UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2017May 31, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 333-127953

SOLARWINDOW TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada		59-3509694
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
10632 Little Patuxent Parkway, 9375 E. Shea Blvd., Suite 406 107-B
ColumbiaScottsdale, MarylandAZ		21044 85260
(Address of principal executive offices)		(Zip Code)

(800) (800) 213-0689

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act). Yes o ☐No x☒

Securities registered pursuant to Section 12(b) of the Act: None

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 36,249,54453,198,399 shares of common stock, par value $0.001, were outstanding on January 10, 2018.October 5, 2023.

SOLARWINDOW TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended November 30, 2017May 31, 2023

Table of Contents

PART I FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)		3
	Consolidated Balance Sheets		3	1
	Consolidated Statements of Operations and Comprehensive Loss		4	2
	Consolidated Statements of Stockholders’ Equity (Deficit)		5	3
	Consolidated Statements of Cash Flows		6	4
	Notes to Consolidated Financial Statements		7	5
Item 2.	Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations		16	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures		22	18
PART II OTHER INFORMATION
Item 6.	Exhibits		23
Signatures			24
Certifications

2
Item 1A. Risk Factors	19
Table of ContentsItem 6. Exhibits	20
Signatures	21
Certifications

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

(The accompanying notes are an integral part of these consolidated financial statements)

(The accompanying notes are an integral part of these consolidated financial statements)

SOLARWINDOW TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited)
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2017 AND YEAR ENDED AUGUST 31, 2017
		Common Stock								Additional Paid-in				Retained				Total Stockholders' Equity
		Shares				Amount				Capital				Deficit				(Deficit)
Balance, August 31, 2016			28,500,221			$	28,500			$	33,729,715			$	(33,676,327	)		$	81,888
July 2017 Private Placement units issued			300,000				300				689,700				-				690,000
Stock based compensation related to stock issuances			138,904				139				448,463				-				448,602
Exercise of warrants for cash			129,000				129				301,731				-				301,860
Exercise of warrants on a cashless basis			5,215,046				5,215				(5,215	)			-				-
Exercise of stock options on a cashless basis			46,520				47				(47	)			-				-
Stock based compensation due to common stock purchase options			-				-				199,599				-				199,599
Net loss for the nine months ended August 31, 2017			-				-				-				(5,353,425	)			(5,353,425	)
Balance, August 31, 2017			34,329,691				34,330				35,363,946				(39,029,752	)			(3,631,476	)
September 2017 Private Placement units issued			821,600				822				2,554,354				-				2,555,176
Stock based compensation related to stock issuances			210,000				210				1,022,490				-				1,022,700
Exercise of warrants for cash			80,000				80				247,920				-				248,000
Exercise of warrants on a cashless basis			379,880				379				(379	)			-				-
Exercise of stock options on a cashless basis			79,248				79				(79	)			-				-
Stock based compensation due to common stock purchase options			-				-				514,273				-				514,273
Discount on convertible promissory note due warrant modifications			-				-				1,074,265				-				1,074,265
Net loss for the three months ended November 30, 2017			-				-				-				(2,699,153	)			(2,699,153	)
Balance, November 30, 2017			35,900,419			$	35,900			$	40,776,790			$	(41,728,905	)		$	(916,215	)

(The accompanying notes are an integral part of these consolidated financial statements)

SOLARWINDOW TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2017 AND 2016
		Three Months Ended November 30,
		2017				2016
Cash flows from operating activities
Net loss		$	(2,699,153	)		$	(1,722,529	)
Adjustments to reconcile net loss to net cash flows from operating activities
Depreciation			3,837				2,279
Stock based compensation expense			1,536,973				492,200
Accretion of debt discount			345,147				364,059
Changes in operating assets and liabilities:
Decrease (increase) in deferred research and development costs			(1,134	)			120,046
Decrease (increase) in prepaid expenses and other current assets			(31,782	)			(10,618	)
Increase (decrease) in accounts payable and accrued expenses			80,111				(47,482	)
Increase (decrease) in interest payable			94,016				74,885
Net cash flows from operating activities			(671,985	)			(727,160	)
Cash flows from financing activities
Proceeds from the issuance of equity securities			2,803,176				-
Repayment of promissory note			-				(18,146	)
Net cash flows from financing activities			2,803,176				(18,146	)
Change in cash and cash equivalents			2,131,191				(745,306	)
Cash and cash equivalents at beginning of period			670,853				2,509,215
Cash and cash equivalents at end of period		$	2,802,044			$	1,763,909
Supplemental disclosure of cash flow information:
Interest paid in cash		$	-			$	1,453
Income taxes paid in cash		$	-			$	-
Supplemental disclosure of non-cash transactions:
Discount on convertible promissory note due to to warrant modifications		$	1,074,265			$	-

(The accompanying notes are an integral part of these consolidated financial statements)

SOLARWINDOW TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – Basis of Presentation, Organization Recent Accounting Pronouncements and Going Concern

BasisOrganization

SolarWindow Technologies, Inc. was incorporated in the State of PresentationNevada on May 5, 1998 (“SWT” and together with its controlled subsidiary companies, collectively, the “Company”). SolarWindow® technology harvests light energy from the sun and from artificial light sources using a transparent and ultra-lightweight coating of organic photovoltaic (“OPV”) solar cells applied to glass and plastics, thereby generating electricity. The Company’s ticker symbol is WNDW.

Liquidity and Management’s Plan

The Company has not generated any revenue since inception and has sustained recurring losses and negative cash flows from operations since inception. We expect to incur losses as we continue to develop and further refine and promote our technologies and potential product applications. As of May 31, 2023, the Company had $6,493,271 of cash, cash equivalents, and short-term investments on hand, and working capital of $6,577,271. The Company believes that it currently has sufficient cash to meet its funding requirements over the next twelve months following the issuance of this Quarterly Report on Form 10-Q. However, the Company has experienced and continues to experience negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment. The Company expects that it may need to raise additional capital to accomplish its business plan. If additional funding is required, the Company expects to seek to obtain that funding through financial or strategic investors. There can be no assurance as to the availability or terms upon which such financing and capital might be available.

NOTE 2 – Interim Statement Presentation

Basis of Presentation and Use of Estimates

The accompanying unaudited interim consolidated financial statements of SolarWindow Technologies, Inc. (theand its controlled subsidiary companies (collectively, the “Company”) as of November 30, 2017,May 31, 2023, and for the three and nine months ended NovemberMay 31, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on August 30, 2017 and 2016,2023.

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (“U.S. GAAP,”) which requires management to make estimates and assumptions that affect amounts reported in the United States forConsolidated Financial Statements and accompanying disclosures. Actual results may differ from those estimates. The accompanying unaudited interim consolidated financial reporting and includestatements have been prepared on the Company’s wholly-owned subsidiaries, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”). Accordingly, they do not include all ofsame basis as the disclosures required by accounting principles generally accepted in the United States for completeaudited financial statements and should be readinclude all adjustments (including normal recurring adjustments) that are, in conjunction with the audited consolidated financial statements and notes thereto for the year ended August 31, 2017, as filed with the Securities and Exchange Commission as part of the Company’s Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interimCompany’s consolidated financial information have been included.position as of May 31, 2023, results of operations, stockholders’ equity and cash flows for the three and nine months ended May 31, 2023 and 2022. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

OrganizationThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. The Company considers its accounting policies relating to stock-based compensation to be the most significant accounting policy that involves management estimates and judgments. The Company has made accounting estimates based on the facts and circumstances available as of the reporting date. Actual amounts could differ from these estimates, and such differences could be material.

These consolidated financial statements presented are those of SolarWindow Technologies, Inc. was incorporatedand its wholly owned subsidiaries, SolarWindow Asia (USA) Corp., and SolarWindow Asia Co. Ltd. (the “Korean Subsidiary”). All significant intercompany balances and transactions have been eliminated.

As more fully described in Note 3, 0n January 13, 2023, the Board determined that it is in the Statebest interests of Nevadathe Company to discontinue operations in South Korea and to dissolve the Korean Subsidiary. In accordance with applicable accounting guidance, the results of the Korean Subsidiary are presented as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Korean Subsidiary as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of August 31, 2022. The Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended August 31, 2022. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Financial Statements” in the Annual Report.

Fiscal quarter

The Company’s quarterly periods end on November 30, February 28, May 31, and August 31. The Company’s third quarter in fiscal 2023 and 2022 ended on May 5, 1998, under31, 2023 and 2022, respectively.

Cash and Highly Liquid Investments

Cash includes cash on hand and highly liquid investments with original maturities of three months or less from the name “Octillion Corp.” On December 2, 2008, thedate of purchase. The Company amended its Articleshad $6,493,271 of Incorporation to effect a change of name to New Energy Technologies, Inc. Effectivecash and short-term deposits as of March 9, 2015,May 31, 2023, including $62,632 held in the Company amended its ArticlesUS and covered by FDIC insurance, and $6,429,708 held in Canadian bank accounts with $6,356,195 in excess of Incorporation to change its name to SolarWindow Technologies, Inc. to align the company name with its brand identity. The Company’s ticker symbol changed to WNDW.Canadian Deposit Insurance Corporation insured limits.

Short-term investments

The Company has been developing two sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. On March 2, 2015, the Company announced its exclusive focus on SolarWindow™.

The Company’s SolarWindow™ technology provides the ability to harvest light energy from the sun and artificial sources and generate electricity from a transparent coating of organic photovoltaic solar cells, applied to glass and plastics, thereby creating a “photovoltaic” effect. Photovoltaics are best known as a method for generating electric power by using solar cells to convert energy from the sun into a flow of electrons. Typically, conventional PV power is generated by making use of solar modules composed of a number of cells containing PV and electricity-conducting materials. These materials are usually opaque (i.e., not see-through) and only effectively generate electricity with sun light. The Company’s researchers have replaced these materials with compounds that allow our SolarWindow™ technology to remain see-through or “transparent,” while generating electricity when exposed to either sun or artificial light.

The Company’s SolarWindow™ product development programs involve ongoing product development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants. The Company’s activities are subject to significant risks and uncertainties, including, but not limited to, the Company’s failure to secure, on a timely basis, adequate additional funding to commercialize its SolarWindow™ technology or the development of a similar technology and products, by existing or potential future competitors, who may gain earlier market entry or greater market acceptance than the Company’s technology and products.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions. The guidance is effective for our fiscal year beginning in the current quarter. The adoption of ASU 2016-09 did not have a material impact on the consolidated financial statements.

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In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842)”, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC 842, Leases. The new guidance requires the recognition of lease assets and liabilities for operating leases with terms of more than 12 months. Presentation of leases within the consolidated statements of operations and consolidated statements of cash flows will be generally consistent with the current lease accounting guidance. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect this accounting update to have a material effect on its consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent ondetermines the balance sheet ratherclassification of its investments at the time of purchase and evaluates the classification at each balance sheet date. Money market funds, certificates of deposit, and time deposits with maturities of greater than being separated into currentthree months but no more than twelve months are carried at cost, which approximates fair value and noncurrent. ASU 2015-17 is effective for our fiscal year beginningare recorded in the current quarter. The adoptionconsolidated balance sheets in short-term investments. As of ASU 2015-17 did not haveMay 31, 2023, short-term investments consists of a material impact on the consolidated financial statements.12-month $4,000,000 fixed-term deposit earning interest of 5.3%, and a 12-month $1,500,000 fixed term deposit earning interest of 4.25% purchased in February 2023.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, to clarify the principles used to recognize revenue for all entities. In March 2016, the FASB issued ASU 2016-08 to further clarify the implementation guidance on principal versus agent considerations. The guidance is effective for annual and interim periods beginning after December 15, 2017. The Company does not expect this accounting update to have a material effect on its consolidated financial statements.Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion. The Company believes that none of the new standards will have a significant impact on the financial statements.

Going Concern

Recent accounting pronouncements not yet adopted

The Company does not have any commercialized products, has not generated any revenue since inception and has sustained recurring losses and negative cash flows from operations since inception. Due toNone.

Recently adopted accounting pronouncements

None.

NOTE 3 – Discontinued Operations

On January 13, 2023, the “start-up” nature of our business, we expect to incur losses as we continue development of our products and technologies. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principlesBoard determined that it is in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.

As of the date of filing of the Company’s most recent Form 10-K on November 22, 2017, based on management’s assessment, the Company had sufficient cash to meet its funding requirements over the next twelve months. Currently, based upon its near term anticipated level of operations and expenditures, management believes that cash on hand should be sufficient to enable the Company to continue operations through November 2018 or approximately ten months from the date of this quarterly report. In view of these conditions, the abilitybest interests of the Company to continuediscontinue operations in South Korea and to dissolve the Korean Subsidiary. The Company is working to dispose the Korean Subsidiary other than by sale in accordance with Accounting Standards Codification (“ASC”) 360-10-45-15, Long-Lived Assets to Be Disposed of Other Than by Sale

In accordance with ASC 205-20, Discontinued Operations, the results of the Korean Subsidiary are presented as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss, and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Korean Subsidiary as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of August 31, 2022. The Consolidated Statements of Cash Flows are presented on a going concern is in substantial doubt and dependent upon achieving a profitable level ofconsolidated basis for both continuing operations and on the ability of the Company to obtain necessary financing to fund ongoingdiscontinued operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

The Company has experiencedfollowing table summarizes the significant items included in income from discontinued operations, net of tax in the Consolidated Statement of Operations and continues to experience negativeComprehensive Loss for the three and nine months ended May 31, 2023 and 2022:

The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of August 31, 2022 and May 31, 2023:

The cash flows fromrelated to discontinued operations as well as an ongoing requirementhave not been segregated and are included in the consolidated statements of cash flows for substantial additional capital investment. The Company expects that it will need to raise substantial additional capital to accomplish its business plan overall periods presented. Korean Subsidiary depreciation expense for the next several years. The Company expects to seek additional funding through private equity or convertible debt. If adequate funds are not available on reasonable terms, or at all, it would resultnine months ended May 31, 2023 and 2022, and included in a material adverse effect on the Company’s business, operating results, financial conditionconsolidated statement of cash flow was $0 and prospects. In particular,$7,532, respectively. Capital expenditures in the Company may be required to delay; reduce the scope of or terminate its researchnine months ended May 31, 2023 and development programs; sell rights to its SolarWindow™ technology and/or MotionPower™ technology, or other technologies or products based upon these technologies; or license the rights to these technologies or products on terms that are less favorable to the Company than might otherwise be available.2022 were $0 and $581,648, respectively.

NOTE 24 - DebtNet Income (Loss) Per Share

AsThe computation of November 30, 2017 and August 31, 2017,basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company hadexperienced a loss, there is no inclusion of dilutive securities as their inclusion in the following outstanding debt balances:EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).

		Issue		Maturity						Debt								Interest
		Date		Date		Principal				Discount				Balance				Payable
As of November 30, 2017:
March 2015 Loan as amended		3/4/2015		12/31/2019		$	600,000			$	-			$	600,000			$	127,901
2013 Note as amended		10/7/2013		12/31/2019			3,000,000				(1,142,495	)			1,857,505				1,012,492
						$	3,600,000			$	(1,142,495	)		$	2,457,505			$	1,140,393
As of August 31, 2017:
March 2015 Loan as amended		3/4/2015		12/31/2017		$	600,000			$	-			$	600,000			$	113,465
2013 Note as amended		10/7/2013		12/31/2017			3,000,000				(413,377	)			2,586,623				932,912
						$	3,600,000			$	(413,377	)		$	3,186,623			$	1,046,377

The shares listed below were not included in the computation of diluted losses per share because to do so would be antidilutive for the periods presented:

March 2015 Loan as AmendedNOTE 5 – Property and Equipment

On March 4, 2015,Property and equipment consists of the Company entered into a Bridge Loan Agreement with 1420468 Alberta Ltd. (which has since been merged with and into Kalen Capital Corporation (the “Investor”)). Pursuant the Bridge Loan Agreement, the Company borrowed $600,000 at an annual interest rate of 7% (the “March 2015 Loan”), compounded quarterly, with a default rate of 15%.following:

On November 3, 2017, the Company entered into the Third Amendment related to the March 2015 Loan pursuant to which the Company and the Investor amended the March 2015 loan to extend the maturity date to December 31, 2019. As consideration for the note extension, the interest rate was increased to 10.5% and all outstanding warrants held by the Investor had their maturity date extended to December 31, 2022.

During the three months ended November 30, 2017May 31, 2023 and 2016,2022, the Company recognized $14,436straight-line depreciation expense of $3,594 and $11,617, respectively, of interest expense.$3,057, respectively. During the threenine months ended November 30, 2017May 31, 2023 and 2016,2022, the Company recognized debt discount accretionstraight-line depreciation expense of $0$11,115 and $55,720,$18,865, respectively.

2013 Note as Amended

On October 7, 2013,During the year ended August 31, 2019, the Company soldmade deposits for in-process equipment totaling $1,292,655 towards the purchase of manufacturing equipment. The Company is currently evaluating configuration options in order to optimize the Investor an unsecured Convertible Promissory Note (the “2013 Note”) in the amount of $3,000,000 with 7% interest compounded quarterly. According to the terms of the amended 2013 Note, the Investor may elect to convert principal and accrued interest into unitsequipment for manufacturing of the Company’s equity securities, with each Unit consisting of (a) one share of common stock; and (b) one Stock Purchase Warrant for the purchase of one share of common stock. The conversion price for each Unit is the lesser of (i) $1.37; or (ii) 70%initial product. Completion of the 20 day average closing priceequipment may require additional payments of the Company’s common stock priorup to conversion, subject to a floor of $1.00 with the exercise price of each Warrant being equal to 60% of the 20 day average closing price of the Company’s common stock prior to conversion. If issued, the Warrant included in the Units will be exercisable for a period of five years. As of November 30, 2017, if the investor elected to convert the entirety of amounts owing under the 2013 Note, the Company would be obligated to issue a warrant for the purchase of 2,928,826 shares of common stock.approximately $510,000.

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On November 3, 2017, the Company entered into the Third Amendment related to the 2013 Note pursuant to which the Company and the Investor amended the 2013 Note to extend the maturity date to December 31, 2019. As consideration for the note extension, the interest rate was increased to 10.5% and all outstanding warrants held by the Investor had their maturity date extended to December 31, 2022, as described below, resulting in an additional debt discount of $1,074,265 as of November 3, 2017. The modification did not result in a gain or loss due to the related party nature of the transaction.

The maturity date of the remaining Series M Warrant to purchase 246,000 shares of common stock was extended from December 31, 2020 to December 31, 2022. The Company recorded $82,656 as a debt discount to recognize the increase in value for the extension of the expiration date.

The maturity date of the Series N Warrant to purchase 767,000 shares of common stock was extended from December 31, 2020 to December 31, 2022. The Company recorded $327,509 as a debt discount to recognize the increase in value for the extension of the expiration date.

The maturity date of the Series P Warrant to purchase 213,500 shares of common stock was extended from April 30, 2018 to December 31, 2022. The Company recorded $348,219 as a debt discount to recognize the increase in value for the extension of the expiration date.

The maturity date of the Series R Warrant to purchase 468,750 shares of common stock was extended from June 20, 2021 to December 31, 2022. The Company recorded $295,781 as a debt discount to recognize the increase in value for the extension of the expiration date.

The maturity date of the Series S-A Warrant to purchase 300,000 shares of common stock was extended from July 24, 2022 to December 31, 2022. The Company recorded $20,100 as a debt discount to recognize the increase in value for the extension of the expiration date.

Interest expense related to the 2013 Note, as amended, amounted to $79,580 and $64,036 during the three months ended November 30, 2017 and 2016, respectively.

Accretion of the debt discount related to the 2013 Note as amended amounted to $345,147 and $308,339 during the three months ended November 30, 2017 and 2016, respectively. The remaining debt discount related to warrant expiration date extensions totals $1,142,495 and will be amortized through December 31, 2019.

NOTE 3 – Private Placements

September 2017 Private Placement

On September 11, 2017, the Company initiated and on September 29, 2017, completed a self-directed offering of 821,600 units at a price of $3.11 per unit for $2,555,176 in aggregate proceeds (the “September 2017 Private Placement”). The unit price was based on a 15% discount to the average of the 30 day closing price (last day being Friday September 8, 2017) of the Company’s common stock as reported on the OTCQB. Each unit consisted of one share of common stock and one Series S Stock Purchase Warrant to purchase one (1) share of common stock at an exercise price of $3.42 per share through September 29, 2022. The warrants may be exercised on a cashless basis. All the units were purchased by unrelated parties.

The relative fair value of the common stock was estimated to be $1,540,000. The relative fair value of the Series S Warrants was estimated to be $1,015,000 as determined based on the relative fair value allocation of the proceeds received. The Series S Warrants were valued using the Black-Scholes option pricing model using the following variables: market price of common stock - $3.95 per share; estimated volatility – 77.96%; 5-year risk free interest rate – 1.71%; expected dividend rate - 0% and expected life - 5 years.

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NOTE 46 – Common Stock and Warrants

Common Stock

At November 30, 2017,May 31, 2023, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001$0.001 per share, 35,900,419and 53,198,399 shares of common stock outstanding and 1,700,832 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) as adopted and approved by the Company’s Board on October 10, 2006 that provides for the grant of stock options to employees, directors, officers and consultants (See “NOTE 5 - Stock Options”).outstanding.

During the three months ended November 30, 2017, we entered into the following securities related transactions:

	·	On September 29, 2017, the Company completed the September 2017 Private Placement of 821,600 units at a price of $3.11 per unit for $2,555,176 in aggregate proceeds. Each unit consisted of one share of common stock and one Series S Stock Purchase Warrant to purchase one (1) share of common stock at an exercise price of $3.42 per share through September 29, 2022. The warrants may be exercised on a cashless basis (See “NOTE 3 – Private Placements”).
	·	On November 21, 2017 each director was granted 40,000 shares of common stock for a total issuance of 160,000 shares of common stock valued at $4.87 per share, the fair market value of our common stock on the date of issuance. Additionally, on November 21, the Company issued Jatinder Bhogal, Director, an additional 50,000 shares valued at $4.87 per share. 75% of the 210,000 issued shares are subject to a one-year lock-up.
	·	From September 6, 2017 through October 30, 2017, holders of our Series O Warrants exercised 80,000 warrants at an exercise price of $3.10 per share resulting in $248,000 to the Company and the issuance of 80,000 shares of common stock.
	·	On September 7, 2017, John Conklin, the Company’s President & CEO, exercised 100,000 stock purchase options on a cashless basis resulting in the issuance of 46,097 shares of common stock.
	·	On September 7, 2017, two other employees exercised a total of 72,500 stock purchase options on a cashless basis resulting in the issuance of 33,151 shares of common stock.
	·	On September 7, 2017, the Investor exercised their outstanding Series Q Warrant to purchase up to 468,750 shares of the Company’s common stock on a cashless basis, resulting in the issuance of 189,940 shares of common stock.
	·	On September 7, 2017, a third party exercised their outstanding Series Q Warrant to purchase up to 468,750 shares of the Company’s common stock on a cashless basis, resulting in the issuance of 189,940 shares of common stock.

Warrants

Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. Other than the Series O Warrants and Series P Warrants, all of the following warrants may be exercised on a cashless basis. A summary of the Company’s warrants outstanding and exercisable as of November 30, 2017May 31, 2023 and August 31, 20172022 is as follows:

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During the nine months ended May 31, 2023, the Series M, N, P R, S-A and S Warrants expired unexercised.

NOTE 57 - Stock Options

Stock option grants pursuant to the 2006 Plan vest either immediately or over one to five years and expire ten years after the date of grant. Stockholders previously approved 5,000,000 shares for grant under the 2006 Plan, of which 1,700,832 remain available for grant, 1,185,834 have been exercised in total and 562,763 net shares issued pursuant to the exercise of vested options from inception of the 2006 Plan through November 30, 2017. All shares approved for grant and subsequently forfeited are available for future grant. The Company does not repurchase shares to fulfill the requirements of options that are exercised. The Company issues new shares when options are exercised. The 2006 Plan was approved by stockholders on February 7, 2011 and expires according to its terms on February 7, 2021.

The Company employsmeasures share-based compensation cost on the following key weighted-average assumptions in determininggrant date, based on the fair value of the award, and recognizes the expense on a straight-line basis over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:following weighted-average assumptions:

A summary of the Company’s stock option activity for the threenine months ended November 30, 2017 and year ended AugustMay 31, 20172023 and related information follows:

The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of the period covered by this report and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all in-the-money option holders exercised their vested options on November 30, 2017.May 31, 2023. The intrinsic value of the option changes based upon the fair market value of the Company’s common stock. Since the closing stock price was $4.75$0.26 on November 30, 2017May 31, 2023 and 1,902,500no outstanding options have an exercise price below $4.75$0.26 per share, as of November 30, 2017,May 31, 2023, there is nointrinsic value toin the Company’s outstanding in-the-money stock options including 32,500 options that are exercisable and in-the-money.vested options.