Quarterly report pursuant to Section 13 or 15(d)

EQUITY

v3.20.4
EQUITY
3 Months Ended
Nov. 30, 2020
Equity [Abstract]  
EQUITY

NOTE 6 - EQUITY

 

Amendment to Articles of Incorporation or Bylaws

 

On December 3, 2020, the Company held a special meeting of stockholders and approved an amendment of the Company’s articles of incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.001, (“Common Stock”) from 18,750,000 to 750,000,000.

 

Preferred shares

 

The Company has authorized 6,250,000 shares of preferred stock with a par value of $0.001 per share.

 

During the three months ended November 30, 2020, there were no issuances of preferred stock.

 

Common Shares

 

The Company has authorized 750,000,000 shares of common stock with a par value of $0.001 per share. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.

 

On October 9, 2020, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co. Inc., as representative of the underwriters described in the Underwriting Agreement (the “Underwriter”), pursuant to which the Company issued and sold, in a firm commitment underwritten public offering by the Company (the “Public Offering”), 8,800,000 units (the “Units”), with each Unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock at an exercise price equal to $0.75 per share of Common Stock that expires on October 14, 2025 (referred to individually as a “Warrant” and collectively as the “Warrants”). Each Unit was offered to the public at an offering price of $0.75 per Unit.

 

In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriter a 45-day option (the “Overallotment Option”) to purchase up to (i) 1,320,000 additional shares of Common Stock and/or (ii) additional Warrants to purchase up to 1,320,000 additional shares of Common Stock, solely to cover over-allotments. The Overallotment Option was exercised in full on October 9, 2020.

 

On October 14, 2020, the Public Offering closed, and the Company issued and sold (i) 10,120,000 shares of Common Stock (which includes 1,320,000 shares of Common Stock sold pursuant to the exercise of the Overallotment Option) and (ii) Warrants to purchase 10,120,000 shares of Common Stock (which includes Warrants to purchase 1,320,000 shares of Common Stock sold pursuant to the exercise of the Overallotment Option), pursuant to the Registration Statement and the Underwriting Agreement. The net proceeds to the Company, after deducting the underwriting discount and commissions and offering expenses payable by the Company, were $6,578,553.

 

Stock based compensation 

 

During the three months ended November 30, 2020, the Company recorded $10,500 of stock compensation expense for four members of the Company’s Board of Directors. The unamortized value of the stock-based compensation as of November 30, 2020 is $23,333.

 

Warrants

A summary of activity during the three months ended November 30, 2020 follows:

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Average

 

 

Weighted

 

   

Number of

   

Exercise

   

Average

 

 

 

shares

 

 

Price

 

 

Life (years)

 

Outstanding, August 31, 2020

 

 

2,334,937

 

 

$ 8.12

 

 

 

3.30

 

Granted

 

 

10,120,000

 

 

 

0.75

 

 

 

5.00

 

Forfeited

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

Outstanding, November 30, 2020

 

 

12,454,937

 

 

$ 2.13

 

 

 

4.53

 

 

The intrinsic value of the warrants as of November 30, 2020 is $0. All of the outstanding warrants are exercisable as of November 30, 2020.

 

Stock Options

 

Amended and Restated 2018 Equity Incentive Plan

 

On September 1, 2020, the Amendment and Restated 2018 Equity Plan (the “Plan”) was increased to permit the issuance of 748,738 shares of common stock. On December 3, 2020, the Company held a special meeting of stockholders and approved an amendment to increase the number of shares of Common Stock reserved for issuance by 2,000,000 shares and to extend the term of the Plan. As of December 3, 2020, the Plan permits the Company to issue up to 3,548,738 shares of common stock awards.

 

On November 30, 2020, the Company appointed a new director and granted 120,000 options of the Company’s common stock vesting monthly over a four-year period for his service on the Board at exercise price of $0.6035, expiring ten years after grant date. The director will be eligible for equity award grants on the same terms as other non-employee members of the Board. The Company intends to pay the director an annual cash retainer payable in quarterly installments. The Company expects the compensation to be $15,000 to $20,000 per year for the first year and $20,000 to $30,000 for the second year and thereafter, subject to formal approval by the Board.

 

During the three months ended November 30, 2020, $40,868 was expensed, of which $10,500 was to related parties, and as of November 30, 2020, $435,217 remains unamortized, of which $250,471 is with related parties. The intrinsic value of the 401,834 options as of November 30, 2020 is $0.

 

The following is a summary of stock option activity during the three months ended November 30, 2020:

 

 

 

Options Outstanding

 

 

Weighted Average

 

 

 

Number of

 

 

Weighted Average

 

 

Remaining life

 

 

 

Options

 

 

Exercise Price

 

 

(years)

 

 

 

 

 

 

 

 

 

 

 

Outstanding, August 31, 2020

 

 

281,834

 

 

$ 3.57

 

 

 

8.90

 

Granted

 

 

120,000

 

 

 

0.60

 

 

 

10.00

 

Exercised

 

 

 

 

 

 

 

 

 

Forfeited/canceled

 

 

 

 

 

 

 

 

 

Outstanding, November 30, 2020

 

 

401,834

 

 

$ 2.68

 

 

 

9.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable options, November 30, 2020

 

 

163,199

 

 

$ 3.89

 

 

 

8.57