Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

v3.20.1
STOCKHOLDERS' EQUITY
6 Months Ended
Feb. 29, 2020
STOCKHOLDERS' EQUITY.  
STOCKHOLDERS' EQUITY

NOTE 11 - STOCKHOLDERS' EQUITY

Preferred Stock

The Company’s authorized preferred stock is 10,000 shares with a par value of $0.001. As of February 29, 2020, and August 31, 2019, there were no shares of preferred stock issued or outstanding.

Common Stock

The Company’s authorized common stock is 265,000 shares with a par value of $0.001. As of February 29, 2020, and August 31, 2019, there were 119,118 and 90,041 shares issued and outstanding, respectively.

On September 26, 2019, the Company entered into purchase agreements with certain accredited investors pursuant to which the Company issued and sold an aggregate of 17,198 units (“Units”), with each unit consisting of one share of its common stock and a warrant to purchase half a share of common stock  in a registered direct offering (the “September 2019 Offering”). The purchase price for a unit was $1.75. The closing of the September 2019 Offering occurred on September 30, 2019 and resulted in aggregate gross proceeds of approximately $30.1 million. The aggregate net proceeds from the September 2019 Offering, after deducting the placement agent fees and other offering expenses, was approximately $27.4 million.  Subject to certain ownership limitations, the warrants were immediately exercisable at an exercise price equal to $2.25 per share of Common Stock. The warrants are exercisable for five years from the date of issuance.

On February 6, 2020, the Company entered into purchase agreements with certain accredited investors pursuant to which the Company issued and sold an aggregate of 10,000 units, with each unit consisting of one share of its common stock and a warrant to purchase half a share of common stock  in a registered direct offering (the “February 2020 Offering”). The purchase price for a unit was $1.60. The closing of the February 2020 Offering occurred on February 10, 2020 and resulted in aggregate gross proceeds of approximately $16.0 million. The aggregate net proceeds from the February 2020 Offering, after deducting the placement agent fees and other offering expenses, was approximately $14.6 million. Subject to certain ownership limitations, the warrants were immediately exercisable at an exercise price equal to $2.00 per share of Common Stock. The warrants are exercisable for five years from the date of issuance.

Share-based Compensation

The Company recorded total stock-based compensation expense of $3,427 and $4,725 for the three months ended February 29, 2020 and February 28, 2019, respectively, and $8,089 and $6,534 for the six months ended February 29, 2020 and February 28, 2019, respectively, in connection with the issuance of shares of common stock and options to purchase common stock. Stock-based compensation expense is included in selling, general and administrative expense in the Condensed Consolidated Statements of Operations.

On September 1, 2019, the Company adopted Accounting Standards Update 2018-07 which addresses several aspects of the accounting for nonemployee share-based payment transactions and expands the scope of ASC 718, Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the simplified standard, nonemployee options will be valued once at the date of grant. At adoption, all awards without established measurement dates were revalued one final time and did not have a material impact on the condensed consolidated financial statements.

Stock Incentive Plan

The Company’s 2016 Stock Incentive Plan (the “Plan”) was adopted on February 9, 2016. The Plan authorizes the issuance of up to 18,000 shares of common stock in the form of stock-based awards to the Company’s employees and directors. 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 common stock at the date of grant and have 10-year contractual terms. The option awards generally vest over three years subject to the recipient’s continuous service.

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 its stock price over the expected option term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term. 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. 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 six months ended February 29, 2020 and February 28, 2019:

 

 

 

 

 

 

 

 

    

Six Months Ended

 

 

 

February 29, 

 

February 28, 

 

 

 

2020

 

2019

 

Expected term in years

 

5.3 - 5.9

 

3.0

 

Expected volatility

 

64% - 87%

 

72% - 87%

 

Risk-free interest rate

 

1.4% - 1.7%

 

2.4% - 3.0%

 

Expected dividend yield

 

0.0%

 

0.0%

 

 

The expected term is based on management judgement and reflects expected exercise patterns. 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.

The following table summarizes the stock option activity during the six months ended February 29, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

Stock

 

Exercise

 

Contractual

 

Intrinsic

 

 

Options

 

Price

 

Term (years)

 

Value

 

 

 

 

 

 

 

 

 

 

 

Balance Outstanding, August 31,  2019

 

14,761

 

$

4.89

 

9.0

 

$

3,192

Granted

 

2,867

 

 

2.50

 

 

 

 

 

Exercised

 

(9)

 

 

2.06

 

 

 

$

14

Forfeited

 

(3,066)

 

 

4.79

 

 

 

 

 

Balance Outstanding, February 29,  2020

 

14,553

 

$

4.44

 

8.6

 

$

 6

Vested and expected to vest at February 29, 2020

 

12,831

 

 

4.45

 

8.6

 

$

 6

Exercisable, February 29,  2020

 

6,728

 

$

4.47

 

8.2

 

$

 6

 

Stock compensation expense related to stock options was $5,845 and $3,452 for the six months ended February 29, 2020 and February 28, 2019, respectively. The weighted-average grant-date fair value of options granted during the six months ended February 29, 2020 and February 28, 2019, was $1.48 and $3.07, respectively.

As of February 29, 2020, there was $19,565 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. The expense is expected to be recognized over a weighted-average period of 2.0 years.

Restricted Stock and Restricted Stock Units

During the six months ended February 29, 2020, the Company awarded 180 shares of restricted stock to consultants in exchange for $296 of services rendered.

During the six months ended February 28, 2019, the Company issued 130 shares of restricted stock to consultants in exchange for $33 of services rendered and $738 of prepaid services, for a total of $771. The prepaid services are included in prepaid expenses on the condensed consolidated balance sheet as of February 28, 2019.  

Stock-based compensation expense related to restricted stock awards was $2,206 and $2,720, respectively, for the six months ended February 29, 2020 and February 28, 2019.  

During the six months ended February 29, 2020, the Company awarded 174 shares of restricted stock units to directors for serving on the board of directors.

As of February 29, 2020,  $824 of total unrecognized compensation cost related to restricted stock units is expected to be recognized over a weighted average period of 1.3 years.