What changed in this filing

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Item 1A. Risk Factors

2021-05-17 compared with 2021-02-16 · 138 added, 77 removed, 0 unchanged (100% of the section changed)

factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,”

in our Annual

Report on Form 10-K, as amended and supplemented by our Quarterly Reports on Form 10-Q (collectively, the “Reports”).

Other than as set forth below, there have been no material changes in our risk factors from those previously disclosed in our

You should carefully consider the risks described in our Reports, which could materially affect our business, financial

condition or future results.

The risks described in our Reports are not the only risks we face.

Additional risks and uncertainties

not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial

condition, and/or operating results.

If any of the risks actually occur, our business, financial condition, and/or results of

operations could be negatively affected.

stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors

in our common stock could incur substantial losses.

stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

By way of example, on February

1, 2021, the price of our common stock closed at $0.32 per share while on February 12, 2021, our stock price closed at $0.45 per

share with no discernable announcements or developments by the company or third parties.

On February 5, 2021, the intra-day sales

price of our common stock fluctuated between a reported low sale price of $0.33 and a reported high sales price of $0.45.

incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance

or prospects.

In addition, the recent outbreak of the novel strain of coronavirus (COVID-19) has caused broad stock market and

industry fluctuations.

The stock market in general and the market for companies such as our in particular have experienced extreme

volatility that has often been unrelated to the operating performance of particular companies.

As a result of this volatility,

investors may experience losses on their investment in our common stock.

The market price for our common stock may be influenced

by many factors, including the following:

reaction to our business strategy;

success of competitive products or technologies;

continued compliance with the OTCQB listing standards;

or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our

taken by regulatory agencies with respect to our products, manufacturing process or sales and marketing terms;

in our financial results or those of companies that are perceived to be similar to us;

success of our efforts to acquire or in-license additional products or product candidates;

concerning our collaborations or partners;

or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain

patent protection for our products;

ability or inability to raise additional capital and the terms on which we raise it;

in the market prices of stocks generally;

volume of our common stock;

of our common stock by us or our stockholders;

economic, industry and market conditions;

events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and

other international conflicts, public health issues including health epidemics or pandemics, such as the recent outbreak of

the novel coronavirus (COVID-19), and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather

and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations

of our suppliers or result in political or economic instability.

broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial

condition or other indicators of value, including our loss per share of $0.18 and $0.03 for our fiscal year ended September 30,

2020 and the three months ended December 31, 2020.

Since the stock price of our common stock has fluctuated in the past, has been

recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses.

following periods of volatility in the market, securities class-action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and

resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

There can be no guarantee that our stock price will remain at current levels or that future sales of our common stock will not

be at prices lower than those sold to investors.

Additionally,

securities of certain companies have recently experienced significant and extreme volatility in stock price due short sellers

of shares of common stock, known as a “short squeeze.”

These short squeezes have caused extreme volatility in both

the stock prices of those companies and in the market, and have led to the price per share of those companies to trade at a significantly

inflated rate that is disconnected from the underlying value of the company.

Many investors who have purchased shares in those

companies at an inflated rate face the risk of losing a significant portion of their original investment, as in many cases the

price per share has declined steadily as interest in those stocks have abated.

While we have no reason to believe our shares would

be the target of a short squeeze, there can be no assurance that we won’t be in the future, and you may lose a significant

portion or all of your investment if you purchase our shares at a rate that is significantly disconnected from our underlying

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

the three months ended December 31, 2019, the Company issued 620,000 shares of stock options.

DEFAULTS UPON SENIOR SECURITIES

MINING SAFETY DISCLOSURES

have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form

10-K for the year ended September 30, 2020, filed with the Commission on December 29, 2020 (the “

Form 10-K ”), under

the heading “

Risk Factors ”

as supplemented by the risk factors included in the Company’s Registration on Form S-1 which

was filed with the Commission on April 30, 2021 (the “

Form S--1 ”), under the heading “

Risk Factors ”, except

as set forth below, and investors should review the risks provided in the Form 10-K, Form S-1 and below, prior to making an investment

in the Company.

The business, financial condition and operating results of the Company can be affected by a number of factors, whether

currently known or unknown, including but not limited to those described below and in the Form 10-K and Form S-1, under the headings

Risk Factors ”, which risk factors from the Form 10-K and Form S-1 are incorporated by reference in this Item 1A.

Risk Factors, subject to updates to such risk factors as provided below, any one or more of which could, directly or indirectly, cause

the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial

condition and operating results.

Any of these factors, in whole or in part, could materially and adversely affect the Company’s

business, financial condition, operating results and stock price.

Related to Preemptive Rights

shareholders have statutory preemptive rights and our failure to provide shareholders notice of their right to exercise such rights or

the exercise by such shareholders of such rights, could create dilution to existing shareholders, uncertainty regarding our capitalization

structure, and result in the value of our common stock declining in value or being less than similarly situated companies whose governing

documents do not provide for preemptive rights.

to Section 21.208 of the Texas Business Organizations Code (TBOC), shareholders of Texas corporations formed prior to September

1, 2003, like the Company, have a preemptive right to acquire unissued or treasury shares, to the extent a Texas corporation’s

Articles of Incorporation do not limit or deny such right.

The Company’s Articles of Incorporation do not limit or deny the statutory

right of preemption and as such our shareholders have preemptive rights.

Specifically, the shareholders of the Company have a preemptive

right to acquire proportional amounts of the Company’s unissued or treasury shares on the decision of the Company’s Board

of Directors to issue the shares, provided that no preemptive right exists with respect to:

(1) shares issued or granted as compensation

to a director, officer, agent, or employee of the Company or a subsidiary or affiliate of the Company;

(2) shares issued or granted to

satisfy conversion or option rights created to provide compensation to a director, officer, agent, or employee of the corporation or

a subsidiary or affiliate of the Company;

or (3) shares sold, issued, or granted by the Company for consideration other than money.

the sale of the Offering Shares and Offering Warrants in the offering did not meet one of the exceptions above, such securities are subject

to statutory preemptive rights.

An action brought against the Company, the Board of Directors or an officer, shareholder, or agent of

the Company, or an owner of a beneficial interest in shares of the Company, for the violation of a preemptive right of a shareholder

under the TBOC must be brought not later than the earlier of:

(1) the first anniversary of the date written notice is given to each shareholder

whose preemptive right was violated;

or (2) the fourth anniversary of the latest of:

(A) the date the Company issued the shares, securities,

(B) the date the Company sold the shares, securities, or rights;

or (C) the date the Company otherwise distributed the shares,

securities, or rights.

The exercise of shareholders preemptive rights could cause dilution to existing shareholders.

Actions brought

by shareholders to enforce their preemptive rights may be costly or time consuming, and may take management’s focus away from the

Company’s operations.

The Company has to date, not provided any shareholders any notice of any preemptive rights and as such, any

and all issuances of the Company’s securities (other than those exempt from the preemptive rights described above) during the past

four years are subject to preemptive rights of shareholders, in the event any shareholders bring an action against the Company to enforce

Shareholders may therefore be subject to dilution in the event any shareholders file an action to enforce their preemptive

rights in connection with prior issuances, are successful in such action, and acquire additional securities of the Company.

the Company, its officers and directors, and in some cases its shareholders, may face liability, penalties and costs in connection with

the continued failure of the Company to provide notice of shareholders’

rights to preemptive rights.

Company is required, pursuant to the terms of the Securities Purchase Agreement (“

Purchase Agreement ”) entered into

with the Purchasers, to take prompt action to seek shareholder approval to amend its Articles of Incorporation to terminate shareholders

preemptive rights and investors in the offering waived their statutory preemptive rights, in consideration for anti-dilutive rights which

require the Company to issue them additional shares of common stock to maintain their percentage ownership in the Company prior to any

preemptive right issuance, for no consideration, if any statutory preemptive rights are exercised by any shareholder of the Company,

which will expire at such time, if ever, as the Company has adopted an amendment to its Articles of Incorporation to terminate such statutory

preemptive rights.

As such, shareholders should not assume that such preemptive rights will continue to exist in the future, or that

such shareholders will be able to acquire any securities in the future, pursuant to such preemptive rights which are currently provided

for under the TBOC.

addition to the Private Offering, the Company completed the sale of 18.9 million common shares during its fiscal year ended September

30, 2018 at $1.00 per unit.

To date, no preemptive rights claims have been made by shareholders as a result of these sales.

that sale, the Company had 7.2 million common shares outstanding and eligible for preemptive rights per the criteria outlined above.

addition to possible dilution caused by shareholders of the Company taking action to enforce their preemptive rights or anti-dilution

rights of the investors in the Private Offering in connection with the exercise of preemptive rights by any other shareholder, such rights

could create uncertainty regarding our capitalization structure, and result in the value of our common stock declining in value or being

less than similarly situated companies whose governing documents do not provide for preemptive rights.

exercise of statutory preemptive rights by shareholders may require us to sell shares or other securities below the then current trading

price of our common stock, or for nominal consideration, and may cause significant dilution to current and future shareholders.

Company may fail in its efforts to obtain shareholder approval to eliminate preemptive rights thereby potentially limiting its ability

to raise capital in the future or incur potential liability.

Company is required, by 180 days after the closing of the Private Offering (i.e., by October 13, 2021), to seek shareholder approval

to remove preemptive rights by either amending its Articles of Incorporation or redomiciling its state of incorporation.

the Company is unsuccessful in obtaining the required shareholder approval to amend its Articles of Incorporation or to redomicile the

Company to remove preemptive rights, the Company’s ability to raise capital may be impacted and the terms of such financing may

be under terms that are less favorable to the Company.

In addition, there is a risk of liability to shareholders with preemptive rights

which may result in dilution to our shareholders (see also the risk factor above).

If a shareholder files a statutory preemptive right

claim, then the dilution risk to existing shareholders is equal to the number of shares necessary to satisfy that claim.

the remedy for a common stock shareholder who owned 1% of the Company prior to the 2018 equity issuance described above who did not participate

in the 2018 equity issuance and files a statutory preemptive rights claim would be to offer 1% of the total shares sold in the 2018 equity

offering to the shareholder (i.e., the same percentage as their ownership in the Company at the time of the offering) at $1.00 per share,

the amount per share of shares sold in the 2018 equity issuance.

If the shareholder elects to purchase shares at the $1.00 price, then

the other shareholders would be diluted by the additional shares purchased by the shareholder with the statutory preemptive rights claim.

This same example applies to shareholders who own the common shares of the Company at the time of the Private Offering, except that the

terms of the Private Offering would apply (i.e., a purchase price of $0.18 per share).

Related to Our Financial Position and Need for Capital

have incurred net losses since our inception and may never be profitable.

likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered

in connection with development of a business enterprise in the technology sector.

We had a net loss of $1,088,838 or $0.04 per share

for the three months ended March 31, 2021, compared to a net loss of $3,068,247 or $0.08 per share for the three months ended March 31,

For the six months ended March 31, 2021, we had a net loss of $1,888,573 or $0.07 per share, compared to a net loss of $5,176,336

or $0.13 per share for the six months ended March 31, 2020.

Our net losses for the year ended September 30, 2020 and for the period from

September 30, 2017 through September 30, 2020 were $6,970,072 and $22,642,039, respectively, and our aggregate accumulated deficit as

of September 30, 2020 and 2019 was $68,426,608 and $61,456,536, respectively.

For the quarters ending December 31, 2020 and September

30, 2020, our net losses were $799,735 and $635,993, respectively.

can be no assurance that any products under development by us will be successfully commercialized, and the extent of our future losses

and the timing of our profitability, if ever achieved, are highly uncertain.

If we are unable to achieve profitability, we may be unable

to continue our operations.

Related to Our Business and Results of Operations

pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, has materially affected, and may in the future materially

and adversely affect, our business and operations.

March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The COVID-19 pandemic is affecting the United

States and global economies and may affect our operations and those of third parties on which we rely.

While the potential economic impact

brought by, and the duration of the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global

financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays

or impacts on our business, financing or the global economy as a whole.

However, these effects could have a material impact on our liquidity,

capital resources, operations and business and those of the third parties on which we rely.

2020 and into 2021, the COVID-19 pandemic has interrupted our sales and marketing activities and restricted face-to-face interaction

between our team members and our partners.

This slowed the pace of our development and the expansion of our deal pipeline.

action for the current pandemic or the emergence of a new viral outbreak may negatively impact the adjustments we, our customers (if

any), and the customers of our licensees, and our partners have made to resume business under new protocols.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors