Common Stock
On August 24, 2017, at the 2017 Annual Meeting of Stockholders, a proposal was approved to increase the total number of authorized shares of common stock
from 350,000,000 to 375,000,000. On June 7, 2018, at a special meeting of stockholders, a proposal was approved to increase the total number of authorized shares of common stock of the Company from 375,000,000 to 450,000,000. Subsequent to each
stockholders meeting, an amendment to the Companys Certificate of Incorporation was filed with the Secretary of State of the State of Delaware to give effect to each authorized share increase.
On November 8, 2018 at the 2018 Annual Meeting of Stockholders, a proposal was approved to increase the total number of authorized shares of common stock
from 450,000,000 to 600,000,000. Subsequent to the meeting, an amendment to the Companys Certificate of Incorporation was filed with the Secretary of State of the State of Delaware to give effect to the authorized share increase.
Preferred Stock
The Companys Board of Directors is
authorized to issue up to 5,000,000 shares of preferred stock without stockholder approval. As of November 30, 2018, the Company has authorized the issuance of 400,000 shares of Series B Convertible Preferred Stock, of which 92,100 shares were
outstanding. The remaining preferred shares authorized have no specified rights.
Treasury Stock
Treasury stock purchases are accounted for under the par value method, whereby the cost of the acquired stock is recorded at par value. During the year ended
May 31, 2018, the Company purchased 159,011 shares of $0.001 par value treasury stock for shares tendered in satisfaction of income tax withholding, in connection with incentive compensation paid to certain officers in the form of common stock.
Debt Discount
During the six months ended
November 30, 2018 and the year ended May 31, 2018, the Company incurred approximately $0.6 million and $1.5 million of debt discount related to the issuance of convertible notes, as described in Note 4. The discount is amortized
over the life of the convertible promissory notes. During the six months ended November 30, 2018 and November 30, 2017, the Company recorded approximately $117,500 and $1.2 million of related amortization.
Debt Issuance Cost
During the six months ended
November 30, 2018 and the year ended May 31, 2018, the Company incurred direct costs associated with the issuance of convertible notes, as described in Note 4, and recorded approximately $0.1 million and $0.4 million,
respectively of debt issuance costs. In connection with the debt issuance costs, the Company recognized approximately $20,000 and $0.3 million of related amortization for the six months ended November 30, 2018 and November 30, 2017,
respectively.
Offering Costs
The Company incurred
direct incremental costs associated with the sale of equity securities, as described in Notes 10 and 11. The costs were approximately $3.5 million for the year ended May 31, 2018, and approximately $2.7 million and $0.6 million
for the six months ended November 30, 2018 and November 30, 2017, respectively. The offering costs were recorded as a component of equity upon receipt of proceeds.
Stock for Services
The Company periodically issues
warrants to consultants for various services. The Black-Scholes option pricing model, as described more fully above, is utilized to measure the fair value of the equity instruments on the date of issuance. The Company recognizes the compensation
expense associated with the equity instruments over the requisite service or vesting period.
Loss per Common Share
Basic loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss
per share would include the weighted average number of shares of common stock outstanding and potentially dilutive common stock equivalents. Because of the net losses for all periods presented, the basic and diluted weighted average shares
outstanding are the same since including the additional shares would have an anti-dilutive effect on the loss per share. For this reason, common stock options and warrants to purchase 155,836,676 and 87,551,801 shares of common stock were not
included in the computation of basic and diluted weighted average number of shares of common stock outstanding for the six months ended November 30, 2018 and November 30, 2017, respectively. Additionally, as of November 30, 2018,
shares of Series B convertible preferred stock in the aggregate of 92,100 shares can potentially convert into 921,000 shares of common stock.
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