Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
9 Months Ended
May 31, 2019
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 13 - STOCKHOLDERS' EQUITY

 

Preferred Stock

 

The authorized preferred stock is 10,000 shares with a par value of $0.001. As of May 31, 2019, and August 31, 2018, the Company has no shares of preferred stock issued or outstanding.

 

Common Stock

 

The authorized common stock is 265,000 shares with a par value of $0.001. As of May 31, 2019, and August 31, 2018, 88,840 and 78,273 shares were issued and outstanding, respectively.

 

On January 15, 2019, the Company entered into a securities purchase agreement with certain accredited investors pursuant to which the Company sold an aggregate of 6,476 shares of its common stock and warrants to purchase 3,238 shares of common stock in a registered direct offering. The securities were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-221910) initially filed with the Securities and Exchange Commission on December 5, 2017, as amended on January 25, 2018 and February 14, 2018, and declared effective on February 28, 2018, and an additional registration statement on Form S-3 filed pursuant to Rule 462(b) under the Securities Act, which became effective upon filing on January 16, 2019. Subject to certain ownership limitations, the warrants became immediately exercisable at an exercise price equal to $5.75 per share of common stock. The warrants are exercisable for five years from the date of issuance. The combined per share purchase price for a share of common stock and a half of a warrant was $5.25. The offering closed on January 18, 2019 with aggregate gross proceeds of approximately $34.0 million. The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, were approximately $31.2 million.

 

During the nine months ended May 31, 2019, the Company sold 9,077 shares of its common stock to investors in exchange for aggregate net proceeds of approximately $41.6 million.

 

During the nine months ended May 31, 2018, the Company sold 5,877 shares of its common stock to investors in exchange for cash of $16.4 million.

 

Stock-based Compensation

 

The Company recorded stock-based compensation-related charges of $8,771 and $1,905 to additional paid in capital for the nine months ended May 31, 2019 and 2018, respectively, in connection with the issuance of shares of common stock and amortization of stock option expense for stock awards issued to employees and directors as compensation and to service providers as consideration for services received.

 

During the nine months ended May 31, 2018, the Company entered into a separation agreement dated as of January 12, 2018 with one employee. The Company issued 100 restricted common shares as part of the separation agreement to this employee, which valued at $667 and was recorded as stock-based compensation as of May 31, 2018.

 

Stock Options

 

The Company’s 2016 Stock Incentive Plan (the “Plan”) was adopted on February 9, 2016. The Plan, as amended, permits the grant of share options and shares to its employees and directors for up to 18,000 shares of common stock. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant; those option awards generally vest based on three years of continuous service and have 10-year contractual terms.

 

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award.

 

The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the nine months ended May 31, 2019 and 2018:

 

    May 31,     May 31,  
    2019     2018  
Expected term in years     1-3       1-4  
Expected volatility     69% - 87%       60%  
Risk-free interest rate     2.29% -3.01%       0.67% - 0.81%  
Expected dividend yield     -%       -%  

 

The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on management's analysis of historical volatility. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend-yield increased.

 

During the nine months ended May 31, 2019 and 2018, the Company granted 6,936 and 4,096 stock options, respectively, pursuant to the Company’s 2016 Stock Incentive Plan. A summary of the Company’s stock option activity during the nine months ended May 31, 2019 is presented below:

 

                Weighted        
          Weighted     Average        
          Average     Remaining     Aggregate  
    Stock     Exercise     Contractual     Intrinsic  
    Options     Price     Term (in years)     Value  
                         
Balance Outstanding, August 31, 2018     9,368     $ 3.85       9.1     $ 14,463  
Granted     6,936     $ 5.63       -       -  
Exercised     (534 )   $ 3.69       -       -  
Forfeited     (3,108 )   $ 4.08       -       -  
Balance Outstanding, May 31, 2019     12,662     $ 4.78       9.2     $ 4,131  
Exercisable, May 31, 2019     2,945     $ 3.22       8.5     $ 3,427  

 

The weighted-average grant-date fair value of options granted during the nine months ended May 31, 2019 and 2018, was $2.59 and $2.22, respectively.

 

During the nine months ended May 31, 2019 and 2018, the aggregate intrinsic value of stock options exercised was $2,773 and $4,503, respectively.

 

As of May 31, 2019, there was $23,741 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.3 years.