SolarWindow Technologies, Inc.

Item 1A. Risk Factors

Risk Factors

The following risk factors and the forward-looking statements elsewhere in this annual report should be read carefully in connection with evaluating the business of the Company. A wide range of events and circumstances could materially affect our overall performance and our results of operations, and therefore, an investment in us is subject to risks and uncertainties. In addition to the important factors affecting specific business operations and the financial results of those operations identified elsewhere in this annual report, the following important factors, among others, could adversely affect our operations. While each risk is described separately below, some of these risks are interrelated and it is possible that certain risks could trigger the applicability of other risks described below. Also, the risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties not presently known to us, or that are currently deemed immaterial, could also potentially impair our business, results of operations and potential profitability. These risk factors may be amended, supplemented, or superseded from time to time in filings and reports that we file with the SEC in the future.

Risks Related to Our Financial Condition and Need for Additional Financing

We have not generated any revenues and have experienced significant losses to date, and we expect to continue incur losses for the foreseeable future. Consequently, we will require additional financing in the future to maintain and expand operations into advanced stages of product development and fabrication, and failure to obtain such financing would have a material adverse effect on our business, operating results, financial condition and prospects.

We have experienced and continue to experience negative cash flows from operations. We have not generated any revenue since inception and do not expect to generate any substantial amounts of revenue for the foreseeable future. We had a net loss o attributable to common stockholders of $2,396,393,455,415 and $4,948,5332,396,395 for our fiscalthe years ended August 31, 20234, and 202223, respectively. As of August 31, 20234, we had cash and short-term investments of $5,992,6104,249,446 and working capital of $6,017,2724,668,658. Based on managements assessment, the Company has sufficient cash and short-term investments to meet its current funding requirements over the next twelve months following the date of this annual report, to meet our projected product development and fabrication goals during this period. However, our current cash and short-term investments may not be sufficient to permit us to maintain or expand our operations beyond this period.

Our ability to use our net operating loss to offset future taxable income may be subject to certain limitations.

As of August 31, 2024, we had U.S. federal net operating loss carryforwards (NOLs) of approximately $40,949,000 due to prior period losses which if not utilized will begin to expire for federal and state tax purposes beginning in 2024. Realization of these NOLs depends on future income, and there is a risk that our existing NOLs could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our results of operations.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an ownership change is subject to limitations on its ability to utilize its NOLs to offset future taxable income. Our initial public offering, as well as future changes in our stock ownership, the causes of which may be outside of our control, could result in an additional ownership change under Section 382 of the Code. Our NOLs may also be impaired under state laws. In addition, under 2017 legislation commonly referred to as the Tax Cuts and Jobs Act, NOLs generated in taxable years beginning after December 31, 2017, may be utilized to offset no more than 80% of taxable income annually. This change may require us to pay federal income taxes in future years despite generating a cumulative loss for federal income tax purposes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, whether or not we attain profitability.

We are currentlwill require additional financing in the future to maintain and expand operations into advanced stages of product development and fabrication, and failure to obtain such financing would have a material adverse effect on our business, operating results, financial condition and prospects.

We are currently in the advanced stages of our research and early stages of product development and have come to the point where larger, faster, and more precise equipment is necessary for development to continue and to be able to come to market with a commercially viable product. 

We expect that capital outlays and operating expenditure to increase over the next several years as we will need to raise substantialork to expand our commercial activities, expand our development activities, expand manufacturing operations and expand our infrastructure. We may need to raise additional capital to acco, among other things:

Our present and future funding requiremplients will depend on many factors, including but not limited to:

We cannot asshure you that our manufacturbusiness will generate sufficient cash flow from operations in an amount sufficient amount, if any, to fund our working and product sales objectives in capital needs. Accordingly, we may need to undertake or seek out additional equity or debt financings to secure additional capital. We cannot assure you that we would be able to locate additional financing on commercially reasonable terms or at all. Any debt financing that we secure in the future years.

Wecould involve restrictive covenants relating to our capital raising activities anticipate seekingd other financial and operational matters, which may make it more difficult for us to obtain additional funding  capital and to pursue business opportunities. If we raise additional funds through finuture issuancial or strategic investors. If adequate funds are not availes of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. If we are unable on reasonato secure additional funding on favorable terms, or at all, it wwhen we require it, our ability to continue could result in a mbe impaired and our business may be harmed.

Rateriising additional advercapital will cause effectdilution to our business,existing stockholders and may restrict our operating results, financial condition,ons or require us to relinquish certain intellectual property and prospects. In rights.

We will seek additional capital through a combination of public and private equity offerings, debt financing, strategic particular, tnerships and alliances, licensing arrangements and grants. To the Company may bextent that we required to delay; reduceaise additional capital through the sale of equity or convertible debt securities, the scopeownership interest of or terminate its research ur existing stockholders may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt and developmreceivables financing may be coupled with an equity component programs; aband, such as warrants to purchase shares, which could also result in dilution its pursuitof our existing stockholders ownership. The incurrence of filed but unissuindebtedness would result in increased patfixed payments; sell rights t obligations and could also result in certain restrictive covenants, such as limitations on our ability to its technology or ncur additional debt, limitations on our ability to acquire or license intellectual property rights and other technologies or prooperating restrictions that could adversely impact our ability to conducts based upon our business. If we raise additional funds these technologies; orrough strategic partnerships and alliances and license the righing arrangements towith these technologies oird parties, we may have to relinquish valuable rights to our products on , or grant licenses on terms that are less favorable to us than might otherwise be available.

not favorable to us. A failure to obtain adequate funds may cause us to curtail certain operational activities, including research and development, sales and marketing, and manufacturing operations, in order to reduce costs and sustain the business, and would have a material adverse effect on our business and financial condition. If we raise additional funds by issuing equity or debt securities, further dilution to stockholders may result and new investors could have rights superior to existing stockholders.

Because we cannot currently estimate the amount of funds or time required to commercialize our technologies, even if financing is available to us, we may secure less funding than is actually required to effectuate our business plan.

As noted above, we are currently in the advanced stages of our research and early stages of product development. We have come to the point where larger, faster, and more precise equipment is necessary for all facets of technology and product development to continue and to be able to come to market with a commercially viable product. We, however, cannot accurately predict the amount of funding or the time required to successfully commercialize our technology. The actual cost and time required to commercialize these technologies may vary significantly depending on, among other things, the results of our research and product development efforts; the cost of developing, acquiring, or licensing various enabling technologies, changes in the focus and direction of our research and product development programs; competitive and technological advances; the cost of filing, prosecuting, defending and enforcing claims with respect to patents; the regulatory approval process; process manufacturing; marketing and other costs associated with commercialization of these technologies. Because of this uncertainty, even if financing is available to us, we may secure insufficient funding to effectuate our business plan.

To obtain financing as needed, we may enter into transactions that may dilute the ownership interest of our current stockholders.

In order to raise sufficient capital to meet its financial obligations, we may enter into financing transactions that would result in dilution of the ownership interests of our current stockholders or which may involve the sale of our securities at prices that are at a discount to current market price of our stock as reported on the Pink market. Such sales will be made at prices determined by our Board based on factors deemed appropriate at the time; accordingly, such sales by us could be made at prices less than the price of the shares of our common stock purchased, in which case, investors could experience dilution of their investment.

Adverse conditions in the alternative energy industry or the global economy generally could have adverse effects on our results of operations and consequently the price of our common stock.

Our business is exposed to significant financial risks, most of which are beyond our control, related to interest rates, State Federal subsidies, the modified accelerated cost recovery system, taxes, and general economic conditions both domestic and internationally. These risks may affect our ability to effect (i) borrowings or to raise capital through the offer and sale of equity-based securities and (ii) the execution of our business plan and product commercialization efforts by thwarting consumer demand for our products, and thereby adversely impacting our potential revenue and profitability.

An increase in raw material prices could have negative consequences for our long-term profitability.

We face exposure to fluctuations in energy, raw materials, chemicals, and glass and plastic film prices. If we are not able to hedge, compensate or pass on our increased costs through a supply chain or to customers, this could have an adverse impact on our financial results and stability, and deployment of our products.

Risks Related to Our Technology, Products and Operations

The development of our technology is subject to the risks of failure inherent in the development of any novel technology.

Ultimately, the development and commercialization of our technology is subject to a variety of risks that are particular to the development and commercialization of any novel technology, the occurrence of any one of which may adversely affect our operations. These risks include, but are not limited to, the following:

The success of our research and development activities is uncertain. If such efforts are not successful, we will be unable to generate revenues from our operations and we may have to cease doing business.

Commercialization of our technology will require significant further research, development, and testing as we must ascertain whether our technology can form the basis for a commercially viable technology or product. If our research and development efforts fail to prove the commercial viability of our technology, we may need to abandon our business model and/or cease doing business, in which case our shares may have no value, and you may lose your investment. We anticipate remaining engaged in technology and product development for the foreseeable future.

If we ultimately do not obtain the necessary regulatory and safe operation approvals for the commercialization of our technology, we will not achieve profitable operations, and your investment may be lost.

To commercialize our technology, we may need to obtain regulatory approval from various local, state, federal or international agencies; or approval from global safety certifying organizations that will certify safe operation of our products. At this time, we do not have a product to be submitted for regulatory or safe operating approval. The process for obtaining these approvals may be time consuming and costly, and there is no guaranty that we will be able to obtain such approvals. The failure to obtain any necessary approvals could delay or prevent us from achieving revenue or profitability, which could result in the partial or total loss of your investment.

We are operating in a highly fragmented and competitive market and our competitors have several competitive advantages over us.

Our commercial success will depend on our ability to compete effectively in product development areas such as, but not limited to, building integration, safety, efficacy, ease of use, customer compliance, price, marketing and distribution. Our competitors may succeed in developing products that are more effective than any products derived from our research and development efforts or that would render such products obsolete and non-competitive. The alternative and renewable energy industry is characterized by intense competition, rapid product development and technological change.

Most of the competition that we encounter is expected to come from companies, research institutions and universities who are researching and developing technologies and products similar to, or are competitive with, any technology we may develop.

These companies, research institutions and universities may have several competitive advantages over us, including:

As a result, we may not be able to compete effectively against these companies or their products.

Any products developed from our technology will face competition from other companies producing solar power and/or energy harvesting or storage products.

The solar power market is intensely competitive and rapidly evolving. Some of our competitors are better capitalized or have more employees than we do; and, unlike us, some have established market positions for their products. There are a number of companies that produce solar power and alternative energy products, which may be competitive with those that we are seeking to develop. Additionally, some of our competitors may be developing or currently producing products based on new solar power and alternative energy technologies that may have a cost basis similar to, or lower than, our projected product costs.

Accordingly, If we fail to attract and retain customers and establish a successful distribution network for our products, we may be unable to achieve adequate sales and market share; or, if our competitors products, services or technologies become more accepted than ours, or if they are successful in bringing their products or services to market earlier than us our revenues could be adversely affected.

As noted above, some of our current (and potential competitors) have significantly greater resources and better competitive positions in certain markets than we do. These factors may allow our competitors to respond more effectively than us to new or emerging technologies and changes in market requirements. Our competitors may develop products, features, or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. See Our Business.

Mergers of, or other strategic transactions by, our competitors could weaken our competitive position or reduce our revenue.

If one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. A potential result of such expansion is that certain of our current or potential competitors may be acquired by third parties with greater available resources and the ability to further invest in product improvements and initiate or withstand substantial price competition. Our competitors also may establish or strengthen cooperative relationships with our current or future value-added resellers, third-party consulting firms or other parties with whom we have relationships, thereby limiting our ability to promote our products. Disruptions in our business caused by these events could reduce our revenue.

Technological changes could render our products uncompetitive or obsolete, which could prevent us from achieving market share and sales.

The alternative and renewable energy industry is rapidly evolving and highly competitive. Our failure to refine or advance our technologies, and to develop and introduce new products on a timely basis could cause our products to become uncompetitive or obsolete, which could prevent us from achieving market share and sales. We will need to invest significant financial resources in additional technology research development, and product development to keep pace with technological advances in the industry and to compete in the future; however, we may be unable to secure such financing. We believe that a variety of competing solar and alternative or renewable energy technologies may be in development by other companies that could result in lower manufacturing costs and/or higher product performance than those expected for our products. Our development efforts may be hindered or rendered obsolete by the technological advances of others, and other technologies may prove more advantageous for the commercialization of transparent electricity-generating products.

To the extent we can develop and commercialize products, if such products do not gain market acceptance, we may not achieve sales and market share.

The development of a successful market for our products may be adversely affected by a number of factors, some of which are beyond our control, including:

If our products fail to gain market acceptance, we will be unable to achieve sales, market share, or profitability.

If organic solar photovoltaic light energy harvesting technologies are not suitable for widespread adoption or sufficient demand for such products does not develop or takes longer to develop than we anticipate, we may not be able to profitably exploit our technology.

The market for OPV solar-energy related products is emerging and rapidly evolving, and the market for energy harvesting products is generally unproven and not well established. The success of products for these markets is uncertain.

If our OPV solar power or light energy harvesting technologies prove unsuitable for widespread commercial deployment or if demand for such power products fails to develop sufficiently, we would be unable to achieve sales and market share. In addition, demand for such products in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate. Many factors will influence the widespread adoption of organic solar photovoltaic light energy capture and conversion products, including, without limitation, the following:

Our growth and success depend on our ability to develop new products and services and adapt to market and customer needs.

The sectors in which we operate experience rapid and significant changes due to the introduction of innovative technologies. Introducing new technology products and innovative services, which we must do on an ongoing basis to meet customers' needs, requires a significant commitment to research and development, which may not result in success. The company is pre-revenue and may suffer if it invests in technologies that do not function as expected or are not accepted in the marketplace; its products, systems or service offers are not brought to market in a timely manner; or products become obsolete or are not responsive to our customers' needs or requirements.

Our business model and strategy are based on growth through in-licensing, out-licensingjoint ventures, cross-licensing,ollaborative research and development agreements and acquisitions, joint venturesthat may be difficult to execute, and mergers that may be difficult it may disrupt our business, create integration issues, impair our results of operations, dilute our stockholders ownership, cause us to execute.

Our incur debt, divert management resources, or cause us to incur significant expense.

We may pursue in the future acquisitions of business modeles and strateassets, as well as technology alicensing and joint venture based on growth through in-licensarrangements, that we believe will complement our products or technologies. We also may pursue strategic alliances that leverage our core technologies and industry experience to expand our product offering, out-licensing, cross-licenss or distribution or make investments in other companies. Any acquisition involves a number of risks, many of which could harm our business, or materially impact our stock price, including,:

To acfinance any acquisitions, joint venture or investments, and mergers. External growth transactions are inherently risky becauswe may choose to issue equity or equity-linked securities as consideration, which could dilute the ownership of our stockholders, including materially. If the price of the Common Stock is low or volatile, we may not be able to acquire of the difficulties thatr companies for equity or equity-linked consideration. In addition, newly issued securities may arise in integrating people, operations, technologies and products,have rights, preferences or privileges senior to those of existing stockholders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and the related would also require us to incur interest expense. Additional funds for acquisition, administrative and other costs.

s also may not be available on terms that are favorable to us, or at all.

As noted above, on a going forward basis, we plan to make acquisitions, which could require significant management attention, disrupt our business, result in dilution to our stockholders, and adversely affect our financial results.

As part of our business strategy, we intend to make acquisitions to add specialized employees, complementary companies, products, or technologies. However, we have not made any acquisitions to date, and, as a result, our ability to acquire and integrate larger or more significant companies, products, or technologies in a successful manner is unproven. In the future, we may not be able to find suitable acquisition candidatetechnologies or products, and we may not be able to complete acquisitions on favorable terms, if at all. Any acquisitions that we consummate may not achieve our goals and could be viewed negatively by investors. In addition, if we fail to successfully integrate any acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and operating results of the combined company could be adversely affected. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, any of which could adversely affect our financial results. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

We may be the subject of product liability claims and other adverse effects due to defective products, design faults or harm caused to persons and property.

Our products may not operate properly or could contain design or fabrication faults or defects, which could give rise to disputes in respect of their performance, degradation and reliability giving rise to liability. Product liability related to defective products could lead to a loss of revenue, claims under warranty, and legal proceedings. Such disputes could result in a fall-off in demand or harm our reputation for product performance, safety, and/or quality.

We lack sales an, marketing and marketnufacturing experience and will likely rely on third party marketers.

We have limited experience in sales, marketing or, distribution of r manufacturing of photovoltaic and energy capture and conversion and generating products. We expect to marnufacture, market and , sell or otherwise commercialize our technology (or any of its derivatives) through distribution and supply-chain channels, co-marketing, co-promotion, or licensing arrangements with third parties. Therefore, any revenues received by us will be dependent on the efforts of third parties. If any such parties breach or terminate their agreements with us or otherwise fail to conduct marketing activities successfully and in a timely manner, the commercialization of our technology (or any of its derivatives) would be delayed or terminated, which would adversely affect our ability to generate revenues and our profitability.

We may not be able to integrate our process and/or technologies into a manufacturing process necessary to produce a manufacturable product.

Without sufficient capital, human resources, the appropriate process equipment, or required supply chain, the Company may not be capable of integrating its process and/or technologies into a manufacturing process necessary to produce a manufacturable product. The innovation of our processes and technologies is a crucial strategic concern, with mounting pressure to meet anticipated power, financial, and ROI and IRR for our manufacturers, or sales and distribution channels. If we are unable to integrate our processes and/or technologies into industry, our product innovations can rapidly become obsolete. LiquidElectricity Coatings and related processes and supply chains are highly complex and continuously exposed to a variety of risks such as microeconomics, macroeconomic, face geopolitical pressures, regulatory requirements, environmental risk and responsibilities, construction risk, and emerging markets. Integration of our processes is critical to product development and revenue generation. If the process cannot be integrated into industry, products, or brought to market in a timely manner, the Company, its potential products, and ability to operate may be threatened. Currently, the integration of our technologies into industrial manufacturing processes is uncertain.

While there are numerous reasons for selecting a manufacturing partner, there is considerable risk in selecting a manufacturing partner that is the correct fit for the Company. The level and severity of risk to the Company is associated with cost, resources and resource management, quality control, scaled production, complicated supply chain, location, corporate culture, management philosophy, market experience, and an adaptable business model. Based on these risks, the Company may not be able to integrate our process or technology into an existing manufacturing process with an acceptable level of risk.

Our insurance coverage may not be adequate to protect us from allWe could be exposed to liability if we experience security breaches or other disruptions, which could harm our reputation and business risks.

We may be subject, in the ordinar to cyber-attacks whereby course of businmputer hackers may attempt to access, to losses resulting from our computer systems or our third-party IT service products liability, accviders systems and, if successful, misappropriate personal or confidents, acts of Godial information. In addition, and contractor or other claims against us, fthird party with whom we do business may attempt to circumvent our security measures or whiobtain such we information and may have no insurance coverage. As a general matter, purposefully or inadvertently cause a breach involving sensitive information. We will continue to evaluate and implement additional protective measures to reduce the risk and detect cyber incidents, but cyber-attacks are becoming more sophisticated and frequent, and the polici techniques used in such attacks change rapidly. Even though we take cyber-security measures that we do havare continuously reviewed and updated, our information technology networks, and infrastructure may include signifstill be vulnerable due to sophisticant deductibleted attacks by hackers or self-insured retentionbreaches.

Even the most well protected IT networks, systems, and we cannot be certain that ourfacilities remain potentially vulnerable because the techniques used insurance coverage will  security breaches are continually evolving and generally are not recognized until launched against a target and, in fact, may not be sufficient to cover all futdetected. Any such compromise of our or our third partys IT service providers data security and access, public disclosure , or losses of personal or claims against us. A loss that is uninsured or which exceeds policy limits mayonfidential business information, could result in legal claims proceedings, liability under laws to protect, privacy of personal information, and regulatory penalties, disrupt our operations, require us to pay substantial amounts,significant management attention and resources to remedy any damages that result, damage our reputation and customers willingness to transact business with us, any of which could adversely affect our finbusiness.

Litigation and other legal proceedings may adversely affect our business, financial condition, and o results of operating results.

Rons.

From time to time we may become involved in legal proceedings, claims, government investisks Rgations, and other proceedings relateding to Internationpatent and other intellectual Expansion

In fiscal year 2021, we expanded our operations to Asia with a property matters, product liability, labor and employment, competition or antitrust, commercial, tort or contract, privacy, consumer protection, tax, federal regulatory investigations, securities (including class action litigation), and other legal proceedings or investigations, which could have an adverse impact on our business and, financial corpondition, and results of operate developmions and divert the attention of our management ofrom the operations office in the Republic of Korea, which, on Janu our business. Litigation is inherently unpredictable and can result in excessive or unanticipated verdicts and/or injunctive relief that affect how we operate our business. We could incur judgments or enter into settlements of claims for monetary 13, 2023, damages or for agreements to change the Board decided to exit.

In September 2020,way we operate our business, or both. There may be an increase in the scope of these matters or the Company re may be additional lawsuits, claims, proceedings or investablished SolarWindow Asia Co. Ltd., its indirectly, wholly owned South Korean subsidiary (the Korean Subsidiary). The Companigations in the future, which could have a material adverse effect on our business, financial condition, and results of operations. Adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our members confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.

We may experienced difficultiebe held liable for, or incur costs to settle, liability and remediation claims in Korea tf any products we develop, or any products that ultimse or incorporately resulted any of our technologies, cause in the Board electjury or are found unsuitable during product testing, manufacturing to shut down the Korean Subsidiary. The Company has engaged Korea-based legal counsel and accou, marketing, sale or use. These risks exist even with respect to products that have received, or may in the future receive, regulatory approval, registration or clearance for commercial use. We cannot guarantee that we will be able to avoid product liability exposure.

At the stage customary to do so, we expect to maintants to asin product liability insurance at levels we believe are sufficient and consist itent with in winding down the Korea operations and gatheringdustry standards for like companies and products. However, we cannot guarantee that our product liability insurance will be sufficient to help us avoid product liability-related losses. In the data necessary to meet its financial reporting requirements. The Company may incur sfuture, it is possible that meaningful insurance coverage may not be available on commercially reasonable terms or at all. In addition, a product liability claim could result in liability to us greater than our assets or insurance coverage. Moreover, even if we have adequate insurance coverage, product liability claims or recalls could result in negative publicity or force us to devote significant future costs relatedtime and attention to the closure, and/se matters, which could harm our business.

Our articles of incorporation provide for potential unknownindemnification of officers and directors at our expense and limit their liabilitiesy, which may remain undisclosed bsult in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors and may its former Chairmannhibit actions against our officers and directors.

Our articles of incorporation and Chief Executive Oapplicable Nevada law provide for the indemnification of our directors, officer. Currently, s, employees, and agents, under certain circumstances, against attorneys fees and othe compr expenses incurred by them in any is not able to determine when litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the closureexpenses of such litigation for any of our directors, of its Korea Subsidiary wificers, employees, or agents, upon such persons promise to repay us if it is ultimately determined that any such person shall be final.

The Company has limited experiencenot have been entitled to indemnification. This indemnification policy could result in intellectual property, manufactusubstantial expenditures by us, which we will be unable to recoup.

The provisions of the Nevada Revised Statutes and our bylaws may discourage stockholders from bring, regulatory compliance, and sales in internaing a lawsuit against our directors for breach of their fiduciary duty. The provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an actional markets, which, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholders investment may be adversely affect our business, resuled to the extent we pay the costs of operations or financial condisettlement and damage awards against directors and officers pursuant to these indemnification shouldprovisions. We believe the Company pursue establishing opeat these amended and restated certificate of incorporations in intern provisions, amended and restated bylaw provisions, indemnificational markets.

International expansion would expose the Company to risks which could have a material impact on our ov agreements and the insurance are necessary to attract and retain qualified persons as directors and officers.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federall operations and ultimate success. These risk securities laws is against public policy as expressed in the Securities Act and is, include:

Ctherefore, unenforceable. In the event thanges in regulatory, geopolitical, social, economic,at a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or monetary policies and other factors, icontrolling person in the successful defense of any, may have a material adverse effect  action, suit or proceeding, is asserted by a director, officer or controlling person our businin connection with the securities being registered, we will (unless in the future, oropinion of our counsel, the may require us to extter has been settled by controlling precedent) submit a particular market or signto a court of appropriate jurisdiction, the question whether indemnificantly modify our current business practices. Abrupt politiction by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal change, terrorist activitprocess relating to this matter, if it were to occur, is likely to be very costly and armed confmay result in us receiving negative publict pose a risk of general economic disruptionity, either of which factors is likely to materially reduce the market and price for our common stock.

Our in affectedsurance countries, which could also result in an adverse effverage may not be adequate to protect us from all business risks.

We may be subject on , in the ordinary cour se of business and, to losses results ing from products liability, accidents, acts of operations.

WGod, and other claims against us, for which we may expand our ophave no insurance coverationge. As abroad where  general matter, the policies that we do have limited operating experience and maymay include significant deductibles or self-insured retentions, and we cannot be certain that our insurance coverage will be subjecfficient to increased business and economic risks thatcover all future losses or claims against us. A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial r condition and operating results.

ARisks we move forwardRelated to Compliance with oLaws and Regulations

Our strategy of expbusiness is and may become subject to complex and evolving into new markets, we may entU.S. and foreign laws and regulations regarding privacy, data use and data protection, content, competition, safety and consumer protection, e-commerce, and other new internmatters. Many of these laws and regulations are subject to change and uncertain interpretational markets where we have limited or no ex, and could result in claims, changes to our products and business practices, monetary penalties, increased cost of operienceations, or declines in marketing, selling, auser growth or engagement, or otherwise harm our business.

We are and deploying our products. Our operamay become subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business and business plan, including privacy, data use, data protections and personal informance will become significantly more dependent on worldwide economtion, biometrics, encryption, rights of publicity, content, integrity, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, data localization and storage, data disclosure, artificial intelligence and machine learning, electronic conditracts and other communications. Uncertainty about global, competition, protection of minors, consumer protection, civil rights, accessibility, telecommunications, product liability, e-commerce, taxation, economic  or other trade conditrols including sanctions ultimately, anti-corruption and political law compliance, securities law could have a material negative effect on demand fmpliance, and online payment services. The introduction of new products, expansion of our activities in certain jurisdictions, or our products and services and, accordinglther actions that we may take may subject us to additional laws, regulations, or other government scrutiny. In addition, foreign data protection, privacy, on our business, results of operations acontent, competition, consumer protection, and other laws and regulations can impose different obligations or be more restrictive than those in the United States.

These U.S. federal, state, and financial condition. Ioreign laws and regulations, which in some cases can be enforced by private parties in addition to the risks inherent in doing business interngovernment entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretationally, as noted above, if, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we are unable to expoperate and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and internationally and manageconsistently with our current policies and practices. For example, regulatory or legislative actions or litigation affecting the complexity ofmanner in which we display content to our global operatiusers, moderate content, or obtain cons successfully, our financial results could be ent to various practices could adversely affect user growth and engagement. Such actions could affect the manner in which we provide our services or adversely affected.

R our financial results.

These laws and regulatisks Relons, as well as any associated to Compliance with Laws claims, inquiries, or investigations or any other government actions, have in the past led to, and Regulations

Our pmay in the future lead to, unfavorable outcomes including increased compliance costs, loss of revenue, delays or impediments in the development of new products or the app, negative publicatity and reputation thereal harm, increased operating costs, diversion of will be subject to environmental, occupationmanagement time and attention, and remedies that harm our business, including fines or demands or orders that we modify or cease existing business practice.

There may be limitations on the effectiveness of our internal safety health regulations, includcontrols, and the failure of our control systems to prevent error or fraud may materially harm our Company.

We do not expect that internal control over financial accounting but not limited to Underwriter Laboratory (UL) Certification, European Conformity (CE) Certificand disclosure, even if timely and well established, will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation, electricas in all control systems, no evaluation of controls can provide absolute assurance that all codes, and other state and federal, European Union (EU), and other Country ntrol issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely affect our business.

Our products or the application thereof will be subject to environmental, occupational safety health regulations, as well as regulations dealing with, among other matters, harmful or hazardous materials.

Our products will be subject to extensive and increasingly stringent environmental, occupational safety and health regulations and certifications, including but not limited to, Underwriter Laboratory (UL) Certification, eelectrical codes, and other state and federal, foreign laws, regulations, and standards (LawsOperational Regulations). If violations of these LawsOperation Regulations occur, whether unintentional or otherwise, we could be held liable for damages, penalties and costs of remedial actions. These expenses or this liability could have a significant negative impact on our business, financial condition, and results of operations.

These LawsOperation Regulations could become more stringent over time, imposing greater compliance costs, and increasing risks and penalties associated with violations. There can be no guarantee that we will not be required to pay significant fines or compensation because of past, current, or future breaches of LawsOperation Regulations. This exposure exists even if we are not responsible for the breaches, in cases where they were committed in the past by companies or businesses that were not part of ours that may be exposed to the risk of claims for breaches of these LawsOperational Regulations. Such claims could adversely affect our financial position and reputation and require unplanned capital investment. If we fail to conduct our business in full compliance with the applicable LawsOperation Regulations, the judicial or regulatory authorities could require us to conduct investigations, unplanned capital investments, and/or implement costly curative measures.

Our pWeriodic and other reports filed with various securities regulators su are subject us to additional compliance expense as well potential liability for any alleged violations of the securities laws and regulations to which we are or may be subject (the Securities Laws Regulations).

As a public company filing periodic and other reports, whether on a mandatory or voluntary basis, with foreign, federal, or state securities regulators (collectively, Securities Regulators), we incur significant accounting, legal and administrative expenses in connection with our efforts to fully comply with the Securities Laws Regulations. This expense may increase significantly should there be any changes in the Securities Laws Regulations that impose greater obligations or requirements on us to fully comply. Such costs may adversely impact our other operations including but not limited to, our research and development efforts.

Moreover, should there be a violation of the Securities Laws Regulations, we may be subject to fines, penalties and other sanctions that could adversely impact our ability to continue our research, product development and commercialization efforts.

Risks Related to our Intellectual Possible Expansion into Foreign Jurisdictions

We may expand our operations abroad where we have limited operating experience and may be subject to increased business and economic risks that could affect our financial results.

As we move forward with our strategy of expanding into new markets, we may enter new international markets where we have limited or no experience in marketing, selling, and deploying our products. Our operations and performance will become significantly more dependent on worldwide economic conditions. Uncertainty about global economic conditions ultimately could have a material negative effect on demand for our products and services and, accordingly, on our business, results of operations and financial condition. In addition to the risks inherent in doing business internationally, as noted above, if we are unable to expand internationally and manage the complexity of our global operations successfully, our financial results could be adversely affected.

Risks Related to our Intellectual Property

Our ability to operate profitably is directly related to our ability to develop, protect, and perfect rights in and to our proprietary technology.

We rely on a combination of trademark, trade secret, nondisclosure, know-how, copyright, and patent law to protect our technology, which may afford only limited protection.

We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity, scope or enforceability of our proprietary rights. Any such claims could be time consuming, result in costly litigation, or force us to enter into royalty or license agreements rather than dispute the merits of such claims, requiring us to pay royalties and/or license fees to third parties. There is always a risk that patents, if issued, may be subsequently invalidated, either in whole or in part and this could diminish or extinguish protection for any technology we may license or may adversely affect our ability to fully commercialize our technologies.

We generally require our employees, consultants, advisors and collaborators to execute appropriate agreements with us, regarding the confidential information developed or made known to such persons during the course of their engagement by us. These agreements provide that any proprietary technologies developed during such engagement are owned by us and that confidential information pertaining to such technologies will be kept confidential and not disclosed to third parties except in specific circumstances. These agreements also provide for the assignment to us by any such person of any patents issued with respect to any such technologies. If these provisions are breached, we may not be able to fully perfect our rights to the technologies in question, and in some instances, we may not have an appropriate remedy available for the damages that we may incur because of any such breach.

Our proprietary rights may not adequately protect our technologies and products.

Our commercial success will depend, in part, on our ability to obtain patents and/or maintain adequate protection for our technologies and products in the United States and other countries. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We intend to apply for additional patents for our technologies, applications, processes, and products, as we deem appropriate. We may, however, fail to apply for patents on important technologies, products, or processes in a timely manner, if at all. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products, processes, or technologies. In addition, the patent positions of alternative energy technology companies are highly uncertain and involve complex legal and factual questions for which important legal principles and regulations or policies remain unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee that:

The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends on many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patents. Our ability to maintain and solidify our proprietary position for our products will depend on our success in obtaining effective claims and enforcing those claims once granted. Our issued patents and those that may be issued in the future, or those licensed to us, may be challenged, invalidated, unenforceable or circumvented, and the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages against competitors with similar products. We also rely on trade secrets to protect some of our technology, especially where it is believed that patent protection is inappropriate or unobtainable. However, trade secrets are difficult to maintain. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain. In addition, non-U.S. courts are sometimes less willing than U.S. courts to protect trade secrets. If our competitors independently develop equivalent knowledge, methods, and know-how, we may not be able to assert our trade secrets against them and our business could be harmed.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our technologies and processes, we rely in part on confidentiality agreements with our employees, independent contractors and other advisors. These agreements may not effectively prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information, and in such cases we may not be able to assert our trade secret rights against such parties. To the extent that our employees, contractors or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights to related or resulting know-how and inventions. The loss of confidential information or intellectual property rights, including trade secret protection, could make it easier for third parties to compete with our products. In addition, any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection of our trade secrets or other proprietary information could harm our business, results of operations, reputation and competitive position.

We may not be able to adequately protect our intellectual property rights throughout the world.

 from infringement by unauthorized persons or competitors.

Our business depends on our intellectual property, the protection of which is crucial to the success of our business. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of technologies, our websites or obtain and use information that we consider proprietary.

We may not be able to discover or determine the extent of any unauthorized use or infringement or violation of our intellectual property or proprietary rights. Third parties also may take actions that diminish the value of our proprietary rights or our reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting to management, result in a diversion of resources, the impairment or loss of portions of our intellectual property and could materially adversely affect our business, financial condition and operating results. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. These steps may be inadequate to protect our intellectual property. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to use information that we regard as proprietary to create product offerings that compete with ours. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights, which could materially adversely affect our business, financial condition and operating results.

Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of the terms ClearlyElectric and SolarWindow.ClearlyElectric LiquidElectricity or SolarWindow any of the other trademarks that we own.

We currently operate primarily in the United States. To the extent that we determine to expand our business internationally, we will encounter additional risks, including different, uncertain or more stringent laws relating to intellectual property rights and protection.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on all our products in every jurisdiction would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products. These products may compete with our products and may not be covered by any patent claims or other intellectual property rights.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

If we fail to protect our intellectual property rights, our competitors may take advantage of our ideas and compete directly against us.

Our success will depend, to a significant degree, on our ability to secure and protect intellectual property rights and enforce patent and trademark protections relating to our technology. While we believe that the protection of patents and trademarks is important to our business, we also rely on a combination of copyright, trade secret, nondisclosure and confidentiality agreements, know-how and continuing technological innovation to maintain a competitive position. From time to time, litigation may be advisable to protect our intellectual property position. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. Any litigation in this regard could be costly, and it is possible that we will not have sufficient resources to fully pursue litigation or to protect our intellectual property rights. This could result in the rejection or invalidation of our existing and future patents. Any adverse outcome in litigation relating to the validity of our patents, or any failure to pursue litigation or otherwise to protect our patent position, could materially harm our business and financial condition. In addition, confidentiality agreements with our employees, consultants, customers, and key vendors may not prevent the unauthorized disclosure or use of our technology. It is possible that these agreements will be breached or that they will not be enforceable in every instance, and that we will not have adequate remedies for any such breach. Enforcement of these agreements may be costly and time consuming. Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States of America.

Our intellectual property rights may not be sufficient to protect our competitive position and to prevent others from manufacturing, using or selling competing products.

The scope of our owned property rights may not be sufficient to prevent others from manufacturing, using or selling competing products. Competitors could purchase our product and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies and thereby avoid infringing our intellectual property rights. If our intellectual property is not sufficient to effectively prevent our competitors from developing and selling similar products, our competitive position and our business could be adversely affected.

We may be accused of infringing the intellectual property rights of others.

We cannot guarantee that we will not become the subject of infringement claims or legal proceedings by third parties with respect to our current or future technological developments. Any such claims could be time-consuming, result in costly litigation and could ultimately lead to a determination that our technology, or any of its derivatives, infringes on a third party's patent rights.

We may need to curtail or cease operations if, in the future, we are unable to obtain additional licenses pursuant to our collaborative development agreements required to maintain our rights to market products, if any, developed by us.

We may not retain all rights to developments, inventions, patents, and other proprietary information resulting from any collaborative arrangements, whether in effect as of the date hereof or which may be entered into at some future time with third parties. As a result, we may be required to license such developments, inventions, patents, or other proprietary information from such third parties, possibly at significant cost to us. Our failure to obtain and maintain any such licenses could have a material adverse effect on our business, financial condition, and results of our operations. In particular, the failure to obtain a license could prevent us from using or commercializing our technology.

Our failure to secure trademark registrations could adversely affect our business and our ability to market our proprietary rights ducts.

Our trademark applications in the United States and any other jurisdictions where we may file may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may not adebe unable to overcome such rejections. In addition, in the USPTO and in corresponding foreign agencies, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our business and our ability to market our products.

We may be unable to adequately protect our technevent disclosure of trade secrets and other proprietary information, or the misappropriation of the intellectual property we regard as our own.

We rely on trade secrets to protect our proprietary know-how and technologies and cal advances, particularly where we do not believe patent protection is appropriate or obtainable. Nevertheless, trade secrets are difficult to products.

Our commercial success will dependtect. We rely in part on confidentiality agreements with our employees, consultants, third party contractors, third party collaborators and other advisors to protect our trade secrets and other proprietary information. These agreements generally require that the other party to the agreement keep confidential and not disclose to third parties all confidential information developed by us or made known to the other party by us during the course of the other partys relationship with us. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. If we were to seek to pursue a claim that a third party had illegally obtained and was using our trade secrets, in part, on ot would be expensive and time-consuming, and the outcome would be unpredictable. Further, courts outside the United States may be less willing to protect trade secrets. In addition, others may independently discover our abitrade secrets and proprietary information and therefore be free to use such trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to obtain patents and/or regulatory eenforce and determine the scope of our proprietary rights. In addition, our trade secrets and proprietary information may be misappropriated as a result of breaches of our electronic or physical security systems in which case we may have no legal recourse. Failure to obtain, or maintain, trade secret protection could enable competitors to use our proprietary information to develop products that compete with our products or cause additional, material adverse effects upon our competitive business position.

Our pending or future patent applications may not result in issued patents, and we cannot predict how long it may take for a patent to issue on any of our pending patent applications, assuming a patent is issued.

Other parties may challenge patents issued or exclusivity and maintain adequely licensed to us, or courts or administrative agencies may hold our patents or the patents we license on an exclusive basis to be invalid or unenforceable. We may not be successful in defending challenges faced with our patents and other intellectual property rights. Any third-party challenge to any of our patents could result in the unenforceability or invalidity of some or all of the claims of such patents and could be time consuming and expensive.

Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property rights.

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation and switch the U.S. patent system from a first-to-invent system to a first-to-file system. Under a first-to-file system, assuming the other requirements for pate protectntability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulation for our technologies and products and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, including the first-to-file provisions in particular, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our owned and licensed patent applications and the enforcement or defense of issued patents that we own or license, all of which could have a material adverse effect on our business and financial condition.

Patent applications in the United States of America and oand many foreign jurisdictions are not published until at least eighteen months after filing and it is possible for a patent application filed in the United States to be maintained in secrecy until a patent issue on the application. In addition, publications in scientific literature often lag behind actual discoveries. We ther countriesefore cannot be certain that others have not filed patent applications that cover inventions that are the subject of pending applications that we own or exclusively license or that we were the first to invent the technology (if filed prior to the Leahy-Smith Act) or first to file (if filed after the Leahy-Smith Act). Our ability to protect our proprietary righcompetitors may have filed, and may in the future file, patent applications covering technology that is similar to or the same as our technology. Any such patent application may have priority over patent applications that we own and, if a patent is issued on such patent application, we could be required to obtain a license to such patent in order to carry on our business. If another party has filed a U.S. patent application covering an invention that is similar to, or the same as, an invention that we own, we may have to participate in an interference or other proceeding in the USPTO or a court to determine priority of invention in the United States, for applications and patents made prior to the enactment of the Leahy-Smith Act. For applications and patents made following the enactment of the Leahy-Smith Act, we may have to participate in a derivation proceeding to resolve disputes relating to inventorship. The costs from unauthorized use of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in our inability to obtain or retain any U.S. patent rights with respect to such invention.

The patent prosecution process is expensive and time-consuming, is highly uncertain and involves complex legal and factual questions. Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and products. We seek to protect our proprietary position by thirdfiling in the United States and in certain foreign jurisdictions parttent applications related to our novel technologies only to the exand products that are important to our business.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patent thaable aspects of our research and development our proprietary technologies antput before it is too late to obtain patent protection. In addition, we may not pursue or obtain patent protection in all major markets. Moreover, in some circumstances, we may not have the right to control the preparation, filing or prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. In some circumstances, our licensors may have the right to enforce the licensed products are coveatents without our involvement or consent, or to decide not to enforce or to allow us to enforce the licensed patents. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. If any of our licensors fail to maintain such patents, or lose rights to those patents, the rights that we have licensed may be red by vuced or eliminated and our right to develop and commercialize any of our products that are the subject of such licensed rights could be adversely affected.

Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercialid and enforceabzing competitive technologies and products. In particular, during prosecution of any patent application, the issuance of any patents based on the application may depend upon our ability to generate additional nonclinical or clinical data that support the patentability of our proposed claims. We may not be able to generate sufficient additional data on a timely basis, or at all. Moreover, changes in either the patent laws or are effeinterpretation of the patent laws in the United States or other countries may diminish the value of our patents or narrow the scope of our patent protectively maintained as trade secrets.

on.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission or proceeding could reduce the scope of, or invalidate, our patent rights; allow third parties to commercialize our technology or products and compete directly with us, without payment to us; or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our owned and licensed patents and patent applications, if any, is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product.

Risks Related to Our Personnel and Management

We are dependent upon hiring and retaining highly qualified management and technical personnel.

Competition for highly qualified management, technical, and scientific personnel (Personnel) is intense in our industry. Future success depends in part on our ability to attract, hire, assimilate and retain engineers and scientists, sales and marketing personnel, and other qualified personnel, especially in the OPV space with focus in our technologies and products. A key risk is our ability to anticipate our needs for certain key competences and to implement human resource solutions to recruit, hire, or improve these competences. If we are not successful in hiring and retaining qualified Ppersonnel, our ability to execute on our business model and strategy will be adversely affected and our ability to achieve profitability compromised.

Due to the fact each of our three directors conducts outside business activities and are not our employees, attention and efforts will not be focused solely on our business activities, which may hinder our achieving our business objectives.

Currently we have three directors, none of whom provides their full-time efforts to our business activities. While our directors intend to devote as much time as necessary to the success and development of our technology, each has other business interests or employment obligations requiring their time and attention. While each has generally agreed to provide such time and attention to our business activities as may be reasonably required, there can be no assurance that their priorities will not shift in the future and that the amount of time that each devotes to our activities will be sufficient for us to meet our business objectives. If their outside interests begin to take precedence over their positions with the Company, our business will suffer and may adversely impact our goal of achieving profitability through the commercialization of SolarWindow. In this event, if effective corrective action is not taken, investors could lose all or part of their investment.

Due to our small size each of our officers and consultants has a significant influence on our operations and access to sensitive information, which, if an officer or consultant goes rogue, could result in significant damage to, without limitation, the Companys operations, reputation, financial health, and security of our intellectual property.

Due to our small size, each of our officers and consultants exercises a significant degree of authority and influence on our operations, and has access to highly sensitive information, including related to our intellectual property and access to the Companys assets. While the Company has implemented various operating procedures and a Code of Ethics and Business Conduct that each person affiliated with the Company is required to review and sign, the Company has no direct control over individual persons actions can make no assurance that one of our officers and consultants will adhere to our operating procedures or act in a manner that is consistent with our Code of Ethics. Nor can the Company provide assurance that an officers and a consultant or a former officers and a consultant may take deliberate action(s) to harm the Company. The potential damages that may result from these unintentional or intentional acts could be materially adverse and result in, but not limited to, loss of capital, loss of assets, weakened intellectual property position because of leaked information, and reputational harm.

Risks Related To Ownership of Our Common Stock

We are not a fully reporting company under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act; therefore, we are subject only to the reporting requirements of Section 15(d) of the Exchange Act.

We are not a fully reporting company under the Securities Exchange Act of 1934, as amended (the Exchange Act); therefore, we are subject only to the reporting requirements of Section 15(d) of the Exchange Act. Until our Common Stock is registered under the Exchange Act, we will be subject only to the reporting obligations imposed by Section 15(d) of the Exchange Act, which we refer to as Section 15(d). Section15(d) requires that issuers file periodic and current reports with the U.S. Securities and Exchange Commission (the Commission or the SEC) when they have issued any class of securities for which a registration statement was filed and became effective pursuant to the Securities Act. The purpose of Section 15(d) is to ensure that investors who buy securities in registered offerings are provided with the same information on an ongoing basis that they would receive if the securities they purchased were listed on a securities exchange or the issuer were otherwise subject to periodic reporting obligations. However, companies that are required to report only under Section 15(d) are not subject to some of the Exchange Act reporting requirements. For example, companies that are required to report only under Section 15(d) are not subject to the short-swing profit reporting requirements contained in Section 16 of the Exchange Act, the beneficial ownership reporting requirements contained in Section 13 of the Exchange Act, the institutional investor reporting rules or the third-party tender offer rules, or the Exchange Acts proxy rules contained in Section 14 of the Exchange Act.

The reporting obligations under Section15(d) of the Exchange Act are automatically suspended when: (i) any class of securities of the issuer reporting under Section 15(d) is registered under Section 12 of the Exchange Act; or (ii) at the beginning of the issuers fiscal year, other than the year in which the applicable registration statement became effective, if the class of securities covered by the registration statement is held of record by fewer than 300 persons. In the latter case, the Company would no longer be subject to periodic reporting obligations so long as the number of holders remained below 300 unless we filed a registration statement with the Securities and Exchange Commission under Section 12 of the Exchange Act. If our obligation to file reports under Section 15(d) is suspended (other than due to our having registered our common stock under Section 12 of the Exchange Act), then investors will have reduced visibility with respect to the Company, its financial condition, and results of operations.

Until our Common Stock is listed on an exchange, we expect to remain eligible for quotation on the OTCPK or PINK Market on another over-the-counter quotation system. In those venues, however, an investor may find it difficult to obtain accurate quotations for our common stock. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of your shares. This would also make it more difficult for us to raise additional capital or attract qualified employees or partners. Please refer to Our common stock is currently quoted on the OTCP PINK (Current Information) which may make it more difficult for you to purchase or sell shares of the Companys Common Stock below.

Our common stock is currently quoted on the OTCP PINK (Current Information) which may make it more difficult for you to purchase or sell shares of the Companys Common Stock.

The OTCP PINK (Current Information) is viewed by most investors as a less desirable, and less liquid, marketplace. As a result, an investor may find it more difficult to purchase, dispose of or obtain accurate quotations as to the value of our common stock. Unless and until we file an application for listing of our shares on a national stock exchange or the OTCQB and such an application is accepted (as to which there is no assurance), we expect that our stock will continue to trade on the OTCP PINK (Current Information).

Our common stock is not registered for trading on any national stock exchange and thus, should the price of our stock on the OTCP PINK (Current Information) fall below five dollars per share and our net tangible assets fall below two million dollars our stock may be deemed a penny stock, in which case, you may find it difficult to, deposit, transfer, sell or purchase the shares of our common stock in open market transactions.

Penny stocks are those securities that are not listed on a national securities exchange and are priced under $5. There are exclusions for securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years or greater than $5 million if in operation less than three years. Securities of issuers with average revenue of at least $6 million for the last three years are also not considered penny stocks.

More specifically, under Rule 240.3a51-1 a stock is excluded from the penny stock definition if it meets one of the following tests: 1) A price of over $5 per share, 2) the issuer has Average Revenue of at least $6 million for the last 3 years, or 3) the issuer has Net Tangible Assets in excess of $2 million if the issuer has been in continuous operations for at least 3 years or $5 million if less than 3 years.

The value of our net tangible assets for the fiscal years ended August 31, 20234, and 20223 was approximately $7,5634,958,000 and $9,5395,010,000, respectively. Accordingly, we do not believe our stock is a penny stock. And if we continue to satisfy at least one of the foregoing exemptions, our common stock should continue to be deemed penny stock exempt. However, because our stock is not registered for trading on a national stock exchange should we no longer satisfy at least one of the exemption criteria described above, our common stock would be considered a penny stock.

The penny stock rules are designed to prevent deceptive or manipulative practices. It provides that a broker cannot sell a penny stock to any person unless it has approved that person's account for penny stock transactions and the broker/dealer has received in writing from customer agreement to the transaction; approving an account includes, among other things, reviewing the customer's financial data and determining the customer's suitability, including the capability to evaluate the risks of trading in penny stocks. Some types of transactions in penny stocks are exempt from these rules. Exempt transactions include those with an established customer (a customer of more than one year or one who has made at least three separate penny stock purchases) and transactions in which the customer is an institutional investor.

In addition, the penny stock regulations require that prior to any non-exempt buy/sell transaction in a penny stock, a disclosure schedule proscribed by the SEC relating to the penny stock market must be delivered by a broker-dealer to the purchaser of such penny stock. This disclosure must include the dollar amount of commissions payable to both the broker-dealer and the registered representative and current price quotations for our common stock. The regulations also require that monthly statements be sent to holders of penny stock that disclose recent price information for the penny stock and information of the limited market for penny stocks. Because of these requirements, many brokerage firms will not process transactions involving low price stocks, especially those that come within the definition of a penny stock. Accordingly, these requirements may adversely affect the market liquidity of our common stock.

Should our common stock be deemed a penny stock, you may find it difficult to deposit, transfer, sell or purchase the shares of our common stock in open market transactions.

Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit a stockholders ability to buy and sell our common stock, which could depress the price of our common stock.

In addition to the penny stock rules described above, FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares of common stock, have an adverse effect on the market for our shares of common stock, and thereby depress the per share price of, and liquidity for, our common stock.

There is a limited market for our common stock, which may make it difficult for holders of our common stock to sell their stock.

Our common stock currently trades on the OTC PinkINK (Current Information) under the symbol WNDW; there is limited and sporadic trading in our common stock. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our common stock, the ability of the holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock. Further, many brokerage firms will not process transactions involving low price stocks, especially those that come within the definition of a penny stock. If we cease to be quoted, holders of our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our common stock, and the market value of our common stock would likely decline.

The trading price of our common stock has been and will likely continue to be volatile.

The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. From December 31, 2019, through November 10, 2023the date of this annual report, the stock price of our common stock has ranged from a low of $0.01 to a high of $39.20 per share. In addition to the factors discussed in these Risk Factors and elsewhere in this report, factors that may cause volatility in our share price include:

In addition, in recent years, broad stock market indices in general, and smaller capitalization companies in particular, have experienced substantial price fluctuations. In a volatile market, we may experience wide fluctuations in the market price of our common stock. These fluctuations may have a negative effect on the market price of our common stock. Such volatile fluctuations may also make us more susceptible to possible class action lawsuits, which are often initiated following price declines.

If securities or industry analysts do not publish, or cease publishing, research or publish inaccurate or unfavorable research about our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and any trading volume could decline.

The trading market for our common stock , which is highly volatile, may depend in part on the research and reports that securities or industry analysts publish about us or our business, markets, or competitors. Securities and industry analysts do not currently, and may never, publish research on us or our business. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively affected. If securities or industry analysts initiate coverage, and one or more of those analysts downgrade our stock or publish inaccurate or unfavorable research about our business or our market, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and any trading volume to decline.

The sale or availability for sale of substantial amounts of our common stock could adversely affect their market price.

Sales of substantial amounts of our common stock in the public market after the filing of a Form S-1, or pursuant to Rule 144, the perception that these sales could occur, could adversely affect the market price of our common stock, and could materially impair our ability to raise capital through equity offerings in the future. Resale Shares held by our existing stockholders may be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act.

As of the date of this annual report, we have 53,198,399 shares of common stock outstanding. We cannot predict what effect, if any, market sales of securities held by our significant stockholders or any other stockholder or the availability of these securities for future sale will have on the market price of our common stock.

Adverse publicity about us and/or our brands, including without limitation, through social media or in connection with brand damaging events and/or public perception, could negatively impact our business.

Negative claims, publicity or allegations made by Securities Regulators, involving us, our bBoard of dOf Directors, our employees and consultants, our brands, our products, services and experiences, consumer data, or any of our key employees, or suppliers, whether arising through social media outlets or short and distort attacks could seriously damage our reputation and the image of our brands, regardless of whether such claims are accurate or true.

Social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges we face in attempting to respond to negative claims. Negative attention or scrutiny on us can also possibly result in negative publicity. 

Adverse publicity could also damage our reputation and the image of our brands, undermine consumer confidence in us and reduce long-term demand for our products, even if such adverse publicity is unfounded or not material to our operations. If our reputation, culture, or image is tarnished or receives negative publicity (whether accurate or not), then our business, financial condition, results of operations and liquidity could be materially adversely affected.

As a smaller reporting company within the meaning of the Securities Act, we may utilize certain modified disclosure requirements, and we cannot be certain if these reduced requirements will make our common stock less attractive to investors.

Generally, a smaller reporting Company or (SRC) is a company that as of the last business day of its most recently completed second quarter: (i) Had a public float of less than $250 million; or (ii) Had annual revenues of less than $100 million and either: (A) No public float; or (B) A public float of less than $700 million. On February 289, 20234, we had a public float of $25,6486,065,000.

We are a SRC; and, for as long as we continue to be a SRC, we are exempt from various reporting requirements applicable to other public companies but not to a SRC, including, for example, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute compensation not previously approved. We have in this annual report utilized, and we may in future filings with the SEC continue to utilize, the modified disclosure requirements available to emerging growth companies. As a result, our stockholders may not have access to certain information they may deem important and may therefore find our stock a less attractive investment.

The sale by our stockholders of restricted shares, either pursuant to a resale prospectus or Rule 144, may adversely affect our ability to raise the funds we will require to effectuate our business plan.

As of the date of this annual report, we had 53,198,399 shares issued and outstanding, of which 35,847,2687,541 are deemed restricted securities or control securities within the meaning of Rule 144. The possibility that substantial amounts of our common stock may be sold into the public market, either under Rule 144, or pursuant to a resale registration statement, may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital in the future through the sale of equity securities because of the perception that future re-sales could decrease our stock price and because of the availability of resale shares to those interested in investing in our common stock. Subject to compliance with our insider trading policies to the extent applicable, sales of such restricted securities or control securities may be made from time to time, at the discretion of the holders of such securities. We may not have knowledge of any such sales until sometime after such sales are made.

Kalen Capital Corporation (KCC), a private corporation solely owned by Mr. Harmel S. Rayat, our Chairman and director, beneficially owns approximately 72.68% of our issued and outstanding stock when giving effect to derivative securities owned by KCC. This ownership interest may preclude you from influencing significant corporate decisions.

As of the date of this report, Kalen Capital Holdings LLC, a wholly owned subsidiary of KCC, a private corannual reporation solely owned by Harmel S. Rayat, bet, KCC beneficially owneds 50,705,598 shares (inclusive of 16,566,667 shares issuable upon exercise of outstanding warrants and 34,138,931 shares of common stock issued and outstanding), or approximately 72.68% of our outstanding common stock, on a fully diluted basis.

As a result, Mr. Rayat, having voting control of 34,138,931 shares of our total issued and outstanding 53,198,399 shares, can exercise significant influencecontrol over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have significant control over our management and policies. Mr. Rayat's interests may be different from yours. For example, he may support proposals and actions with which you may disagree, or which are not in your interest. This concentration of ownership could delay, prevent, or cause a change in control should Mr. Rayat sell all or a portion of his shares of our company or otherwise discourage a potential acquirer from attempting to obtain control of our company, which in turn could reduce the price of our common stock, possibly cause acceleration of vesting of outstanding options, result in limits to the utilization of our net operating loss, and may adversely affect your investment. In addition, Mr. Rayat could use his voting influence to maintain our existing management and Board of Directors (Board) in office, or support or reject other management and Board members) proposals that are subject to stockholder approval, such as the adoption of employee stock plans and significant unregistered and registered financing transactions.

We are a controlled company and as a result our stockholders do not have the same protections afforded to stockholders of companies that are not controlled companies.

Mr. Rayat has voting control over 64.17% of our outstanding voting stock and therefore we currently meet the definition of a controlled company under the corporate governance standards for Nasdaq listed companies and for so long as we remain a controlled company under this definition, we are eligible to utilize certain exemptions from the corporate governance requirements of Nasdaq.

As long as KCC owns at least 50% of the voting power of our Company, we will be a controlled company as defined under applicable rules. For so long as we are a controlled company under that definition, we are permitted to rely on certain exemptions from corporate governance rules, including:

By relying on the controlled company exemption, a majority of the members of our Board might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. As a result, you will not have the same protection afforded to stockholders of companies that are subject to these corporate governance requirements. We would cease our reliance on the controlled company exemption in the future should we apply for listing on a national stock exchange.

The company may be subject to compliance with rules requiring the adoption of certain corporate governance measures, which require control measures for related party transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act of 2002 (SOX), as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange and the Nasdaq Stock Market, as a result of SOX, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the Nasdaq Stock Market.

A significant requirement that applies to accelerated and large accelerated filers under SOX 404(b), but not to non-accelerated filers, is the requirement that accelerated and large accelerated filers have an internal control over financial reporting (ICFR) auditor attestation. An ICFR auditor attestation requires the independent accounting firm that prepares or issues the issuers financial statement audit report to also attest to, and report on, managements assessment of the effectiveness of the issuers ICFR. SOX Section 404(b), however, exempts non-accelerated filers from the ICFR auditor attestation requirement. As a result of our public float exceeding $75 million (prior to the rule change described below) on February 28, 2018, for our year ended August 31, 2018, the Company was subject to SOX 404(b). As a result of the rule change described below, The Company was not considered an accelerated filer for its fiscal year ended August 31, 2019.

On March 12, 2020, the SEC approved amendments to Rule 12b-2 that excludes from the definitions of accelerated filer and large, accelerated filer any issuer that is eligible to be a SRC. To be an eligible SRC that is also a non-accelerated filer, a company must have revenues of less than $100 million in the most recent fiscal year and also have a public float of less than $700 million. As a result of the recent amendments to the definition of an SRC and the resulting increase in the thresholds in revenue and public float value, the Company is not subject to the attest requirements of SOX 404(b). However, should our fiscal year revenues exceed $100 million, and our second quarter public float exceed $250 million, the Company will again be subject to SOX 404(b) and the added additional professional fees and management time required to comply SOX 404(b).

There are options to purchase shares of our common stock currently outstanding.

As of November 10August 31, 20234, we have granted options to purchase shares of our common stock to various persons and entities, under which we could be obligated to issue up to 4,207,45,433,000 shares of our common stock. The exercise prices of these options range from $2.320.33 to $6.21 per share. 3,8135,088,000 of the options contain cashless exercise provisions. If issued, the shares underlying these options would increase the number of shares of our common stock currently outstanding and dilute the holdings and voting rights of our then-existing stockholders.

There are warrants to purchase shares of our common stock currently outstanding.

As of November 10August 31, 20234, we had outstanding warrants to purchase shares of our common stock to various persons and entities, under which we could be obligated to issue up to 16,666,667 shares of common stock with exercise price of $1.70 per share. Each of the Companys warrants outstanding entitles the holder to purchase one share of the Companys common stock for each warrant share held. The Companys unexercised warrants may be exercised on a cashless basis. If issued, the shares underlying these warrants would increase the number of shares of our common stock currently outstanding and dilute the holdings and voting rights of our then-existing stockholders.

We may issue preferred stock which may have greater rights than our common stock.

Our Articles of Incorporation allow our Board to issue up to 1,000,000 shares of preferred stock. Currently, no shares of preferred stock are issued and outstanding. However, we can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from the holders of our common stock. Any preferred stock that we issue may rank ahead of our common stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our common stock. In addition, such preferred stock may contain provisions allowing it to be converted into shares of common stock, which could dilute the value of our common stock to then current stockholders and could adversely affect the market price, if any, of our common stock.

The Company may sell additional equity securities in the future and your ownership interest in the Company may be diluted because of such sales.

The Company may sell additional equity securities to fully implement our business plan. Such sales will be made at prices determined by our Board based on factors deemed appropriate at the time; accordingly, such sales by us could be made at prices less than the price of the shares of our common stock purchased, in which case, investors could experience dilution of their investment.

Our compliance with changing laws and rules regarding corporate governance and public disclosure may result in additional expenses to us which, in turn, may adversely affect our ability to continue our operations.

Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure, including SOX, new SEC regulations and, in the event, we are ever approved for listing on a registered national exchange, such exchange's rules, will require an increased amount of management attention and external resources. We intend to continue to invest all reasonably necessary resources to comply with evolving standards, which may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Our failure to adequately comply with any of these laws, regulations, standards, or rules may result in substantial fines or other penalties and could have an adverse impact on our ongoing operations.

Because we do not intend to pay dividends for the foreseeable future, you should not purchase our shares if you are seeking dividend income.

We currently intend to retain future earnings, if any, to support the development and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board after considering various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase our common stock.

Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability, which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors and may inhibit actions against our officers and directors.

Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorneys fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such persons promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we will be unable to recoup.

The provisions of the Nevada Revised Statutes and our bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. The provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholders investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these amended and restated certificate of incorporation provisions, amended and restated bylaw provisions, indemnification agreements and the insurance are necessary to attract and retain qualified persons as directors and officers.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter, if it were to occur, is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our common stock.

Because Mr. Harmel S. Rayat, our majority stockholder by virtue of his sole ownership KCC, has been named a defendant, along with RenovaCare, Inc. (a company whose majority stockholder is also Mr. Rayat by virtue of his sole ownership of KCC) and certain other individuals in an enforcement action filed by the SEC in May 2021 (the Enforcement Action), the Company has and may incur ancillary legal costs.

Although not named as a defendant in the Enforcement Action, the Company has incurred approximately $145,000 in legal fees pertaining to counsels privilege review of Company related documentation that has been or may be produced to the SEC by Mr. Rayat, KCC and others in the Enforcement Action and related matters.

Should the matter involve the Company further, the costs, legal and otherwise, that may be incurred by the Company may increase significantly and require Company personnel to expend more time on the matter, which could adversely affect the Companys operations and ability to secure additional financing as, when, and if needed.

It is the Companys understanding that each of Mr. Rayat and RenovaCare, Inc. has denied the SECs allegations of any wrongdoing and are, and intend to continue, defending themselves against such allegations.