|3 Months Ended|
Nov. 30, 2020
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.
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.
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.
A summary of activity during the three months ended November 30, 2020 follows:
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.
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 aperiod 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:
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef