By Caleb Hannan
- SolarWindow Technologies, Inc. (OTC: WNDW) is the latest iteration of a company that in 23 years of existence has never made a product, never booked an order, and never generated a single dollar of revenue. It is one in a long line of frequently hyped companies that rely on a single man, Vancouver commercial real estate investor Harmel S. Rayat, for both funding and staffing. In the world of Rayat-run companies, SolarWindow is unique in only one way: It recently had a market cap of $2 billion, a value many times higher than any other that Rayat has controlled.
- Rayat, a onetime stock promoter who was hit with two separate SEC actions in the early 2000s, has a small, rotating cast of characters who pop up in many of the companies he controls, including SolarWindow. That cast includes SolarWindow’s current chief executive, one of its vice presidents, its general counsel, and some of its largest shareholders. Rayat has also been linked in the recent past to financier Barry C. Honig, a familiar name to Sharesleuth readers. One of SolarWindow’s corporate predecessors and three other Rayat companies got millions in capital from Honig and his associates. In addition, Rayat and Honig teamed up on a deal in which one of those companies acquired another business owned by Honig and certain partners, ultimately giving Honig’s group control.
- According to an SEC filing last month, SolarWindow has only one full-time employee and two full-time consultants. Unlike other companies developing similar products, SolarWindow has never published any peer-reviewed data about its technology. If SolarWindow has ever given guidance to investors, it has come in the form of slickly-produced promotional videos, press releases with zero detail, or long, ultimately empty interviews with management.
THE COMPANY
SolarWindow Technologies, Inc. (OTC: WNDW) is a company that has made many promises in its 23 years of existence. Each one of those promises, save for one, centered on the commercial potential of green energy. And each one of those promises went undelivered.
In its first iteration, SolarWindow was Octillion Corp., a self-proclaimed technology incubator whose main product was a proprietary “electro spray system” meant to turn the glass in office buildings into solar panels. From Octillion came MicroChannel Technologies Corp. (formerly OTC: MCTC, now OTC: CBGL), a nerve regeneration spin-off that ended its decade-long existence with zero revenue before being subsumed in a reverse merger by a cannabis company.
Octillion then begat New Energy Technologies Inc., whose one product was a series of moving plates designed to be installed at truck stops and other locations to harvest kinetic energy created by heavy vehicles. New Energy faded away in 2015, also having generated no revenue.
Thus SolarWindow was born, reviving the original promise of electricity-producing windows.
In the past six years, SolarWindow has neither produced a commercially available product nor an independently certified prototype. And although its website shows a team that includes a CEO, a president, a chief financial officer, a general counsel, five vice presidents and five other staffers, it said in an SEC filing last month that only three are full timers.
SolarWindow has spent only about $12 million on research and development since its inception, and said in its most recent quarterly SEC filing that it had just $13.5 million in cash and equivalents on its books at the end of November.
Despite that, from early November to mid-February, SolarWindow’s stock price went nearly parabolic, and volume surged as well, culminating in the company’s market capitalization topping $2 billion.
SolarWindow’s stock peaked at $39.20 on Feb. 19. After sinking as low as $10 on March 5, the stock rallied again, almost reaching $20 early last week.
SolarWindow closed Wednesday at $15.64, giving the company a market cap of almost $830 million. This week, the SEC approved a registration covering the resale of nearly 1.2 million shares held by private-placement investors, several of whom have popped up as large shareholders in multiple Rayat companies over the years.
(Disclosure: Mark Cuban, owner of Sharesleuth.com LLC, does not have a position in any of the stocks mentioned in this report. Chris Carey, editor of Sharesleuth, and Caleb Hannan, the writer of this story, do not have positions in any of the companies mentioned).
Although it’s always hard to pinpoint the exact reasons for such a large gain in such a short period of time, SolarWindow’s recent stock market success seems to have come from a combination of at least three factors. The first, investor goodwill towards anything green energy. The second, the expectation that the Biden administration will disproportionately reward such investments. And finally, a series of announcements suggesting that the company’s long-touted, never-realized potential has been met.
The first such announcement came in August, when SolarWindow debuted a video showing a transparent window it said was covered by its patented LiquidElectricity™ coatings. The second came in November, when SolarWindow touted what it said was another breakthrough at the National Renewable Energy Laboratory in Golden, Colo., where the company has a formal collaboration agreement to help produce newer, more efficient coatings.
SolarWindow also has set up an outpost in South Korea, a move it said would help the company tap into the Asian advanced-manufacturing world. That unit is headed by John S. Rhee, who was elevated to president of the entire company earlier this month.
It is hard to properly assess how far SolarWindow has or hasn’t come in its attempt to commercialize a technology that’s been the pursuit of well-funded research institutions and well-capitalized start-ups the world over for two decades. And the company certainly isn’t eager to go into great detail.
In response to a long list of questions from Sharesleuth, a representative emailed back a one-sentence answer: “SolarWindow does not engage with short-selling internet newsletters.”
What is easier to assess is who owns the company and who they’ve associated with over time. And when it comes to SolarWindow’s successes or failures, almost all credit goes to Rayat, its founder, majority shareholder and, until October, chairman of the board.
THE TECHNOLOGY
SolarWindow has been talking about selling an actual product—a liquid, energy-generating coating—for almost a decade. Rayat claims that he was the first to conceive “the idea of commercially applying invisible particles onto glass.”
Yet today no product is available for purchase.
This does not necessarily mean that SolarWindow has failed to make any progress. In that same decade, the company has spent a few million paying NREL for the use of its research labs, manufacturing facilities, and the time and effort of individual researchers.
But in speaking with other entrants in the solar glass industry, along with those who know the ins and outs of SolarWindow’s research thus far, all mentioned that the company’s use of a federal laboratory was far from standard practice. They asserted that merely the overhead involved with doing the entirety of a company’s R&D at a large, established lab like NREL would be two to three times more expensive than simply scaling up a similar lab in-house. This use of costlier-to-operate facilities associated either with a well-known university or the federal government is a hallmark of most of Rayat’s companies, none of which have been able to transition from the research stage into actual manufacturing.
What’s more, any material breakthroughs actually made by the company using NREL facilities would likely require SolarWindow to pay large licensing and royalty fees.
Other hopefuls in the solar glass industry also are distinguished from SolarWindow by the company they keep. While SolarWindow does have some partnerships with small manufacturers, competitor Ubiquitous Energy Inc. has a joint development agreement with NSG Group, a Japanese conglomerate with $5 billion in annual revenue and 28,000 employees. In January, Pilkington, one of NSG’s large subsidiaries, installed solar windows it manufactured alongside Ubiquitous as part of that agreement in one of its facilities in Ohio.
Onyx Solar in Spain, meanwhile, calls itself the “world’s leading manufacturer of transparent photovoltaic glass for buildings.” It claims to have completed over 350 projects worldwide, with companies like Apple Inc. and McDonald’s Corp., and has a production facility with annual capacity of two million square feet.
Ubiquitous’s formation began as a series of articles published in peer-reviewed scientific journals by its co-founders, professors at the Massachusetts Institute of Technology and Michigan State University. The founder of UbiQD, another solar glass start-up that just raised $7 million, recently co-authored a peer-reviewed piece full of trial results funded by a grant from NASA.
This foundational research with specific, peer-reviewed metrics may not result in great commercial products, or a windfall for either company’s investors. But the fact that they were published at all stands in contrast to SolarWindow’s approach of touting its own supposed technological advancements in press releases only.
In the most recent one, for example, SolarWindow claimed “record results” with a “500 percent increase in prototyping and testing speed; 12-fold increase in testing capacity and output; and a 20-times reduction in material costs.” Those astounding figures become less astounding when you consider that the increases and reductions cited haven’t actually been independently verified and, most importantly, are purported improvements on baseline numbers that were never actually established in any prior press release. (As in all other cases, SolarWindow declined to provide details of where these figures came from or how they might be relevant to its future.)
To be sure, SolarWindow competitors like Ubiquitous, Onyx, and others are all working on different variations of the same theme: glass that can generate electricity. Experts reiterated to Sharesleuth that the landscape for solar glass is not a winner-take-all market, and that each company could prosper despite the success of another.
THE FOUNDER
Rayat’s current public profile is largely built around his success as a commercial real estate investor. In the past six years he has self-published two books touting those successes, asserting that in his time as an owner and landlord he’s seen an annualized return of 45 percent.
These are difficult numbers to check. But it does appear as if there is some truth to them.
In just one example, Rayat’s company purchased the Leckie Building in Vancouver’s fashionable Gastown neighborhood for less than $20 million in 2006. Two years ago, it sold the property to one of its main tenants for $91 million.
The public companies that Rayat either founded or funded have met with considerably less success, at least in terms of sales and profits.
Our analysis of SEC filings found that SolarWindow and five other public companies that Rayat created or helped to create have generated just $4.5 million in combined revenue since the mid-1990s, and had more than $126 million in cumulative losses.
The revenue figure includes almost $1.5 million that an early incarnation of RenovaCare Inc. (OTC: RCAR) called Whatsonline.com Inc. received from two other Rayat companies. They include EquityAlert.com, a stock-promotion business at the center of his SEC cases.
The last time a company where Rayat was a significant shareholder reported any revenue was 2012.
In a recent interview, Rayat described his investment philosophy as something akin to philanthropy. “The kinds of companies I support, ideas I support, they’re karmically blessed,” he said. “Because I wanna do things that are meaningful for society.”
One of Rayat’s companies took on the ambitious task of creating an artificial liver; one tried to use the component parts of cinnamon to treat diabetes; another said it had developed a spray device to treat burn victims with their own stem cells. All, it can be argued, failed to meet their stated goals.
SolarWindow is just the latest example of Rayat starting a company with massive ambitions but questionable results.
Last October, Rayat resigned as chairman of SolarWindow’s board. This decoupling from the company he founded, though, did not alter its ownership structure: More than 75 percent of its shares are owned by Kalen Capital Corp., which itself is wholly owned by Rayat.
Kalen Capital and Rayat also own 75 percent of RenovaCare, the maker of the spray device. Both SolarWindow and RenovaCare have limited cash, no revenue, and relatively low spending on research and development. Both have stayed alive through infusions from Rayat, most recently in 2018, when SEC filings show that he put $34 million into those companies, with almost $20 million of that going to SolarWindow. Rayat also converted $5.2 million in old SolarWindow notes to stock.
His last reported stake of 34.6 million shares would have had a market value of almost $540 million at Wednesday’s closing price. That share count excludes a further 18.5 million warrants that, according to the company’s most recent annual SEC filing, are exercisable at prices ranging from $1.70 to $4 a share.
Rayat has many times described his rise in Vancouver as a rags-to-riches story. He started off in the mailroom of a brokerage before selling stock himself, then eventually graduated to a publicly company shell creator and promoter.
In 2000, the SEC secured a permanent injunction against Rayat and EquityAlert.com for failing to disclose that it had made more than $450,000 promoting specific company’s stocks. Those promotions, the SEC noted, came with no notice to investors that they were paid for by the companies themselves.
Three years later, the SEC again acted against Rayat, this time issuing a cease-and-desist after he and the site were found to have sold some $170,000 worth of unregistered shares in companies they had promoted. Rayat and the site agreed to pay disgorgement penalties of only $31,555.14 after successfully arguing they lacked the ability to pay the full balance.
HONIG
After EquityAlert, Rayat seemed to turn his attention away from promoting other peoples’ companies to building his own. Though he still touted his, too: SolarWindow’s predecessor, Octillion; HepaLife Technologies Inc., the artificial-liver company; and PhytoMedical Technologies Inc., the company pursuing a new diabetes treatment, all spent heavily on stock promotion.
HepaLife was a biotech start-up perhaps best known for spending four times more on advertising and investor relations than R&D. It was headquartered, like most of Rayat’s companies, in his Vancouver office, and owed most of its existence to Rayat’s willingness to provide it with capital, in return for stock and copious amounts of warrants.
HepaLife eventually attracted the attention of another man well known to Sharesleuth readers, Barry Honig.
As detailed at length in a recently published piece by The Activist, HepaLife stayed alive thanks to an investor-friendly PIPE led by Honig, an entity under his control called GRQ Consultants, his longtime business partner Michael H. Brauser, and Alpha Capital Anstalt, a veteran of many complex Honig deals.
Honig, Brauser and Alpha Capital were among the many defendants in a 2018 SEC case alleging involvement in multiple pump-and-dump schemes that netted $23 million. The complaint described Honig as the architect of the schemes.
And Hepalife was far from the only Rayat-led company where those defendants invested. Between the fall of 2007 and the spring of 2008, SolarWindow’s predecessor, Octillion, and two other Rayat companies sold millions of shares through private placements to groups that included Honig.
He and six other investors, including Brauser and Alpha Capital, bought roughly 3.7 million shares of Octillion in March 2008 for $1 each. They also got 3.7 million warrants, which they exercised over the next three years. What’s more, Honig purchased an additional 2.7 million shares in December of that year from a major shareholder apparently eager to liquidate.
Honig, Brauser and Alpha Capital also were among the biggest investors in the $4.5 million private placement by HepaLife, a $3.2 million private placement by Phytomedical Technologies and a $2.4 million placement by International Energy Inc. (later NDB Energy Inc. and Armada Oil Inc.).
The investors cashed out of most of their holdings between 2008 and 2012, after the companies registered them for resale.
As noted in The Activist, Rayat’s role in helping Honig and others gain control of much of the share count of the company then known as HepaLife and a subsidiary called AquaMed was helped along by “an associate named Ranjit Bhogal.” The pooling of shares by Honig, Rayat, and Bhogal was what then allowed for the approval of HepaLife’s purchase of AquaMed, since the three controlled a majority of shares and could approve the deal on their own.
Ranjit Bhogal has been an employee of Rayat-backed companies at various points for at least 20 years. And a 2006 HepaLife 8-K indicates that at the time she was the spouse of Jatinder “Jay” S. Bhogal.
Until July of last year, Jay Bhogal was chief operating officer of RenovaCare, the other public company in which Rayat owns a majority share. He left that role for his new position as chairman and CEO of SolarWindow.
Bhogal signed a consulting agreement that gave him an annual salary of $410,000, plus 2.5 million stock options exercisable at $2.60 each. Half vested immediately, and have a current in-the-money value of more than $16 million.
THE FREQUENT FLIERS
For more than two decades, Rayat has relied on a rotating cast of family, friends and business associates to act as officers or directors of the companies he created, or to provide financing through share placements.
In addition to Bhogal and his wife Ranjit, there is Jeet Sidhu, who was a longtime executive at Rayat’s real estate company, and before that an executive at another Rayat firm, Montgomery Asset Management Corp.
The circle also include Rayat’s wife, Tajinder Chohan; two brothers, Herdev S. Rayat and Jasvir S. Rayat, his father and a woman who appears to be his sister-in-law, Jasbinder Chohan.
Jasbinder Chohan, for instance, was secretary treasurer of EquityAlert.com, the company at the center of the old SEC cases against Harmel Rayat. A 1999 filing also lists her as secretary, treasurer and a director of American Alliance Corp., the shell that went on to become HepaLife.
In 2008, she was listed as the owner of 1420468 Alberta Ltd., which got large distributions of stock in SolarWindow, HepaLife, RenovaCare and a fourth company, International Energy Inc., ostensibly as part of Rayat’s estate planning.
The filings said that Chohan was acting as trustee for a trust benefitting Rayat’s daughter. It appears that 1420468 Alberta sold most, or all, of the shares it received from the distributions, because it never appeared among the biggest holders of those stocks again.
Rayat also distributed millions of shares to three other Alberta companies. One set up as a trust for his son, another set up as a trust for Bhogal’s son, and another set up for someone with the last name Sidhu.
Those companies later filed registration statements covering the resale of many of those shares, which had an estimated market value of more than $20 million at the time of the distributions.
Because Rayat disclaimed beneficial ownership of the shares, and the entities that received them seldom held 5 percent of more of any companies stock, the ultimate disposition of those shares was not reported in SEC disclosure statements.
SEC filings show that in early December 2015, 1420468 Alberta sent money back to SolarWindow, through a $600,000 loan that was convertible to stock. Later that month, it merged into Kalen Capital, which is SolarWindow’s controlling shareholder and is owned entirely by Rayat.
SolarWindow did not provide an explanation for that transaction, or say what became of the trust.
Another recurring player in Rayat’s companies is a man named Narinder Thouli, described in one SEC filing as an airline pilot living in Kelowna, British Columbia. He was listed in 1995 as a director of MedCare Technologies Inc., a Rayat-backed urology venture that later morphed into PhytoMedical Technologies.
Thouli also was listed in SEC filings as a private placement investor in Octillion, in 2007, and in Duke Mountain Resources Inc., another Rayat vehicle, in 2010.
Thouli also was listed as one of five selling shareholders, alongside Kalen Capital, in a RenovaCare registration in 2018. Most recently, he was listed in several SolarWindow registrations, covering the resale of shares from two earlier private placements.
The registration that became effective this week said he was offering 82,667 shares, all underlying two classes of warrants. At the current market price, those shares would have a value of around $1.3 million.
SolarWindow’s latest registration also covers 643,000 shares controlled by a woman in British Columbia named Cindy Bains. According to our review of SEC filings, she has put at least $4 million into SolarWindow and RenovaCare in recent years, recouping most, if not all, of that money through previous registrations.
At Wednesday’s closing price, the shares she was offering to sell had a market value of $10 million.
Our investigation found that one of Rayat’s longtime associates has used two different names, obscuring his previous involvement in multiple failures.
SolarWindow’s website lists Amit Singh as a vice president whose roles include corporate finance, business development, media and public relations and investor engagement.
His bio on the site makes no reference to his previous roles as interim president and chief executive of HepaLife, PhytoMedical Technologies or International Energy, under the name Amit S. Dang.
While living in the Detroit area, Dang had a leadership role in a social-service organization called Sikhcess, which provided meals for the homeless and other types of community aid. SolarWindow’s chief executive, Bhogal, holds the U.S. and Canadian trademarks for that name.
We noted that two press releases the group put out in 2008 contained a contact number in Vancouver for someone identified as Jatinder Singh. The phone number matched Bhogal’s.
Another name that has popped up with some regularity in the SEC filings of Rayat-connected companies is Meetesh V. Patel, a lawyer in Maryland.
He served as an officer or director of SolarWindow’s predecessors, Octillion and New Energy Technologies, between 2008 and 2010. He was chief executive for the final year of that period. Patel also was CEO of Ceres Ventures, the successor to PhytoMedical Technologies.
His LinkedIn profile says that from 2010 to 2015, he was executive vice president of Vector Asset Management Inc. That is Jay Bhogal’s investment company. We did not see any SEC filings that identified the two as business partners.
DISCLOSURE ISSUES
SolarWindow’s officers and directors have not reported any share sales since 2009. Nor has Rayat, spurring some retail investors to note on stock message boards that insiders must be fully confident in the company’s prospects.
But our analysis of SolarWindow’s 10-K filings, proxy statements and securities registrations showed that Rayat and others sold millions of shares without ever disclosing the transactions.
They also did not file disclosure forms for additional share purchases, options exercises, warrants exercises and other transactions.
For example, Rayat’s share count fell by 2.3 million from 2009 to 2011, a drop that followed a registration statement that included his offer to sell an identical number of shares. Rayat never reported the change, which was partially obscured by a one-for-three reverse share split.
His holdings fell again between the end of 2014 and the end of 2015, after SolarWindow registered 6 million of his 24 million shares for resale. Our analysis found that, after adjusting for warrant exercises and new issuances, the net drop in his share count was around 1.5 million.
Similarly, SolarWindow filed a registration in early 2019 covering the potential sale of 1.1 million shares by officers, directors and key employees. None reported any subsequent sales.
However, SEC filings showed drops for some of those people, such as Alistair Livesey, who was the company’s longest-serving director prior to his resignation last year. His total number of shares, excluding options, fell by almost half, to 49,057, from late 2018 to late 2019.
Our analysis also showed slight declines in the actual number of shares held by other insiders, including former CEO John A. Conklin, who left the company last year.
We noted the same lack of disclosure at RenovaCare, the other company where Rayat is controlling shareholder. The last Form 3, Form 4, Form 13D or Form 13G filing there was in 2016.
Rayat and others, including Joseph Sierchio — SolarWindow’s securities counsel and a member of its board of directors, who was once penalized $100,000 by the SEC after settling insider-trading charges – have exercised millions of RenovaCare options and warrants since then without submitting any forms to report the changes in their holdings.
Given that track record, it’s possible that some of the insiders at SolarWindow have failed to disclose recent option or warrant exercises during the stock’s incredible runup. That won’t become clear until the company files its next quarterly SEC filing, most likely next month.
Chris Carey and Jim McNair contributed to this report
