10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended November 30, 2018
	or
¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________ to __________
	Commission File Number 333-179079

AIRBORNE WIRELESS NETWORK

(Exact name of registrant as specified in its charter)

 

Nevada	27-4453740
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
4115 Guardian Street, Suite C, Simi Valley, California	93063
(Address of principal executive offices)	(Zip Code)

 

(805) 583-4302

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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. x YES    ¨ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). x YES    ¨ NO

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

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 Rule 12b-2 of the Exchange Act) ¨ YES    x NO

The number of shares outstanding of the issuer’s common stock, as of January 4, 2019 was 3,327,404,310. 

 

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition or Plan of Operation	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
SIGNATURES		31

2

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

AIRBORNE WIRELESS NETWORK

INTERIM FINANCIAL STATEMENTS

NOVEMBER 30, 2018

(UNAUDITED)

	Page
Balance Sheets	4
Statements of Operations	5
Statements of Stockholders’ Deficit	6
Statements of Cash Flows	7
Notes to the Unaudited Financial Statements	8

3

AIRBORNE WIRELESS NETWORK

BALANCE SHEETS

(Unaudited)

	November 30,			August 31,
	2018			2018
Assets
Current Assets
Cash and cash equivalents	$	130,513		$	155,988
Prepaid expenses and other assets		128,953			1,019,650
Total Current Assets		259,466			1,175,638
Property and equipment, net		31,486			34,610
Total Assets	$	290,952		$	1,210,248
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued liabilities	$	8,411,333		$	4,909,419
Accrued interest		103,919			67,157
Convertible notes payable, net of unamortized debt discount of $349,422 and $863,852, respectively		1,406,583			976,229
Derivative liabilities		3,105,129			4,494,698
Total Current Liabilities		13,026,964			10,447,503
Total Liabilities		13,026,964			10,447,503
Stockholders’ Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized.
Series A Convertible Preferred Stock, $0.001 par value, $1,150 stated value, 1,000,000 shares authorized; 1,099 and 1,048 shares issued and outstanding as of November 30, 2018 and August 31, 2018, respectively		1			1
Common stock, $0.001 par value, 5,000,000,000,000 shares authorized; 2,937,101,278 and 684,342 shares issued and outstanding as of November 30, 2018 and August 31, 2018, respectively		2,937,101			684
Additional paid-in capital		107,949,888			104,574,113
Accumulated deficit		(123,623,002	)		(113,812,053	)
Total Stockholders’ Deficit		(12,736,012	)		(9,237,255	)
Total Liabilities and Stockholders’ Deficit	$	290,952		$	1,210,248

The accompanying notes are an integral part of these unaudited interim financial statements.

 

4

AIRBORNE WIRELESS NETWORK

STATEMENTS OF OPERATIONS

(Unaudited) 

	Three Months Ended
	November 30,
	2018			2017
Revenue	$	-		$	-
Operating Expenses
Marketing and branding		3,231,383			1,089,280
Depreciation		3,124			2,088
General and administrative expenses		157,200			114,742
Professional fees		1,502,768			857,285
Research and development		55,141			285,889
Salaries and wages		221,594			229,215
Stock based compensation		4,310,328			5,962,525
Total operating expense		9,481,538			8,541,024
Operating Loss		(9,481,538	)		(8,541,024	)
Other income (expense)
Interest expense		(564,303	)		(980,604	)
Net change in fair value of derivative liabilities including day one losses		234,892			(535,068	)
Total other expense		(329,411	)		(1,515,672	)
Net Loss	$	(9,810,949	)	$	(10,056,696	)
Net loss per common share – basic and diluted	$	(0.01	)	$	(3,296	)
Weighted average number of common shares outstanding		761,133,987			3,051

The accompanying notes are an integral part of these unaudited interim financial statements.

 

5

AIRBORNE WIRELESS NETWORK

STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

	Series A Convertible										Additional
	Preferred Stock						Common Stock				Paid-In			Accumulated
	Shares			Amount			Shares		Amount		Capital			Deficit			Total
Balance as of August 31, 2017		-			-			3,022		3		37,235,403			(37,128,829	)		106,577
Preferred stock units issued for cash		8,000			8			-		-		6,714,479			-			6,714,487
Common stock converted from preferred stock		(7,552	)		(8	)		557,351		557		(549	)		-			-
Preferred stock units issued from the exercise of warrants		600			1			-		-		599,999			-			600,000
Common stock units issued for cash		-			-			3,178		3		1,174,996			-			1,174,999
Common stock issued for exercise of warrants		-			-			84		-		1,657,125						1,657,125
Common stock issued for services		-			-			32,884		33		3,394,055			-			3,394,088
Common stock issued in conjunction with convertible notes		-			-			53		-		1,840,742			-			1,840,742
Common stock issued for conversion of convertible notes		-			-			87,770		88		4,403,137			-			4,403,225
Stock options issued to employees and consultants		-			-			-		-		26,846,659			-			26,846,659
Net change of derivative liability from exercise of warrants		-			-			-		-		1,050,554			-			1,050,554
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes		-			-			-		-		6,857,743			-			6,857,743
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock		-			-			-		-		12,799,770			-			12,799,770
Net loss		-			-			-		-		-			(76,683,224	)		(76,683,224	)
Balance as of August 31, 2018		1,048		$	1			684,342	$	684	$	104,574,113		$	(113,812,053	)	$	(9,237,255	)
Common stock converted from preferred stock		(749	)		(1	)		2,632,629,380		2,632,629		(2,632,628	)		-			-
Preferred stock units issued from the exercise of warrants		800			1			-		-		799,999			-			800,000
Common stock issued for services		-			-			46,242,792		46,243		(28,093	)		-			18,150
Common stock issued for conversion of convertible notes		-			-			257,544,764		257,545		(210,358	)		-			47,187
Stock options issued to employees and consultants		-			-			-		-		4,292,178			-			4,292,178
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes		-			-			-		-		122,122			-			122,122
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock		-			-			-		-		1,032,555			-			1,032,555
Net loss		-			-			-		-					(9,810,949	)		(9,810,949	)
Balance as of November 30, 2018		1,099		$	1			2,937,101,278	$	2,937,101	$	107,949,888		$	(123,623,002	)	$	(12,736,012	)

The accompanying notes are an integral part of these unaudited interim financial statements.

 

6

AIRBORNE WIRELESS NETWORK

STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	November 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,810,949	)	$	(10,056,696	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		3,124			2,088
Stock-based compensation		4,310,328			5,962,525
Amortization of debt discount included in interest expense		514,429			953,451
Change in fair value of derivative liabilities		(234,892	)		535,068
Changes in operating assets and liabilities:
Prepaid expenses and other assets		890,697			(359,956	)
Accounts payable and accrued liabilities		3,501,914			158,422
Accrued interest		49,874			27,153
Net Cash Used in Operating Activities		(775,475	)		(2,777,945	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		-			(8,456	)
Net Cash Used in Investing Activities		-			(8,456	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes, net		-			2,249,000
Repayment of convertible notes		(50,000	)		-
Proceeds from issuance of common stock units		-			484,000
Preferred stock units issued from the exercise of warrants		800,000			-
Net Cash Provided by Investing Activities		750,000			2,733,000
Net change in cash and cash equivalents		(25,475	)		(53,401	)
Cash and cash equivalents, beginning of period		155,988			217,694
Cash and cash equivalents, end of period	$	130,513		$	164,293
Supplemental cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	800
Non-cash financing transactions:
Derivative liabilities recognized as debt discount	$	-		$	479,762
Common stock issued for conversion of debt	$	47,187		$	-
Common stock issued for conversion of preferred stock	$	2,632,629		$	-
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes	$	122,122		$	-
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock	$	1,032,555		$	-
Reclassification to derivative liability from additional paid in capital due to warrants	$	-		$	2,078,065
Addition of new derivative liabilities recognized upon issuance of warrants	$	-		$	238,701
Original issuance discount and deferred financing cost	$	-		$	341,125

The accompanying notes are an integral part of these unaudited interim financial statements.

 

7

AIRBORNE WIRELESS NETWORK

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

NOVEMBER 30, 2018

NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

Airborne Wireless Network (the “Company”) is a Nevada corporation incorporated on January 5, 2011 under the name Ample-Tee. Effective on May 19, 2016, the Company’s corporate name was changed to Airborne Wireless Network. It is based in Simi Valley, California, USA. The Company’s fiscal year end is August 31.

We are an early stage company with the principal business strategy of developing, marketing and licensing a fully meshed, high-speed broadband airborne wireless network by linking commercial aircraft in flight. We call this network the “Infinitus Super Highway^SM” (“Infinitus”).

Amended and Restated Articles of Incorporation

On June 28, 2018, the stockholders of the Company approved an amendment (the “Amendment”) to the Company’s Amended and Restated Articles of Incorporation (as amended to date, the “Articles”) that increased the number of authorized shares of stock and granted the Company the right to effect up to five reverse stock splits of all of the Company’s issued and outstanding common stock. The number of shares of stock authorized under the Articles prior to the Amendment was 360,000,000, of which 350,000,000 were designated as common stock and 10,000,000 were designated as preferred stock. After giving effect to the Amendment, the number of authorized shares of all classes of stock the Company has authority to issue is 5,000,010,000,000, of which 5,000,000,000,000 are be designated as common stock and 10,000,000 are designated as preferred stock. Under the Amendment, the board of directors of the Company can effect up to five separate reverse splits of the Common Stock, each to be in a ratio of up to thirty thousand (30,000) to one (1), with any fractional shares to be rounded up to the next whole share, or paid in cash. Effective August 24, 2018, the Company effected a 30,000-for-one reverse stock split. All shares of common stock, the number of shares underlying options, warrants and other convertible securities and the per-share exercise price of such options, warrants and convertible securities disclosed in the financial statements retroactively reflect this reverse stock split.

Going concern

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the Company’s continuation as a going concern. The Company incurred operating losses of $9,810,949 during the period ended November 30, 2018 and has an accumulated deficit of $123,623,002 as of November 30, 2018.

There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.

Due to uncertainties related to these matters, there exists a substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited interim financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation of Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended November 30, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, 2019. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2018 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended August 31, 2018 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on November 14, 2018.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following table summarizes fair value measurements by level at November 30, 2018, and August 31, 2018, measured at fair value on a recurring basis:

November 30, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	3,105,129	$	3,105,129

August 31, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	4,494,698	$	4,494,698

9

Research and Development Expenses

We follow ASC 730-10, ”Research and Development,” and expense research and development costs when incurred. Accordingly, third-party research and development costs, including designing, prototyping and testing of product, are expensed when the contracted work has been performed or milestone results have been achieved. Indirect costs are allocated based on percentage usage related to the research and development. Research and development costs of $55,141 and $285,889 were incurred for the three months ended November 30, 2018 and 2017, respectively.

Stock-Based Compensation

ASC 718, ”Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, ”Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Stock-based compensation incurred for the three months ended November 30, 2018 and 2017, respectively, are summarized as follows:

	November 30,
	2018		2017
Stock options issued to employees, strategic service provider and consultants	$	4,292,178	$	5,545,200
Stock warrants issued to investors and consultants		-		186,968
Common stock issued to strategic service providers and consultants		18,150		230,357
Total	$	4,310,328	$	5,962,525

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating the effect, if any, that the ASU will have on its financial statements.

Management has considered all other recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s unaudited interim financial statements.

10

NOTE 3 – PREPAID EXPENSES

Prepaid expenses relate to prepayment made for future services in advance and will be expensed over time as the benefit of the services is received in the future, expected within one year.

Prepaid expenses consisted of the following at November 30, 2018 and August 31, 2018:

	November 30,		August 31,
	2018		2018
Legal and regulatory fees	$	108,258	$	255,500
Marketing and branding		4,500		712,900
Rent expense		9,020		22,550
Professional fees		7,175		28,700
	$	128,953	$	1,019,650

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at November 30, 2018 and August 31, 2018:

	November 30,		August 31,
	2018		2018
Trade Payables	$	8,302,628	$	4,796,784
Credit Card Payable		38,745		37,675
Other Payable		69,960		74,960
Total	$	8,411,333	$	4,909,419

NOTE 5 – EQUITY

Authorized Stock

The Company is authorized to issue an aggregate of 5,000,000,000,000 common shares and 10,000,000 shares of preferred stock, each with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.

Series A Convertible Preferred stock

The Company is authorized to issue 1,000,000 shares of Series A Convertible Preferred Stock at a par value of $0.001 and a stated value equal to $1,150 per share.

· The Series A Convertible Preferred Stock ranks senior to our common stock and other classes of capital stock with respect to dividend and redemption.

· Holders of the Series A Convertible Preferred Stock will only be entitled to receive any dividends on the Series A Preferred Stock when, as and if the board of directors declares such dividends.

· The Series A Convertible Preferred Stock is convertible into shares of common stock by dividing the stated value per share ($1,150) by the lesser of $0.71 per share or 82.5% of the lowest volume weighted average price for our common stock as reported at the close of trading on the market reporting trade prices for the common stock during the five trading days ending on and including the day the notice of conversion is delivered.

· A holder of Series A Convertible Preferred Stock has the same voting rights as a holder of common stock on a fully converted basis not to exceed the beneficial ownership limitation.

11

On May 29, 2018, the Company issued 8,000 units for aggregate net proceeds of $6.7 million, after deducting underwriting discounts and other expenses of the offering. Each unit consisted of one share of Series A Preferred Stock, one Series 1 warrant to purchase one share of Series A Preferred Stock, one Series 2 warrant to purchase one share of Series A Preferred Stock and one Series 3 warrant to purchase one share of Series A Preferred Stock (“Series 1, 2 and 3 warrants”). The Company also issued to the underwriter of the offering a warrant to purchase 640 units.

The Company determined that the Series A Convertible Preferred Stock qualifies for derivative accounting which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options (See Note 8).

During the three months ended November 30, 2018, 749 shares of Series A Convertible Preferred Stock were converted into 2,632,629,380 shares of common stock.

As of November 30, 2018, and August 31, 2018, 1,099 and 1,048 shares of Series A Convertible Preferred Stock were issued and outstanding, respectively.

Warrants Exercisable into Preferred A Stock

Each warrant is immediately exercisable into one share of Series A Convertible Preferred Stock at a price of $1,000 per share. The Series 1 Warrants will expire on the 90-day anniversary of the issuance date. The Series 2 Warrants will expire on the six-month anniversary of the issuance date. The Series 3 Warrants will expire on the 12-month anniversary of the issuance date. During the three months ended November 30, 2018, the Company amended the expiry date of Series 1, 2 and 3 warrant to May 29, 2019.

The below table summarizes warrant activity during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Number of warrants								Weighted- Average Exercise Price
	Series 1		Series 2			Series 3			Series 1		Series 2		Series 3
Balances as of August 31, 2018		7,500		7,900			8,000		$	1,000	$	1,000	$	1,000
Granted		-		-			-			-		-		-
Exercised		-		(200	)		(600	)		1,000		1,000		1,000
Forfeited		-		-			-			-		-		-
Balances as of November 30, 2018		7,500		7,700			7,400		$	1,000	$	1,000	$	1,000

The following table summarizes information relating to outstanding and exercisable warrants as of November 30, 2018:

	Warrants Outstanding						Warrants Exercisable
			Weighted Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
	of Shares		life (in Months)		Exercise Price		of Shares		Exercise Price
Series 1		7,500		5.92	$	1,000		7,500	$	1,000
Series 2		7,700		5.92	$	1,000		7,700	$	1,000
Series 3		7,400		5.92	$	1,000		7,400	$	1,000

During the three months ended November 30, 2018, 200 Series 2 warrants were exercised into 200 shares of Series A Convertible Preferred Stock and 600 Series 3 warrants were exercised into 600 shares of Series A Convertible Preferred Stock.

12

Common stock

Issuances

During the three months ended November 30, 2018, the Company issued 2,936,416,936 shares of common stock, as follows:

· 46,242,792 shares of common stock to strategic service providers, for services valued at $18,150.

· 2,632,629,380 shares of common stock issued for the conversion of 749 shares of Series A Convertible Preferred Stock.

· 257,544,764 shares of common stock issued upon the conversion of convertible notes in aggregate principal amount of $34,075 and accrued interest of $13,112.

As at November 30, 2018 and August 31, 2018, the Company had 2,937,101,278 and 684,342 shares of common stock issued and outstanding, respectively.

Warrants Exercisable to Common Shares

The below table summarizes the activity of warrants exercisable for common shares during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Number of Shares			Weighted- Average Exercise Price
Balances as of August 31, 2017		119		$	48,900
Granted		3,513			4,505
Exercised		(92	)		40,823
Forfeited		(231	)		46,862
Balances as of August 31, 2018		3,309		$	1,196
Granted		3			57,000
Exercised		-			-
Forfeited		-			-
Balances as of November 30, 2018		3,312		$	2,196

The fair value of each warrant on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for options granted during the year ended August 31, 2018:

	Year Ended
	August 31,
	2018
Exercise price	$10.2 - $97,500
Expected term	1.49 - 5 years
Expected average volatility	124%-354%
Expected dividend yield	-
Risk-free interest rate	0.98% - 2.83%

The following table summarizes information relating to outstanding and exercisable warrants as of November 30, 2018:

Warrants Outstanding						Warrants Exercisable
		Weighted Average		Weighted				Weighted
Number		Remaining Contractual		Average		Number		Average
of Shares		life (in years)		Exercise Price		of Shares		Exercise Price
	3,312		2.64	$	2,196		3,312		2,196

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Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at November 30, 2018 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of November 30, 2018, the aggregate intrinsic value of warrants outstanding was approximately $0 based on the closing market price of $0.0001 on November 30, 2018.

The Company determined that the warrants qualify for derivative accounting as a result of the related issuances of convertible notes, which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options.

NOTE 6 – STOCK COMPENSATION PLANS

In the ordinary course of business, the Company may issue stock options to employees, officers and directors from time to time. Fair values of the stock option awards are based on the associated value of the services rendered, where reasonably determinable.

Equity Compensation not approved by security holders

During the three months ended November 30, 2018 and the year ended August 31, 2018, options to purchase 0 and 339 shares of our common stock, respectively, had been granted to our employees, officers and directors under equity compensation not approved by security holders.

Options issued had the following terms:

	Year Ended
	August 31,
	2018
Exercise price	$15,000 - $97,500
Time to vest	On issuance – 4 years
Expiration after vesting	5 years

2017 Equity Incentive Plan

On July 30, 2017, the Board of Directors of the Company approved, and on July 31, 2017 the stockholders of the Company approved, the Airborne Wireless Network 2017 Stock Option Plan (the “2017 Plan”). The 2017 Plan permits the Company to issue up to 334 shares of common stock upon exercise of options granted to selected employees, officers, directors, consultants and advisers. The options may be either “incentive stock options” (as such term is defined in the Internal Revenue Code of 1986) or options that are not intended to qualify as “incentive stock options” (these are referred to as “non-qualified options”). Incentive stock options may be granted only to employees. The 2017 Plan is administered by the Board or, at the discretion of the Board, a Board committee. The administrator determines who will receive options and the terms of the options, including the exercise price, expiration date, vesting and the number of shares. The exercise price of each stock option may not be less than the fair market value of the Common Stock on the date of grant, although the exercise price of any incentive stock option granted to a 10% stockholder may not be less than 110% of the fair market value on the grant date. Options may be exercisable (“vest”) immediately or in increments based on time and/or performance criteria as determined by the administrator. The term of any option may not exceed 10 years (five years for any incentive stock option granted to a 10% stockholder), and unless otherwise determined by the administrator, each option must terminate no later than three months after the termination of the optionee’s employment (one year in the event of death or disability). Subject to a few minor exceptions, options may not be transferred other than by will or by the laws of descent and distribution. The 2017 Plan will expire on December 31, 2026.

On December 30, 2017, the Company granted options to directors (see below) to purchase an aggregate of 14 shares of our common stock at a price of $59,400 per share vesting immediately on December 31, 2017. The options expire December 29, 2022, unless such director ceases his or her service as a director prior the exercise or expiration of the option.

As of November 30, 2018, there were 320 shares available for future grant under the 2017 Plan.

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Stock Options

During the three months ended November 30, 2018, the Company did not grant options and during the year ended August 31, 2018, the Company granted options with an aggregate fair value of $19,412,264, which are being amortized into compensation expense over the vesting period of the options as the services are being provided.

The following is a summary of stock option activity during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Options Outstanding
	Number of Shares			Weighted- Average Exercise Price		Fair Value on Grant Date			Intrinsic Value
Balances as of August 31, 2017		946			98,700		35,864,990			-
Granted		339			66,000		19,412,264			-
Exercised		-			-		-			-
Forfeited		(2	)		37,200		(67,894	)		-
Balances as of August 31, 2018		1,283		$	58,500	$	55,209,360		$	-
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		-			-		-			-
Balances as of November 30, 2018		1,283		$	58,504	$	55,209,360		$	-

The following table summarizes information relating to exercisable stock options as of November 30, 2018:

Options Exercisable
Number of Shares		Weighted Average Exercise Price
	660	$	45,979

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options exercisable at November 30, 2018. As of November 30, 2018, the aggregate intrinsic value of stock options outstanding was $0 based on the closing market price of $0.0001 on November 30, 2018.

Weighted-average grant-date fair value for non-vested stock options as of November 30, 2018 and August 31, 2018 were listed as follows:

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested, August 31, 2017		809		$	38,100
Granted		339			57,300
Vested		(473	)		43,800
Forfeited		-			-
Unvested, August 31, 2018		675		$	43,800
Granted		-			-
Vested		(52	)		37,500
Forfeited		-			-
Unvested, November 30, 2018		623		$	43,800

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The fair value of each option on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for options granted during the year ended August 31, 2018 and 2017:

	Year Ended
	August 31,
	2018	2017
Expected term	3.59 - 5.98 years	4.59 - 6.43 years
Expected average volatility	175% - 176%	179% - 183%
Expected dividend yield	-	-
Risk-free interest rate	2.20% - 2.35%	1.17% - 2.25%

The total fair values of stock options that vested during the period ended November 30, 2018 and year ended August 31, 2018 were $2,510,847 and $18,112,430, respectively.

As of November 30, 2018, there was $7,831,411 of total unrecognized compensation cost related to non-vested stock options granted. The Company expects to recognize that cost over a remaining weighted average vesting period of 0.55 years as of November 30, 2018.

NOTE 7 – CONVERTIBLE NOTES

The Company had the following principal balances under its convertible notes outstanding as of November 30, 2018 and August 31, 2018:

	November 30,			August 31,
	2018			2018
Convertible Notes - originated in October 2017	$	162,700		$	164,190
Convertible Notes - originated in December 2017		109,725			109,725
Convertible Notes - originated in January 2018		1,915			24,500
Convertible Notes - originated in March 2018		145,833			145,833
Convertible Notes - originated in April 2018		1,190,000			1,250,000
Convertible Notes - originated in May 2018		145,832			145,833
		1,756,005			1,840,081
Less debt discount and debt issuance cost		(349,422	)		(863,852	)
		1,406,583			976,229
Less current portion of convertible notes payable		(1,406,583	)		(976,229	)
Long-term convertible notes payable	$	-		$	-

The Company recognized amortization expense related to the debt discount and deferred financing fees of $514,429 and $953,451 for the three months ended November 30, 2018 and 2017, respectively, which is included in interest expense in the statements of operations.

For the three months ended November 30, 2018 and 2017, the interest expense on convertible notes was $49,874 and $27,153, respectively. As of November 30, 2018 and August 31, 2018, the accrued interest payable was $103,919 and $67,157, respectively.

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Conversion

During the three months ended November 30, 2018, holders of certain of the convertible notes converted these notes with principal amounts of $34,075 and accrued interest of $13,112 into 257,544,764 shares of common stock. The corresponding derivative liability at the date of conversion of $122,122 was credited to additional paid in capital.

Convertible Notes – Issued during the year ended August 31, 2018

During the year ended August 31, 2018, the Company issued a total principal amount of $6,618,099 convertible notes for cash proceeds of $5,662,750, after deducting an original issuance discount of $629,099 and financing fees of $326,250. The convertible notes were also provided with a total of 53 common shares and warrants to purchase up to 25 shares of common stock at exercise prices ranging from $52,500 to $60,000 per share. The terms of convertible notes are summarized as follows:

· Term ranging from six months to one year;

· Annual interest rates ranging from 0% to 12%;

· Convertible at the option of the holders either at issuance or 180 days from issuance; and

· Conversion prices are typically based on 55% or 70% of the lowest trading prices of the Company’s shares during 20-25 days prior to the conversion.

NOTE 8 – DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants and Series A Convertible Preferred Stock as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of November 30, 2018. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in November 30, 2018 and August 31, 2018:

	Three months ended	Year Ended
	November 30,	August 31,
	2018	2018
Expected term	0.11 - 0.50 years	0.10 - 5.00 years
Expected average volatility	283% - 580%	49% - 350%
Expected dividend yield	-	-
Risk-free interest rate	2.31%-2.52%	0.98% - 2.83%

The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2018:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - August 31, 2018	$	4,494,698
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610
Derivative liabilities settled upon conversion of convertible notes		(122,122	)
Derivative liabilities settled upon conversion of convertible preferred stock		(1,032,555	)
Loss on change in fair value of the derivative liabilities		(1,341,502	)
Balance - November 30, 2018	$	3,105,129

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The following table summarizes the (gain) loss on derivative liability included in the income statement for the three months ended November 30, 2018 and 2017, respectively.

	Three months ended
	November 30,
	2018			2017
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes	$	-		$	140,251
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610			-
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		-			859,488
(Gain) loss on change in fair value of the derivative liabilities		(1,341,502	)		(464,671	)
	$	(234,892	)	$	535,068

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Anti-Dilution Agreements

Pursuant to our agreement with Jet Midwest Group, LLC entered into in October 2016, in consideration of the services to be provided by Jet Midwest Group, LLC, we issued to Jet Midwest Group, LLC 1,250,000 shares of common stock representing 1.6% of our common stock outstanding at that date. The agreement with Jet Midwest Group, LLC provides full ratchet anti-dilution protection to Jet Midwest Group, LLC. As a result, each time we issue additional shares of common stock or shares of another class or series of capital stock, we will issue to Jet Midwest Group, LLC without further consideration additional shares of our common stock or other class or series of capital stock so that Jet Midwest Group, LLC will continue to own 1.6% of the outstanding shares of common stock and each other class or series of capital stock. Through November 30, 2018, we had issued 49 shares of common stock to Jet Midwest Group, LLC and were obligated to issue an additional 46,253,639 shares of common stock. After entering into the agreement with us, Jet Midwest Group, LLC sought protection from creditors under the bankruptcy code, which proceedings were subsequently dismissed. One of Jet Midwest Group, LLC’s creditors has claimed that shares of our common stock to be issued under the anti-dilution right should be issued to it instead of Jet Midwest Group, LLC. In light of this dispute and ongoing litigation between Jet Midwest Group, LLC and its creditors, the Company is evaluating its obligation to continue issuing shares to Jet Midwest Group, LLC.

Consulting agreement

On July 31, 2017, the Company engaged Brighton Capital, Ltd. (“Brighton”) for a three (3) year term to render strategic advisory services. Pursuant to our agreement with Brighton, in consideration of the services to be provided by Brighton, we are to issue 14 shares of common stock and 34 warrants over a three-year term. We issued 2 shares of common stock and 4 warrants upon execution of this agreement, and are to issue 1 shares of common stock and 1 warrant per month for thirty-six (36) months, with the first issuance beginning August 1, 2017. Through November 30, 2018, we had issued 18 shares of common stock and 20 warrants to purchase common stock to Brighton. The warrants, as issued, shall immediately vest and have a term of five (5) years with an exercise price of $57,000 per share. The warrants have a cashless exercise feature that can be utilized if the shares underlying the warrants cannot be resold under an effective registration statement filed with the Securities and Exchange Commission by March 1, 2018.

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Other

On August 3, 2016, we acquired from Apcentive, Inc. (“Apcentive”) all of Apcentive’s right, title and interest in and to U.S. Patent No. 6,285,878 B1 and all related supporting materials, continuations, amendments, updates and contemplated updates and amendments and the trademark “Infinitus Super Highway^SM.” In consideration for the patent and the trademark, we issued a number of shares of our common stock to Apcentive and agreed to pay Apcentive a future royalty equal to 1.5% of the net cash we receive from the promotion, marketing, sale, licensing, distribution and other exploitation of the patent. We are further required to issue an additional 20 million shares of common stock to Apcentive if we do not spend, on matters relating to the patent and trademark, a cumulative total of $8 million on or before August 3, 2019. The purchase agreement requires that we spend at least $1 million on or before August 3, 2017 (which goal has been met), a total of at least $2 million on or before August 3, 2018 (which goal has been met) and a total of at least $5 million on or before August 3, 2019. As of November 30, 2018, the Company has not made a contingency for these events, but has expensed these costs, as incurred, which have exceeded the commitment.

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company'’s financial position.

Lease Commitment

In June 2016, we signed a lease agreement that commenced on July 1, 2016 for our corporate office headquarters with approximately 1,500 square feet, at 4115 Guardian Street, Simi Valley, California 93063. The lease expired on August 31, 2017 and our monthly rent was $1,750 (plus HVAC charges), payable in equal monthly installments. In August 2017, the lease was extended by two years commencing September 1, 2017 at $1,803 per month (plus HVAC charges) for the first year and $1,857 per month (plus HVAC charges) for the second year.

On February 1, 2018, the Company signed an operating lease for a residence to be used by our Chief Executive Officer, located in Moorpark, California. The lease term commenced on February 1, 2018 and expires on January 31, 2019. Our monthly rent is $4,510, payable in equal monthly installments. On February 1, 2018, the Company prepaid the $54,120, for the full term of the lease. As at November 30, 2018, we recognized $9,020 as a prepaid expense.

Total net rent expense related to our operating leases for the three months ended November 30, 2018 and 2017, was $5,570 and $5,355 respectively.

Future minimum payments under the non-cancelable portion of our operating leases as of August 31, 2018 are as follows:

Year ended August 31,
2019		22,284
Thereafter		-
Total	$	22,284

NOTE 10 – SUBSEQUENT EVENTS

Subsequent to November 30, 2018 and through the date that these financials were made available, the Company had the following subsequent events:

On December 6, 2018, the Company issued 195,151,516 shares of common stock for the conversion of 14 shares of preferred stock.

On December 17, 2018, the Company and Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”) entered into that certain Exercise Agreement pursuant to which Sabby, which holds certain shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”) and warrants to purchase shares of the Preferred Stock, agreed to exercise a minimum of $90,000 of its warrants on or immediately following December 17, 2018. Under the terms of the Sabby Exercise Agreement, the Company also committed to not issue, sell or offer any securities without the consent of Sabby until 11:59 p.m. on January 9, 2019. On December 18, 2018, we received gross proceeds of $90,000 from the exercise of 90 warrants into 90 shares of Preferred Stock.

On December 28, 2018, the Company issued 195,151,516 shares of common stock for the conversion of 14 shares of preferred stock.

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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. All statements other than statements of historical or current facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategy, proposed new products and services, research and development costs, granting of regulatory approvals, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products and services, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, and except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, prospective investors should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in, or implied by, the forward-looking statements due to a variety of factors, including, but not limited to:

· our financial performance, including our history of operating losses;

· our ability to obtain additional funding to continue our operations;

· our ability to successfully develop, implement and commercialize the Infinitus Super Highway (“Infinitus”);

· our ability to enter into agreements with airlines that permit us to install our equipment on their aircraft;

· our ability to enter into agreements with potential customers and purchasers;

· changes in the regulatory environments of the United States and other countries in which we intend to operate;

· our ability to attract and retain key management and other personnel;

· competition from new market entrants and new technologies;

· our ability to identify and pursue development of appropriate products; and

· risks, uncertainties and assumptions described under Section 1A. “Risk Factors” in our Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2018, and in any subsequent filings we make with the Securities and Exchange Commission (the “SEC”) and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this quarterly report.

Forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and we do not undertake any obligation to update forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. We qualify all of our forward-looking statements by these cautionary statements.

As used in this quarterly report, the terms the “Company”, “we”, “us” and “our” refer to Airborne Wireless Network, a Nevada corporation.

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The Company

Airborne Wireless Network was formed as a Nevada corporation on January 5, 2011 under the name “Ample-Tee” to engage in the business of promoting, marketing, selling and distributing hard to find ergonomic products for the physically disabled.

On October 20, 2015, our current President, Treasurer and Secretary, J. Edwards Daniels, acquired control of the Company by purchasing from Lawrence Chenard, our former president, 2,803 shares of our common stock for a purchase price of $250,000 (2,667 of which shares were delivered by Mr. Daniels to the Company for cancellation without consideration in August 2016).

On May 19, 2016, we changed our name to “Airborne Wireless Network” to better align our name with our intention to develop and deliver next generation global connectivity.

On August 3, 2016, we acquired from Apcentive, Inc. (“Apcentive”) all of Apcentive’s right, title and interest in and to U.S. Patent No. 6,285,878 B1, which expired on September 20, 2018, and all related support materials, continuations, amendments, updates and contemplated updates and amendments and the trademark “Infinitus Super Highway.” In exchange for that patent and trademark, we issued to Apcentive a number of shares of our common stock and agreed to pay Apcentive a future royalty equal to 1.5% of the net cash we receive from the promotion, marketing, sale, licensing, distribution and other exploitation of that patent.

On August 24, 2018, we effected a 30,000-to-1 reverse split of our common stock. As a result of the reverse split, every 30,000 pre-split shares of the Company’s common stock outstanding on the effective date of the reverse split were automatically combined into one new share of common stock without any action on the part of the holders, and the number of outstanding shares of common stock was reduced from approximately 8,888,443,700 to approximately 296,000 (subject to the rounding up of fractional shares). All historical share balances and share price-related data in this quarterly report have been adjusted based on the 30,000-to-1 reverse split ratio.

We are an early-stage company with the principal business strategy of developing, marketing and licensing a fully meshed, high-speed broadband airborne wireless network by linking aircraft in flight. We call this network the “Infinitus Super Highway.” To our knowledge, no fully meshed commercial broadband airborne network exists in the world today.

We expect that Infinitus will provide a broadband wireless communication infrastructure by using and customizing existing, small, lightweight, low-power relay station equipment and antennae that will be installed onboard aircraft. Each equipped aircraft would have a broadband wireless communication link to one or more neighboring aircraft and/or ground stations. These aircraft would form a chain of seamless airborne repeaters or routers providing broadband wireless communication gateways along the entire flight path, essentially creating a digital superhighway in the sky. If a link was interrupted, the signal would be redirected to the next participating aircraft or ground station in the chain -- in other words, there would be multiple, simultaneous data connections and thus the system would not rely on a single link.

We intend to act as a wholesale carrier, licensing our bandwidth to, among others, data service providers (such as major telecommunications companies and other Internet service providers) that provide broadband services to end users, to government agencies and to companies that desire a more robust private broadband network. We do not plan to license or sell Infinitus directly to consumers. We anticipate that Infinitus will enable our future customers to minimize their infrastructure development time and costs, and increase the reliability of their broadband communications systems.

If we can successfully complete the development of Infinitus, Infinitus could provide high-speed broadband Internet service to (i) supplement or replace current broadband networks, (ii) serve currently underserved markets, such as maritime, rural and remote locations, (iii) government agencies, including those that provide emergency or disaster relief services, (iv) companies seeking a more secure, reliable private data network, (v) customers onboard aircraft in flight seeking improved Internet access and connectivity and (vi) owners and operators of private jets and small aircraft owners, which in turn, can provide additional aircraft for the Infinitus network. Infinitus could also provide a wireless broadband network that is not vulnerable or susceptible to single points of failure (as is the case with current networks).

21

We are currently in the process of completing the development of Infinitus, and have not licensed Infinitus to anyone or generated any revenue from external customers during the last three fiscal years.

Our principal executive office is located at 4115 Guardian Street, Suite C, in Simi Valley, California 93063 and our telephone number is (805) 583-4302. Our fiscal year end is August 31.

Recent Developments

Although our software platform has been substantially completed, we have had several technological issues with the manufactured lasers (Free Space Optic terminals) that we acquired which are not aligning up independently, making the system integration problematic. After exhaustive testing and related efforts, we have determined that the laser units we purchased are inherently defective and faulty. Even though the manufacturer has sent engineers to us, at our expense, the manufacturer has been unable to demonstrate that the units function and we have determined that we cannot continue with the manufacturer’s units. Simultaneously with making these units try to work, we have been seeking alternative manufacturers and are exploring those options. The Company intends to seek either a buy back of those units from the manufacturer or intends to seek damages, including consequential damages, through legal action against the manufacturer.

Infinitus was originally based principally on a United States patent that we acquired in August 2016. The patent, which expired on September 20, 2018, gave the holder the right to exclude others in the United States, commensurate with the scope of the patent, from creating a fully meshed, high-speed broadband wireless network by linking commercial aircraft in flight. We also filed a patent application in the United States on July 25, 2017 seeking rights to exclude others from using our method of synchronizing free space optic links between aircraft in flight, which technology we believe will be instrumental in making Infinitus operate successfully. The patent application was recently rejected by the U.S. Patent and Trademark Office, but we believe there are adequate grounds for appeal.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements included elsewhere in this quarterly report.

To date, we have not earned any revenues from operations.

Three Months Ended November 30, 2018 and 2017

Our operating results for the three months ended November 30, 2018 and 2017, and the changes between those periods for the respective items, are summarized as follows:

	Three Months Ended
	November 30,
Statement of Operations Data:	2018		2017		Changes
Revenue	$	-	$	-	$	-
Total operating expense		9,481,538		8,541,024		940,514
Other expense		329,411		1,515,672		(1,186,261	)
Net loss	$	9,810,949	$	10,056,696	$	(245,747	)

We incurred a net loss of $9.8 million for the three months ended November 30, 2018 as compared to a net loss of $10.1 million for the same period in 2017. The decrease in net loss was due to a decrease in other expenses offset by an increase in operating expense. The increase in operating expenses was mainly attributable to an increase in marketing of Infinitus and professional fees for legal services, and reduced by stock-based compensation expense. The decrease in other income relates primarily from a gain in change in fair value on derivative liabilities for the three months ended November 30, 2018, whereas we had a loss in change in derivative liabilities in the same period 2017, primarily from the decline in market price of our common stock.

We currently have very limited capital resources and cash flows to support our operations. Until we obtain additional debt or equity financing, we will incur costs at a reduced level compared to prior-year periods, and our development of Infinitus and the Company’s business may be materially delayed or terminated.

22

Our operating expenses for the three months ended November 30, 2018 and 2017, and the changes between those periods for the respective items, are summarized as follows:

	Three Months Ended
	November 30,
Operating Expense:	2018		2017		Changes
Marketing and branding	$	3,231,383	$	1,089,280	$	2,142,103
Depreciation		3,124		2,088		1,036
General and administrative expenses		157,200		114,742		42,458
Professional fees		1,502,768		857,285		645,483
Research and development		55,141		285,889		(230,748	)
Salaries and wages		221,594		229,215		(7,621	)
Stock based compensation		4,310,328		5,962,525		(1,652,197	)
Total operating expense	$	9,481,538	$	8,541,024	$	940,514

 

The biggest component of the operating expenses was $4.3 million of stock-based compensation expenses incurred in the 2018 period compared to $6.0 million of stock-based compensation expenses incurred in the 2017 period. In the three months ended November 30, 2018, stock compensation expense included: (i) $18,150 in connection with the issuance of 46,242,789 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; and (ii) $4,292,178 million with respect to employee stock options. In the three months ended November 30, 2017, stock compensation expense included: (i) $165,000 in connection with the issuance of 125,146 shares of common stock to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $27,000 in connection with the issuance of 20,336 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; (iii) $39,000 in connection with the issuance of 30,000 shares of common stock and $94,000 in connection with the issuance of warrants to purchase 75,000 shares to Brighton Capital Ltd. pursuant to our consulting agreement with that company; (iv) $5.5 million with respect to employee stock options; and (v) $93,000 in connection with the issuance of 118,580 shares of warrants to consultants..

Marketing and branding expenses incurred relate to television and print advertising for branding purposes. We believe that building recognition for our brand enhances our reputation and ultimately our ability to attract technology, financial and other companies which can potentially assist us in developing and commercializing Infinitus. For the fiscal quarter ended November 30, 2018,we recorded $3.2 million in marketing and branding expenses. The majority of these expenses reflect the accrual of the maximum amount we may owe under a contract with a vendor to purchase media time for our marketing and branding messages, although the amount we may ultimately pay to this vendor is uncertain and in dispute. Other than this and other accruals, none of which were material, we did not otherwise incur any new marketing and branding expenses, whereas, $1.1 million was incurred by our Company during the three months ended November 30, 2017. We expect to incur expenditures on marketing and branding in future fiscal periods if and when cash flow is available, as we plan to continue to develop Infinitus, however, until we obtain additional or equity financing, we will be unable to continue spending on marketing and branding efforts.

Professional fees include fees to consultants, investor relations firms, and legal, accounting and compliance professionals for our audit, SEC filings, securities offerings and contracts. During the three months ended November 30, 2018, professional fees were $1.5 million compared to $857,000 for the comparative period in 2017. The increase in professional fees were mainly attributed to the increase in legal fees related to SEC reporting and regulatory compliance issues. We expect to continue to incur professional fees at an elevated level for the foreseeable future in connection with capital-raising transactions, regulatory compliance and responses and other related matters.

Research and development expenses incurred relate to the development of Infinitus starting in August 2016. During the three months ended November 30, 2018, research and development expense was $55,141, as compared to $286,000 during the same period in 2017. The decrease in our research and development spending during the three months ended November 30, 2018 was due to our lack of adequate capital resources to support our operations. Had the Company had access to greater capital resources, including cash on hand, during this period, the Company would have spent a greater amount on research and development. Until we obtain additional debt or equity financing, we will be unable to increase spending on research and development, and unable to prepare for our planned two-plane test and the eventual 20-plane test.

General and administrative expenses include office, shipping, entertainment, travel, insurance and other miscellaneous expenses. During the three months ended November 30, 2018, general and administrative expenses increased primarily from office expense increasing by $11,205 and travel costs increasing by $11,573 as compared to the same period in 2017.

23

Our other (income) expense for the three months ended November 30, 2018 and 2017, and the changes between those periods for the respective items, are summarized as follows:

	Three Months Ended
	November 30,
Other (Income) Expenses	2018			2017		Changes
Interest expense	$	564,303		$	980,604	$	(416,301	)
Change in fair value of derivative liabilities		(234,892	)		535,068		(769,960	)
Total other expenses	$	329,411		$	1,515,672	$	(1,186,261	)

During the three months ended November 30, 2018, our Company recognized $329,411 in other income which included a gain on change in fair value of derivative liabilities of $234,892 and interest expense of $564,303. The gain on change in fair value of derivative liabilities related to $1,106,610 as a day one loss from the addition of new derivative liabilities recognized upon issuance of convertible preferred stock and a gain of $1,341,502 in the change in the fair value of derivative liabilities, as calculated using Black-Scholes option model. The interest expense includes amortization of debt discount and interest incurred on convertible notes during the three months ended November 30, 2018.

During the three months ended November 30, 2017, the Company incurred $1,515,672 other expenses which include loss on change in fair value of derivative liabilities of $535,068 and interest expense of $980,604. The loss on change in fair value of derivative liabilities related to an increase in the fair value of warrants and convertible notes calculated using Black Scholes option model and recorded as a derivative liability. The interest expense includes amortization of debt discount and interest incurred on convertible notes issued during the three months ended November 30, 2017.

Liquidity and Capital Resources

The following table presents selected financial information as of and for the three months ended November 30, 2018, and 2017:

	November 30,			August 31,
Balance Sheet Data:	2018			2018			Changes
Cash	$	130,513		$	155,988		$	(25,475	)
Working capital deficiency	$	(12,767,498	)	$	(9,271,865	)	$	(3,495,633	)
Total assets	$	290,952		$	1,210,248		$	(919,296	)
Total liabilities	$	13,026,964		$	10,447,503		$	2,579,461
Total stockholders' deficit	$	(12,736,012	)	$	(9,237,255	)	$	(3,498,757	)

Because we have not generated any revenues, we depend on proceeds from the sales of securities and loans to finance our operations. As previously disclosed, on May 29, 2018, we completed a public offering of 8,000 units consisting of 8,000 shares of our Series A Convertible Preferred Stock (the “Prefered Stock”) and 24,000 warrants to purchase additional shares of Preferred Stock from which we generated $6.7 million, after deducting underwriting discounts and other expenses of the offering. If the warrants included in the offering are exercised, then the Company could receive additional gross proceeds of up to $24 million, although there can be no assurance that the warrants will be exercised in full, or at all. During the three months ended November 30, 2018, we generated proceeds from Preferred Stock issued from the exercise of warrants of $800,000.

24

On December 18, 2018, we received gross proceeds of $90,000 from the exercise of 90 warrants issued in our May 2018 public offering into 90 shares of Preferred Stock.

Because we currently do not generate revenue, we must obtain additional financing to continue operations at our current level. We currently do not have enough cash on hand to fund our contemplated two-plane test, and we are unable to predict for how long our cash on hand will fund our current operations. We believe that we will be able to secure additional private and public financing in the future. We can give no assurance that we can obtain any additional financing, or if such financing is available, that it would be available on terms generally as favorable as terms of recent financings. We believe our ability to secure such additional funding has been made more difficult by recent declines in the trading price of our common stock and the drastic increase in the number of shares outstanding resulting from conversions of the Preferred Stock by the holders thereof at conversation prices unfavorable to us due to the market-price-based nature of the conversation formula.

Unless we are able to raise additional capital or begin to generate sufficient revenues to finance operations as a going concern, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to cease operations if additional financing is not available. In addition to our burn rate and ongoing research and development expenses, we anticipate expending significant funds in connection with a contemplated two-plane test utilizing two Cessnas (or equivalent planes) installed with Infinitus technology incorporating the free space optic links underlying the Company’s patent application filed on July 25, 2017, and a larger airborne test involving up to 20 commercial aircraft, assuming that sufficient progress has been made in the relevant software and hardware development and that we are able to obtain additional funding. In light of the issues we recently experienced in connection with integrating the manufactured lasers into Infinitus, we are currently unable to predict when, or if, the two-plane test will occur.

The following table sets forth certain information about our cash flows during the three months ended November 30, 2018 and 2017:

	Three Months Ended
	November 30,
Cash Flow Data:	2018			2017			Changes
Cash Flows used in Operating Activities	$	(775,475	)	$	(2,777,945	)	$	2,002,470
Cash Flows used in Investing Activities		-			(8,456	)		8,456
Cash Flows provided by Financing Activities		750,000			2,733,000			(1,983,000	)
Net Change in Cash	$	(25,475	)	$	(53,401	)	$	27,926

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the three months ended November 30, 2018, net cash flows used in operating activities were $775,475, consisting of a net loss of $9.8 million and net gain on change in fair value of derivative liabilities of $234,892, offset by stock-based compensation of $4.3 million, amortization of debt discount of 514,429, depreciation of $3,124, and was decreased from a net change in operation assets and liabilities of $4.4 million. Unless and until we generate revenue from Infinitus, we expect to continue to generate net losses.

For the three months ended November 30, 2017, net cash flows used in operating activities were $2,777,945, consisting of a net loss of $10,056,696, which was reduced by adding back stock-based compensation of $5,962,525, loss on change in fair value of derivative liabilities of $535,068, amortization of debt discount of $953,451, depreciation of $2,088 and was increased from a net change in operating assets and liabilities of $174,381. Unless and until we general revenue from Infinitus, we expect to continue to generate net losses.

25

Cash Flows from Investing Activities

For the three months ended November 30, 2018, we did not have investing activities.

For the three months ended November 30, 2017, we acquired $8,456 of office and computer equipment.

Cash Flows from Financing Activities

For the three months ended November 30, 2018, net cash flows provided by financing activities was $750,000, consisting of proceeds from Preferred Stock issued from the exercise of warrants of $800,000, and was offset by repayment of convertible notes of $50,000.

For the three months ended November 30, 2017, net cash flows provided by financing activities was $2,733,000, consisting of proceeds from issuance of convertible notes of $2,249,000 and proceeds from issuance of common stock and warrants of $484,000.

Off Balance Sheet Arrangements

Our Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Application of Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact on our business operations and any associated risks related to these policies are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported or expected financial results.

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

The material estimates for our Company are that of income tax valuation allowance recorded for deferred tax assets and stock-based compensation. We recorded stock-based compensation for options and warrants issued and the fair value of embedded conversion options that are convertible into a variable amount of shares. The fair values of options, warrants, and embedded conversion options are determined using the Black-Scholes option pricing model. We have no historical data on the accuracy of these estimates. The estimated sensitivity to change is related to the various variables of the Black-Scholes option pricing model stated below. The specific quantitative variables are included in the notes to the financial statements. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the expected life, dividend yield, expected volatility, and risk-free interest rate weighted-average assumptions used for options and warrants granted. Expected volatility for 2018 and 2017 was estimated using our common stock for convertible notes and the average historical volatility of three public companies offering services similar to ours for warrants and stock options. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of options is based on the life of the instrument on the grant date.

Basis of Accounting and Going Concern

Our unaudited condensed financial statements have been prepared on the accrual basis of accounting in conformity with GAAP. In addition, the accompanying unaudited condensed financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We generated accumulated losses of approximately $92 million through November 30, 2018 and have insufficient working capital and cash flows to support operations. These factors raise substantial doubt about our ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from this uncertainty.

26

Research and Development Expenses

We follow ASC 730-10, ”Research and Development,” and expense research and development costs when incurred. Accordingly, third-party research and development costs, including designing, prototyping and testing of product, are expensed when the contracted work has been performed or milestone results have been achieved. Indirect costs are allocated based on percentage usage related to the research and development. Research and development costs of $55,141 and $285,889 were incurred for the three months ended November 30, 2018 and 2017, respectively.

Stock-Based Compensation

ASC 718, “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

Our Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Stock-based compensation of $4,310,328 and $5,962,525 were incurred for the three months ended November 30, 2018 and 2017, respectively.

Recent accounting pronouncements

Management has considered all recent accounting pronouncements issued. Management believes that these recent pronouncements will not have a material effect on our Company’s financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by the SEC’s rules and forms and that such information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of November 30, 2018. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as a result of the previously reported material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of November 30, 2018.

27

Material Weaknesses in Internal Control Over Financial Reporting and Remediation Measures

As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2018, management identified the following material weaknesses in our internal control over financial reporting:

(1)	Management override of controls;
(2)	absent or inadequate segregation of duties within a significant account or process;
(3)	inadequate design of monitoring controls used to assess the design and operating effectiveness of the entitiy’s internal control over time.

The Company continues to work on remediation measures for the above weaknesses. However, the material weaknesses will not be considered fully remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As management continues to evaluate and work to improve internal control over financial reporting, the Company may decide to take additional measures to address control deficiencies or decide to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

Changes in Internal Control Over Financial Reporting

Except as related to the material weaknesses and remedial measures described above, there have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended November 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

28

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, other than as set forth below, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition or results of operations.

On January 2, 2018, the Company, J. Edward Daniels, the Company’s transfer agent and certain other individuals were named as defendants in a lawsuit filed in the Central District of California captioned The Alliance for Education, Inc. v. Airborne Wireless Network, Inc. et al., Case No. 2:18-cv-20. The complaint makes fraud and conversion claims against the Company, and a breach of fiduciary duty claim against Mr. Daniels, alleging that the defendants wrongfully deprived the plaintiff of certain stock certificates representing shares of the Company’s common stock, and seeks monetary damages, a judicial declaration regarding the ownership of the share certificates at issue, an injunction that the certificates at issue be returned or reissued to the plaintiff and costs and attorneys’ fees. The outcome of this lawsuit is uncertain. The Company believes that the claims asserted are without merit.

On November 15, 2018, the Company was named as a defendant in Neutron Media, Inc. v. Airborne Wireless Network, a complaint filed in the Ventura County Superior Court in California. Neutron Media, Inc., the plaintiff, seeks money damages in connection with the alleged breach by the Company of an advertising package contract. The contract at issue provides that in exchange for payment, the plaintiff would provide the Company a 30-second spot looping a minimum of three times per hour, for a total of 90 seconds per hour, airing 20 hours per day, from 6:00 am to 2:00 am, over an 89-day period, on The 1500 Broadway Spectacular, a 56 foot-by-29 foot viewing space. Neutron Media, Inc. alleges that it performed all conditions of the contract, but that the Company had breached the agreement by failing to provide payment. By agreement, the Company’s response date has been extended to January 11, 2019. The parties are currently meeting and conferring over the issue of forum non conveniens due to a mandatory forum selection clause contained in the subject contract. The outcome of this lawsuit is uncertain. The Company believes that the claims asserted are without merit.

Item 1A. Risk Factors

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended November 30, 2018, the Company issued 257,544,764 shares of common stock upon the conversion of convertible notes in the aggregate principal amount and accrued interest of $47,187. The convertible notes were originally offered and sold to the holders thereof in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D, and the issuance of the shares upon conversion of such notes were similarly exempt from registration.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

29

Item 6. Exhibits

The following exhibits are filed herewith or incorporated by reference to exhibits previously filed with the SEC.

Exhibit		INCORPORATED BY REFERENCE
Number	Exhibit Description	Form	Exhibit	Filing Date
3.1	Amended and Restated Articles of Incorporation, effective as of July 31, 2017	8-K	3.1	08/01/2017
3.2	Certificate of Amendment to Articles of Incorporation, filed June 18, 2018	8-K	3.1	06/20/2018
3.3	Certificate of Amendment to Articles of Incorporation, filed June 28, 2018	8-K	3.1	06/29/2018
3.4	Certificate of Change, filed August 22, 2018	8-K	3.1	08/24/2018
3.5	Certificate of Designation for Series A Convertible Preferred Stock	8-K	3.1	05/29/2018
3.6	Amended and Restated Bylaws effective as of July 30, 2017	8-K	3.2	08/01/2017
10.1	Exercise Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Sabby Volatility Warrant Master Fund, Ltd.	8-K	10.1	10/17/2018
10.2	Exercise Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Ionic Ventures LLC	8-K	10.2	10/17/2018
10.3	Lock-up Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Sabby Volatility Warrant Master Fund, Ltd.	8-K	10.3	10/17/2018
10.4	Lock-up Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Ionic Ventures LLC	8-K	10.4	10/17/2018
10.5	Lock-up Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Anson Funds Management LP	8-K	10.5	10/17/2018
10.6	Lock-up Agreement, dated as of October 17, 2018, between Airborne Wireless Network and Hudson Bay Master Fund Ltd.	8-K	10.6	10/17/2018
10.7	Lock-up Agreement, dated as of October 17, 2018, between Airborne Wireless Network and YA II PN, Ltd.	8-K	10.7	10/17/2018
10.8	Exercise Agreement, dated as of December 17, 2018, between Airborne Wireless Network and Sabby Volatility Warrant Master Fund, Ltd.	8-K	10.1	12/18/2018
10.9	Lock-up Agreement, dated as of December 12, 2018, between Airborne Wireless Network and Anson Funds Management LP	8-K	10.2	12/18/2018
10.10	Lock-up Agreement, dated as of December 12, 2018, between Airborne Wireless Network and Hudson Bay Master Fund Ltd.	8-K	10.3	12/18/2018
10.11	Lock-up Agreement, dated as of December 12, 2018, between Airborne Wireless Network and Ionic Ventures LLC	8-K	10.4	12/18/2018
10.12	Lock-up Agreement, dated as of December 13, 2018, between Airborne Wireless Network and YA II PN, Ltd.	8-K	10.5	12/18/2018
31.1*	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2*	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1*	Section 1350 Certification of Chief Executive Officer
32.2*	Section 1350 Certification of Chief Financial Officer
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

______

* Filed herewith.

† Management contract or plan.

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AIRBORNE WIRELESS NETWORK
Dated: January 9, 2019	By:	/s/ Kevin L. Spence
		Kevin L. Spence
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer) (duly authorized officer)

31

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Warren, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Airborne Wireless Network;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: January 9, 2019

/s/ Michael J. Warren

Michael J. Warren

Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin L. Spence, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Airborne Wireless Network;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 9, 2019

/s/ Kevin L. Spence

Kevin L. Spence 

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Michael J. Warren, Chief Executive Officer, of Airborne Wireless Network, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the quarterly report on Form 10-Q of Airborne Wireless Network for the period ended November 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Airborne Wireless Network

Date: January 9, 2019

/s/ Michael J. Warren

Michael J. Warren

Chief Executive Officer and Director

(Principal Executive Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Airborne Wireless Network and will be retained by Airborne Wireless Network and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Kevin L. Spence, Chief Financial Officer, of Airborne Wireless Network, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the quarterly report on Form 10-Q of Airborne Wireless Network for the period ended November 30, 2018 (the ”Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Airborne Wireless Network

Date: January 9, 2019

/s/ Kevin L. Spence

Kevin L. Spence

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Airborne Wireless Network and will be retained by Airborne Wireless Network and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	3 Months Ended
	Nov. 30, 2018	Jan. 04, 2019
Document and Entity Information:
Entity Registrant Name	AIRBORNE WIRELESS NETWORK
Entity Central Index Key	0001537258
Trading Symbol	abwn
Current Fiscal Year End Date	--08-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		3,327,404,310
Document Type	10-Q
Document Period End Date	Nov. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Small Business	true
Entity Emerging Growth Company	false

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BALANCE SHEETS - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Current Assets
Cash and cash equivalents	$ 130,513	$ 155,988
Prepaid expenses and other assets	128,953	1,019,650
Total Current Assets	259,466	1,175,638
Property and equipment, net	31,486	34,610
Total Assets	290,952	1,210,248
Current Liabilities
Accounts payable and accrued liabilities	8,411,333	4,909,419
Accrued interest	103,919	67,157
Convertible notes payable, net of unamortized debt discount of $349,422 and $863,852, respectively	1,406,583	976,229
Derivative liabilities	3,105,129	4,494,698
Total Current Liabilities	13,026,964	10,447,503
Total Liabilities	13,026,964	10,447,503
Stockholders' Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized. Series A Convertible Preferred Stock, $0.001 par value, $1,150 stated value, 1,000,000 shares authorized; 1,099 and 1,048 shares issued and outstanding as of November 30, 2018 and August 31, 2018, respectively	1	1
Common stock, $0.001 par value, 5,000,000,000,000 shares authorized; 2,937,101,278 and 684,342 shares issued and outstanding as of November 30, 2018 and August 31, 2018, respectively	2,937,101	684
Additional paid-in capital	107,949,888	104,574,113
Accumulated deficit	(123,623,002)	(113,812,053)
Total Stockholders' Deficit	(12,736,012)	(9,237,255)
Total Liabilities and Stockholders' Deficit	$ 290,952	$ 1,210,248

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BALANCE SHEETS (Parentheticals) - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Unamortized debt discount (in dollars)	$ 349,422	$ 863,852
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	5,000,000,000,000	5,000,000,000,000
Common stock, shares issued	2,937,101,278	684,342
Common stock, shares outstanding	2,937,101,278	684,342
Series A Convertible Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, stated value per share	$ 1,150	$ 1,150
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	1,099	1,048
Preferred stock, shares outstanding	1,099	1,048

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STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Income Statement [Abstract]
Revenue	$ 0	$ 0
Operating Expenses
Marketing and branding	3,231,383	1,089,280
Depreciation	3,124	2,088
General and administrative expenses	157,200	114,742
Professional fees	1,502,768	857,285
Research and development	55,141	285,889
Salaries and wages	221,594	229,215
Stock based compensation	4,310,328	5,962,525
Total operating expense	9,481,538	8,541,024
Operating Loss	(9,481,538)	(8,541,024)
Other income (expense)
Interest expense	(564,303)	(980,604)
Net change in fair value of derivative liabilities including day one losses	234,892	(535,068)
Total other expense	(329,411)	(1,515,672)
Net Loss	$ (9,810,949)	$ (10,056,696)
Net loss per common share - basic and diluted (in dollars per share)	$ (0.01)	$ (3,296)
Weighted average number of common shares outstanding (in shares)	761,133,987	3,051

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STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($)	Series A Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Aug. 31, 2017		$ 3	$ 37,235,403	$ (37,128,829)	$ 106,577
Balance (in shares) at Aug. 31, 2017		3,022
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Preferred stock units issued for cash	$ 8		6,714,479		6,714,487
Preferred stock units issued for cash (in shares)	8,000
Common stock converted from preferred stock	$ (8)	$ 557	(549)
Common stock converted from preferred stock (in shares)	(7,552)	557,351
Preferred stock units issued from the exercise of warrants	$ 1		599,999		600,000
Preferred stock units issued from the exercise of warrants (in shares)	600
Common stock units issued for cash		$ 3	1,174,996		1,174,999
Common stock units issued for cash (in shares)		3,178
Common stock issued for exercise of warrants			1,657,125		1,657,125
Common stock issued for exercise of warrants (in shares)		84
Common stock issued for services		$ 33	3,394,055		3,394,088
Common stock issued for services (in shares)		32,884
Common stock issued in conjunction with convertible notes			1,840,742		1,840,742
Common stock issued in conjunction with convertible notes (in shares)		53
Common stock issued for conversion of convertible notes		$ 88	4,403,137		4,403,225
Common stock issued for conversion of convertible notes (in shares)		87,770
Stock options issued to employees and consultants			26,846,659		26,846,659
Net change of derivative liability from exercise of warrants			1,050,554		1,050,554
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes			6,857,743		6,857,743
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock			12,799,770		12,799,770
Net loss				(76,683,224)	(76,683,224)
Balance at Aug. 31, 2018	$ 1	$ 684	104,574,113	(113,812,053)	(9,237,255)
Balance (in shares) at Aug. 31, 2018	1,048	684,342
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock converted from preferred stock	$ (1)	$ 2,632,629	(2,632,628)
Common stock converted from preferred stock (in shares)	(749)	2,632,629,380
Preferred stock units issued from the exercise of warrants	$ 1		799,999		800,000
Preferred stock units issued from the exercise of warrants (in shares)	800
Common stock issued for services		$ 46,243	(28,093)		18,150
Common stock issued for services (in shares)		46,242,792
Common stock issued for conversion of convertible notes		$ 257,545	(210,358)		47,187
Common stock issued for conversion of convertible notes (in shares)		257,544,764
Stock options issued to employees and consultants			4,292,178		4,292,178
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes			122,122		122,122
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock			1,032,555		1,032,555
Net loss				(9,810,949)	(9,810,949)
Balance at Nov. 30, 2018	$ 1	$ 2,937,101	$ 107,949,888	$ (123,623,002)	$ (12,736,012)
Balance (in shares) at Nov. 30, 2018	1,099	2,937,101,278

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STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,810,949)	$ (10,056,696)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	3,124	2,088
Stock-based compensation	4,310,328	5,962,525
Amortization of debt discount included in interest expense	514,429	953,451
Change in fair value of derivative liabilities	(234,892)	535,068
Changes in operating assets and liabilities:
Prepaid expenses and other assets	890,697	(359,956)
Accounts payable and accrued liabilities	3,501,914	158,422
Accrued interest	49,874	27,153
Net Cash Used in Operating Activities	(775,475)	(2,777,945)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(8,456)
Net Cash Used in Investing Activities		(8,456)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes, net		2,249,000
Repayment of convertible notes	(50,000)
Proceeds from issuance of common stock units		484,000
Preferred stock units issued from the exercise of warrants	800,000
Net Cash Provided by Investing Activities	750,000	2,733,000
Net change in cash and cash equivalents	(25,475)	(53,401)
Cash and cash equivalents, beginning of period	155,988	217,694
Cash and cash equivalents, end of period	130,513	164,293
Supplemental cash flow information:
Cash paid for interest	0	0
Cash paid for taxes		800
Non-cash financing transactions:
Derivative liabilities recognized as debt discount		479,762
Common stock issued for conversion of debt	47,187
Common stock issued for conversion of preferred stock	2,632,629
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes	122,122
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock	$ 1,032,555
Reclassification to derivative liability from additional paid in capital due to warrants		2,078,065
Addition of new derivative liabilities recognized upon issuance of warrants		238,701
Original issuance discount and deferred financing cost		$ 341,125

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ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

3 Months Ended

Nov. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

Airborne Wireless Network (the “Company”) is a Nevada corporation incorporated on January 5, 2011 under the name Ample-Tee. Effective on May 19, 2016, the Company’s corporate name was changed to Airborne Wireless Network. It is based in Simi Valley, California, USA. The Company’s fiscal year end is August 31.

We are an early stage company with the principal business strategy of developing, marketing and licensing a fully meshed, high-speed broadband airborne wireless network by linking commercial aircraft in flight. We call this network the “Infinitus Super Highway^SM” (“Infinitus”).

Amended and Restated Articles of Incorporation

On June 28, 2018, the stockholders of the Company approved an amendment (the “Amendment”) to the Company’s Amended and Restated Articles of Incorporation (as amended to date, the “Articles”) that increased the number of authorized shares of stock and granted the Company the right to effect up to five reverse stock splits of all of the Company’s issued and outstanding common stock. The number of shares of stock authorized under the Articles prior to the Amendment was 360,000,000, of which 350,000,000 were designated as common stock and 10,000,000 were designated as preferred stock. After giving effect to the Amendment, the number of authorized shares of all classes of stock the Company has authority to issue is 5,000,010,000,000, of which 5,000,000,000,000 are be designated as common stock and 10,000,000 are designated as preferred stock. Under the Amendment, the board of directors of the Company can effect up to five separate reverse splits of the Common Stock, each to be in a ratio of up to thirty thousand (30,000) to one (1), with any fractional shares to be rounded up to the next whole share, or paid in cash. Effective August 24, 2018, the Company effected a 30,000-for-one reverse stock split. All shares of common stock, the number of shares underlying options, warrants and other convertible securities and the per-share exercise price of such options, warrants and convertible securities disclosed in the financial statements retroactively reflect this reverse stock split.

Going concern

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the Company’s continuation as a going concern. The Company incurred operating losses of $9,810,949 during the period ended November 30, 2018 and has an accumulated deficit of $123,623,002 as of November 30, 2018.

There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.

Due to uncertainties related to these matters, there exists a substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited interim financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation of Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended November 30, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, 2019. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2018 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended August 31, 2018 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on November 14, 2018.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following table summarizes fair value measurements by level at November 30, 2018, and August 31, 2018, measured at fair value on a recurring basis:

November 30, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	3,105,129	$	3,105,129

August 31, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	4,494,698	$	4,494,698

Research and Development Expenses

We follow ASC 730-10, ”Research and Development,” and expense research and development costs when incurred. Accordingly, third-party research and development costs, including designing, prototyping and testing of product, are expensed when the contracted work has been performed or milestone results have been achieved. Indirect costs are allocated based on percentage usage related to the research and development. Research and development costs of $55,141 and $285,889 were incurred for the three months ended November 30, 2018 and 2017, respectively.

Stock-Based Compensation

ASC 718, ”Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, ”Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Stock-based compensation incurred for the three months ended November 30, 2018 and 2017, respectively, are summarized as follows:

	November 30,
	2018		2017
Stock options issued to employees, strategic service provider and consultants	$	4,292,178	$	5,545,200
Stock warrants issued to investors and consultants		-		186,968
Common stock issued to strategic service providers and consultants		18,150		230,357
Total	$	4,310,328	$	5,962,525

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating the effect, if any, that the ASU will have on its financial statements.

Management has considered all other recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s unaudited interim financial statements.

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PREPAID EXPENSES

3 Months Ended

Nov. 30, 2018

Prepaid Expense, Current [Abstract]

PREPAID EXPENSES

NOTE 3 – PREPAID EXPENSES

Prepaid expenses relate to prepayment made for future services in advance and will be expensed over time as the benefit of the services is received in the future, expected within one year.

Prepaid expenses consisted of the following at November 30, 2018 and August 31, 2018:

	November 30,		August 31,
	2018		2018
Legal and regulatory fees	$	108,258	$	255,500
Marketing and branding		4,500		712,900
Rent expense		9,020		22,550
Professional fees		7,175		28,700
	$	128,953	$	1,019,650

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

3 Months Ended

Nov. 30, 2018

Accounts Payable and Accrued Liabilities [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at November 30, 2018 and August 31, 2018:

	November 30,		August 31,
	2018		2018
Trade Payables	$	8,302,628	$	4,796,784
Credit Card Payable		38,745		37,675
Other Payable		69,960		74,960
Total	$	8,411,333	$	4,909,419

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EQUITY

3 Months Ended

Nov. 30, 2018

Stockholders' Equity Note [Abstract]

EQUITY

NOTE 5 – EQUITY

Authorized Stock

The Company is authorized to issue an aggregate of 5,000,000,000,000 common shares and 10,000,000 shares of preferred stock, each with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.

Series A Convertible Preferred stock

The Company is authorized to issue 1,000,000 shares of Series A Convertible Preferred Stock at a par value of $0.001 and a stated value equal to $1,150 per share.

· The Series A Convertible Preferred Stock ranks senior to our common stock and other classes of capital stock with respect to dividend and redemption.

· Holders of the Series A Convertible Preferred Stock will only be entitled to receive any dividends on the Series A Preferred Stock when, as and if the board of directors declares such dividends.

· The Series A Convertible Preferred Stock is convertible into shares of common stock by dividing the stated value per share ($1,150) by the lesser of $0.71 per share or 82.5% of the lowest volume weighted average price for our common stock as reported at the close of trading on the market reporting trade prices for the common stock during the five trading days ending on and including the day the notice of conversion is delivered.

· A holder of Series A Convertible Preferred Stock has the same voting rights as a holder of common stock on a fully converted basis not to exceed the beneficial ownership limitation.

On May 29, 2018, the Company issued 8,000 units for aggregate net proceeds of $6.7 million, after deducting underwriting discounts and other expenses of the offering. Each unit consisted of one share of Series A Preferred Stock, one Series 1 warrant to purchase one share of Series A Preferred Stock, one Series 2 warrant to purchase one share of Series A Preferred Stock and one Series 3 warrant to purchase one share of Series A Preferred Stock (“Series 1, 2 and 3 warrants”). The Company also issued to the underwriter of the offering a warrant to purchase 640 units.

The Company determined that the Series A Convertible Preferred Stock qualifies for derivative accounting which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options (See Note 8).

During the three months ended November 30, 2018, 749 shares of Series A Convertible Preferred Stock were converted into 2,632,629,380 shares of common stock.

As of November 30, 2018, and August 31, 2018, 1,099 and 1,048 shares of Series A Convertible Preferred Stock were issued and outstanding, respectively.

Warrants Exercisable into Preferred A Stock

Each warrant is immediately exercisable into one share of Series A Convertible Preferred Stock at a price of $1,000 per share. The Series 1 Warrants will expire on the 90-day anniversary of the issuance date. The Series 2 Warrants will expire on the six-month anniversary of the issuance date. The Series 3 Warrants will expire on the 12-month anniversary of the issuance date. During the three months ended November 30, 2018, the Company amended the expiry date of Series 1, 2 and 3 warrant to May 29, 2019.

The below table summarizes warrant activity during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Number of warrants								Weighted- Average Exercise Price
	Series 1		Series 2			Series 3			Series 1		Series 2		Series 3
Balances as of August 31, 2018		7,500		7,900			8,000		$	1,000	$	1,000	$	1,000
Granted		-		-			-			-		-		-
Exercised		-		(200	)		(600	)		1,000		1,000		1,000
Forfeited		-		-			-			-		-		-
Balances as of November 30, 2018		7,500		7,700			7,400		$	1,000	$	1,000	$	1,000

The following table summarizes information relating to outstanding and exercisable warrants as of November 30, 2018:

	Warrants Outstanding						Warrants Exercisable
			Weighted Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
	of Shares		life (in Months)		Exercise Price		of Shares		Exercise Price
Series 1		7,500		5.92	$	1,000		7,500	$	1,000
Series 2		7,700		5.92	$	1,000		7,700	$	1,000
Series 3		7,400		5.92	$	1,000		7,400	$	1,000

During the three months ended November 30, 2018, 200 Series 2 warrants were exercised into 200 shares of Series A Convertible Preferred Stock and 600 Series 3 warrants were exercised into 600 shares of Series A Convertible Preferred Stock.

Common stock

Issuances

During the three months ended November 30, 2018, the Company issued 2,936,416,936 shares of common stock, as follows:

· 46,242,792 shares of common stock to strategic service providers, for services valued at $18,150.

· 2,632,629,380 shares of common stock issued for the conversion of 749 shares of Series A Convertible Preferred Stock.

· 257,544,764 shares of common stock issued upon the conversion of convertible notes in aggregate principal amount of $34,075 and accrued interest of $13,112.

As at November 30, 2018 and August 31, 2018, the Company had 2,937,101,278 and 684,342 shares of common stock issued and outstanding, respectively.

Warrants Exercisable to Common Shares

The below table summarizes the activity of warrants exercisable for common shares during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Number of Shares			Weighted- Average Exercise Price
Balances as of August 31, 2017		119		$	48,900
Granted		3,513			4,505
Exercised		(92	)		40,823
Forfeited		(231	)		46,862
Balances as of August 31, 2018		3,309		$	1,196
Granted		3			57,000
Exercised		-			-
Forfeited		-			-
Balances as of November 30, 2018		3,312		$	2,196

The fair value of each warrant on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for options granted during the year ended August 31, 2018:

	Year Ended
	August 31,
	2018
Exercise price	$10.2 - $97,500
Expected term	1.49 - 5 years
Expected average volatility	124%-354%
Expected dividend yield	-
Risk-free interest rate	0.98% - 2.83%

The following table summarizes information relating to outstanding and exercisable warrants as of November 30, 2018:

Warrants Outstanding						Warrants Exercisable
		Weighted Average		Weighted				Weighted
Number		Remaining Contractual		Average		Number		Average
of Shares		life (in years)		Exercise Price		of Shares		Exercise Price
	3,312		2.64	$	2,196		3,312		2,196

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at November 30, 2018 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of November 30, 2018, the aggregate intrinsic value of warrants outstanding was approximately $0 based on the closing market price of $0.0001 on November 30, 2018.

The Company determined that the warrants qualify for derivative accounting as a result of the related issuances of convertible notes, which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options.

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STOCK COMPENSATION PLANS

3 Months Ended

Nov. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK COMPENSATION PLANS

NOTE 6 – STOCK COMPENSATION PLANS

In the ordinary course of business, the Company may issue stock options to employees, officers and directors from time to time. Fair values of the stock option awards are based on the associated value of the services rendered, where reasonably determinable.

Equity Compensation not approved by security holders

During the three months ended November 30, 2018 and the year ended August 31, 2018, options to purchase 0 and 339 shares of our common stock, respectively, had been granted to our employees, officers and directors under equity compensation not approved by security holders.

Options issued had the following terms:

	Year Ended
	August 31,
	2018
Exercise price	$15,000 - $97,500
Time to vest	On issuance – 4 years
Expiration after vesting	5 years

2017 Equity Incentive Plan

On July 30, 2017, the Board of Directors of the Company approved, and on July 31, 2017 the stockholders of the Company approved, the Airborne Wireless Network 2017 Stock Option Plan (the “2017 Plan”). The 2017 Plan permits the Company to issue up to 334 shares of common stock upon exercise of options granted to selected employees, officers, directors, consultants and advisers. The options may be either “incentive stock options” (as such term is defined in the Internal Revenue Code of 1986) or options that are not intended to qualify as “incentive stock options” (these are referred to as “non-qualified options”). Incentive stock options may be granted only to employees. The 2017 Plan is administered by the Board or, at the discretion of the Board, a Board committee. The administrator determines who will receive options and the terms of the options, including the exercise price, expiration date, vesting and the number of shares. The exercise price of each stock option may not be less than the fair market value of the Common Stock on the date of grant, although the exercise price of any incentive stock option granted to a 10% stockholder may not be less than 110% of the fair market value on the grant date. Options may be exercisable (“vest”) immediately or in increments based on time and/or performance criteria as determined by the administrator. The term of any option may not exceed 10 years (five years for any incentive stock option granted to a 10% stockholder), and unless otherwise determined by the administrator, each option must terminate no later than three months after the termination of the optionee’s employment (one year in the event of death or disability). Subject to a few minor exceptions, options may not be transferred other than by will or by the laws of descent and distribution. The 2017 Plan will expire on December 31, 2026.

On December 30, 2017, the Company granted options to directors (see below) to purchase an aggregate of 14 shares of our common stock at a price of $59,400 per share vesting immediately on December 31, 2017. The options expire December 29, 2022, unless such director ceases his or her service as a director prior the exercise or expiration of the option.

As of November 30, 2018, there were 320 shares available for future grant under the 2017 Plan.

Stock Options

During the three months ended November 30, 2018, the Company did not grant options and during the year ended August 31, 2018, the Company granted options with an aggregate fair value of $19,412,264, which are being amortized into compensation expense over the vesting period of the options as the services are being provided.

The following is a summary of stock option activity during the three months ended November 30, 2018 and the year ended August 31, 2018:

	Options Outstanding
	Number of Shares			Weighted- Average Exercise Price		Fair Value on Grant Date			Intrinsic Value
Balances as of August 31, 2017		946			98,700		35,864,990			-
Granted		339			66,000		19,412,264			-
Exercised		-			-		-			-
Forfeited		(2	)		37,200		(67,894	)		-
Balances as of August 31, 2018		1,283		$	58,500	$	55,209,360		$	-
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		-			-		-			-
Balances as of November 30, 2018		1,283		$	58,504	$	55,209,360		$	-

The following table summarizes information relating to exercisable stock options as of November 30, 2018:

Options Exercisable
Number of Shares		Weighted Average Exercise Price
	660	$	45,979

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options exercisable at November 30, 2018. As of November 30, 2018, the aggregate intrinsic value of stock options outstanding was $0 based on the closing market price of $0.0001 on November 30, 2018.

Weighted-average grant-date fair value for non-vested stock options as of November 30, 2018 and August 31, 2018 were listed as follows:

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested, August 31, 2017		809		$	38,100
Granted		339			57,300
Vested		(473	)		43,800
Forfeited		-			-
Unvested, August 31, 2018		675		$	43,800
Granted		-			-
Vested		(52	)		37,500
Forfeited		-			-
Unvested, November 30, 2018		623		$	43,800

The fair value of each option on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for options granted during the year ended August 31, 2018 and 2017:

	Year Ended
	August 31,
	2018	2017
Expected term	3.59 - 5.98 years	4.59 - 6.43 years
Expected average volatility	175% - 176%	179% - 183%
Expected dividend yield	-	-
Risk-free interest rate	2.20% - 2.35%	1.17% - 2.25%

The total fair values of stock options that vested during the period ended November 30, 2018 and year ended August 31, 2018 were $2,510,847 and $18,112,430, respectively.

As of November 30, 2018, there was $7,831,411 of total unrecognized compensation cost related to non-vested stock options granted. The Company expects to recognize that cost over a remaining weighted average vesting period of 0.55 years as of November 30, 2018.

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CONVERTIBLE NOTES

3 Months Ended

Nov. 30, 2018

Debt Disclosure [Abstract]

CONVERTIBLE NOTES

NOTE 7 – CONVERTIBLE NOTES

The Company had the following principal balances under its convertible notes outstanding as of November 30, 2018 and August 31, 2018:

	November 30,			August 31,
	2018			2018
Convertible Notes - originated in October 2017	$	162,700		$	164,190
Convertible Notes - originated in December 2017		109,725			109,725
Convertible Notes - originated in January 2018		1,915			24,500
Convertible Notes - originated in March 2018		145,833			145,833
Convertible Notes - originated in April 2018		1,190,000			1,250,000
Convertible Notes - originated in May 2018		145,832			145,833
		1,756,005			1,840,081
Less debt discount and debt issuance cost		(349,422	)		(863,852	)
		1,406,583			976,229
Less current portion of convertible notes payable		(1,406,583	)		(976,229	)
Long-term convertible notes payable	$	-		$	-

The Company recognized amortization expense related to the debt discount and deferred financing fees of $514,429 and $953,451 for the three months ended November 30, 2018 and 2017, respectively, which is included in interest expense in the statements of operations.

For the three months ended November 30, 2018 and 2017, the interest expense on convertible notes was $49,874 and $27,153, respectively. As of November 30, 2018 and August 31, 2018, the accrued interest payable was $103,919 and $67,157, respectively.

Conversion

During the three months ended November 30, 2018, holders of certain of the convertible notes converted these notes with principal amounts of $34,075 and accrued interest of $13,112 into 257,544,764 shares of common stock. The corresponding derivative liability at the date of conversion of $122,122 was credited to additional paid in capital.

Convertible Notes – Issued during the year ended August 31, 2018

During the year ended August 31, 2018, the Company issued a total principal amount of $6,618,099 convertible notes for cash proceeds of $5,662,750, after deducting an original issuance discount of $629,099 and financing fees of $326,250. The convertible notes were also provided with a total of 53 common shares and warrants to purchase up to 25 shares of common stock at exercise prices ranging from $52,500 to $60,000 per share. The terms of convertible notes are summarized as follows:

· Term ranging from six months to one year;

· Annual interest rates ranging from 0% to 12%;

· Convertible at the option of the holders either at issuance or 180 days from issuance; and

· Conversion prices are typically based on 55% or 70% of the lowest trading prices of the Company’s shares during 20-25 days prior to the conversion.

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DERIVATIVE LIABILITIES

3 Months Ended

Nov. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITIES

NOTE 8 – DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants and Series A Convertible Preferred Stock as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of November 30, 2018. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in November 30, 2018 and August 31, 2018:

	Three months ended	Year Ended
	November 30,	August 31,
	2018	2018
Expected term	0.11 - 0.50 years	0.10 - 5.00 years
Expected average volatility	283% - 580%	49% - 350%
Expected dividend yield	-	-
Risk-free interest rate	2.31%-2.52%	0.98% - 2.83%

The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2018:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - August 31, 2018	$	4,494,698
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610
Derivative liabilities settled upon conversion of convertible notes		(122,122	)
Derivative liabilities settled upon conversion of convertible preferred stock		(1,032,555	)
Loss on change in fair value of the derivative liabilities		(1,341,502	)
Balance - November 30, 2018	$	3,105,129

The following table summarizes the (gain) loss on derivative liability included in the income statement for the three months ended November 30, 2018 and 2017, respectively.

	Three months ended
	November 30,
	2018			2017
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes	$	-		$	140,251
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610			-
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		-			859,488
(Gain) loss on change in fair value of the derivative liabilities		(1,341,502	)		(464,671	)
	$	(234,892	)	$	535,068

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Nov. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Anti-Dilution Agreements

Pursuant to our agreement with Jet Midwest Group, LLC entered into in October 2016, in consideration of the services to be provided by Jet Midwest Group, LLC, we issued to Jet Midwest Group, LLC 1,250,000 shares of common stock representing 1.6% of our common stock outstanding at that date. The agreement with Jet Midwest Group, LLC provides full ratchet anti-dilution protection to Jet Midwest Group, LLC. As a result, each time we issue additional shares of common stock or shares of another class or series of capital stock, we will issue to Jet Midwest Group, LLC without further consideration additional shares of our common stock or other class or series of capital stock so that Jet Midwest Group, LLC will continue to own 1.6% of the outstanding shares of common stock and each other class or series of capital stock. Through November 30, 2018, we had issued 49 shares of common stock to Jet Midwest Group, LLC and were obligated to issue an additional 46,253,639 shares of common stock. After entering into the agreement with us, Jet Midwest Group, LLC sought protection from creditors under the bankruptcy code, which proceedings were subsequently dismissed. One of Jet Midwest Group, LLC’s creditors has claimed that shares of our common stock to be issued under the anti-dilution right should be issued to it instead of Jet Midwest Group, LLC. In light of this dispute and ongoing litigation between Jet Midwest Group, LLC and its creditors, the Company is evaluating its obligation to continue issuing shares to Jet Midwest Group, LLC.

Consulting agreement

On July 31, 2017, the Company engaged Brighton Capital, Ltd. (“Brighton”) for a three (3) year term to render strategic advisory services. Pursuant to our agreement with Brighton, in consideration of the services to be provided by Brighton, we are to issue 14 shares of common stock and 34 warrants over a three-year term. We issued 2 shares of common stock and 4 warrants upon execution of this agreement, and are to issue 1 shares of common stock and 1 warrant per month for thirty-six (36) months, with the first issuance beginning August 1, 2017. Through November 30, 2018, we had issued 18 shares of common stock and 20 warrants to purchase common stock to Brighton. The warrants, as issued, shall immediately vest and have a term of five (5) years with an exercise price of $57,000 per share. The warrants have a cashless exercise feature that can be utilized if the shares underlying the warrants cannot be resold under an effective registration statement filed with the Securities and Exchange Commission by March 1, 2018.

Other

On August 3, 2016, we acquired from Apcentive, Inc. (“Apcentive”) all of Apcentive’s right, title and interest in and to U.S. Patent No. 6,285,878 B1 and all related supporting materials, continuations, amendments, updates and contemplated updates and amendments and the trademark “Infinitus Super Highway^SM.” In consideration for the patent and the trademark, we issued a number of shares of our common stock to Apcentive and agreed to pay Apcentive a future royalty equal to 1.5% of the net cash we receive from the promotion, marketing, sale, licensing, distribution and other exploitation of the patent. We are further required to issue an additional 20 million shares of common stock to Apcentive if we do not spend, on matters relating to the patent and trademark, a cumulative total of $8 million on or before August 3, 2019. The purchase agreement requires that we spend at least $1 million on or before August 3, 2017 (which goal has been met), a total of at least $2 million on or before August 3, 2018 (which goal has been met) and a total of at least $5 million on or before August 3, 2019. As of November 30, 2018, the Company has not made a contingency for these events, but has expensed these costs, as incurred, which have exceeded the commitment.

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company'’s financial position.

Lease Commitment

In June 2016, we signed a lease agreement that commenced on July 1, 2016 for our corporate office headquarters with approximately 1,500 square feet, at 4115 Guardian Street, Simi Valley, California 93063. The lease expired on August 31, 2017 and our monthly rent was $1,750 (plus HVAC charges), payable in equal monthly installments. In August 2017, the lease was extended by two years commencing September 1, 2017 at $1,803 per month (plus HVAC charges) for the first year and $1,857 per month (plus HVAC charges) for the second year.

On February 1, 2018, the Company signed an operating lease for a residence to be used by our Chief Executive Officer, located in Moorpark, California. The lease term commenced on February 1, 2018 and expires on January 31, 2019. Our monthly rent is $4,510, payable in equal monthly installments. On February 1, 2018, the Company prepaid the $54,120, for the full term of the lease. As at November 30, 2018, we recognized $9,020 as a prepaid expense.

Total net rent expense related to our operating leases for the three months ended November 30, 2018 and 2017, was $5,570 and $5,355 respectively.

Future minimum payments under the non-cancelable portion of our operating leases as of August 31, 2018 are as follows:

Year ended August 31,
2019		22,284
Thereafter		-
Total	$	22,284

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SUBSEQUENT EVENTS

3 Months Ended

Nov. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 10 – SUBSEQUENT EVENTS

Subsequent to November 30, 2018 and through the date that these financials were made available, the Company had the following subsequent events:

On December 6, 2018, the Company issued 195,151,516 shares of common stock for the conversion of 14 shares of preferred stock.

On December 17, 2018, the Company and Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”) entered into that certain Exercise Agreement pursuant to which Sabby, which holds certain shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”) and warrants to purchase shares of the Preferred Stock, agreed to exercise a minimum of $90,000 of its warrants on or immediately following December 17, 2018. Under the terms of the Sabby Exercise Agreement, the Company also committed to not issue, sell or offer any securities without the consent of Sabby until 11:59 p.m. on January 9, 2019. On December 18, 2018, we received gross proceeds of $90,000 from the exercise of 90 warrants into 90 shares of Preferred Stock.

On December 28, 2018, the Company issued 195,151,516 shares of common stock for the conversion of 14 shares of preferred stock.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation of Interim Financial Statements

Basis of Presentation of Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended November 30, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, 2019. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2018 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended August 31, 2018 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on November 14, 2018.

Use of Estimates and Assumptions

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following table summarizes fair value measurements by level at November 30, 2018, and August 31, 2018, measured at fair value on a recurring basis:

November 30, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	3,105,129	$	3,105,129

August 31, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	4,494,698	$	4,494,698

Research and Development Expenses

Research and Development Expenses

We follow ASC 730-10, ”Research and Development,” and expense research and development costs when incurred. Accordingly, third-party research and development costs, including designing, prototyping and testing of product, are expensed when the contracted work has been performed or milestone results have been achieved. Indirect costs are allocated based on percentage usage related to the research and development. Research and development costs of $55,141 and $285,889 were incurred for the three months ended November 30, 2018 and 2017, respectively.

Stock-Based Compensation

Stock-Based Compensation

ASC 718, ”Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, ”Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Stock-based compensation incurred for the three months ended November 30, 2018 and 2017, respectively, are summarized as follows:

	November 30,
	2018		2017
Stock options issued to employees, strategic service provider and consultants	$	4,292,178	$	5,545,200
Stock warrants issued to investors and consultants		-		186,968
Common stock issued to strategic service providers and consultants		18,150		230,357
Total	$	4,310,328	$	5,962,525

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating the effect, if any, that the ASU will have on its financial statements.

Management has considered all other recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s unaudited interim financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

Schedule of fair value measurements on a recurring basis

November 30, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	3,105,129	$	3,105,129

August 31, 2018	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	4,494,698	$	4,494,698

Schedule of stock-based compensation

	November 30,
	2018		2017
Stock options issued to employees, strategic service provider and consultants	$	4,292,178	$	5,545,200
Stock warrants issued to investors and consultants		-		186,968
Common stock issued to strategic service providers and consultants		18,150		230,357
Total	$	4,310,328	$	5,962,525

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PREPAID EXPENSES (Tables)

3 Months Ended

Nov. 30, 2018

Prepaid Expense, Current [Abstract]

Schedule of prepaid expenses

	November 30,		August 31,
	2018		2018
Legal and regulatory fees	$	108,258	$	255,500
Marketing and branding		4,500		712,900
Rent expense		9,020		22,550
Professional fees		7,175		28,700
	$	128,953	$	1,019,650

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

3 Months Ended

Nov. 30, 2018

Accounts Payable and Accrued Liabilities [Abstract]

Schedule of accounts payable and accrued liabilities

	November 30,		August 31,
	2018		2018
Trade Payables	$	8,302,628	$	4,796,784
Credit Card Payable		38,745		37,675
Other Payable		69,960		74,960
Total	$	8,411,333	$	4,909,419

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EQUITY (Tables)

3 Months Ended

Nov. 30, 2018

Warrants Exercisable to Common Shares

Schedule of summary of warrant activity

	Number of Shares			Weighted- Average Exercise Price
Balances as of August 31, 2017		119		$	48,900
Granted		3,513			4,505
Exercised		(92	)		40,823
Forfeited		(231	)		46,862
Balances as of August 31, 2018		3,309		$	1,196
Granted		3			57,000
Exercised		-			-
Forfeited		-			-
Balances as of November 30, 2018		3,312		$	2,196

Schedule of weighted-average assumptions for options granted

	Year Ended
	August 31,
	2018
Exercise price	$10.2 - $97,500
Expected term	1.49 - 5 years
Expected average volatility	124%-354%
Expected dividend yield	-
Risk-free interest rate	0.98% - 2.83%

Schedule of outstanding and exercisable warrants

Warrants Outstanding						Warrants Exercisable
		Weighted Average		Weighted				Weighted
Number		Remaining Contractual		Average		Number		Average
of Shares		life (in years)		Exercise Price		of Shares		Exercise Price
	3,312		2.64	$	2,196		3,312		2,196

Warrants Exercisable into Preferred A Stock

Schedule of summary of warrant activity

	Number of warrants								Weighted- Average Exercise Price
	Series 1		Series 2			Series 3			Series 1		Series 2		Series 3
Balances as of August 31, 2018		7,500		7,900			8,000		$	1,000	$	1,000	$	1,000
Granted		-		-			-			-		-		-
Exercised		-		(200	)		(600	)		1,000		1,000		1,000
Forfeited		-		-			-			-		-		-
Balances as of November 30, 2018		7,500		7,700			7,400		$	1,000	$	1,000	$	1,000

Schedule of outstanding and exercisable warrants

	Warrants Outstanding						Warrants Exercisable
			Weighted Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
	of Shares		life (in Months)		Exercise Price		of Shares		Exercise Price
Series 1		7,500		5.92	$	1,000		7,500	$	1,000
Series 2		7,700		5.92	$	1,000		7,700	$	1,000
Series 3		7,400		5.92	$	1,000		7,400	$	1,000

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STOCK COMPENSATION PLANS (Tables)

3 Months Ended

Nov. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of options issued

	Year Ended
	August 31,
	2018
Exercise price	$15,000 - $97,500
Time to vest	On issuance – 4 years
Expiration after vesting	5 years

Schedule of stock option activity

	Options Outstanding
	Number of Shares			Weighted- Average Exercise Price		Fair Value on Grant Date			Intrinsic Value
Balances as of August 31, 2017		946			98,700		35,864,990			-
Granted		339			66,000		19,412,264			-
Exercised		-			-		-			-
Forfeited		(2	)		37,200		(67,894	)		-
Balances as of August 31, 2018		1,283		$	58,500	$	55,209,360		$	-
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		-			-		-			-
Balances as of November 30, 2018		1,283		$	58,504	$	55,209,360		$	-

Schedule of information relating to exercisable stock options

Options Exercisable
Number of Shares		Weighted Average Exercise Price
	660	$	45,979

Schedule of weighted-average grant-date fair value for non-vested stock options

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested, August 31, 2017		809		$	38,100
Granted		339			57,300
Vested		(473	)		43,800
Forfeited		-			-
Unvested, August 31, 2018		675		$	43,800
Granted		-			-
Vested		(52	)		37,500
Forfeited		-			-
Unvested, November 30, 2018		623		$	43,800

Schedule of weighted-average assumptions for options granted

	Year Ended
	August 31,
	2018	2017
Expected term	3.59 - 5.98 years	4.59 - 6.43 years
Expected average volatility	175% - 176%	179% - 183%
Expected dividend yield	-	-
Risk-free interest rate	2.20% - 2.35%	1.17% - 2.25%

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CONVERTIBLE NOTES (Tables)

3 Months Ended

Nov. 30, 2018

Debt Disclosure [Abstract]

Schedule of convertible notes payable outstanding

	November 30,			August 31,
	2018			2018
Convertible Notes - originated in October 2017	$	162,700		$	164,190
Convertible Notes - originated in December 2017		109,725			109,725
Convertible Notes - originated in January 2018		1,915			24,500
Convertible Notes - originated in March 2018		145,833			145,833
Convertible Notes - originated in April 2018		1,190,000			1,250,000
Convertible Notes - originated in May 2018		145,832			145,833
		1,756,005			1,840,081
Less debt discount and debt issuance cost		(349,422	)		(863,852	)
		1,406,583			976,229
Less current portion of convertible notes payable		(1,406,583	)		(976,229	)
Long-term convertible notes payable	$	-		$	-

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DERIVATIVE LIABILITIES (Tables)

3 Months Ended

Nov. 30, 2018

Derivative Instruments and Hedges, Liabilities [Abstract]

Schedule of weighted-average assumptions

	Three months ended	Year Ended
	November 30,	August 31,
	2018	2018
Expected term	0.11 - 0.50 years	0.10 - 5.00 years
Expected average volatility	283% - 580%	49% - 350%
Expected dividend yield	-	-
Risk-free interest rate	2.31%-2.52%	0.98% - 2.83%

Schedule of derivative liabilities included in the balance sheet

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - August 31, 2018	$	4,494,698
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610
Derivative liabilities settled upon conversion of convertible notes		(122,122	)
Derivative liabilities settled upon conversion of convertible preferred stock		(1,032,555	)
Loss on change in fair value of the derivative liabilities		(1,341,502	)
Balance - November 30, 2018	$	3,105,129

Schedule of (gain) loss on derivative liability included in the income statement

	Three months ended
	November 30,
	2018			2017
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes	$	-		$	140,251
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610			-
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		-			859,488
(Gain) loss on change in fair value of the derivative liabilities		(1,341,502	)		(464,671	)
	$	(234,892	)	$	535,068

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Nov. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum payments under the non-cancelable portion of our operating leases

Year ended August 31,
2019		22,284
Thereafter		-
Total	$	22,284

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ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN (Detail Textuals)	1 Months Ended	3 Months Ended		12 Months Ended
	Jun. 28, 2018 Split shares	Nov. 30, 2018 USD ($) shares	Nov. 30, 2017 USD ($)	Aug. 31, 2018 USD ($) shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
State of incorporation		Nevada
Date of incorporation		Jan. 05, 2011
Total number of share authorized	360,000,000	5,000,010,000,000
Common stock, shares authorized	350,000,000	5,000,000,000,000		5,000,000,000,000
Preferred stock, shares authorized	10,000,000	10,000,000		10,000,000
Number of reverse stock split | Split	5
Reverse split ratio		thirty thousand (30,000) to one (1)
Operating losses | $		$ (9,810,949)	$ (10,056,696)	$ (76,683,224)
Accumulated deficit | $		$ (123,623,002)		$ (113,812,053)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Recurring basis - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Liabilities
Derivative Liabilities	$ 3,105,129	$ 4,494,698
Level 1
Liabilities
Derivative Liabilities	0	0
Level 2
Liabilities
Derivative Liabilities	0	0
Level 3
Liabilities
Derivative Liabilities	$ 3,105,129	$ 4,494,698

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Accounting Policies [Abstract]
Stock options issued to employees, strategic service provider and consultants	$ 0	$ 186,968
Stock warrants issued to investors and consultants	4,292,178	5,545,200
Common stock issued to strategic service providers and consultants	18,150	230,357
Total	$ 4,310,328	$ 5,962,525

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Accounting Policies [Abstract]
Research and development costs	$ 55,141	$ 285,889

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PREPAID EXPENSES (Details) - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Prepaid Expense, Current [Abstract]
Legal and regulatory fees	$ 108,258	$ 255,500
Marketing and branding	4,500	712,900
Rent expense	9,020	22,550
Professional fees	7,175	28,700
Total prepaid expenses	$ 128,953	$ 1,019,650

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Accounts Payable and Accrued Liabilities, Current [Abstract]
Trade Payables	$ 8,302,628	$ 4,796,784
Credit Card Payable	38,745	37,675
Other Payable	69,960	74,960
Total	$ 8,411,333	$ 4,909,419

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EQUITY (Details) - Warrant - $ / shares	3 Months Ended	12 Months Ended
	Nov. 30, 2018	Aug. 31, 2018
Number of warrants
Balances at beginning	3,309	119
Granted	3	3,513
Exercised	0	(92)
Forfeited	0	(231)
Balances at end	3,312	3,309
Weighted- Average Exercise Price
Balances at beginning	$ 1,196	$ 48,900
Granted	57,000	4,505
Exercised	0	40,823
Forfeited	0	46,862
Balances at end	$ 2,196	$ 1,196
Series 1
Number of warrants
Balances at beginning	7,500
Granted	0
Exercised	0
Forfeited	0
Balances at end	7,500	7,500
Weighted- Average Exercise Price
Balances at beginning	$ 1,000
Granted	0
Exercised	1,000
Forfeited	0
Balances at end	$ 1,000	$ 1,000
Series 2
Number of warrants
Balances at beginning	7,900
Granted	0
Exercised	(200)
Forfeited	0
Balances at end	7,700	7,900
Weighted- Average Exercise Price
Balances at beginning	$ 1,000
Granted	0
Exercised	1,000
Forfeited	0
Balances at end	$ 1,000	$ 1,000
Series 3
Number of warrants
Balances at beginning	8,000
Granted	0
Exercised	(600)
Forfeited	0
Balances at end	7,400	8,000
Weighted- Average Exercise Price
Balances at beginning	$ 1,000
Granted	0
Exercised	1,000
Forfeited	0
Balances at end	$ 1,000	$ 1,000

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EQUITY (Details 1) - Warrant - $ / shares	3 Months Ended
	Nov. 30, 2018	Aug. 31, 2018	Aug. 31, 2017
Stockholders' Equity [Line Items]
Warrants Outstanding, Number of Shares	3,312	3,309	119
Warrants Outstanding, Weighted Average Remaining Contractual life (in Months)	2 years 7 months 21 days
Warrants Outstanding, Weighted Average Exercise Price	$ 2,196	$ 1,196	$ 48,900
Warrants Exercisable, Number of Shares	3,312
Warrants Exercisable, Weighted Average Exercise Price	$ 2,196
Series 1
Stockholders' Equity [Line Items]
Warrants Outstanding, Number of Shares	7,500	7,500
Warrants Outstanding, Weighted Average Remaining Contractual life (in Months)	5 years 11 months 1 day
Warrants Outstanding, Weighted Average Exercise Price	$ 1,000	$ 1,000
Warrants Exercisable, Number of Shares	7,500
Warrants Exercisable, Weighted Average Exercise Price	$ 1,000
Series 2
Stockholders' Equity [Line Items]
Warrants Outstanding, Number of Shares	7,700	7,900
Warrants Outstanding, Weighted Average Remaining Contractual life (in Months)	5 years 11 months 1 day
Warrants Outstanding, Weighted Average Exercise Price	$ 1,000	$ 1,000
Warrants Exercisable, Number of Shares	7,700
Warrants Exercisable, Weighted Average Exercise Price	$ 1,000
Series 3
Stockholders' Equity [Line Items]
Warrants Outstanding, Number of Shares	7,400	8,000
Warrants Outstanding, Weighted Average Remaining Contractual life (in Months)	5 years 11 months 1 day
Warrants Outstanding, Weighted Average Exercise Price	$ 1,000	$ 1,000
Warrants Exercisable, Number of Shares	7,400
Warrants Exercisable, Weighted Average Exercise Price	$ 1,000

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EQUITY (Details 2) - Warrant - $ / shares	3 Months Ended	12 Months Ended
	Nov. 30, 2018	Aug. 31, 2018
Number of Shares
Balances at beginning	3,309	119
Granted	3	3,513
Exercised	0	(92)
Forfeited	0	(231)
Balances at end	3,312	3,309
Weighted- Average Exercise Price
Balances at beginning	$ 1,196	$ 48,900
Granted	57,000	4,505
Exercised	0	40,823
Forfeited	0	46,862
Balances at end	$ 2,196	$ 1,196

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EQUITY (Details 3)	Nov. 30, 2018 Percent	Aug. 31, 2018 Percent $ / shares
Expected dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	0.00	0.00
Minimum | Expected term
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding, term	1 month 10 days	1 month 6 days
Minimum | Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	2.31	0.98
Maximum | Expected term
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding, term	6 months	5 years
Maximum | Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	2.52	2.83
Warrant | Expected dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input		0
Warrant | Minimum | Exercise price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding exercise price | $ / shares		$ 10.2
Warrant | Minimum | Expected term
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding, term		1 year 5 months 27 days
Warrant | Minimum | Expected average volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input		124
Warrant | Minimum | Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input		0.98
Warrant | Maximum | Exercise price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding exercise price | $ / shares		$ 97,500
Warrant | Maximum | Expected term
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding, term		5 years
Warrant | Maximum | Expected average volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input		354
Warrant | Maximum | Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input		2.83

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EQUITY (Details 4) - Warrant - $ / shares	3 Months Ended
	Nov. 30, 2018	Aug. 31, 2018	Aug. 31, 2017
Stockholders' Equity [Line Items]
Warrants Outstanding, Number of Shares	3,312	3,309	119
Warrants Outstanding, Weighted Average Remaining Contractual life (in years)	2 years 7 months 21 days
Warrants Outstanding, Weighted Average Exercise Price	$ 2,196	$ 1,196	$ 48,900
Warrants Exercisable, Number of Shares	3,312
Warrants Exercisable, Weighted Average Exercise Price	$ 2,196

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EQUITY (Detail Textuals) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	May 29, 2018	Nov. 30, 2018	Aug. 31, 2018	Jun. 28, 2018
Stockholders' Equity [Line Items]
Common stock, shares authorized		5,000,000,000,000	5,000,000,000,000	350,000,000
Preferred stock, shares authorized		10,000,000	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001
Common stock, voting rights		one vote
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Common stock, shares issued (in shares)		2,937,101,278	684,342
Common stock issued in conjunction with convertible notes			$ 1,840,742
Series A Convertible Preferred Stock
Stockholders' Equity [Line Items]
Preferred stock, shares authorized		1,000,000	1,000,000
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001
Preferred stock, stated value per share		1,150	$ 1,150
Conversion Price		$ 0.71
Discount percent		82.50%
Number of shares issued	8,000		8,000
Proceeds from issuance of convertible preferred Stock	$ 6,700,000
Number of units called by warrant issued to underwriters	640
Preferred stock converted to common stock (in shares)		(749)	(7,552)
Preferred stock, shares issued		1,099	1,048
Preferred stock, shares outstanding		1,099	1,048
Common Stock
Stockholders' Equity [Line Items]
Common stock issued in conjunction with convertible notes (in shares)			53
Common stock, shares issued (in shares)		2,936,416,936
Preferred stock converted to common stock (in shares)		2,632,629,380	557,351
Warrant
Stockholders' Equity [Line Items]
Exercise price		$ 57,000	$ 4,505
Number of warrants exercised		0	92
Warrant | Series 1
Stockholders' Equity [Line Items]
Exercise price		$ 0
Number of warrants exercised		0
Warrant | Series 2
Stockholders' Equity [Line Items]
Exercise price		$ 0
Number of warrants exercised		200
Warrant | Series 3
Stockholders' Equity [Line Items]
Exercise price		$ 0
Number of warrants exercised		600

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EQUITY (Detail Textuals 1) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	May 29, 2018	Nov. 30, 2018	Nov. 30, 2017	Aug. 31, 2018	Jun. 28, 2018
Stockholders' Equity [Line Items]
Common stock, shares authorized		5,000,000,000,000		5,000,000,000,000	350,000,000
Common stock, par value (in dollars per share)		$ 0.001		$ 0.001
Preferred stock, shares authorized		10,000,000		10,000,000	10,000,000
Preferred stock, par value (in dollars per share)		$ 0.001		$ 0.001
Common stock issued for services		$ 18,150		$ 3,394,088
Proceeds from issuance of common stock			$ 484,000
Common stock issued in conjunction with convertible notes				$ 1,840,742
Common stock, shares issued (in shares)		2,937,101,278		684,342
Common stock, shares outstanding (in shares)		2,937,101,278		684,342
Conversion of convertible note principal amount		$ 1,756,005		$ 1,840,081
Series A Convertible Preferred Stock
Stockholders' Equity [Line Items]
Preferred stock, shares authorized		1,000,000		1,000,000
Preferred stock, par value (in dollars per share)		$ 0.001		$ 0.001
Number of shares issued	8,000			8,000
Preferred stock converted to common stock (in shares)		(749)		(7,552)
Minimum
Stockholders' Equity [Line Items]
Warrants exercise price (in dollars per share)				$ 52,500
Maximum
Stockholders' Equity [Line Items]
Warrants exercise price (in dollars per share)				$ 60,000
Warrant
Stockholders' Equity [Line Items]
Warrants outstanding value		$ 0
Warrant market closing price		$ 0.0001
Common Stock
Stockholders' Equity [Line Items]
Common stock issued for conversion of convertible notes (in shares)		257,544,764		87,770
Common stock issued for services (in shares)		46,242,792		32,884
Common stock issued for services		$ 46,243		$ 33
Common stock units issued for cash (in shares)				3,178
Common stock issued for exercise of warrants (in shares)				84
Common stock issued in conjunction with convertible notes (in shares)				53
Common stock, shares issued (in shares)		2,936,416,936
Preferred stock converted to common stock (in shares)		2,632,629,380		557,351
Common Stock | Convertible Notes
Stockholders' Equity [Line Items]
Common stock issued for conversion of convertible notes (in shares)		257,544,764
Conversion of convertible note principal amount		$ 34,075		$ 6,618,099
Conversion of convertible note accrued interest		$ 13,112

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STOCK COMPENSATION PLANS (Details) - Stock options	12 Months Ended
	Aug. 31, 2018 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Time to vest	4 years
Expiration after vesting	5 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price	$ 15,000
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price	$ 97,500

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STOCK COMPENSATION PLANS (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Nov. 30, 2018	Aug. 31, 2018
Number of Shares
Balances at beginning	1,283	946
Granted	0	339
Exercised	0	0
Forfeited	0	(2)
Balances at end	1,283	1,283
Weighted- Average Exercise Price
Balances at beginning	$ 58,500	$ 98,700
Granted	0	66,000
Exercised	0	0
Forfeited	0	37,200
Balances at end	$ 58,504	$ 58,500
Fair Value on Grant Date
Balances at beginning	$ 55,209,360	$ 35,864,990
Granted	0	19,412,264
Exercised	0	0
Forfeited	0	(67,894)
Balances at end	55,209,360	55,209,360
Intrinsic Value
Balances at beginning	0	0
Granted	0	0
Exercised	0	0
Forfeited	0	0
Balances at end	$ 0	$ 0

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STOCK COMPENSATION PLANS (Details 2)	Nov. 30, 2018 $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options Exercisable, Number of Shares | shares	660
Options Exercisable, Weighted Average Exercise Price | $ / shares	$ 45,979

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STOCK COMPENSATION PLANS (Details 3) - $ / shares	3 Months Ended	12 Months Ended
	Nov. 30, 2018	Aug. 31, 2018
Shares
Unvested, Balances	675	809
Granted	0	339
Vested	(52)	(473)
Forfeited	0	0
Unvested, Balances	623	675
Weighted-Average Grant Date Fair Value Per Share
Unvested, Balances	$ 43,800	$ 38,100
Granted	0	57,300
Vested	37,500	43,800
Forfeited	0	0
Unvested, Balances	$ 43,800	$ 43,800

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STOCK COMPENSATION PLANS (Details 4)	12 Months Ended
	Aug. 31, 2018	Aug. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	3 years 7 months 2 days	4 years 7 months 2 days
Expected average volatility	175.00%	179.00%
Risk-free interest rate	2.20%	1.17%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	5 years 11 months 23 days	6 years 5 months 5 days
Expected average volatility	176.00%	183.00%
Risk-free interest rate	2.35%	2.25%

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STOCK COMPENSATION PLANS (Detail Textuals) - USD ($)	1 Months Ended		3 Months Ended		12 Months Ended
	Dec. 30, 2017	Jul. 30, 2017	Nov. 30, 2018	Nov. 30, 2017	Aug. 31, 2018	Aug. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense			$ 4,310,328	$ 5,962,525
Intrinsic value of options outstanding			0		$ 0	$ 0
Granted			0		19,412,264
Total fair values of stock options that vested			$ 2,510,847		$ 18,112,430
2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant			320
Common stock issued price per share			$ 0.0001
Total compensation cost expected to be recognized			$ 7,831,411
Intrinsic value of options outstanding			$ 0
Compensation cost not yet recognized, period for recognition			6 months 18 days
Employees, officers and directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock issued			0		339
Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock issued	14
Common stock issued price per share	$ 59,400
Share based compensation arrangement option expire date	Dec. 29, 2022
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options expiration period					5 years
Employee Stock Option | 2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for issuance		334
Percentage of shareholder to grant exercise price of incentive stock option		10.00%
Threshold percentage limit of exercise price respect to fair market value on the grant date		110.00%
Threshold limit of term of options		10 years
Threshold limit of term of options granted to 10% shareholders		5 years
Termination term of option under termination of employment		3 months
Termination term of option under event of death or disability		1 year
Share based compensation arrangement option expire date		Dec. 31, 2026

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CONVERTIBLE NOTES (Details) - USD ($)	Nov. 30, 2018	Aug. 31, 2018
Debt Instrument [Line Items]
Convertible notes	$ 1,756,005	$ 1,840,081
Less debt discount and debt issuance cost	(349,422)	(863,852)
Convertible notes, net	1,406,583	976,229
Less current portion of convertible notes payable	(1,406,583)	(976,229)
Long-term convertible notes payable	0	0
Convertible Notes - originated in October 2017
Debt Instrument [Line Items]
Convertible notes	162,700	164,190
Convertible Notes - originated in December 2017
Debt Instrument [Line Items]
Convertible notes	109,725	109,725
Convertible Notes - originated in January 2018
Debt Instrument [Line Items]
Convertible notes	1,915	24,500
Convertible Notes - originated in March 2018
Debt Instrument [Line Items]
Convertible notes	145,833	145,833
Convertible Notes - originated in April 2018
Debt Instrument [Line Items]
Convertible notes	1,190,000	1,250,000
Convertible Notes - originated in May 2018
Debt Instrument [Line Items]
Convertible notes	$ 145,832	$ 145,833

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CONVERTIBLE NOTES (Detail Textuals) - USD ($)	3 Months Ended		12 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	Aug. 31, 2018
Debt Instrument [Line Items]
Convertible notes	$ 1,756,005		$ 1,840,081
Proceeds from issuance of convertible notes		$ 2,249,000	5,662,750
Accrued interest	49,874	27,153
Accrued interest payable	$ 103,919		$ 67,157
Common Stock
Debt Instrument [Line Items]
Common stock issued for conversion of convertible notes (in shares)	257,544,764		87,770
Convertible Notes | Common Stock
Debt Instrument [Line Items]
Convertible notes	$ 34,075		$ 6,618,099
Accrued interest payable	$ 13,112
Proceeds from issuance of convertible notes			5,662,750
Original issuance discount			629,099
Financing fees			$ 326,250
Common shares and warrant units to purchase common stock			53
Number of warrants called to purchase common stock			25
Common stock issued for conversion of convertible notes (in shares)	257,544,764
Derivative liabilities	$ 122,122
Minimum
Debt Instrument [Line Items]
Warrants exercise price (in dollars per share)			$ 52,500
Convertible note term			6 months
Annual interest rate			0.00%
Discount percent			55.00%
Trading days prior to conversion			20 days
Maximum
Debt Instrument [Line Items]
Warrants exercise price (in dollars per share)			$ 60,000
Convertible note term			1 year
Annual interest rate			12.00%
Conversion after issuance days			180 days
Discount percent			70.00%
Trading days prior to conversion			25 days
Interest expense
Debt Instrument [Line Items]
Amortization expense of debt discount and deferred financing fees	514,429	953,451
Interest expense | Convertible Notes
Debt Instrument [Line Items]
Accrued interest	49,874	$ 27,153
Accrued interest payable	$ 103,919		$ 67,157

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DERIVATIVE LIABILITIES (Details) - Percent	Nov. 30, 2018	Aug. 31, 2018
Expected term | Minimum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, term	1 month 10 days	1 month 6 days
Expected term | Maximum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, term	6 months	5 years
Expected average volatility | Minimum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, measurement input	283	49
Expected average volatility | Maximum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, measurement input	580	350
Expected dividend yield
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, measurement input	0.00	0.00
Risk-free interest rate | Minimum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, measurement input	2.31	0.98
Risk-free interest rate | Maximum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants outstanding, measurement input	2.52	2.83

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DERIVATIVE LIABILITIES (Details 1) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock	$ 1,106,610	$ 0
Loss on change in fair value of the derivative liabilities	(1,341,502)	$ (464,671)
Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - August 31, 2018	4,494,698
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock	1,106,610
Derivative liabilities settled upon conversion of convertible notes	(122,122)
Derivative liabilities settled upon conversion of convertible preferred stock	(1,032,555)
Loss on change in fair value of the derivative liabilities	(1,341,502)
Balance - November 30, 2018	$ 3,105,129

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DERIVATIVE LIABILITIES (Details 2) - USD ($)	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes	$ 0	$ 140,251
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock	1,106,610	0
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants	0	859,488
(Gain) loss on change in fair value of the derivative liabilities	1,341,502	464,671
(Gain) loss on derivative liability	$ (234,892)	$ 535,068

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COMMITMENTS AND CONTINGENCIES (Details)	Aug. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 22,284
Thereafter	0
Total	$ 22,284

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COMMITMENTS AND CONTINGENCIES (Detail Textuals)		1 Months Ended		3 Months Ended
	Aug. 03, 2016 USD ($) shares	Jul. 31, 2017 shares	Oct. 31, 2016 shares	Nov. 30, 2018 USD ($) $ / shares shares	Nov. 30, 2017 USD ($)	Aug. 31, 2018 USD ($)	May 31, 2018 $ / shares shares	Feb. 01, 2018 USD ($)	Jun. 30, 2016 USD ($) ft²
Other Commitments [Line Items]
Rent per month for first year | $						$ 22,284
Prepaid rent | $				$ 9,020		$ 22,550
Total net rent expense related to operating leases | $				$ 5,570	$ 5,355
Lease Agreement
Other Commitments [Line Items]
Area of Land | ft²									1,500
Amount of rent expenses | $									$ 1,750
Extended term of lease agreement									2 years
Rent per month for first year | $									$ 1,803
Rent per month for the second year | $									$ 1,857
Lease Agreement | Chief Executive Officer
Other Commitments [Line Items]
Amount of rent expenses | $								$ 4,510
Prepaid rent | $								$ 54,120
Jet Midwest Group
Other Commitments [Line Items]
Common stock, share issued | shares				49
Common stock outstanding shares, percentage			1.60%
Additional common stock to be issued | shares				46,253,639
Common stock issued for services | shares			1,250,000
Brighton Capital, Ltd | Consulting agreement
Other Commitments [Line Items]
Common stock issued for services | shares		14
Number of warrants exercise | shares		34
Term of warrants		3 years
Brighton Capital, Ltd | Consulting agreement | Date of Execution
Other Commitments [Line Items]
Common stock issued for services | shares		2
Number of warrants exercise | shares		4
Brighton Capital, Ltd | Consulting agreement | Date of first issuance beginning August 1, 2017
Other Commitments [Line Items]
Common stock issued for services | shares		1
Number of warrants exercise | shares		1
Term of warrants		36 months
Brighton Capital, Ltd | Consulting agreement | Date Through August 31, 2017
Other Commitments [Line Items]
Additional common stock to be issued | shares				18
Number of warrants exercise | shares				20			12
Term of warrants				5 years
Warrants Outstanding, Weighted Average Exercise Price | $ / shares				$ 57,000			$ 57,000
Apcentive Inc
Other Commitments [Line Items]
Additional common stock to be issued | shares	20,000,000
Expected expenditure on acquired intangible assets | $	$ 8,000,000
Percentage of royalty to be payable	1.50%
Apcentive Inc | Expenditure on or before August 3, 2017
Other Commitments [Line Items]
Expected expenditure on acquired intangible assets | $	$ 1,000,000
Apcentive Inc | Expenditure on or before August 3, 2018
Other Commitments [Line Items]
Expected expenditure on acquired intangible assets | $	2,000,000
Apcentive Inc | Expenditure on or before August 3, 2019
Other Commitments [Line Items]
Expected expenditure on acquired intangible assets | $	$ 5,000,000

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SUBSEQUENT EVENTS (Detail Textuals) - Subsequent Event - USD ($)	1 Months Ended
	Dec. 17, 2018	Dec. 28, 2018	Dec. 06, 2018
Subsequent Event [Line Items]
Number of common stock issued for the conversion		195,151,516	195,151,516
Number of preferred stock converted		14	14
Sabby Exercise Agreement
Subsequent Event [Line Items]
Number of preferred stock converted	90
Number of warrants called to purchase preferred stock	90,000
Number of warrants exercise	90
Proceeds from exercise of warrants	$ 90,000