administrative | |
$ | 389,557 | | |
$ | 1,321,654 | | |
$ | 647,187 | | |
$ | 2,855,479 | |
Research
and development | |
| 21,232 | | |
| 142,250 | | |
| 42,465 | | |
| 446,957 | |
Total | |
$ | 410,789 | | |
$ | 1,463,904 | | |
$ | 689,652 | | |
$ | 3,302,436 | |
As
of February 28, 2022, the Company had $603,963
of unrecognized compensation cost related to
unvested stock options which is expected to be recognized over a period of 2.50
years.
The
following table summarizes information about stock options outstanding and exercisable at February 28, 2022:
| Stock
options outstanding and exercisable | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Stock
Options Outstanding | |
Stock
Options Exercisable |
Range
of Exercise Prices | |
Number
of Shares Subject to Outstanding Options | |
Weighted
Average Contractual Life (years) | |
Weighted
Average Exercise Price ($) | |
Number
of Shares Subject To Options Exercise | |
Weighted
Average Remaining Contractual Life (Years) | |
Weighted
Average Exercise Price ($) |
| 2.32 | | |
| 153,000 | | |
| 7.62 | | |
| 2.32 | | |
| 119,000 | | |
| 7.62 | | |
| 2.32 | |
| 2.60 | | |
| 2,500,000 | | |
| 4.34 | | |
| 2.60 | | |
| 2,500,000 | | |
| 4.34 | | |
| 2.60 | |
| 3.42 | | |
| 50,000 | | |
| 4.64 | | |
| 3.42 | | |
| 12,500 | | |
| 4.64 | | |
| 3.42 | |
| 3.46 | | |
| 35,000 | | |
| 3.85 | | |
| 3.46 | | |
| 35,000 | | |
| 3.85 | | |
| 3.46 | |
| 3.54 | | |
| 1,283,800 | | |
| 6.51 | | |
| 3.54 | | |
| 1,196,700 | | |
| 6.73 | | |
| 3.54 | |
| 3.66 | | |
| 1,000,000 | | |
| 1.50 | | |
| 3.66 | | |
| 1,000,000 | | |
| 1.50 | | |
| 3.66 | |
| 4.87 | | |
| 150,000 | | |
| 5.73 | | |
| 4.87 | | |
| 150,000 | | |
| 5.73 | | |
| 4.87 | |
| 6.00 | | |
| 800,000 | | |
| 1.50 | | |
| 6.00 | | |
| 800,000 | | |
| 1.50 | | |
| 6.00 | |
| 6.21 | | |
| 110,000 | | |
| 9.67 | | |
| 6.21 | | |
| - | | |
| 9.67 | | |
| 6.21 | |
| 8.00 | | |
| 700,000 | | |
| 1.50 | | |
| 8.00 | | |
| 700,000 | | |
| 1.50 | | |
| 8.00 | |
| Total | | |
| 6,781,800 | | |
| 3.89 | | |
| 4.01 | | |
| 6,513,200 | | |
| 3.78 | | |
| 3.99 | |
NOTE
7 - Transactions with Related Persons
A
related party with respect to the Company is generally defined as any person (i) (and, if a natural person, inclusive of his or her immediate
family) that holds 10% or more of the Company’s securities, (ii) that is part of the Company’s management, (iii) that directly
or indirectly controls, is controlled by or is under common control with the Company, or (iv) who can significantly influence the financial
and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources
or obligations between related parties.
On
August 7, 2017, the Company appointed Jatinder Bhogal to the Board of Directors. Mr. Bhogal has provided consulting services to the Company
through his wholly owned company, Vector Asset Management, Inc. (“VAMI”). On July 1, 2020 the Company and VAMI entered into
an Executive Consulting Agreement (the “ECA”) pursuant to which Mr. Bhogal served as a director of the Company and as its
Chairman and Chief Executive Officer. Effective January 18, 2022, Mr. Bhogal resigned all positions he held in the Company. Pursuant
to the ECA, VAMI received $34,167 per month and was eligible for an annual bonus. VAMI also incurred expenses on behalf of the Company
which are reimbursed according to the Company’s expense reimbursement policy. In connection with the ECA and the Separation and
Release of Claims Agreement dated January 18, 2022 by and among the Company, VAMI and Mr. Bhogal, the Company recognized cash compensation
expense of $258,005
(includes bonus of $204,000) and $102,500
during the three months ended February 28, 2022
and 2021, respectively, and $524,505
(includes bonus of $368,000) and $205,000
during the six months ended February 28, 2022
and 2021, respectively. As of February 28, 2022, all amounts owed to VAMI were paid.
Joseph
Sierchio, one of the Company’s directors, has maintained his role as the Company’s General Counsel since its inception as
Principal of the law firm of Sierchio & Partners, LLP, and then as a Partner with Satterlee Stephens LLP and beginning in August
2020, as Principal of Sierchio Law, LLP pursuant to an engagement letter which provides for an annual fee of $175,000 in exchange for
general counsel services. Mr. Sierchio resigned from the Board effective October 22, 2018, and was reappointed on October 1, 2020. Fees
for legal services billed by Sierchio Law, LLP while serving as a Director totaled $43,750
and $43,750
for the three months ended February 28, 2022
and 2021, respectively and $87,500
and $72,917
during the six months ended February 28, 2022
and 2021, respectively. As of February 28, 2022, the Company recognized a related party payable to Sierchio Law, LLP of $14,583.
All
related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal
course of business.
NOTE
8 – Commitments and Contingencies
In
September 2020, and February 2021, SolarWindow Asia entered into leases for office space and an apartment in South Korea. See “Note
9 - Leases” for additional information.
The
Company has made commitments to purchase certain equipment. For additional information, see “Note 4 – Equipment” above.
COVID-19
A
novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World
Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and
in markets served. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there was
no material adverse impact on the Company’s results of operations and financial position as of February 28, 2022. The full extent
of the future impact of COVID-19 on the Company’s plan of operations is uncertain. A prolonged outbreak could have a material adverse
impact on the Company’s ability to identify and implement business opportunities or continue to effectuate its business plan.
NOTE
9 – Leases
On
February 26, 2021, SolarWindow Asia entered into an apartment lease for the purposes of housing foreign personnel. The
apartment lease provided for a term of one year beginning March 7, 2021, and was renewed on March 7, 2022 for an additional year. Monthly
rent is approximately $950. The Company paid a security deposit of approximately $8,700.
In
September 2020, SolarWindow Asia entered a lease for office space in South Korea. The
office lease provided for an initial term of one-year from September 23, 2020 through September 23, 2021, which has been renewed for
an additional year, monthly rent of approximately $1,200 and a security deposit of approximately $13,000
The
Company’s policy is to record all leases with a term of less than one year as an operating lease with rent expensed recorded on
a straight-line basis and to not recognize lease assets or lease liabilities.
As
of February 28, 2022, the Company has not entered into any leases other than those described above which have not yet commenced
and would entitle the Company to significant rights or create additional obligations.
NOTE
10 – Subsequent Events
Management
has reviewed material events subsequent of the period ended February 28, 2022 and through the date of filing of financial statements
in accordance with FASB ASC 855 “Subsequent Events”. In managements opinion, no material subsequent events have occurred
as of the date of this quarterly report.