Item 8.01 Other Events.
On November 29, 2022, SolarWindow Technologies, Inc. (the "Company") filed from
12B-25 (NT 10-K) "Notification of Late Filing" which provides for a fifteen (15)
day grace period and extension to December 14, 2022 to file Form 10-K.
The extension was filed due to the Company's inability to obtain information
from the management of the Company's indirect, wholly owned subsidiary,
SolarWindow Asia Co. Ltd. (the "Korean Subsidiary") thus preventing the
Company's auditors from completing their audit procedures for the Company's
Fiscal year ended August 31, 2022 (the "Annual Audit") as of the Company's Form
10-K filing deadline on November 29, 2022. Mr. John Rhee ("Rhee"), is a member
of the Company's Board of Directors (the "Board") and the Representative
Director of the Korean Subsidiary.
As previously disclosed by the Company in its Form 8-K filed on May 13, 2022, by
letter dated May 8, 2022, the ESCA between the Company and Rhee was terminated
effective May 9, 2022. Termination of the ESCA resulted in the automatic
termination of Rhee's positions as the President, Chief Executive Officer and
Chairman of the Company and all positions held at the Company's subsidiaries.
Termination of the ESCA did not constitute termination of Rhee's tenure as a
member of the Board, and per Korean law, his position as the Representative
Director of the Korean Subsidiary.
As a member of the Board and Representative Director of the Korean Subsidiary,
Rhee has certain responsibilities, including, but not limited to (1) oversight
of the Korean Subsidiary's financial reporting and record maintenance, (2)
responsibility for the management of the Korean Subsidiary's operations (3)
oversight of the Korean's Subsidiary's compliance with applicable Korean and US
laws, and (4) continuing obligation to keep the Company's Board apprised of the
foregoing in order to ensure compliance with the Company's ongoing disclosure
obligations.
The Interim Chief Financial Officer has made numerous requests to Rhee for the
production of the Korea Subsidiary's financial and related operational
information in the form and content as provided from inception of the Korea
Subsidiary through the Company's 2nd fiscal quarter ended February 28, 2022.
Despite these repeated requests beginning in May 2022, including a direct
communication by the Company's auditors on October 17, 2022, the management of
the Korean Subsidiary, of which Rhee continues acting as the Representative
Director and President has not delivered the requested documentation and
information, including, but not limited to such basic information as the Korean
Subsidiary's monthly banking statements.
This continuing failure of the Korean Subsidiary's management, under Rhee's
control, to provide the required documentation resulted in the Company
recognizing an impairment, as of May 31, 2022, of all assets related to the
Korean Subsidiary totaling $674,200 (as reported in the Company's Form 10-Q for
the period ended May 31, 2022 and filed on July 15, 2022) and, more recently in
the Companying filing, on November 29, 2022, a Form NT 10- K in which the
Company stated:
"SolarWindow Technologies, Inc. (the "Company") was not able to obtain
information from the management of the Company's indirect, wholly owned
subsidiary, SolarWindow Asia Co. Ltd. (the "Korean Subsidiary") prior to the
filing date, thus preventing the Company's auditors from completing their audit
procedures as of November 29, 2022. The Company continues to make efforts via
its South Korea counsel to obtain the financial information from the Korean
Subsidiary as required by our auditors for them to complete their procedures and
issue their audit report so that the Company can file its audited financial
statements for the year ended August 31, 2022. The Company is unable to estimate
if its efforts to acquire the required financial information from the Korean
Subsidiary will prove successful and if received will be received with enough
time for our auditors to conduct their procedures within the fifteen (15) day
extension period hereof."
During the 15-day extension period, the Company has been unable to obtain the
required information and is filing this information statement to inform its
stockholders that with the assistance of Korean Counsel (defined below), the
Company continues to make progress in its efforts to remove Rhee as the
Representative Director and President of the Korean Subsidiary in order to,
among other things, obtain the financial and related operational information as
required by our auditors.
In May 2022, the Company engaged legal counsel based in South Korea ("Korean
Counsel") and provided them the authority to act on behalf of SolarWindow Asia
(USA) Corp., a Nevada corporation wholly owned by the Company, and the sole
shareholder of the Korean Subsidiary. Korean Counsel attempted to Convene an
Extraordinary General Meeting of the Shareholders and to Inspect Books of
Account and Shareholder Register by sending notice to the Directors to which
Korean Counsel received no response. About August 30, 2022, Korean Counsel then
filed with the Korean courts a request for an order to convene an extraordinary
general meeting of the shareholders ("EGM"), which required that Rhee, as the
representative director of the Company, be served notice. Following several
unsuccessful attempts to serve Rhee (September 26, 2022, October 6, 2022, and on
October 12, 2022), the Korean Counsel effected service on October 19, 2022.
A hearing in the 31st Civil Division of the Korean courts was held on November
16, 2022. At the hearing, Korean Counsel submitted that the sole shareholder of
the Korean Subsidiary is seeking to convene an EGM as soon as possible, that
Rhee has not provided required financial information of the Korean Subsidiary to
the Company, that Rhee was legally dismissed as a director of SolarWindow Asia
(USA) Corp. on May 8, 2022, the current legally recognized director is the
Company's Interim CFO, and that a Canadian court has issued an injunction
prohibiting Rhee from exercising any rights as a shareholder of the Company.
Further, the Company has elected to appoint an independent third party who can
objectively conduct an EGM. Korean Counsel asked the Korean court to make a
prompt decision in consideration of the above circumstances. The Korean court
acknowledged the urgency and stated that a final decision would be issued after
December 7, 2022. No decision has been issued as of the date of this Form 8-K.
The goals at the EGM are to remove Rhee as representative director of Korean
Subsidiary, as well as removal of two additional directors and auditor appointed
by Rhee, and replace them with three new Company-appointed directors and
auditor.
The actions taken by the Company in Korea are subject to the timeline of legal
processes in Korea which processes the Company has attempted to expedite where
possible. The Company remains committed to obtaining the information related to
its Korean Subsidiary and intends to complete the Annual Audit and file Form
10-K as soon as practicable. However, at this time, the Company cannot provide,
with certainty, an estimate of when it will be able to do so.
Although the Company is in the process of exploring interim alternative means of
providing its stockholders and the public at large appropriate financial
statement information, pending resolution of the issues precluding the Company
from obtaining the information and documentation from the Korean Subsidiary, as
requested by its auditors, the failure to timely file its Form10-K may have
regulatory and market repercussions that will adversely affect the stock price
of, as well as investors' ability to effect purchase and sale transactions in,
the Company's securities.
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