Stock Options

9 Months Ended

May 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock Options

NOTE 7 - Stock Options

The Company measures share-based compensation cost on the grant 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 following weighted-average assumptions:

	Nine Months Ended May 31,
	2023		2022
Expected dividend yield		-		-
Expected stock price volatility		-		103.31	%
Risk-free interest rate		-		1.16	%
Expected term (in years)(simplified method)		-		5.75
Exercise price		-	$	6.21
Weighted-average grant date fair-value		-	$	4.92

A summary of the Company’s stock option activity for the nine months ended May 31, 2023 and related information follows:

	Number of Shares Subject to Option Grants			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($)
Outstanding at August 31, 2022		6,761,400			4.01
Forfeitures and cancellations		(54,000	)		4.53
Outstanding at  May 31, 2023		6,707,400			4.00		2.63		-
Exercisable at  May 31, 2023		6,656,050			4.01		2.63		-

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 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 $0.26 on May 31, 2023 and no outstanding options have an exercise price below $0.26 per share, as of May 31, 2023, there is no intrinsic value in the Company’s outstanding stock options and vested options.

Three and Nine Months Ended May 31, 2022

Grants - On October 27, 2021, the Company’s Board granted 140,000 options to its officers and directors, with an exercise price of $6.21, exercisable on a cashless basis any time prior to the Company’s listing of any of its securities for trading on a national stock exchange, ten-year term and vesting as to 50% of the options on the six-month anniversary of the date of grant and as to the remaining 50% of the options on the twelve-month anniversary from the date of grant.

Forfeitures and cancellations - As a result of his resignation from the Board on November 10, 2021, Mr. Gary Parmar forfeited 58,600 unvested stock options, including 30,000 options granted on October 27, 2021.

The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in the Company’s Statements of Operations for the three and nine months ended May 31, 2023 and 2022:

	Three Months Ended May 31,				Nine Months Ended May 31,
Stock compensation expense:	2023		2022		2023		2022
Selling, general and administrative	$	24,023	$	389,557	$	118,855	$	838,309
Research and development		705		21,232		15,800		63,698
Total	$	24,728	$	410,789	$	134,655	$	902,007

As of May 31, 2023, the Company had $93,672 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 1.25 years.

The following table summarizes information about stock options outstanding and exercisable at May 31, 2023:

	Stock Options Outstanding						Stock Options Exercisable
Exercise Prices	Number of Shares Subject to Outstanding Options		Weighted Average Contractual Life (years)		Weighted Average Exercise Price ($)		Number of Shares Subject To Options Exercise		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)
2.32		153,000		6.36		2.32		153,000		6.36		2.32
2.60		2,500,000		3.09		2.60		2,500,000		3.09		2.60
3.42		50,000		3.39		3.42		37,500		3.39		3.42
3.46		35,000		2.60		3.46		35,000		2.60		3.46
3.54		1,249,400		5.34		3.54		1,210,550		5.44		3.54
3.66		1,000,000		0.25		3.66		1,000,000		0.25		3.66
4.87		110,000		4.48		4.87		110,000		4.48		4.87
6.00		800,000		0.25		6.00		800,000		0.25		6.00
6.21		110,000		8.41		6.21		110,000		8.41		6.21
8.00		700,000		0.25		8.00		700,000		0.25		8.00
Total		6,707,400		2.63		4.00		6,632,650		2.63		4.01