SolarWindow Technologies, Inc. (WNDW)

[TRUISM]

This is going to $5 or back to $2... Who Knows?

Just know there are many games at play here....

Heck, if I wanted to, I could've placed an article on Seeking Alpha, like a fellow shareholder did:

Click For Seeking Alpha Link

An Honest Look At SolarWindow Technologies From A Shareholder
May 21, 2015 11:21 AM ET | 25 comments | About: SolarWindow Technologies, Inc. (WNDW)
Disclosure: The author is long WNDW. (More...)
Summary

SolarWindow Technologies' main product is its namesake, the Solar Window, which produces electricity from solar energy on glass surfaces.
One author exposed some of the more problematic issues with the company last month, much of which I agree with and troubles me also. Nevertheless, I remain long.
Its main investor, Harmel Rayat, keeps saving the company and will probably continue doing so until it becomes too expensive for him or it succeeds.
While SolarWindow has its problems, including low cash, high executive pay, going concern issues, and problematic claims about its technology, it is still making progress slowly but surely.
I've been a shareholder of SolarWindow Technologies (OTCQB:WNDW) since 2009. Back then it was New Energy Technologies. I had heard about its MotionPower technology on some media snippet and thought it was neat, so I bought a few shares on impulse. MotionPower generates electricity on speed bumps as cars go over them, so it is the flipside of a hybrid car, which seeks to produce energy for itself through breaking. MotionPower produces energy for whatever the speed bump is connected to.

I can't say there was any deep intelligence to my move, but I always keep a few dollars in cash to take small positions in speculative companies I find intriguing. SolarWindow was just lucky enough to catch a few seconds of my attention while I happened to be logged in to my brokerage account.

Ironically, it wasn't even the company's lead Solar Window product that piqued my interest. That technology I didn't even know about at the time. (Admittedly I didn't do much research back then into this pick.) I would only hear about it a few weeks after I went long, and then the stock exploded for a time and I was way up. But I didn't sell, and now I'm back down again. From time to time I would get periodic emails of the company's own claims as to its progress, most of which I ignored because they looked clearly self-promotional. But the idea of the Solar Window and the (apparent) slow progress it was making were interesting enough to keep me in the game.

By that time I had concluded that MotionPower was being ignored in favor of the much more exciting Solar Window concept, and that was pretty much confirmed when the company changed its name this year to SolarWindow and outwardly admitted it was all but abandoning the MotionPower project for now.

I had never seen an article on the company on Seeking Alpha until Hunter Straus broached the subject in his skeptical attack article SolarWindow Technologies - I'm Not a Believer. I read through it, and much of it actually reflects the same concerns I have had with the company for some time. It is chronically short on cash, it pays its staff too much considering its shaky financial position, it rarely backs up its own claims with any concrete data, and yes, there are too many people gawking at glass on its website.

The most glaring example of a strange press release is its insistence on a one year financial payback when the company has never given any indication of how much the system will even cost. How can you calculate payback if there is no price tag? Yes, you can estimate, but there aren't even any cost estimates in the actual estimates!

On Mr. Rayat

Straus's concerns are all warranted concerning the company's shaky finances, but there are going concern issues on many companies of SolarWindow's size that keep surviving. There have been going concern issues with SolarWindow since its founding in 2008 back when it was Octillion.

Here's from the 2008 10K:

The Company has not generated any revenues and has an accumulated deficit of $8,113,444 as of August 31, 2008. The Company incurred a net loss of $5,721,545 during the year ended August 31, 2008. In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

And yet, somehow it is 7 years later and the company still exists. Much of that is due to Kalen Capital and Harmel Rayat. Every time the company is about to go bankrupt, Rayat comes in and invests another few million. Interestingly, there is one paragraph from the latest 10-K that Straus does not quote.

KCC is a private Alberta corporation wholly owned by Mr. Harmel S. Rayat (our former director and officer). In such capacity, Mr. Rayat may be deemed to have beneficial ownership of these shares…The above assumes exercise of the 2013 Note and all interest due as of November 10, 2014, at a conversion price of $1.04, resulting in the issuance of: 3,110,378 shares of common stock and (ii) a Series L Warrant exercisable for up to 3,110,378 shares of common stock. As of the date of this filing we have not received notice of KCC's intent to convert the 2013 Note.

There's a saying when it comes to loans like this. If you owe the bank $10,000, you have a problem. If you owe the bank $10,000,000,000, the bank has a problem. While Rayat has not loaned that much and I wouldn't say he's in a "problem" in that sense, most of the company's money is his, so he's sort of stuck. He's in this for the long haul. Evidence? Why would Rayat, who owns warrants at a conversion price of $1.04, not exercise them when the stock is at $2.13? Because he knows it would only go against his own position, ultimately. He saves the company every time because he believes in it, and he can't get out now without losing his investment. He's in it until it becomes too expensive for him or the company succeeds.

SolarWindow has to answer mainly to him about its high executive compensation. I'm pretty sure that if Mr. Rayat had a problem with it, he'd say something, and it would be lowered. It's mostly his money after all that John Conklin is going home with, and Rayat is the one that is most probably expected to refill the fish tank once it empties again. As for me, I only put in a few bucks.

Regarding Rayat's past with the SEC, somehow being fined $20,000 for running a stock promotion website in 2003 doesn't impress me. The SEC may be given the power by the government to overrule the 1st Amendment of free speech, but just because they do doesn't turn those who promote what they want to promote into monsters in my eyes.

Rayat is primarily a real estate investor through his company Talia Jevan Properties, named after his daughter, and he owns $150M (according to his website) in real estate in Canada and the US. Some of that is commercial real estate. I would venture a guess that his dream is to outfit his commercial real estate with Solar Window once it's ready. Fitting how the main investor in a company targeted at commercial real estate buildings owns commercial real estate buildings.

Conclusion

SolarWindow's slow progress may be a bit questionable. Its claims could use more backing. Its executive pay is high. Its cash is low. But Solar Window is not some fictional story made up out of whole cloth. If it were, Rayat would have to go down in history as one of the worst and stupidest investors of the 21st century, so far at least. SolarWindow is trudging along, reporting progress every now and then on some aspect of its potentially revolutionary technology. Will dilution be a factor going forward? Yes, but if Solar Window ever does make it to market, that won't matter.

At this point, I see the worst possible outcome as a firesale of the Solar Window technology to the highest bidder if Rayat pulls out and the company can't find a replacement. But I don't think he will, and even if he does, I believe enough progress has been made on Solar Window, most recently with its power connection system improvements, that it could even now attract the attention of some big player with the capital and capability to bring it to market.

I would say that the worst thing SolarWindow is guilty of lazy self-promotion, but like Rayat, I'm staying long.