UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended: May 31, 2018

For the quarterly period ended November 30, 2018

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

For the transition period from _________ to __________

Commission File Number 333-179079

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)

(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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 ~~(Do not check if a smaller reporting company)~~ Emerging growth company x¨

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 ~~July~~January 64, ~~2018~~2019 was 23,~~390~~327,~~496~~404,~~267~~310.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3	3
Item 2.	Management'’s Discussion and Analysis of Financial Condition or Plan of Operation	20	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27	13
Item 4.	Controls and Procedures	27	13
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	29	15
Item 1A.	Risk Factors	29	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29	15
Item 3.	Defaults Upon Senior Securities	29	16
Item 4.	Mine Safety Disclosures	29	16
Item 5.	Other Information	29	16
Item 6.	Exhibits	30	17
SIGNATURES		31	18

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

AIRBORNE WIRELESS NETWORK

INTERIM FINANCIAL STATEMENTS

~~MAY~~NOVEMBER 3130, 2018

(UNAUDITED)

		Page
Balance Sheets		~~F-1~~4
Statements of Operations		~~F-2~~5
Statement of Stockholders’ Equity (Deficit)		F-3
Statements of Stockholders’ Deficit		6
Statements of Cash Flows		~~F-4~~7
Notes to the Unaudited Financial Statements		~~F-5~~8

Table of Contents

AIRBORNE WIRELESS NETWORK

BALANCE SHEETS

(Unaudited)

	May 31,			August 31,
	November 30,			August 31,
	2018			~~2017~~2018
Assets
Current Assets
Cash and cash equivalents	$	4130,~~119,148~~513		$	~~217~~155,~~694~~988
Prepaid expenses and other assets		1128,~~527,433~~953			~~285~~1,~~284~~019,650
Total Current Assets		5259,~~646,581~~466			~~502~~1,~~978~~175,638
Property and equipment, net		3731,~~734~~486			2534,~~348~~610
Total Assets	$	5290,~~684,315~~952		$	~~528~~1,~~326~~210,248
Liabilities and Stockholders' Equity (Deficit)
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued liabilities	$	~~945~~8,~~255~~411,333		$	~~421~~4,~~749~~909,419
Accrued interest		78103,~~319~~919			-67,157
Convertible notes payable, net of unamortized debt discount of $2,408,303 and $0, respectively		1,176,295			-
Convertible notes payable, net of unamortized debt discount of $349,422 and $863,852, respectively		1,406,583			976,229
Derivative liabilities		123,~~848~~105,~~016~~129			-4,494,698
Total Current Liabilities		1513,~~047~~026,~~885~~964			~~421~~10,~~749~~447,503
Total Liabilities		1513,~~047~~026,~~885~~964			~~421~~10,~~749~~447,503
Stockholders' Equity (Deficit)
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; 7,058 and 0 shares issued and outstanding as of May 31, 2018 and August 31, 2017, respectively		7			-
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; 111,713,403 and 90,589,154 shares issued and outstanding as of May 31, 2018 and August 31, 2017, respectively		111,713			90,589
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		82107,~~200~~949,~~896~~888			37104,~~144~~574,~~817~~113
Accumulated deficit		(91123,~~676~~623,~~186~~002	)		(37113,~~128~~812,~~829~~053	)
Total Stockholders' Equity (Deficit)		(9,363,570	)		106,577
Total Stockholders’ Deficit		(12,736,012	)		(9,237,255	)
Total Liabilities and Stockholders' Equity (Deficit)	$	5,684,315		$	528,326
Total Liabilities and Stockholders’ Deficit	$	290,952		$	1,210,248

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

~~F-1~~4 Table of Contents

AIRBORNE WIRELESS NETWORK

STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						~~Nine Months Ended,~~
	May 31,						May 31,
	November 30,
	2018			2017			~~2018~~			~~2017~~
Revenue	$	-		$	-		$	-		$	-
Operating Expenses
Marketing and branding		13,~~255~~231,~~280~~383			~~523~~1,~~893~~089,280			~~4,227,012~~			~~1,130,070~~
Depreciation		23,~~793~~124			12,~~885~~088			~~7,345~~			~~2,614~~
General and administrative expenses		~~466~~157,~~803~~200			87114,~~475~~742			~~786,835~~			~~163,102~~
Management fees		60,000			1,500			102,000			13,135
Professional fees		1,502,768			857,285
Professional fees		2,048,596			668,119			4,049,113			1,427,770
Research and development		55,141			285,889
Research and development		18,100			383,606			588,042			704,257
Salaries and wages		221,594			229,215
Salaries and wages		307,231			192,467			786,510			400,658
Stock based compensation		4,310,328			5,962,525
Stock based compensation		6,317,452			7,615,873			44,278,826			23,226,492
Total operating expense		9,481,538			8,541,024
Total operating expenses		10,476,255			9,474,818			54,825,683			27,068,098
Operating Loss		(9,481,538	)		(8,541,024	)
Operating Loss		(10,476,255	)		(9,474,818	)		(54,825,683	)		(27,068,098	)
Other income (expense)
Other income (expense)
Interest expense		(564,303	)		(980,604	)
Interest expense		(3,193,927	)		-			(4,755,835	)		(150	)
Net change in fair value of derivative liabilities including day one losses		234,892			(535,068	)
Net Change in fair value of derivative liabilities including day one losses		7,576,117			-			5,034,161			-
Total other expense		(329,411	)		(1,515,672	)
Total other income (expense)		4,382,190			-			278,326			(150	)
Net Loss	$	(9,810,949	)	$	(10,056,696	)
Net Loss	$	(6,094,065	)	$	(9,474,818	)	$	(54,547,357	)	$	(27,068,248	)
Net loss per common share – basic and diluted	$	(0.01	)	$	(3,296	)
Net loss per common share – basic and diluted	$	(0.06	)	$	(0.11	)	$	(0.57	)	$	(0.33	)
Weighted average number of common shares outstanding		761,133,987			3,051
Weighted average number of common shares outstanding		99,743,974			87,484,413			95,446,195			81,556,795

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

~~F-2~~5 Table of Contents

AIRBORNE WIRELESS NETWORK

STATEMENTS OF STOCKHOLDERS' ~~EQUITY (~~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, 2016		-		$	-			74,097,796	$	74,098	$	51,108		$	(215,870	)	$	(90,664	)
Balance as of August 31, 2017		-			-			3,022		3		37,235,403			(37,128,829	)		106,577
Common stock units for cash		-			-			4,104,998		4,105		4,715,268			-			4,719,373
Common stock issued for exercise of warrants		-			-			1,152,000		1,152		1,438,848			-			1,440,000
Common stock issued for services		-			-			10,894,480		10,894		13,902,182			-			13,913,076
Conversion of related party loans to common shares		-			-			339,880		340		574,058			-			574,398
Stock options issued to employees		-			-			-		-		16,234,692			-			16,234,692
Stock warrants issued for services		-			-			-		-		228,661			-			228,661
Net loss		-			-			-		-		-			(36,912,959	)		(36,912,959	)
Balance as of August 31, 2017		-			-			90,589,154		90,589		37,144,817			(37,128,829	)		106,577
Preferred stock units issued for cash		8,000			8			-		-		6,714,479			-			6,714,487
Preferred stock converted to common stock		(942	)		(1	)		4,333,200		4,333		(4,332	)		-			-
Common stock converted from preferred stock		(7,552	)		(8	)		557,351		557		(549	)		-			-
Common stock units issued for cash		-			-			1,346,222		1,346		1,143,653			-			1,144,999
Preferred stock units issued from the exercise of warrants		600			1			-		-		599,999			-			600,000
Common stock issued for exercise of warrants		-			-			2,506,063		2,506		1,654,619						1,657,125
Common stock units issued for cash		-			-			3,178		3		1,174,996			-			1,174,999
Common stock issued for services		-			-			2,930,769		2,931		2,824,029			-			2,826,960
Common stock issued for exercise of warrants		-			-			84		-		1,657,125						1,657,125
Common stock issued in conjunction with convertible notes		-			-			1,589,977		1,590		1,839,152			-			1,840,742
Common stock issued for services		-			-			32,884		33		3,394,055			-			3,394,088
Common stock issued for conversion of convertible notes		-			-			8,418,018		8,418		3,146,857			-			3,155,275
Common stock issued in conjunction with convertible notes		-			-			53		-		1,840,742			-			1,840,742
Stock options issued to employees and consultants		-			-			-		-		22,047,375			-			22,047,375
Common stock issued for conversion of convertible notes		-			-			87,770		88		4,403,137			-			4,403,225
Net reduction of derivative liability from exercise of warrants		-			-			-		-		1,050,554			-			1,050,554
Stock options issued to employees and consultants		-			-			-		-		26,846,659			-			26,846,659
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes		-			-			-		-		3,626,032			-			3,626,032
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 preferred stock		-			-			-		-		1,013,661			-			1,013,661
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes		-			-			-		-		6,857,743			-			6,857,743
Net loss		-			-			-		-		-			(54,547,357	)		(54,547,357	)
Reclassification to additional paid in capital from derivative liability upon conversion of convertible preferred stock		-			-			-		-		12,799,770			-			12,799,770
Balance as of May 31, 2018		7,058		$	7			111,713,403	$	111,713	$	82,200,896		$	(91,676,186	)	$	(9,363,570	)
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.

~~F-3~~6 Table of Contents

AIRBORNE WIRELESS NETWORK

STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended,
	Three Months Ended
	May 31,
	November 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(549,~~547~~810,~~357~~949	)	$	(2710,~~068~~056,~~248~~696	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		73,~~345~~124			2,~~614~~088
Stock-based compensation		444,~~278~~310,~~826~~328			235,~~226~~962,~~492~~525
Amortization of debt discount included in interest expense		4514,~~573,723~~429			-953,451
Change in fair value of derivative liabilities		(5234,~~034,161~~892	)		-535,068
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(1890,~~242,149~~697	)		(~~215~~359,~~753~~956	)
Accounts payable and accrued liabilities		~~523~~3,~~504~~501,914			~~309~~158,~~036~~422
Accrued interest		~~182~~49,~~093~~874			-27,153
Net Cash Used in Operating Activities		(11775,~~258,176~~475	)		(32,~~745~~777,~~859~~945	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		~~(19,731~~-	)		(298,~~910~~456	)
Net Cash Used in Investing Activities		~~(19,731~~-	)		(298,~~910~~456	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes to related parties		-			39,615
Proceeds from issuance of convertible notes, net		-			2,249,000
Proceeds from issuance of convertible notes		5,662,750			-
Repayment of convertible notes		(50,000	)		-
Proceeds from issuance of common stock units		~~1,144,999~~-			3484,~~019,676~~000
Proceeds from exercise of warrants		1,657,125			940,000
Preferred stock units issued from the exercise of warrants		800,000			-
Proceeds from issuance of preferred stock		6,714,487			-
Net Cash Provided by Investing Activities		750,000			2,733,000
Net Cash Provided by Financing Activities		15,179,361			3,999,291
Net change in cash and cash equivalents		(25,475	)		(53,401	)
Net increase in cash and cash equivalents		3,901,454			223,522
Cash and cash equivalents, beginning of period		155,988			217,694
Cash and cash equivalents, beginning of period		217,694			809
Cash and cash equivalents, end of period	$	130,513		$	164,293
Cash and cash equivalents, end of period	$	4,119,148		$	224,331
Supplemental cash flow information:
Cash paid for interest	$	-		$	5-
Cash paid for taxes	$	-		$	-800
Non-cash financing transactions:
Derivative liabilities recognized as debt discount	$	~~4,167,934~~-		$	-479,762
Common shares issued in conjunction with convertible notes recognized as debt discount	$	1,840,742		$	-
Common stock issued for conversion of debt	$	47,187		$	-
Reclassification of derivative liability from additional paid in capital due to tainting of warrants	$	2,078,065		$	-
Common stock issued for conversion of preferred stock	$	2,632,629		$	-
Reduction of derivative liabilities from exercise of warrants, convertible notes and convertible preferred stock	$	7,731,540		$	-
Reclassification to additional paid in capital from derivative liability upon conversion of convertible notes	$	122,122		$	-
Common stock issued for conversion of debt	$	3,155,275		$	-
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.

~~F-4~~7 Table of Contents

AIRBORNE WIRELESS NETWORK

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

~~MAY~~NOVEMBER 3130, 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 ~~three~~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 $549,~~547~~810,~~357~~949 during the period ended ~~May~~November 3130, 2018 and has an accumulated deficit of $91123,~~676~~623,~~186~~002 as of ~~May~~November 3130, 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 ~~placement~~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.

Table of Contents

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 ~~generally~~U.S. ~~accepted~~GAAP ~~accounting principles~~ 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 ~~and nine~~ months ended ~~May~~November 3130, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, ~~2018~~2019. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year ~~2017~~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, ~~2017~~2018 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on November 14, ~~2017~~2018.

F-5 Table of Contents

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.

Related Parties

We follow ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 9).

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company has cash on deposits in financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. As of May 31, 2018 and August 31, 2017 the Company had $4,119,148 and $217,694 in cash and cash equivalents, respectively.

Intangible Assets

We account for intangible assets in accordance with ASC 350 “Intangibles-Goodwill and Other.” The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. Customer relationships, brands and other non-contractual intangible assets with determinable lives are amortized over 3 years. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

The Company issued 40 million shares of common stock (approximately 26% of its outstanding common stock on issuance) for the acquisition of certain intellectual property. Subsequent to the transferor’s receipt of the consideration shares, 80,000,000 shares held by Mr. Daniels were cancelled without consideration to the Company in August 2016 (for the purpose of making more shares available for issuance to new investors and making the Company’s capital structure more attractive to those new investors), thereby increasing the transferor’s beneficial ownership of the Company’s common stock to over 50%. Accordingly, the intellectual property was recorded on the Company’s books at its historical cost of $0. To further substantiate the valuation and due to the lack of readily available market information, the Company hired an independent third-party firm to perform a valuation on the acquired intangible assets. It was concluded that the intellectual property had nominal current value because future net economic benefit could not be reasonably estimated. This firm employed, but ultimately excluded or discounted the following methods of valuation: cost calculation, replacement value, relief from royalty-IP value and fair exchange. It was determined that the intellectual property had nominal current value because (i) the patent had fewer than three years left until expiration, (ii) management projections indicated approximately $582.8 million in capital was required to bring the proposed products/services to market, (iii) the Company, as of the valuation date, had no revenues, a limited business plan, no committed source of funding, a limited workforce and other limitations and (iv) the Company had limited or no contracts in place for personnel, customers or vendors to implement its business plan. As a result of further stock issuances by the Company, on and after February 28, 2017, the transferor held less than 50% of the outstanding common stock of the Company. Further, in July 2017, the transferor distributed all of such shares among its shareholders and thus, no longer has direct ownership in the Company.

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.

F-6 Table of Contents

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 ~~May~~November 3130, 2018, and August 31, ~~2017~~2018, measured at fair value on a recurring basis:

May 31, 2018

Level 1

Level 2

Level 3

Total

November 30, 2018

Level 1

Level 2

Level 3

Total

Liabilities

Derivative Liabilities

123,~~848~~105,~~016~~129

August 31, 2017

Level 1

Level 2

Level 3

Total

Liabilities

Derivative Liabilities

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

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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 $~~588~~55,~~042~~141 and $~~704~~285,~~257~~889 were incurred for the ~~nine~~three months ended ~~May~~November 3130, 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.

FStock-7based ~~Table~~compensation ofincurred ~~Contents~~for the three months ended November 30, 2018 and 2017, respectively, are summarized as follows:

Stock-based compensation incurred for the nine months ended May 31, 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

	Nine Months Ended,
	May 31,
	2018		2017
Vesting of stock options issued to directors, officers and employees	$	22,047,376	$	9,175,104
Stock warrants issued to investors, strategic service providers and consultants		19,404,490		-
Common stock issued to strategic service providers and consultants		2,826,960		14,051,388
Total	$	44,278,826	$	23,226,492

Income Taxes

We account for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The Company’s deferred tax assets and liabilities are comprised primarily of differences between the book and tax valuation of derivative liabilities, resulting debt discounts and warrant and option valuations, in addition to Net Operating Loss carryforwards for Federal and State income tax purposes. Net deferred tax assets and liabilities are offset in their entirety by a valuation allowance due to the uncertainty of their realization.

Recently Issued Accounting Pronouncements

~~Management~~In ~~has~~August ~~considered~~2018, ~~all~~the ~~recent~~Financial ~~accounting~~Accounting ~~pronouncements~~Standards Board issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ~~Company’s~~ASU ~~management~~modifies ~~believes~~the ~~that~~disclosure ~~these~~requirements ~~recent~~in ~~pronouncements~~Topic ~~will~~820, ~~not~~Fair ~~have~~Value aMeasurement, ~~material~~by ~~effect~~removing oncertain disclosure requirements related to the ~~Company’s~~fair ~~unaudited~~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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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 ~~May~~November 3130, 2018 and August 31, ~~2017~~2018:

	May 31,		August 31,
	November 30,		August 31,
	2018		~~2017~~2018
Legal and regulatory fees	$	56108,~~128~~258	$	94255,~~573~~500
Marketing and branding		14,~~380,000~~500		~~164~~712,~~667~~900
Rent expense		369,~~080~~020		22,~~250~~550
Professional fees		557,~~225~~175		328,~~794~~700
	$	1128,~~527,433~~953	$	~~285~~1,~~284~~019,650

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at ~~May~~November 3130, 2018 and August 31, ~~2017~~2018:

	May 31,		August 31,
	November 30,		August 31,
	2018		~~2017~~2018
Trade payables	$	920,393	$	334,132
Trade Payables	$	8,302,628	$	4,796,784
Credit card payable		19,382		56,501
Credit Card Payable		38,745		37,675
Payroll liabilities		-		25,636
Other Payable		69,960		74,960
Other payable		5,480		5,480
Total	$	8,411,333	$	4,909,419
Total accounts payable and accrued liabilities	$	945,255	$	421,749

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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.

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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 ~~period~~three months ended ~~May~~November 3130, 2018, ~~942~~749 shares of Series A Convertible Preferred Stock were converted into 42,~~333~~632,~~200~~629,380 shares of common stock.

As of ~~May~~November 3130, 2018, and August 31, ~~2017~~2018, 71,~~058~~099 and 01,048 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 ~~nine~~three months ended ~~May~~November 3130, 2018 and the year ended August 31, ~~2017~~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, 2017		-		-			-		$	-	$	-	$	-
Balances as of August 31, 2018		7,500		7,900			8,000		$	1,000	$	1,000	$	1,000
Granted		~~8,000~~-		~~8,000~~-			~~8,000~~-			~~1,000~~-		~~1,000~~-		~~1,000~~-
Exercised		-		-(200	)		-(600	)		-1,000		-1,000		-1,000
Forfeited		-		-			-			-		-		-
Balances as of May 31, 2018		8,000		8,000			8,000		$	1,000	$	1,000	$	1,000
Balances as of November 30, 2018		7,500		7,700			7,400		$	1,000	$	1,000	$	1,000

~~F-9~~The ~~Table~~following table summarizes information relating to outstanding and exercisable warrants as of ~~Contents~~November 30, 2018:

The following table summarizes information relating to outstanding and exercisable warrants as of May 31, 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

	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		8,000		2.70	$	1,000		8,000	$	1,000
Series 2		8,000		5.79	$	1,000		8,000	$	1,000
Series 3		8,000		11.70	$	1,000		8,000	$	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.

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Common stock

Issuances

During the ~~nine~~three months ended ~~May~~November 3130, 2018, the Company issued 212,~~124~~936,~~249~~416,936 shares of common stock, as follows:

· 146,~~346~~242,~~222~~792 units for aggregate proceeds of $1,144,999. Each unit consisted of one share of common stock and one share purchase warrant. Each share purchase warrant is exercisable for one share of common stock for a period ranging from one to five years from issuance, at a price range of $0.65 to $2.60 per share. · 2,506,063 shares of common stock ~~issued for the exercise of warrants for proceeds of $1,657,125. · 2,452,029 shares of common stock~~ to strategic service providers, for services valued at $218,~~289,996~~150. · ~~478~~2,~~740 shares of common stock to a consultant~~632, ~~for services valued at $536~~629,~~964.~~380 ~~· 1,589,977~~ shares of common stock in conjunction with the issuance of convertible notes. The common shares were valued at $1,840,742 based on quoted market prices of the Company’s stock on the date of each share issuance. · 4,333,200 shares of common stock issued for the conversion of ~~942~~749 shares of Series A Convertible Preferred Stock. · 8257,~~418~~544,~~018~~764 shares of common stock issued upon the conversion of convertible notes in aggregate principal amount of $334,~~051,501~~075 and accrued interest of $~~103~~13,~~774~~112.

As at ~~May~~November 3130, 2018 and August 31, ~~2017~~2018, the Company had ~~111~~2,~~713~~937,~~403~~101,278 and 90684,~~589,154~~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 ~~nine~~three months ended ~~May~~November 3130, 2018 and the year ended August 31, ~~2017~~2018:

	Number of Shares			Weighted- Average Exercise Price
Balances as of August 31, 2016		-		$	-
Balances as of August 31, 2017		119		$	48,900
Granted		43,~~229,998~~513			~~1.52~~4,505
Exercised		(~~1,152,000~~92	)		~~1.25~~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 August 31, 2017		3,077,998		$	1.63
Balances as of November 30, 2018		3,312		$	2,196
Granted		10,504,218			1.40
Exercised		(2,474,615	)		1.36
Forfeited		(1,010,604	)		1.26
Balances as of May 31, 2018		10,096,997		$	1.49

~~F-10~~The ~~Table~~fair value of ~~Contents~~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:

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 nine months ended May 31, 2018 and 2017:

		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%

	Nine Months Ended
	May 31,
	2018		2017
Exercise price	$0.65 - $2.60		$1.25 - $3.25
Expected term	3 - 5 years		1 year
Expected average volatility	155%-350%		193% - 216%
Expected dividend yield		-		-
Risk-free interest rate	0.98% - 2.83%		0.66% - 1.76%

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

The following table summarizes information relating to outstanding and exercisable warrants as of May 31, 2018:

Warrants Outstanding

Warrants Exercisable

Weighted Average

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 Outstanding

Warrants Exercisable

Weighted Average

Number

Remaining Contractual

Weighted Average

Number

Weighted Average

of Shares

life (in years)

Exercise Price

of Shares

Exercise Price

10,096,997

3.88

1.49

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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 ~~May~~November 3130, 2018 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of ~~May~~November 3130, 2018, the aggregate intrinsic value of warrants outstanding was approximately $0 based on the closing market price of $0.230001 on ~~May~~November 3130, 2018.

The Company determined that the warrants qualify for derivative accounting as a result of the related ~~issuance~~issuances of ~~the~~ convertible ~~note on September 15~~notes, ~~2017,~~ which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options. On September 15, 2017, the Company revalued the fair value on the 3,415,498 units of share purchase warrants granted prior to September 15, 2017 at $2,937,553 based on Black-Scholes option valuation model and reclassified the previously determined fair value of $2,078,065 on the date of grant for each warrant unit from additional paid-in capital to derivative liabilities, resulting in loss on warrants of $859,448 included in change in fair value of derivatives liabilities (see Note 8).

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 ~~nine~~three months ended ~~May~~November 3130, 2018 and the year ended August 31, ~~2017~~2018, options to purchase ~~10,150,000~~0 and ~~23,800,000~~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:

		Nine months Ended	Year Ended
	Year Ended
		May 31,	August 31,
	August 31,
	2018	~~2018~~	~~2017~~
Exercise price	$15,000 - $97,500	~~$0.50 - $3.25~~	~~$0.75 - $3.75~~
Time to vest	On issuance – 4 years	~~On issuance – 4 years~~	~~On issuance – 4 years~~
Expiration after vesting	5 years	~~5 years~~	~~3 years – 5 years~~

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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 ~~10,000,000~~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 ~~400,000~~14 shares of our common stock at a price of $~~1.98~~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 ~~May~~November 3130, 2018, there were ~~9,600,000~~320 shares available for future grant under the 2017 Plan.

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Stock Options

During the ~~period~~three months ended ~~May~~November 3130, 2018, the Company did not grant options and during the year ended August 31, ~~2017~~2018, the Company granted options with an aggregate fair value of $19,412,264 ~~and $33~~,~~314,610,~~ ~~respectively,~~ 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 ~~nine~~three months ended ~~May~~November 3130, 2018 and the year ended August 31, ~~2017~~2018:

	Options Outstanding
	Number of Shares			Weighted- Average Exercise Price		Fair Value on Grant Date			Intrinsic Value
Balances as of August 31, 2016		4,550,000		$	1.32	$	2,550,380		$	-
Balances as of August 31, 2017		946			98,700		35,864,990			-
Granted		~~23,800,000~~339			~~1.97~~66,000		3319,~~314~~412,~~610~~264			-
Exercised		-			-		-			-
Forfeited		-(2	)		-37,200		-(67,894	)		-
Balances as of August 31, 2017		28,350,000		$	1.86	$	35,864,990		$	-
Balances as of August 31, 2018		1,283		$	58,500	$	55,209,360		$	-
Granted		~~10,150,000~~-			~~2.20~~-		~~19,412,264~~-			-
Exercised		-			-		-			-
Forfeited		-			-		-			-
Balances as of May 31, 2018		38,500,000		$	1.95	$	55,277,254		$	-
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 ~~May~~November 3130, 2018:

Options Exercisable
Number		Weighted Average
Number of Shares		Weighted Average Exercise Price
of Shares		Exercise Price
	660	$	45,979
	16,750,000	$	1.58

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 ~~May~~November 3130, 2018. As of ~~May~~November 3130, 2018, the aggregate intrinsic value of stock options outstanding was $0 based on the closing market price of $0.230001 on ~~May~~November 3130, 2018.

FWeighted-12average ~~Table~~grant-date fair value for non-vested stock options as of ~~Contents~~November 30, 2018 and August 31, 2018 were listed as follows:

Weighted-average grant-date fair value for non-vested stock options as of May 31, 2018 and August 31, 2017 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

				Weighted-Average
				Grant Date
				Fair Value
	Shares			Per Share
Unvested, August 31, 2016		4,500,000		$	0.56
Granted		23,800,000			1.40
Vested		(4,050,000	)		1.27
Forfeited		-			-
Unvested, August 31, 2017		24,250,000		$	1.27
Granted		10,150,000			1.91
Vested		(12,650,000	)		1.46
Forfeited		-			-
Unvested, May 31, 2018		21,750,000		$	1.46

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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 ~~nine~~year ~~months~~ ended ~~May~~August 31, 2018 and 2017:

	Nine Months Ended
	Year Ended
	May 31,
	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 ~~May~~November 3130, 2018 and year ended August 31, ~~2017~~2018 were $222,~~047~~510,~~377~~847 and $1618,~~234~~112,~~697~~430, respectively.

As of ~~May~~November 3130, 2018, there was $167,~~922~~831,~~872~~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 50.4455 years as of ~~May~~November 3130, 2018.

NOTE 7 – CONVERTIBLE NOTES

The Company had the following principal balances under its convertible notes outstanding as of ~~May~~November 3130, 2018 and August 31, ~~2017~~2018:

	May 31,			August 31,
	November 30,			August 31,
	2018			~~2017~~2018
Convertible Notes - originated in September 2017	$	150,000		$	-
Convertible Notes - originated in October 2017	$	162,700		$	164,190
Convertible Notes - originated in October 2017		223,124			-
Convertible Notes - originated in December 2017		109,725			109,725
Convertible Notes - originated in November 2017		200,000			-
Convertible Notes - originated in January 2018		1,915			24,500
Convertible Notes - originated in December 2017		768,975			-
Convertible Notes - originated in March 2018		145,833			145,833
Convertible Notes - originated in January 2018		145,833			-
Convertible Notes - originated in April 2018		1,190,000			1,250,000
Convertible Notes - originated in March 2018		145,833			-
Convertible Notes - originated in May 2018		145,832			145,833
Convertible Notes - originated in April 2018		1,805,000			-
		1,756,005			1,840,081
Convertible Notes - originated in May 2018		145,833			-
Less debt discount and debt issuance cost		(349,422	)		(863,852	)
Less debt discount and debt issuance cost		(2,408,303	)		-
		1,406,583			976,229
		1,176,295			-
Less current portion of convertible notes payable		(1,406,583	)		(976,229	)
Less current portion of convertible notes payable		(1,176,295	)		-
Long-term convertible notes payable	$	-		$	-

The Company recognized amortization expense related to the debt discount and deferred financing fees of $4514,~~573,723~~429 and $0953,451 for the ~~nine~~three months ended ~~May~~November 3130, 2018 and 2017, respectively, which is included in interest expense in the statements of operations.

~~F-13~~For ~~Table~~the three months ended November 30, 2018 and 2017, the interest expense on convertible notes was $49,874 and $27,153, respectively. As of ~~Contents~~November 30, 2018 and August 31, 2018, the accrued interest payable was $103,919 and $67,157, respectively.

~~Convertible~~16 ~~Notes~~Table –of ~~Issued during the nine months ended May 31, 2018~~Contents

~~During~~Conversion the nine months ended May 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 1,589,977 common shares and warrant units to purchase up to 721,000 shares of common stock at exercise price ranging from $1.75 to $2.00 per share. The terms of convertible notes are summarized as follows:

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.

During the nine months ended May 31, 2018, holders of certain of the convertible notes converted notes with principal amounts of $3,051,501 and accrued interest of $103,774 into 8,418,018 shares of common stock. The corresponding derivative liability at the date of conversion of $3,626,032 was credited to common stock issued at a discount.

For the nine months ended May 31, 2018 and 2017, the interest expense on convertible notes was $182,093 and $0, respectively. As of May 31, 2018, and August 31, 2017, the accrued interest payable was $78,319 and $0, respectively.

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 ~~May~~November 3130, 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 ~~May~~November 3130, 2018 and August 31, ~~2017~~2018:

	Nine Months Ended			Year Ended
	Three months ended		Year Ended
	May 31,			August 31,
	November 30,		August 31,
	2018		2018	~~2017~~
Expected term	0.1011 - 50.0050 years		0.10 - 5.00 years		-
Expected average volatility	49283% - ~~350~~580%		49% - 350%		-
Expected dividend yield	-	-	-		-
Risk-free interest rate	02.9831%-2.8352%		0.98% - 2.83%		-

~~F-14~~The ~~Table~~following oftable ~~Contents~~summarizes the derivative liabilities included in the balance sheet at November 30, 2018:

The following table summarizes the derivative liabilities included in the balance sheet at May 31, 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

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - August 31, 2017	$	-
Addition of new derivative liabilities upon issuance of convertible notes as debt discounts		4,167,934
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes		3,225,787
Addition of new derivative liabilities from reclass of warrants from additional paid in capital		2,078,065
Addition of new derivative liabilities recognized upon issuance of warrants		19,367,718
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		7,806,061
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		859,488
Reduction of derivative liabilities from exercise of warrants		(3,091,847	)
Derivative liabilities settled upon conversion of convertible notes		(3,626,032	)
Derivative liabilities settled upon conversion of convertible preferred stock		(1,013,661	)
Loss on change in fair value of the derivative liabilities		(16,925,497	)
Balance - May 31, 2018	$	12,848,016

Table of Contents

The following table summarizes the (gain) loss on derivative liability included in the income statement for the ~~nine~~three months ended ~~May~~November 3130, 2018 and 2017, respectively.

	Nine Months Ended
	Three months ended
	May 31,
	November 30,
	2018			2017
Day one loss due to derivative liabilities on convertible notes and warrants	$	3,225,787		$	-
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes	$	-		$	140,251
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		859,488
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		1,106,610			-
Addition of new derivative liabilities recognized upon issuance of convertible preferred stock		7,806,061
Addition of new derivative liabilities recognized as day one loss on derivatives from warrants		-			859,488
Gain on change in fair value of the derivative liabilities		(16,925,497	)		-
(Gain) loss on change in fair value of the derivative liabilities		(1,341,502	)		(464,671	)
Gain on change in the fair value of derivative liabilities	$	(5,034,161	)	$	-
	$	(234,892	)	$	535,068

NOTE 9 – ~~RELATED~~COMMITMENTS ~~PARTY~~AND ~~TRANSACTIONS~~CONTINGENCIES

On February 1, 2018, the Company paid $54,120 for housing occupied by our Chief Executive Officer (see Note 10).

During the nine months ended May 31, 2018 and 2017, the Company incurred management fees of $0 and $13,135, respectively, to directors and officers of the Company.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Anti-Dilution Agreements

Pursuant to our agreement with ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC entered into in ~~January~~October ~~2017~~2016, in consideration of the services to be provided by ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC, we issued to ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, 7LLC 1,~~700~~250,000 shares of common stock representing 101.6% of our common stock outstanding at that date. The agreement with ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC provides full ratchet anti-dilution protection to ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~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 ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC without further consideration additional shares of our common stock or other class or series of capital stock so that ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC will continue to own 101.6% of the outstanding shares of common stock and each other class or series of capital stock. Through ~~May~~November 3130, 2018, we had issued ~~9,058,652~~49 shares of common stock to ~~Air~~Jet ~~Lease~~Midwest ~~Corporation~~Group, LLC and were obligated to issue an additional 246,~~113~~253,~~549~~639 shares of common stock. We ~~also~~After ~~granted~~entering ainto ~~five-year~~the ~~warrant~~agreement towith ~~Air~~us, ~~Lease~~Jet ~~Corporation~~Midwest toGroup, ~~purchase~~LLC 6%sought protection from creditors under the bankruptcy code, which proceedings were subsequently dismissed. One of ~~our~~Jet ~~outstanding~~Midwest Group, LLC’s creditors has claimed that shares of our common stock~~. This~~ ~~warrant~~to ~~has~~be ~~similar~~issued under the anti-dilution ~~protection~~right ~~that~~should ~~will~~be ~~require~~issued us to ~~issue~~it ainstead ~~number~~ of ~~shares~~Jet ~~equal~~Midwest toGroup, 6%LLC. In light of ~~the~~this ~~number~~dispute ofand ~~shares~~ongoing ~~outstanding~~litigation atbetween Jet Midwest Group, LLC and its creditors, the ~~time~~Company ofis ~~exercise~~evaluating its obligation to continue issuing shares to Jet Midwest Group, LLC.

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 May 31, 2018, we had issued 1,449,172 shares of common stock to Jet Midwest Group, LLC and were obligated to issue an additional 338,480 shares of common stock. Jet Midwest Group, LLC has sought protection from creditors under the bankruptcy code. The Company is evaluating how and whether the bankruptcy will impact its obligation to continue issuing shares to Jet Midwest Group, LLC.

F-15 Table of Contents

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 ~~410,000~~14 shares of common stock and ~~1,000,000~~34 warrants over a three-year term. We issued ~~50,000~~2 shares of common stock and ~~100,000~~4 warrants upon execution of this agreement, and are to issue ~~10,000~~1 shares of common stock and ~~25,000~~1 ~~warrants~~warrant per month for thirty-six (36) months, with the first issuance beginning August 1, 2017. Through ~~May~~November 3130, 2018, we had issued ~~150,000~~18 shares of common stock and ~~350,000~~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 $~~1.90~~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.

Table of Contents

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 HighwaySM.” 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 ~~May~~November 3130, 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 ~~May~~November 3130, 2018, we recognized $369,~~080~~020 as a prepaid expense.

Total net rent expense related to our operating leases for the ~~nine~~three months ended ~~May~~November 3130, 2018 and 2017, was $385,~~540~~570 and $165,~~400~~355 respectively.

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

Year ending August 31,
Year ended August 31,
2018	$	5,409
2019		22,284
Total	$	27,693
Thereafter		-
Total	$	22,284

NOTE 1110 – SUBSEQUENT EVENTS

Subsequent to ~~May~~November 3130, 2018 and through the date that these financials were made available, the Company had the following subsequent events:

WeOn ~~issued~~December ~~units~~6, ~~consisting~~2018, ofthe anCompany ~~aggregate~~issued ~~of 1~~195,~~388~~151,~~889~~516 shares of common stock ~~and~~for ~~warrants~~the toconversion ~~purchase~~of ~~1,388,889~~14 shares of ~~common~~preferred stock~~, exercisable for three years from issuance at $0~~.~~0045 per share, for aggregate gross proceeds of $5,000.~~

~~The~~On December 17, 2018, the Company ~~issued~~and ~~634~~Sabby Volatility Warrant Master Fund,~~818~~ Ltd. (“Sabby”) entered into that certain Exercise Agreement pursuant to which Sabby,~~042~~ which holds certain shares of ~~common~~the ~~stock~~Company’s ~~for~~Series A Convertible Preferred Stock (the ~~conversion~~“Preferred ofStock”) ~~convertible~~and ~~notes~~warrants into purchase shares of the Preferred ~~aggregate~~Stock, ~~principal~~agreed ~~amount~~to exercise a minimum of $190,~~008~~000 of its warrants on or immediately following December 17,~~131~~ ~~and~~2018. ~~accrued~~Under ~~interest~~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,~~271~~ 2018, we received gross proceeds of $90,000 from the exercise of 90 warrants into 90 shares of Preferred Stock.

~~The~~On December 28, 2018, the Company issued 1195,~~754~~151,~~219,336~~516 shares of common stock for the conversion of ~~6,323~~14 shares of preferred stock.

~~Pursuant~~19 toTable ~~our agreement with Brighton Capital, Ltd., we issued 20,000 shares~~ of ~~common stock and a total of 50,000 warrants at an exercise price of $1.90 per share for a term of five years.~~Contents

~~F-16~~Item ~~Table~~2. Management’s Discussion and Analysis of ~~Contents~~Financial Condition or Plan of Operation

~~Item~~Cautionary 2.Note ~~Management's~~Regarding ~~Discussion~~Forward-Looking ~~and Analysis of Financial Condition and Results of Operations~~Statements

~~Cautionary~~This ~~Note~~quarterly ~~Regarding~~report ~~Forward~~on Form 10-~~Looking~~Q ~~Statements~~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.

~~This~~In ~~quarterly~~some ~~report~~cases, ~~on Form 10-Q contains~~ forward-looking statements. ~~All~~can ~~statements~~be ~~other~~identified ~~than~~by ~~statements~~terms ofsuch ~~historical~~as or“may,” ~~current~~“will,” ~~facts~~“should,” ~~contained~~“expect,” in“plan,” ~~this~~“anticipate,” ~~quarterly~~“could,” ~~report~~“would,” ~~including~~“intend,” ~~statements~~“target,” ~~regarding~~“project,” ~~our~~“contemplate,” ~~future~~“believe,” ~~results~~“estimate,” “predict,” “potential” or “continue” or the negative of ~~operations~~these ~~and~~terms ~~financial~~or ~~position,~~other ~~business~~similar ~~strategy,~~expressions. ~~proposed~~The ~~new~~forward-looking ~~products~~statements ~~and~~in ~~services,~~this ~~research~~quarterly ~~and~~report ~~development~~are ~~costs,~~only ~~granting~~predictions. ofWe ~~regulatory~~have ~~approvals,~~based ~~timing~~these ~~and~~forward-looking ~~likelihood~~statements oflargely ~~success,~~on ~~plans~~our ~~and~~current ~~objectives~~expectations ofand ~~management~~projections ~~for~~about future ~~operations~~events and ~~future~~financial ~~results~~trends ofthat ~~anticipated~~we ~~products~~believe ~~and~~may ~~services~~affect our business, ~~are~~financial condition and results of operations. These forward-looking statements. ~~These~~speak ~~statements~~only ~~involve~~as ~~known~~of ~~and~~the ~~unknown~~date ~~risks,~~of ~~uncertainties~~this quarterly report and ~~other~~are ~~important~~subject ~~factors~~to ~~that~~a ~~may~~number ~~cause~~of ~~our~~risks, ~~actual~~and ~~results~~except as required by applicable law, ~~performance~~we ordo ~~achievements~~not plan to bepublicly ~~materially~~update ~~different~~or ~~from~~revise any ~~future~~forward-looking ~~results~~statements contained herein, ~~performance~~whether oras ~~achievements~~a ~~expressed~~result orof ~~implied~~any bynew ~~the~~information, ~~forward-looking~~future ~~statements~~events, changed circumstances or otherwise.

InBecause ~~some cases,~~ forward-looking statements ~~can~~are beinherently ~~identified~~subject byto ~~terms~~risks ~~such~~and ~~as “may~~uncertainties,” ~~“will,”~~some ~~“should,”~~of ~~“expect,”~~which ~~“plan,”~~cannot ~~“anticipate,”~~be ~~“could,”~~predicted ~~“would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”~~ or ~~“continue”~~quantified orand ~~the~~some ~~negative~~ of ~~these~~which ~~terms~~are orbeyond ~~other~~our ~~similar~~control, ~~expressions.~~prospective ~~The~~investors ~~forward-looking~~should ~~statements~~not inrely ~~this~~on ~~quarterly report are only predictions. We have based~~ these forward-looking statements ~~largely~~as onpredictions ~~our~~of ~~current~~future ~~expectations~~events. ~~and~~The ~~projections about future~~ events and ~~financial~~circumstances ~~trends~~reflected ~~that~~in ~~we believe may affect~~ our ~~business, financial condition and results of operations. These~~ forward-looking statements ~~speak~~may ~~only~~not asbe ofachieved ~~the~~or ~~date~~occur ofand ~~this~~actual ~~quarterly~~results ~~report~~could ~~and~~differ ~~are~~materially ~~subject~~from tothose aprojected ~~number of risks~~in, ~~and~~or ~~except~~implied ~~as required~~ by ~~applicable law~~, wethe ~~do not plan to publicly update or revise any~~ forward-looking statements ~~contained~~due ~~herein,~~to ~~whether as~~ a ~~result~~variety of ~~any new information~~factors, ~~future events~~including, ~~changed~~but ~~circumstances~~not orlimited ~~otherwise.~~to:

~~Because~~· ~~forward-looking~~our ~~statements~~financial ~~are~~performance, ~~inherently~~including ~~subject~~our history of operating losses; · our ability to ~~risks~~obtain ~~and~~additional ~~uncertainties~~funding to continue our operations; · our ability to successfully develop, ~~some~~implement ofand ~~which~~commercialize ~~cannot~~the beInfinitus ~~predicted~~Super orHighway ~~quantified~~(“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 ~~some~~purchasers; · changes in the regulatory environments of the United States and other countries in which ~~are~~we ~~beyond~~intend to operate; · our ~~control,~~ability ~~prospective~~to ~~investors~~attract ~~should~~and ~~not~~retain ~~rely~~key onmanagement ~~these~~and ~~forward-looking~~other ~~statements~~personnel; as· ~~predictions~~competition from new market entrants and new technologies; · our ability to identify and pursue development of ~~future~~appropriate ~~events.~~products; ~~The~~and ~~events~~· risks, uncertainties and ~~circumstances~~assumptions ~~reflected~~described under Section 1A. “Risk Factors” in our ~~forward~~Company’s Annual Report on Form 10-~~looking~~K ~~statements~~for ~~may~~the ~~not~~fiscal beyear ~~achieved~~ended orAugust ~~occur~~31, 2018, and ~~actual~~in ~~results~~any ~~could~~subsequent ~~differ~~filings ~~materially~~we ~~from~~make ~~those~~with ~~projected~~the ~~in,~~Securities orand ~~implied~~Exchange ~~by,~~Commission (the ~~forward-looking~~“SEC”) ~~statements~~and ~~due~~under to“Management’s aDiscussion ~~variety~~and Analysis of ~~factors,~~Financial ~~including,~~Condition ~~but~~and ~~not~~Results ~~limited~~of ~~to:~~Operations” and elsewhere in this quarterly report.

·Forward-looking ~~our~~statements ~~financial~~are ~~performance,~~expressly ~~including~~qualified ~~our~~in 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;~~entirety ·by ~~our~~this ~~ability~~cautionary tostatement. ~~enter~~The ~~into~~forward-looking ~~agreements~~statements ~~with~~included ~~potential~~in ~~customers,~~this ~~vendors~~document ~~and~~are ~~purchasers;~~made ·as ~~changes~~of in the ~~regulatory~~date ~~environments~~ of ~~the~~this ~~United~~document ~~States~~ and ~~other~~we ~~countries~~do innot ~~which~~undertake weany ~~intend~~obligation to ~~operate;~~update ·forward-looking ~~our~~statements ~~ability~~ to ~~attract~~reflect ~~and retain key management and other personnel; · competition from~~ new ~~market~~information, ~~entrants~~subsequent ~~and~~events ~~new~~or ~~technologies; · our ability to identify and pursue development of appropriate products; and · risks~~otherwise, ~~uncertainties~~except ~~and~~as ~~assumptions~~required ~~described~~by ~~under Section 1A~~law. ~~“Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31~~Moreover, ~~2017,~~we ~~under~~operate ~~Part~~in ~~II,~~an ~~Item~~evolving 1environment. ~~“Risk~~New ~~Factors”~~risk infactors ~~the~~and ~~Company’s~~uncertainties ~~Quarterly~~may ~~Report~~emerge onfrom ~~Form~~time ~~10-Q~~to ~~for the fiscal quarter ended February 28~~time, ~~2018~~ and init ~~any~~is ~~subsequent~~not ~~filings~~possible wefor ~~make~~management ~~with~~to ~~the~~predict ~~Securities~~all ~~and~~risk ~~Exchange~~factors ~~Commission (the “SEC”)~~ and ~~under~~uncertainties. ~~“Management’s~~We ~~Discussion~~qualify ~~and~~all ~~Analysis~~ of ~~Financial~~our ~~Condition~~forward-looking ~~and~~statements ~~Results~~by ofthese ~~Operations”~~cautionary ~~and elsewhere in this quarterly report~~statements.

4As ~~Table~~used ofin ~~Contents~~this quarterly report, the terms the “Company”, “we”, “us” and “our” refer to Airborne Wireless Network, a Nevada corporation.

~~Forward-looking~~20 ~~statements~~Table ~~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.Contents

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

~~The~~Airborne ~~Company~~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.

~~Airborne~~On ~~Wireless~~October ~~Network~~20, ~~was~~2015, ~~formed~~our ascurrent aPresident, ~~Nevada~~Treasurer ~~corporation~~and onSecretary, ~~January~~J. 5,Edwards ~~2011~~Daniels, ~~with~~acquired control of the ~~name~~Company ~~“Ample-Tee”~~by topurchasing ~~engage~~from inLawrence ~~the~~Chenard, ~~business~~our former president, 2,803 shares of ~~promoting~~our common stock for a purchase price of $250,000 ~~marketing~~(2,667 ~~selling~~of ~~and~~which ~~distributing~~shares ~~hard~~were todelivered ~~find~~by ~~ergonomic~~Mr. ~~products~~Daniels ~~for~~to the ~~physically~~Company ~~disabled~~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 ~~expires~~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.

WeOn ~~are~~August an24, ~~early~~2018, ~~stage~~we ~~company~~effected ~~with~~a ~~the~~30,000-to-1 ~~principal~~reverse ~~business~~split ~~strategy~~ of ~~developing,~~our ~~marketing~~common ~~and~~stock. ~~licensing~~As a ~~high-speed~~result of the reverse split, ~~meshed~~every ~~broadband~~30,000 ~~airborne~~pre-split ~~wireless~~shares ~~network~~of bythe ~~linking~~Company’s ~~aircraft~~common instock ~~flight.~~outstanding Weon ~~call~~the ~~this~~effective ~~network~~date of the ~~“Infinitus~~reverse ~~Super~~split ~~Highway.”~~were Toautomatically ~~our~~combined ~~knowledge~~into one new share of common stock without any action on the part of the holders, noand ~~commercial~~the ~~broadband~~number ~~airborne~~of ~~network~~outstanding ~~exists~~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 ~~world~~30,000-to-1 ~~today~~reverse split ratio.

We ~~expect~~are ~~that~~an ~~Infinitus~~early-stage ~~will~~company ~~provide~~with athe ~~broadband~~principal ~~wireless~~business ~~communication~~strategy ~~infrastructure~~of bydeveloping, ~~using~~marketing and ~~customizing~~ ~~existing,~~licensing ~~small,~~a ~~lightweight~~fully meshed, ~~low~~high-~~power~~speed ~~relay station equipment and antennae that will be installed onboard aircraft. Each equipped aircraft would have a~~ broadband airborne wireless ~~communication~~network ~~link~~by tolinking ~~one or more neighboring~~ aircraft ~~and/or~~in ~~ground stations~~flight. ~~These~~We ~~aircraft~~call ~~would~~this ~~form~~network ~~a chain of seamless airborne repeaters or routers providing broadband wireless communication gateways along~~ the ~~entire~~“Infinitus ~~flight~~Super ~~path, essentially creating a digital superhighway in the sky~~Highway.” IfTo aour ~~link was interrupted~~knowledge, ~~the~~no ~~signal~~fully ~~would~~meshed becommercial ~~redirected~~broadband toairborne ~~the~~network ~~next~~exists ~~participating aircraft or ground station~~ in the ~~chain~~world ~~-- in other words, there would be multiple, simultaneous data connections and thus the system would not rely on a single link~~today.

We ~~intend~~expect tothat ~~act~~Infinitus aswill provide a ~~wholesale~~broadband ~~carrier,~~wireless ~~licensing~~communication ~~our~~infrastructure ~~bandwidth~~by tousing and customizing existing, ~~among~~small, ~~others~~lightweight, ~~data~~low-power ~~service~~relay ~~providers~~station ~~(such~~equipment asand ~~major~~antennae ~~telecommunications~~that ~~companies~~will ~~and~~be ~~other~~installed ~~Internet~~onboard ~~service~~aircraft. ~~providers)~~Each ~~that~~equipped ~~provide~~aircraft would have a broadband ~~services~~wireless communication link to ~~end~~one ~~users,~~or tomore ~~government~~neighboring ~~agencies~~aircraft and/or toground ~~companies~~stations. ~~that~~These ~~desire~~aircraft would form a ~~more~~chain ~~robust~~of ~~private~~seamless airborne repeaters or routers providing broadband ~~network.~~wireless Wecommunication dogateways ~~not~~along ~~plan~~the toentire ~~license~~flight orpath, ~~sell~~essentially ~~Infinitus~~creating ~~directly~~a todigital ~~consumers~~superhighway in the sky. WeIf ~~anticipate~~a ~~that~~link ~~Infinitus~~was ~~will~~interrupted, ~~enable~~the ~~our~~signal ~~future~~would ~~customers~~be redirected to ~~minimize~~the ~~their~~next ~~infrastructure~~participating ~~development~~aircraft ~~time~~or ~~and~~ground ~~costs~~station in the chain -- in other words, there would be multiple, simultaneous data connections and ~~increase~~thus the ~~reliability~~system ofwould ~~their~~not ~~broadband~~rely ~~communications~~on ~~systems~~a single link.

IfWe weintend ~~can~~to ~~successfully~~act ~~complete~~as ~~the~~a ~~development~~wholesale ~~of Infinitus~~carrier, ~~Infinitus~~licensing ~~could~~our ~~provide~~bandwidth ~~high-speed broadband Internet service~~ to, ~~(i)~~among ~~supplement or replace current broadband networks~~others, ~~(ii)~~data ~~serve~~service ~~currently~~providers ~~underserved markets,~~ (such as ~~maritime,~~major ~~rural~~telecommunications companies and ~~remote~~other ~~locations,~~Internet ~~(iii~~service providers) ~~government agencies, including those~~ that provide ~~emergency~~broadband ~~or disaster relief~~ services, ~~(iv)~~to ~~companies~~end ~~seeking a more secure~~users, ~~reliable~~to ~~private~~government ~~data~~agencies ~~network, (v) customers onboard aircraft in flight seeking improved Internet access~~ and ~~connectivity~~to ~~and~~companies ~~(vi)~~that ~~owners~~desire ~~and~~a ~~operators~~more ofrobust private ~~jets~~broadband ~~and~~network. ~~small~~We ~~aircraft~~do ~~owners,~~not ~~which~~plan into ~~turn,~~license ~~can~~or ~~provide~~sell ~~additional~~Infinitus ~~aircraft~~directly ~~for~~to ~~the Infinitus network~~consumers. ~~Infinitus~~We ~~could~~anticipate ~~also~~that ~~provide~~Infinitus awill ~~wireless~~enable ~~broadband~~our ~~network~~future ~~that~~customers isto ~~not~~minimize ~~vulnerable~~their orinfrastructure ~~susceptible~~development totime ~~single~~and ~~points~~costs, ofand ~~failure~~increase ~~(as is~~ the ~~case~~reliability ~~with~~of ~~some~~their ~~current~~broadband ~~networks)~~communications systems.

~~Infinitus~~If ~~was~~we ~~originally~~can ~~based~~successfully ~~principally~~complete onthe adevelopment ~~United~~of ~~States~~Infinitus, ~~patent~~Infinitus ~~that~~could weprovide ~~acquired~~high-speed inbroadband ~~August~~Internet ~~2016.~~service ~~The~~to ~~patent,~~(i) ~~which~~supplement ~~expires~~or onreplace ~~September~~current ~~20,~~broadband ~~2018~~networks, ~~gives~~(ii) ~~the~~serve ~~holder~~currently ~~the~~underserved ~~right to~~markets, ~~exclude~~such ~~others in~~as ~~the United States~~maritime, ~~commensurate~~rural ~~with~~and ~~the~~remote ~~scope of the patent~~locations, ~~from~~(iii) ~~creating a~~government ~~fully meshed~~agencies, ~~high-speed~~including ~~broadband~~those ~~wireless~~that ~~network~~provide byemergency ~~linking~~or ~~commercial~~disaster ~~aircraft~~relief inservices, ~~flight.~~(iv) Wecompanies ~~also~~seeking ~~filed~~ a ~~patent~~more ~~application~~secure, inreliable ~~the~~private ~~United~~data ~~States on July 25~~network, ~~2017~~(v) ~~seeking~~customers ~~rights~~onboard ~~to exclude~~aircraft ~~others,~~in ~~commensurate~~flight ~~with~~seeking ~~the~~improved ~~scope~~Internet ofaccess ~~the~~and ~~patent~~connectivity ~~application,~~and ~~from~~(vi) ~~using our~~owners ~~method~~and operators of ~~synchronizing~~private ~~free~~jets ~~space~~and ~~optic~~small ~~links between~~ aircraft ~~in flight~~owners, which ~~technology we~~ ~~believe will be instrumental~~ in ~~making Infinitus operate successfully. Currently~~turn, ~~this~~can ~~patent~~provide ~~application~~additional isaircraft ~~undergoing~~for ~~prioritized examination at~~ the UInfinitus network.S. ~~Patent~~Infinitus ~~and~~could ~~Trademark~~also ~~Office~~provide ~~and~~a wewireless ~~are~~broadband ~~continuing~~network tothat ~~prosecute~~is ~~this~~not ~~patent~~vulnerable ~~application~~or insusceptible ~~order~~ to ~~get~~single ~~the~~points ~~patent~~of ~~granted~~failure (as ~~soon~~is ~~as possible. We also expect to seek~~ the ~~right~~case towith ~~exclude~~current ~~others from using this method under an international Patent Cooperation Treaty application~~networks).

521 Table of Contents

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.

OnOur ~~May~~principal ~~23,~~executive ~~2018,~~office ~~the~~is ~~Company,~~located inat ~~connection~~4115 ~~with~~Guardian ~~the~~Street, ~~offering~~Suite ~~of the Units comprised of its Series A Convertible Preferred Stock (the “Preferred Stock”) and related warrants to purchase Preferred Stock~~C, ~~filed~~in aSimi ~~Certificate of Designation of Preferences~~Valley, ~~Rights~~California 93063 and ~~Limitations~~our oftelephone ~~Series~~number Ais ~~Convertible Preferred Stock~~ (~~the “Certificate of Designation”~~805) ~~with the Secretary of State of the State of Nevada establishing the preferences, rights and limitations of the Preferred Stock issued in the offering~~583-4302. ~~The~~Our ~~terms~~fiscal ofyear ~~the~~end ~~Preferred~~is ~~Stock~~August ~~are set forth in the Certificate of Designation, which became effective upon filing~~31.

~~Our~~Recent ~~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.~~Developments

~~Results~~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 ~~Operations~~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 ~~following~~patent, ~~summary~~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 ~~results~~method of ~~operations~~synchronizing ~~should~~free bespace ~~read~~optic links between aircraft in ~~conjunction~~flight, ~~with~~which ~~our~~technology ~~financial~~we ~~statements~~believe ~~included~~will ~~elsewhere~~be instrumental in ~~this~~making ~~quarterly~~Infinitus ~~report~~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.

ToResults ~~date,~~of ~~we have not earned any revenue from operations.~~Operations

~~Nine~~The ~~Months~~following ~~Ended~~summary ~~May~~of ~~31,~~our ~~2018~~results ~~and~~of ~~2017~~operations should be read in conjunction with our financial statements included elsewhere in this quarterly report.

~~Our~~To ~~operating results for the nine months ended May 31~~date, ~~2018~~we ~~and~~have ~~2017,~~not ~~and~~earned ~~the~~any ~~changes~~revenues ~~between~~from ~~those periods for the respective items, are summarized as follows:~~operations.

	Nine Months Ended,
	May 31,
Statement of Operations Data:	2018			2017		Changes
Revenue	$	-		$	-	$	-
Total operating expenses		54,825,683			27,068,098		27,757,585
Other (income) expenses		(278,326	)		150		(278,476	)
Net loss	$	54,547,357		$	27,068,248	$	27,479,109

Three Months Ended November 30, 2018 and 2017

WeOur ~~incurred~~operating aresults ~~net loss of $54.5 million~~ for the ~~nine~~three months ended ~~May~~November 3130, 2018 asand ~~compared to a net loss of $27.1 million for the same period in~~ 2017., ~~The increase in net loss was due to an increase in operating expenses~~ and ~~other expenses. The increase in operating expenses was mainly attributable to~~ the ~~development~~changes ~~and~~between ~~marketing~~those ofperiods ~~Infinitus starting in August 2016, stock-based compensation expense related to common stock and warrants issued to consultants and debt holders, and professional fees~~ for ~~consulting,~~the ~~legal~~respective ~~and accounting services. The increase in other (income) relates to gain in change in fair value on derivative liabilities and interest expense~~items, ~~primarily~~are ~~from~~summarized ~~the~~as ~~issuance of convertible notes during the nine months ended May 31, 2018.~~follows:

We expect that operating costs will continue to be incurred at an elevated level in future periods as we continue to develop Infinitus.

	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	)

6We ~~Table~~incurred a net loss of ~~Contents~~$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.

~~Our~~We ~~operating~~currently ~~expenses~~have ~~for~~very ~~the~~limited ~~nine~~capital ~~months~~resources ~~ended~~and ~~May~~cash ~~31,~~flows ~~2018~~to ~~and~~support ~~2017~~our operations. Until we obtain additional debt or equity financing, ~~and~~we ~~the~~will ~~changes~~incur ~~between~~costs ~~those~~at a reduced level compared to prior-year periods, ~~for~~and our development of Infinitus and the ~~respective~~Company’s ~~items,~~business ~~are~~may ~~summarized~~be asmaterially ~~follows:~~delayed or terminated.

	Nine Months Ended,
	May 31,
Operating Expenses:	2018		2017		Changes
Marketing and branding	$	4,227,012	$	1,130,070	$	3,096,942
Depreciation		7,345		2,614		4,731
General and administrative expenses		786,835		163,102		623,733
Management fees		102,000		13,135		88,865
Professional fees		4,049,113		1,427,770		2,621,343
Research and development		588,042		704,257		(116,215	)
Salaries and wages		786,510		400,658		385,852
Stock based compensation		44,278,826		23,226,492		21,052,334
Total operating expenses	$	54,825,683	$	27,068,098	$	27,757,585

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~~The principal~~Our ~~reason for the increase in~~ operating expenses ~~was~~for ~~$44.3 million of stock-based compensation expenses incurred in~~ the ~~2018~~three ~~period compared to $23.2 million of stock-based compensation expenses incurred in the 2017 period. In the nine~~ months ended ~~May~~November 3130, 2018, ~~stock compensation expense included: (i) $2.0 million in connection with the issuance of 2,113,548 shares of common stock~~ and ~~$13.6 million in connection with the issuance of 5~~2017,~~714,031~~ warrants to purchase shares to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $316,252 in connection with the issuance of 338,481 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; (iii) $128,800 in connection with the issuance of 90,000 shares of common stock and ~~$314,923 in connection with~~ the ~~issuance~~changes ofbetween ~~225,000~~those ~~warrants~~periods to purchase shares to Brighton Capital Ltd. pursuant to our consulting agreement with that company; (iv) $22 million with respect to employee stock options; (v) $5.5 million in connection with the issuance of 3,523,072 warrants to purchase shares to shareholders; (vi) $408,164 in connection with the issuance of 388,740 shares of common stock for ~~services. In~~ the ~~nine~~respective ~~months ended May 31~~items, ~~2017,~~are ~~stock~~summarized ~~compensation~~as ~~expense included~~follows: (i) $12 million in connection with the issuance of 8,839,600 shares of common stock to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $1.6 million in connection with the issuance of 1,414,336 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; (iii) $9.2 million with respect to employee stock options; and (iv) $320,000 in connection with the issuance of 326,656 shares of common stock for services.

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 we can potentially assist us in developing and commercializing Infinitus. Furthermore, building our reputation and brand will enhance our ability to attract vendors and customers, like airlines and internet service providers, once Infinitus is ready for commercialization. During the nine months ended May 31, 2018, our company has increased marketing and branding efforts and incurred $4.2 million marketing and branding expenses; whereas, $1.1 million were incurred by our company during the nine months ended May 31, 2017. We expect that our expenditures on marketing and branding will increase in future fiscal periods as we continue to develop Infinitus, and will grow proportionally with our research and development spending.

	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

~~Professional~~The ~~fees~~biggest ~~include~~component ~~fees~~of the operating expenses was $4.3 million of stock-based compensation expenses incurred in the 2018 period compared to ~~consultants~~$6.0 million of stock-based compensation expenses incurred in the 2017 period. In the three months ended November 30, ~~investor~~2018, ~~relations~~stock ~~firms~~compensation expense included: (i) $18,150 ~~and~~in ~~legal~~connection with the issuance of 46,242,789 ~~accounting~~shares ~~and~~of ~~compliance~~common ~~professionals~~stock ~~for~~to Jet Midwest Group pursuant to our ~~audit,~~service ~~SEC~~agreement ~~filings,~~with ~~securities~~that ~~offerings~~company; and ~~contracts~~(ii) $4,292,178 million with respect to employee stock options. ~~During~~In the ~~nine~~three months ended ~~May~~November 3130, ~~2018~~2017, ~~professional~~stock ~~fees~~compensation ~~were~~expense included: (i) $~~4.0~~165,000 ~~million~~in ~~compared~~connection with the issuance of 125,146 shares of common stock to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $~~1.4~~27,000 ~~million~~in ~~for~~connection with the ~~comparative~~issuance ~~period~~of in20,336 ~~2017.~~shares ~~The~~of ~~increase~~common instock ~~professional~~to ~~fees~~Jet ~~were~~Midwest ~~mainly~~Group ~~attributed~~pursuant to our service agreement with that company; (iii) $39,000 in connection with the ~~increase~~issuance of 30,000 shares of common stock and $94,000 in ~~consulting~~connection ~~fees~~with ~~related~~the issuance of warrants to ~~business~~purchase 75,000 ~~strategic~~shares ~~and~~to ~~software~~Brighton ~~development~~Capital ~~and~~Ltd. ~~legal~~pursuant ~~fees~~to ~~related~~our consulting agreement with that company; (iv) $5.5 million with respect to ~~private~~employee ~~placements~~stock options; and ~~public~~(v) ~~offerings~~$93,000 in connection with the issuance of ~~our~~118,580 ~~securities.~~shares of warrants to consultants..

~~Research~~Marketing and ~~development~~branding expenses incurred relate to ~~the~~television ~~development~~and ofprint ~~Infinitus~~advertising ~~starting~~for inbranding ~~August 2016~~purposes. ~~During~~We ~~the~~believe ~~nine~~that ~~months~~building ~~ended~~recognition ~~May~~for ~~31,~~our ~~2018,~~brand ~~research~~enhances ~~and~~our ~~development~~reputation ~~expense~~and ~~was~~ultimately ~~$588,042,~~our asability ~~compared~~ to ~~$704~~attract technology,~~257~~ ~~during~~financial ~~the~~and ~~same~~other ~~period~~companies inwhich ~~2017.~~can ~~The~~potentially ~~reduction~~assist us in ~~our~~developing ~~research~~ and ~~development~~commercializing ~~spending~~Infinitus. ~~during~~For the ~~nine~~fiscal ~~months~~quarter ended ~~May~~November 3130, 2018,we ~~was~~recorded ~~due~~$3.2 ~~to our~~million ~~having~~in ~~limited~~marketing ~~capital~~and ~~resources,~~branding ~~including~~expenses. ~~cash~~The onmajority ~~hand,~~of ~~during~~these expenses reflect the ~~nine-month~~accrual ~~period,~~of the maximum amount we may owe under a contract with a vendor to purchase media time for our marketing and ~~especially~~branding ~~during~~messages, although the ~~third~~amount ~~fiscal~~we ~~quarter,~~may ultimately pay to ~~continue~~this ~~funding~~vendor ~~our~~is ~~development~~uncertain ~~work~~and in dispute. AsOther athan ~~result~~this ofand ~~the~~other ~~closing~~accruals, none of ~~our~~which ~~public~~were ~~offering~~material, ofwe ~~8,000~~did ~~units~~not onotherwise ~~May~~incur 29any new marketing and branding expenses, ~~2018~~whereas, we$1.1 ~~anticipate~~million ~~that~~was ~~spending~~incurred onby ~~research~~our ~~and~~Company ~~development~~during ~~will~~the ~~grow~~three months ended November 30, 2017. We expect to incur expenditures on marketing and branding in future fiscal ~~quarters,~~periods ~~especially~~if and when cash flow is available, as we ~~prepare~~plan ~~for~~to ~~the~~continue ~~two-plane~~to ~~test~~develop ~~and~~Infinitus, ~~eventually~~however, ~~the~~until ~~20-plane~~we ~~test~~obtain additional or equity financing, we will be unable to continue spending on marketing and branding efforts.

~~General~~Professional ~~and~~fees ~~administrative~~include ~~expenses~~fees ~~include~~to ~~office~~consultants, ~~shipping,~~investor ~~entertainment~~relations firms, ~~travel~~and legal, ~~insurance~~accounting and ~~other~~compliance ~~miscellaneous~~professionals ~~expenses~~for our audit, SEC filings, securities offerings and contracts. During the ~~nine~~three months ended ~~May~~November 3130, 2018, ~~general~~professional ~~and~~fees ~~administrative~~were ~~expenses~~$1.5 ~~increased~~million ~~primarily~~compared ~~from~~to ~~travel costs increasing~~ $~~582~~857,000 asfor ~~compared~~the comparative period in 2017. The increase in professional fees were mainly attributed to the ~~same~~increase ~~period~~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 ~~2017~~connection with capital-raising transactions, regulatory compliance and responses and other related matters.

7Research ~~Table~~and development expenses incurred relate to the development of ~~Contents~~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.

~~Our~~General and administrative expenses include office, shipping, entertainment, travel, insurance and other ~~(income)~~miscellaneous ~~expense~~expenses. ~~for~~During the ~~nine~~three months ended ~~May~~November 3130, 2018, general and ~~2017~~administrative expenses increased primarily from office expense increasing by $11,205 and ~~the~~travel ~~changes~~costs ~~between~~increasing ~~those~~by ~~periods~~$11,573 ~~for~~as ~~the~~compared ~~respective~~to ~~items,~~the ~~are~~same ~~summarized~~period asin ~~follows:~~2017.

	Nine Months Ended,
	May 31,
Other (Income) Expense	2018			2017		Changes
Interest expense	$	4,755,835		$	150	$	4,755,685
Change in fair value of derivative liabilities		(5,034,161	)		-		(5,034,161	)
Total other (income) expense	$	(278,326	)	$	150	$	(278,476	)

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~~During~~Our ~~the nine months ended May 31, 2018, our Company recognized $(278,326) in~~ other (income) ~~which included a net gain on change in fair value of derivative liabilities of $5.0 million and interest~~ expense offor ~~$4.8 million. The gain on change in fair value of derivative liabilities related to $4.1 million as a day one loss in~~ the ~~fair~~three ~~value~~months ofended ~~warrants~~November ~~and convertible notes recorded as a derivative liability~~30, ~~$7.8~~2018 ~~million as a day one loss from the addition of new derivative liabilities recognized upon issuance of convertible preferred stock~~ and ~~a gain of $16.9 million in the change in the fair value of derivative liabilities~~2017, ~~as calculated using Black-Scholes option model. The interest expense includes amortization of debt discount~~ and ~~interest incurred on convertible notes issued during~~ the ~~nine~~changes ~~months~~between ~~ended~~those ~~May~~periods ~~31,~~for ~~2018. For~~ the ~~nine~~respective ~~months ended May 31~~items, ~~2017,~~are ~~other~~summarized ~~expense~~as ~~included $150 of interest expense.~~follows:

Three Months Ended May 31, 2018 and 2017

	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	)

~~Our~~During ~~operating results for~~ the three months ended ~~May~~November 3130, 2018, ~~and~~our ~~2017~~Company recognized $329,411 in other income which included a gain on change in fair value of derivative liabilities of $234,892 and ~~the~~interest ~~changes~~expense ~~between~~of ~~those~~$564,303. ~~periods~~The ~~for~~gain on change in fair value of derivative liabilities related to $1,106,610 as a day one loss from the ~~respective~~addition ~~items~~of new derivative liabilities recognized upon issuance of convertible preferred stock and a gain of $1,341,502 ~~are~~in ~~summarized~~the change in the fair value of derivative liabilities, as ~~follows:~~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.

	Three Months Ended
	May 31,
Statement of Operations Data:	2018			2017		Changes
Revenue	$	-		$	-	$	-
Total operating expenses		10,476,255			9,474,818		1,001,437
Other (income) expense		(4,382,190	)		-		(4,382,190	)
Net loss	$	6,094,065		$	9,474,818	$	(3,380,753	)

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.

WeLiquidity incurred a net loss of $6.1 million for the three months ended May 31, 2018 as compared to a net loss of $9.5 million for the same period in 2017. The decrease in net loss was due to an increase in other income in excess of the increase in operating expenses. The increase in operating expenses was mainly attributed to the development of Infinitus starting in August 2016, stock-based compensation expense related to common stock and ~~warrants~~Capital issued to consultants and debt holders, and professional fees for consulting, legal and accounting services. The increase in other (income) expense relates to the gain on change in fair value on derivative liabilities and interest expense from the issuance of convertible notes during the three months ended May 31, 2018.Resources

WeThe ~~expect~~following ~~that~~table ~~operating~~presents ~~costs~~selected ~~will~~financial ~~continue~~information toas beof ~~incurred~~and atfor anthe ~~elevated~~three ~~level~~months inended ~~future~~November ~~periods~~30, as2018, weand ~~continue to develop Infinitus.~~ 2017:

8 Table of Contents

	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	)

~~Our~~Because ~~operating~~we ~~expenses~~have ~~for~~not generated any revenues, we depend on proceeds from the ~~three~~sales ~~months~~of ~~ended~~securities and loans to finance our operations. As previously disclosed, on May 3129, 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 ~~2017~~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 ~~changes~~offering. ~~between~~If ~~those~~the ~~periods~~warrants ~~for~~included in the ~~respective~~offering ~~items~~are exercised, ~~are~~then ~~summarized~~the asCompany ~~follows:~~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.

	Three Months Ended
	May 31,
Operating Expenses:	2018		2017		Changes
Marketing and branding	$	1,255,280	$	523,893	$	731,387
Depreciation		2,793		1,885		908
General and administrative expenses		466,803		87,475		379,328
Management fees		60,000		1,500		58,500
Professional fees		2,048,596		668,119		1,380,477
Research and development		18,100		383,606		(365,506	)
Salaries and wages		307,231		192,467		114,764
Stock based compensation		6,317,452		7,615,873		(1,298,421	)
Total operating expenses	$	10,476,255	$	9,474,818	$	1,001,437

Table of Contents

~~The~~On ~~principal~~December ~~reason for the increase in operating expenses was an increase in marketing and professional fees~~18, ~~partially offset by a decrease in stock -based compensation. We incurred $6.3 million of stock-based compensation expenses in the~~ 2018 ~~period compared to $7.6 million of stock-based compensation expenses incurred in the 2017 period. In the three months ended May 31~~, ~~2018,~~we ~~stock~~received ~~compensation~~gross ~~expense~~proceeds ~~included: (i) $960,225 in connection with the issuance~~ of ~~1,530,861 shares of common stock and~~ $~~13.6 million in connection with the issuance of 5~~90,714,031 warrants to purchase shares to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $153,636 in connection with the issuance of 244,983 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; (iii) $38,400 in connection with the issuance of 30,000 ~~shares~~from ~~of common stock and $100,904 in connection with~~ the ~~issuance~~exercise of ~~75,000~~90 warrants toissued ~~purchase~~in ~~shares to Brighton Capital Ltd. pursuant to~~ our consulting agreement with that company; (iv) $4.7 million with respect to employee stock options; (v) $163,279 in connection with the issuance of 159,235 warrants to purchase shares to shareholders; (vi) $200,000 in connection with the issuance of 300,000 shares of common stock for services. In the three months ended May ~~31,~~2018 ~~2017,~~public ~~stock~~offering ~~compensation~~into ~~expense~~90 ~~included: (i) $3.1 million in connection with the issuance of 1,139,600~~ shares of ~~common~~Preferred stock to Air Lease Corporation pursuant to our marketing agreement with that company; (ii) $410,843 in connection with the issuance of 164,336 shares of common stock to Jet Midwest Group pursuant to our service agreement with that company; (iii) $4Stock.~~0 million with respect to employee stock options; and (iv) $30,000 in connection with the issuance of 11,798 shares of common stock for services.~~

~~Marketing~~Because ~~and~~we ~~branding~~currently ~~expenses~~do ~~incurred~~not ~~relate~~generate torevenue, ~~television~~we ~~and~~must ~~print~~obtain ~~advertising~~additional ~~for~~financing ~~branding~~to ~~purposes~~continue operations at our current level. We ~~believe~~currently ~~that~~do ~~building~~not ~~recognition~~have ~~for~~enough ~~our~~cash ~~brand~~on ~~enhances~~hand to fund our ~~reputation~~contemplated two-plane test, and ~~ultimately~~we ~~our~~are ~~ability~~unable to ~~attract~~predict ~~technology,~~for ~~financial~~how ~~and~~long ~~other~~our ~~companies~~cash ~~which~~on wehand ~~can~~will ~~potentially~~fund ~~assist~~our uscurrent inoperations. ~~developing~~We ~~and~~believe ~~commercializing~~that ~~Infinitus.~~we ~~Furthermore,~~will ~~building~~be ~~our~~able ~~reputation~~to secure additional private and ~~brand~~public ~~will~~financing ~~enhance~~in ~~our~~the ~~ability~~future. toWe ~~attract~~can ~~vendors~~give ~~and~~no ~~customers,~~assurance ~~like~~that ~~airlines~~we ~~and~~can ~~internet~~obtain ~~service~~any ~~providers~~additional financing, ~~once~~or ~~Infinitus~~if issuch ~~ready~~financing ~~for~~is ~~commercialization.~~available, ~~During~~that ~~the~~it ~~three~~would ~~months~~be ~~ended~~available ~~May~~on ~~31,~~terms ~~2018,~~generally ~~our~~as ~~company~~favorable ~~has~~as ~~increased~~terms ~~marketing~~of ~~and~~recent ~~branding~~financings. ~~efforts~~We ~~and~~believe ~~incurred~~our ~~$1.3~~ability ~~million~~to ~~advertising~~secure ~~and~~such ~~marketing~~additional ~~expense;~~funding ~~whereas,~~has ~~$523,893~~been ~~was~~made ~~incurred~~more difficult by ~~our~~recent ~~Company~~declines ~~for~~in ~~such~~the ~~purposes~~trading ~~during~~price ~~the~~of ~~three~~our ~~months~~common ~~ended~~stock ~~May~~and ~~31,~~the ~~2017.~~drastic Weincrease ~~expect~~in ~~that~~the ~~our~~number ~~expenditures~~of onshares ~~marketing~~outstanding ~~and~~resulting ~~branding~~from ~~will~~conversions ~~increase~~of inthe ~~future~~Preferred ~~fiscal~~Stock ~~periods~~by asthe weholders ~~continue~~thereof toat ~~develop~~conversation ~~Infinitus,~~prices ~~and~~unfavorable ~~will~~to ~~grow~~us ~~proportionally~~due ~~with~~to ~~our~~the ~~research~~market-price-based ~~and~~nature ~~development~~of ~~spending~~the conversation formula.

~~Professional~~Unless ~~fees~~we ~~include~~are ~~fees~~able to ~~consultants,~~raise ~~investor~~additional ~~relations,~~capital ~~and~~or ~~legal,~~begin ~~accounting~~to ~~and~~generate ~~compliance~~sufficient ~~fees~~revenues ~~for~~to ~~our~~finance ~~audit,~~operations ~~SEC~~as ~~filings~~a going concern, ~~securities~~we ~~offerings~~may experience liquidity and ~~contracts~~solvency problems. ~~During~~Such ~~the~~liquidity ~~three~~and ~~months~~solvency ~~ended~~problems ~~May~~may ~~31,~~force ~~2018,~~us ~~professional~~to ~~fees~~cease ~~were~~operations $2if additional financing is not available.0 ~~million~~In ~~compared~~addition to ~~$668~~our burn rate and ongoing research and development expenses,~~119~~ ~~for~~we ~~the~~anticipate ~~comparative~~expending ~~period~~significant funds in ~~2017.~~connection ~~The~~with ~~increase~~a incontemplated ~~professional~~two-plane ~~fees~~test ~~mainly~~utilizing ~~attributed~~two toCessnas (or equivalent planes) installed with Infinitus technology incorporating the ~~increase~~free inspace ~~consulting~~optic ~~fees~~links ~~related~~underlying tothe ~~business~~Company’s patent application filed on July 25, ~~strategic~~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 ~~legal~~that ~~fees~~we ~~related~~are able to ~~private~~obtain ~~placements~~additional ~~and~~funding. ~~public~~In ~~offerings~~light of ~~our~~the ~~securities.~~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.

~~Research~~The ~~and~~following ~~development~~table ~~expenses~~sets ~~incurred~~forth ~~relate~~certain toinformation ~~the~~about development of Infinitus starting in August 2016. During the three months ended May 31, 2018, research and development expense was $18,100, as compared to $383,606 during the same period in 2017. The reduction in our ~~research~~cash ~~and~~flows ~~development spending~~ during the three months ended ~~May~~November 3130, 2018 was due to our having limited capital resources, including cash on hand, to continue funding our development work, prior the consummation of our public offering toward the end of the quarter. We anticipate that spending on research and ~~development will grow in future fiscal quarters, especially as we prepare for the two-plane test and eventually the 20-plane test.~~2017:

General and administrative expenses include office, shipping, entertainment, travel, insurance and other miscellaneous expenses. During the three months ended May 31, 2018, general and administrative expenses increased primarily from travel costs increasing $366,000 as compared to the same period in 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

9Cash ~~Table~~Flows offrom ~~Contents~~Operating Activities

~~Our~~We ~~other~~have ~~expenses~~not ~~for~~generated positive cash flows from operating activities. For the three months ended ~~May~~November 3130, 2018, net cash flows used in operating activities were $775,475, consisting of a net loss of $9.8 million and ~~2017~~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 ~~the~~was ~~changes~~decreased ~~between~~from ~~those~~a ~~periods~~net ~~for~~change ~~the~~in ~~respective~~operation ~~items~~assets and liabilities of $4.4 million. Unless and until we generate revenue from Infinitus, ~~are~~we ~~summarized~~expect asto ~~follows:~~continue to generate net losses.

	Three Months Ended
	May 31,
Other (Income) Expense	2018			2017		Changes
Interest expense	$	3,193,927		$	-	$	3,193,927
Change in fair value of derivative liabilities		(7,576,117	)		-		(7,576,117	)
Total other (income) expense	$	(4,382,190	)	$	-	$	(4,382,190	)

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.

~~During~~25 ~~the~~Table ~~three months ended May 31, 2018, our company recognized $(4.4) million in other (income) which included a net gain on change in fair value~~ of derivative liabilities of $7.6 million and interest expense of $3.2 million. The gain on change in fair value of derivative liabilities includes a day one loss in the fair value of warrants and convertible notes recorded as a derivative liability and a gain from 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 May 31, 2018. Contents

~~Liquidity~~Cash ~~and~~Flows ~~Capital~~from ~~Resources~~Investing Activities

~~May~~For 31the three months ended November 30, 2018, ~~and~~we ~~August~~did ~~31,~~not ~~2017~~have investing activities.

	May 31,			August 31,
Balance Sheet Data:	2018			2017		Changes
Cash	$	4,119,148		$	217,694	$	3,901,454
Working capital (deficiency)	$	(9,401,304	)	$	81,229	$	(9,482,533	)
Total assets	$	5,684,315		$	528,326	$	5,155,989
Total liabilities	$	15,047,885		$	421,749	$	14,626,136
Total stockholders' equity (deficit)	$	(9,363,570	)	$	106,577	$	(9,470,147	)

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

~~Because~~Cash weFlows ~~have not generated any revenues, we depend on proceeds~~ from ~~the~~Financing 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 Preferred Stock and 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. Additionally, during the nine months ended May 31, 2018, we also generated proceeds from the issuances of securities exempt from the registration requirements of the Securities Act, including the following: (i) $1.1 million from the issuance of units that included an aggregate of 1,346,222 shares of common stock and warrants to purchase an additional 1,346,222 shares of common stock that expire in one to five years from the sale date at exercise prices ranging from $0.65to $2.60 per share; (ii) $1.7 million from the exercise of 2,506,063 warrant units; and (iii) $5.7 million from the issuance of convertible notes.Activities

~~Subsequent~~For tothe ~~May~~three 31months ended November 30, 2018, wenet ~~obtained~~cash ~~$5,000~~flows inprovided ~~additional~~by ~~capital.~~financing Weactivities ~~issued~~was ~~units~~$750,000, consisting of anproceeds ~~aggregate~~from ofPreferred ~~1,388,889~~Stock ~~shares~~issued offrom ~~common~~the ~~stock~~exercise ~~and~~of warrants toof ~~purchase 1~~$800,~~388~~000,~~889~~ ~~shares~~and ofwas ~~common~~offset ~~stock,~~by ~~exercisable~~repayment ~~for~~of ~~three~~convertible ~~years~~notes ~~from issuance at $0.0045 per share, for aggregate gross proceeds~~ of $650,~~250~~000.

~~Accordingly,~~For wethe ~~must~~three ~~obtain~~months ~~additional~~ended ~~financing~~November to30, ~~continue operations at our current level. Although we believe that we have enough cash on hand to fund our upcoming two-plane test~~2017, wenet ~~are unable to predict for how long our~~ cash onflows ~~hand~~provided ~~will~~by ~~fund our operations. We believe that we will be able to secure additional private and public~~ financing inactivities ~~the~~was ~~future.~~$2,733,000, Weconsisting ~~can~~of ~~give~~proceeds nofrom ~~assurance~~issuance ~~that~~of weconvertible ~~can~~notes ~~obtain~~of ~~any additional financing~~$2, ~~or if such financing is available~~249,000 itand ~~would~~proceeds befrom ~~available~~issuance onof ~~terms~~common ~~generally~~stock asand ~~favorable~~warrants ~~as terms~~ of ~~recent financings~~$484,000.

~~Unless~~Off weBalance ~~are~~Sheet 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 an upcoming 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 during the next 12-18 months, assuming that sufficient progress has been made in the relevant software and hardware development and that we are able to obtain additional funding.Arrangements

10Our ~~Table~~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 ~~Contents~~operations, liquidity, capital expenditures or capital resources that are material to investors.

~~The~~Application ~~following~~of ~~table~~Critical ~~sets~~Accounting ~~forth certain information about our cash flow during the nine months ended May 31, 2018 and 2017:~~Policies

	Nine Months Ended,
	May 31,
Cash Flow Data:	2018			2017			Changes
Cash Flows used in Operating Activities	$	(11,258,176	)	$	(3,745,859	)	$	(7,512,317	)
Cash Flows used in Investing Activities		(19,731	)		(29,910	)		10,179
Cash Flows provided by Financing Activities		15,179,361			3,999,291			11,180,070
Net Increase in Cash During Period	$	3,901,454		$	223,522		$	3,677,932

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.

~~Cash~~In ~~Flows~~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 ~~Operating~~other ~~Activities~~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.

WeThe ~~have~~material ~~not~~estimates ~~generated~~for ~~positive~~our ~~cash~~Company ~~flows~~are ~~from~~that ~~operating~~of ~~activities.~~income ~~For~~tax ~~the~~valuation ~~nine~~allowance ~~months~~recorded ~~ended~~for ~~May~~deferred ~~31,~~tax ~~2018,~~assets ~~net~~and ~~cash~~stock-based ~~flows~~compensation. ~~used~~We inrecorded ~~operating~~stock-based ~~activities~~compensation ~~were~~for ~~$11.3~~options ~~million,~~and ~~consisting~~warrants issued and the fair value of embedded conversion options that are convertible into a ~~net~~variable ~~loss~~amount of ~~$54~~shares.5 ~~million~~The fair values of options, ~~offset~~warrants, byand ~~stock~~embedded conversion options are determined using the Black-~~based~~Scholes ~~compensation~~option ofpricing ~~$44~~model.3 ~~million,~~We ~~net~~have ~~gain~~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 ~~derivative~~options ~~liabilities~~is ofrecognized $5as expense on the straight-line basis over the options’ vesting periods.0 ~~million,~~The ~~amortization~~fair value of ~~debt~~each ~~discount~~option granted is estimated on the date of ~~$4.6~~grant ~~million~~using the Black-Scholes option pricing model with the expected life, ~~depreciation~~dividend ofyield, $7expected volatility,~~345~~ and anrisk-free ~~increase~~interest inrate ~~operating~~weighted-average ~~liabilities~~assumptions ~~from~~used ~~accounts~~for ~~payable~~options and ~~accrued~~warrants ~~liabilities~~granted. ofExpected ~~$523,504~~volatility for 2018 and ~~accrued~~2017 ~~interest~~was estimated using our common stock for convertible notes and the average historical volatility of ~~$182,093,~~three ~~as well~~public ascompanies anoffering ~~increase~~services insimilar ~~operating~~to ~~assets~~ours ~~from~~for ~~prepaid~~warrants ~~expenses~~and stock options. The risk-free rate for periods within the contractual life of $1the option is based on the U.2S. ~~million~~Treasury yield curve in effect at the grant date. ~~Unless~~The ~~and~~expected ~~until~~life weof ~~general~~options ~~revenue~~is ~~from~~based ~~Infinitus,~~on wethe ~~expect~~life toof ~~continue~~the toinstrument ~~generate~~on ~~net~~the ~~losses~~grant date.

~~For~~Basis ~~the nine months ended May 31, 2017, net cash flows used in operating activities were $3.8 million, consisting~~ of aAccounting ~~net loss of $27.1 million~~ and ~~was~~Going ~~reduced by stock-based compensation of $23 million, depreciation of $2,614 and an increase in accounts payable of $309,036 offset by an increase in operating assets from prepaid expenses of $215,753.~~ Concern

~~Cash~~Our ~~Flows~~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 ~~Investing~~this ~~Activities~~uncertainty.

~~For~~26 ~~the~~Table ~~nine months ended May 31, 2018, we acquired $19,731~~ of ~~office and computer equipment. For the nine months ended May 31, 2017, we acquired $29,910 of office and computer equipment.~~Contents

~~Cash~~Research ~~Flows~~and ~~from~~Development ~~Financing Activities~~Expenses

~~For~~We ~~the~~follow ~~nine~~ASC ~~months~~730-10, ~~ended~~”Research ~~May~~and 31Development,” ~~2018,~~and ~~net~~expense ~~cash~~research ~~flows~~and ~~provided~~development bycosts ~~financing~~when ~~activities was $15~~incurred.2 ~~million~~Accordingly, ~~consisting~~third-party ofresearch ~~proceeds~~and ~~from~~development ~~the~~costs, ~~issuance~~including ofdesigning, ~~convertible~~prototyping ~~notes~~and testing of ~~$5.6 million~~product, ~~proceeds~~are ~~from~~expensed when the ~~issuance~~contracted ofwork ~~common~~has ~~stock~~been ~~from~~performed ~~share~~or ~~subscriptions~~milestone inresults ~~exempt~~have ~~private~~been ~~placements of $1~~achieved.1 ~~million,~~Indirect ~~proceeds~~costs ~~from~~are ~~the~~allocated ~~exercises~~based ofon ~~warrants~~percentage ofusage ~~$1.7~~related ~~million~~to ~~and proceeds from~~ the ~~consummation~~research ofand ~~our~~development. ~~public~~Research ~~offering~~and ofdevelopment ~~units~~costs ~~consisting~~ of ~~Preferred~~$55,141 ~~Stock~~ and ~~warrants~~$285,889 towere incurred for the ~~purchase~~three ~~shares~~months ofended ~~Preferred~~November ~~Stock~~30, of2018 ~~$6.7~~and ~~million.~~2017, respectively.

~~For~~Stock-Based the nine months ended May 31, 2017, net cash flows provided by financing activities were $4.0 million, consisting of proceeds from issuance of common stock from share subscriptions in exempt private placements of $3.0 million, exercises of warrants of $940,000 and loans from related parties of $39,615.Compensation

~~Off~~ASC ~~Balance~~718, ~~Sheet~~“Compensation ~~Arrangements~~- 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~~Company ~~does~~accounts ~~not~~for ~~have~~stock-based ~~any~~compensation ~~off~~issued to non-~~balance~~employees ~~sheet~~and ~~arrangements~~consultants ~~that~~in ~~have~~accordance with the provisions of ASC 505-50, or“Equity ~~are~~- ~~reasonably~~Based ~~likely~~Payments to ~~have,~~Non-Employees.” aMeasurement ~~current~~of orshare-based ~~future~~payment ~~effect~~transactions with non-employees is based on ~~our~~the ~~company’s~~fair ~~financial~~value ~~condition,~~of ~~revenues~~whichever is more reliably measurable: (a) the goods or ~~expenses,~~services ~~results~~received; or (b) the equity instruments issued. The fair value of ~~operations,~~the ~~liquidity,~~share-based ~~capital~~payment ~~expenditures~~transaction oris ~~capital~~determined ~~resources~~at ~~that~~the ~~are~~earlier ~~material~~of toperformance ~~investors~~commitment date or performance completion date.

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

WeRecent ~~have~~accounting 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.pronouncements

11Management ~~Table~~has ofconsidered ~~Contents~~all recent accounting pronouncements issued. Management believes that these recent pronouncements will not have a material effect on our Company’s financial statements.

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 consolidated 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 consolidated 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 May 31, 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.

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 $588,042 and $704,257 were incurred for the nine months ended May 31, 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 $44,278,826 and $23,226,492 were incurred for the nine months ended May 31, 2018 and 2017, respectively.

12 Table of Contents

Intangible Assets

Our company issued 40 million shares of common stock for the acquisition of certain intellectual property. Due to the lack of readily available market information and because the shares represented approximately 54% of the outstanding common stock shortly after the issuance, our company hired an independent third party firm to perform a valuation on the acquired intangible assets. It was determined that the intellectual property had no value because future economic benefit could not be determined.

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

~~There~~Not ~~have~~required been no material changes in the Company’s quantitative and qualitative disclosures about market risk as of May 31, 2018 from those disclosed in Part II, Item 7A. “Qualitative and Quantitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for ~~the~~smaller ~~fiscal~~reporting ~~year ended August 31, 2017~~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 ~~May~~November 3130, 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 ~~May~~November 3130, 2018.

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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, ~~2017~~2018, management identified the following material weaknesses in our internal control over financial reporting:

1. We lack formal policies and procedures necessary to adequately review significant accounting transactions. We utilize a third party independent contractor for the preparation of our financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in our day -to -day operations and may not be provided information from our management on a timely basis to allow for adequate reporting and consideration of certain transactions;

	(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.

13The ~~Table~~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 ~~Contents~~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.

2. We do not have an audit committee with a financial expert and, thus, we lack the appropriate oversight within the financial reporting process; 3. We have inadequately segregated duties consistent with control objectives; 4. We have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements; and 5. We have ineffective controls over period end financial disclosure and reporting processes.

We intend to initiate measures to remediate the identified material weaknesses, including, but not necessarily limited to, the following:

· Establish a formal review process of significant accounting transactions that includes participation of our principal executive officer, principal financial officer and corporate legal counsel; and · Form an audit committee that will establish policies and procedures that will provide our Board of Directors with a formal review process that will among other things, assure that management controls and procedures are in place and being maintained consistently.

Several of these changes have already been implemented. In this connection, on December 30, 2017, the Company expanded the size of its board of directors from two members to six, and elected four independent directors to fill the newly created vacancies. Additionally, the Company’s board of directors created three new committees of the board of directors: an audit committee (on which a director meeting the definition of an audit committee financial expert sits), a compensation committee and a nominating and corporate governance committee. The Company continues to work on the remaining remediation measures. 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 ~~May~~November 3130, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

1428 Table of Contents

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 ~~previously~~set ~~disclosed~~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

~~There~~Not ~~have~~required ~~been no material changes in our risk factors from those disclosed in the Company’s Annual Report on Form 10-K~~ for ~~the~~smaller ~~fiscal~~reporting ~~year ended August 31, 2017 and in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2018, except as set forth below~~companies.

We have outstanding convertible notes and convertible preferred stock with fluctuating conversion rates that are set at a discount to market prices of our common stock during the period immediately preceding conversion, which may result in material dilution to our common stockholders.

As of July 6, 2018, we had outstanding unsecured convertible notes issued to a number of unrelated third parties in the aggregate principal amount of approximately $2.1 million. These unsecured convertible notes are convertible into shares of our common stock at a price per share equal to 70% of the lowest price at which our common stock traded during the 20 or 25 days preceding the conversion date. Additionally, on May 29, 2018, we completed a public offering of 8,000 units, each consisting of one share of the Company’s Series A Convertible Preferred Stock and one Series 1 warrant to purchase one share of Series A Convertible Preferred Stock, one Series 2 warrant to purchase one share of Series A Convertible Preferred Stock and one Series 3 warrant to purchase one share of Series A Convertible Preferred Stock, each exercisable at an initial exercise price of $1,000 per share of Series A Convertible Preferred Stock The Series A Convertible Preferred Stock issued in the offering, and the additional shares of Series A Convertible Preferred Stock that may be issued upon exercise of the warrants, are also convertible into shares of our common stock at a price discounted to the market price of our common stock at price equal to the lesser of $0.71 per share or 82.5% of the lowest volume weighted average price at which our common stock traded during the five trading preceding and including the conversion date. Conversions under these convertible securities have resulted, and will continue to result, in material dilution to existing stockholders of our company. Specifically, as of July 6, 2018, 6,323 of the original 8,000 issued shares of Series A Convertible Preferred Stock have been converted into 1,754,219,336 shares of common stock. Because the conversion prices of the notes and preferred stock are based upon the trading prices of our common stock at the time of conversion, the number of shares of common stock into which the notes and preferred stock may be converted may increase without an upper bound. If the trading prices of the common stock remains low when the conversion price of our remaining outstanding convertible notes and/or preferred stock is determined, we will be required to issue a higher number of shares of our common stock to the converting noteholder or preferred stockholder, which will cause substantial additional dilution to our stockholders. In addition, if any or all of the holders of our convertible notes and/or preferred stock convert and then sell our common stock, this could result in an imbalance of supply and demand for our common stock and further reduce our stock price. The further our stock price declines, the further the adjustment of the conversion price will fall and the greater the number of shares we will have to issue upon conversion, resulting in further dilution to our stockholders. Because a market price-based conversion formula can lead to dramatic stock price reductions and corresponding negative effects on both a company and its stockholders, convertible security financings with market price-based conversion ratios have colloquially been called “floorless,” “toxic,” “death spiral,” and “ratchet” convertibles.

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

InDuring ~~addition~~the tothree months ended November 30, 2018, the ~~unregistered~~Company ~~sales~~issued 257,544,764 shares of ~~equity~~common ~~securities~~stock ~~completed~~upon ~~during~~the conversion of convertible notes in the ~~three~~aggregate ~~months~~principal ~~ended~~amount ~~May~~and 31accrued interest of $47,187. ~~2018~~The ~~that~~convertible notes were ~~previously~~originally ~~reported~~offered inand ~~Current~~sold ~~Reports~~to the holders thereof in reliance on ~~Form~~the ~~8-K~~exemption ~~filed~~from ~~with~~registration provided by Section 4(a)(2) of the ~~SEC~~Securities Act and Rule 506(b) of Regulation D, and the ~~Company~~issuance ~~also~~of ~~completed~~ the ~~following~~shares ~~unregistered~~upon ~~sales~~conversion of ~~common~~such ~~equity:~~notes were similarly exempt from registration.

On or about March 2, 2018, we sold to a trust a unit which consists of (i) 31,500 shares of our common stock and (ii) a 3-year warrant to purchase 31,500 shares of our common stock at a price of $2.00 per share, for a total purchase price of $63,000. The foregoing units were issued in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to that exemption specified by the provisions of Section 4(a)(2) of the Securities Act.

15 Table of Contents

On or about May 9, 2018, as compensation for services, we issued to Evert Van Den Brandhof 300,000 shares of our common stock. The issuance of the foregoing securities is not subject to the registration requirements of the Securities Act, pursuant to Regulation S. No directed selling efforts were made in the United States, the investor was not a U.S. person, and the investor represented that it understands the securities would not be registered under the Securities Act.

During the fiscal quarter ended May 31, 2018, as compensation for services pursuant to a previously disclosed agreement, we issued to Brighton Capital, Ltd. 30,000 shares of our common stock. The foregoing units were issued in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to that exemption specified by the provisions of Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.

During the fiscal quarter ended May 31, 2018, we issued 91,448 shares of common stock to a note holder upon the exercise of previously outstanding 60,000 warrants on a cashless basis and 100,000 shares of common stock on the exercise of previously outstanding 100,000 warrants for proceeds of $65,000 .

During the fiscal quarter ended May 31, 2018, we sold to individuals units which consisted of (i) 2,000 shares of our common stock and (ii) 3-year warrants to purchase 2,000 shares of our common stock at $1.25 per share, for a total purchase price of $2,000. The purchaser represented that he is an accredited investor and the foregoing units were issued in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to that exemption specified by the provisions of Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.

During the fiscal quarter ended May 31, 2018, we issued 8,418,018 shares of common stock for the conversion of convertible notes in the aggregate principal amount of $3,051,500 and accrued interest of $103,274.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

1629 Table of Contents

Item 6. Exhibits

		INCORPORATED BY REFERENCE
EXHIBIT 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 Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock	8-K	3.1	05/29/2018
3.4	Amended and Restated Bylaws effective as of July 30, 2017	8-K	3.2	08/01/2017
4.1	Amendment to the $287,500 Promissory Note dated September 15, 2017 issued by Airborne Wireless Network to Black Mountain Equities, Inc.	8-K	4.1	03/20/2018
4.2	10% Convertible Promissory Note, dated as of March 30, 2018, issued by Airborne Wireless Network to Concord Holding Group, LLC	8-K	4.1	04/05/2018
4.3	10% Convertible Promissory Note, Back-end Note, dated as of March 30, 2018, issued by Airborne Wireless Network to Concord Holding Group, LLC	8-K	4.2	04/05/2018
4.4	Amendment to $86,250 Promissory Note dated October 3, 2017 to Lucas Hoppel	8-K	4.3	04/05/2018
4.5	Convertible Debenture, dated as of April 9, 2018, issued by Airborne Wireless Network YA II PN, Ltd.	8-K	4.1	04/13/2018
10.1	Services and Compensation Agreement, dated March 6, 2018, between Airborne Wireless Network and South Bay Aviation Inc.	8-K	10.1	03/12/2018
10.2	Securities Purchase Agreement, dated as of March 30, 2018, by and between Airborne Wireless Network and Concord Holding Group, LLC	8-K	10.1	04/05/2018
10.3	Securities Purchase Agreement, dated as of April 9, 2018, by and between Airborne Wireless Network and YA II PN, Ltd.	8-K	10.1	04/13/2018
10.4	Warrant, dated as of April 9, 2018, issued by Airborne Wireless Network to YA II PN, Ltd.	8-K	10.2	04/13/2018
10.5	Underwriting Agreement, dated May 23, 2018, between Airborne Wireless Network and Maxim Group LLC	8-K	10.1	05/29/2018
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

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______

* Filed herewith.

† Management contract or plan.

1730 Table of Contents

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: July 10, 2018	By:	/s/ Michael J. Warren
Dated: January 9, 2019	By:	/s/ Kevin L. Spence
		Michael J. Warren
		Chief Executive Officer
		(Principal Executive Officer)
Dated: July 10, 2018	By:	/s/ Kevin L. Spence
		Kevin L. Spence
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)
		(Principal Financial Officer and Principal Accounting Officer) (duly authorized officer)

1831

Filing Compare · AIRBORNE WIRELESS NETWORK