Note 7. Private Equity Securities Offerings

Private Warrant Exchanges

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During the three and six months ended November 30, 2021, the Company entered into privately negotiated warrant exchange agreements with certain accredited investors, pursuant to which the investors purchased shares of common stock at exercise prices ranging from $0.40 to $1.00 per share. The Company issued approximately 3.5 million shares of common stock under the original warrants, as well as additional shares as an inducement to exercise their warrants, for a total of approximately 7.9 million shares of common stock. Aggregate gross and net proceeds from the private warrant exchange were approximately $6.4 million. In connection with these transactions, the Company recognized $4.7 million and $5.2 million of inducement interest expense for the three and six months ended November 30, 2021, respectively. Also see Note 6 above.

Private Placement of Shares of Common Stock and Warrants

During the six months ended November 30, 2021, the Company issued in a private placement to accredited investors a total of approximately 16.7 million shares of common stock, together with warrants to purchase a total of approximately 4.2 million shares of common stock at exercise prices ranging from $1.00 to $1.80 per share. The warrants have a five-year term and are immediately exercisable. The securities were issued with a combined purchase price of between $1.00 and $1.80 per fixed combination of one share of common stock and one quarter of one warrant

to purchase one share of common stock, for total gross and net proceeds to the Company of approximately $18.8 million.

The representations, warranties and covenants contained in the subscription agreements were made solely for the benefit of the parties to the subscription agreements. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the subscription agreements and not as statements of fact, and (ii) may apply standards of materiality that are different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the subscription agreements only provide information to investors regarding the terms of the private placement, and do not provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts regarding or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of each subscription agreement, which subsequent information may or may not be fully reflected in public disclosures. A form of the subscription agreement was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2021 and is incorporated herein by reference.

Private Placement of Common Stock and Warrants through Placement Agent

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During the six months ended November 30, 2021, the Company issued in a private placement to accredited investors an aggregate of approximately 11.4 million shares of common stock, together with warrants to purchase an aggregate of approximately 5.0 million shares of common stock at an exercise price of $1.00 per share. The securities were issued at a combined purchase price of $1.00 per fixed combination of one share of common stock and three-tenths of one warrant to purchase one share of common stock, for aggregate gross and net proceeds to the Company of approximately $11.4 million and $10.0 million, respectively. The warrants have a five-year term and are immediately exercisable. A copy of the form of warrant was filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2021, and is incorporated herein by reference. See Exhibit 10.1 to this report for a copy of the form of subscription agreement used in the private placement. The foregoing summary of the terms of the forms of warrant and subscription agreement is subject to, and qualified in its entirety by, such documents.

The representations, warranties and covenants contained in the subscription agreements were made solely for the benefit of the parties to the subscription agreements. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the subscription agreements and not as statements of fact and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, inclusion of the form of subscription agreement as an exhibit to this report is intended only to provide investors with information regarding the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the subscription agreements, which subsequent information may or may not be fully reflected in public disclosures.

As a fee to the placement agent, the Company agreed to pay a cash fee equal to 12% of the gross proceeds received from qualified investors in the offering, as well as a one-time non-accountable expense fee of $50,000 in the aggregate for all closings in this offering. The Company also agreed to grant the placement agent, or its designees, warrants with an exercise price of $1.00 per share and a 10-year term to purchase 12% of the total number of shares of common stock sold to qualified investors in the offering.