| STOCK-BASED COMPENSATION |
| 7. |
STOCK-BASED COMPENSATION |
| |
2017
Plan |
| |
The Company grants
stock options and other stock-based awards under its 2017 Stock Option Plan (the “2017 Plan”). All stock option
awards granted to employees are valued at fair value by using either the Black-Scholes or Binomial Lattice option pricing
models and recognized on a straight-line basis over the service periods of each award. The Company accounts for equity instruments
issued in exchange for the receipt of goods or services from non-employees using the estimated fair market value of the consideration
received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of
equity instruments issued for consideration for employees and non-employee services is determined on the earlier of a performance
commitment or completion of performance by the provider of goods or services. |
| |
|
| |
During the six months
ended May 31, 2020, the Company granted options to purchase 3,917,500 shares of common stock to its employees and directors,
of which 3,417,500 options vested immediately and 500,000 options vest over three years. The Company recorded stock-based
compensation expense for options granted to its employees and directors of $613,423 and $23,075 during the six months ended
May 31, 2020 and 2019, respectively. The Company recorded stock-based compensation expense for options granted to its employees
and directors of $11,315 and $18,848 during the three months ended May 31, 2020 and 2019, respectively. |
| |
During the six months
ended May 31, 2020, the Company granted options to purchase 110,000 shares of common stock to non-employees (consultants),
which vested immediately. The Company recorded stock-based compensation expense for options granted to non-employees of $19,244
and $Nil during the six months ended May 31, 2020 and 2019, respectively. The Company recorded stock-based compensation expense
for options granted to non-employees of $19,244 and $Nil during the three months ended May 31, 2020 and 2019, respectively. |
| |
|
| |
Stock
Option Valuation |
| |
The assumptions
that the Company used to determine the grant-date fair value of stock options granted to employees and non-employees for
the six months ended May 31, 2020 and 2019 were as follows: |
| |
|
| |
Employee, Director
and Non-Employee Options (Black-Scholes option pricing model) |
| |
|
2020 |
|
|
2019 |
|
| Risk
free rate |
|
|
1.07-1.68 |
%
|
|
|
2.00 |
% |
| Expected
dividends |
|
|
0 |
% |
|
|
0 |
% |
| Expected
volatility |
|
|
143.90-144.28 |
%
|
|
|
133 |
% |
| Expected
life |
|
|
5
years |
|
|
|
5
years |
|
| Market
price of the Company’s common stock on date of grant |
|
$ |
0.19 |
|
|
$ |
0.14 |
|
| Exercise
price |
|
$ |
0.19 |
|
|
$ |
0.14 |
|
|
The following table summarizes
option activity under the 2017 Plan during the six months ended May 31, 2020: |
| |
|
Stock |
|
|
Weighted-Average
Exercise Price Per Stock
Option |
|
| |
|
Options |
|
|
CDN$ |
|
|
USD$ |
|
| Outstanding,
November 30, 2019 |
|
|
2,911,667 |
|
|
|
0.19 |
|
|
|
0.14 |
|
| Granted
|
|
|
4,027,500 |
|
|
|
0.25 |
|
|
|
0.19 |
|
| Expired
|
|
|
(212,500 |
) |
|
|
(0.28 |
) |
|
|
(0.21 |
) |
| Cancelled
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Outstanding,
May 31, 2020 |
|
|
6,726,667 |
|
|
|
0.23 |
|
|
|
0.17 |
|
| Exercisable,
May 31, 2020 |
|
|
4,726,667 |
|
|
|
0.23 |
|
|
|
0.17 |
|
|
During
the year ended November 30, 2019, the Company issued 750,000 warrants each to two consultants (the “Incentive Warrants”)
to purchase common shares. The Incentive Warrants were issued outside of the 2017 Plan and became fully vested in December
2019. |
|
During
the six months ended May 31, 2020, the Company issued 150,000 warrants in exchange for services to a marketing consultant
to purchase common shares. The warrants were issued outside of the 2017 Plan and were fully vested at issuance. |
|
Stock-based
compensation expense for the six months ended May 31, 2020 and 2019 was $15,434 and $141,835, respectively. Stock-based compensation
expense for the three months ended May 31, 2020 and 2019 was $Nil and $22,395, respectively. |
|
The
assumptions the Company used to determine the grant-date fair value of warrants granted to consultants during the six months
ended May 31, 2020 and 2019 were as follows: |
|
(Black-Scholes
option pricing model) |
| |
|
2020 |
|
|
2019 |
|
| Risk
free rate |
|
|
1.47 |
% |
|
|
2.00 |
% |
| Expected
dividends |
|
|
0 |
% |
|
|
0 |
% |
| Expected
volatility |
|
|
56.92 |
% |
|
|
149 |
% |
| Expected
life |
|
|
1.1
years |
|
|
|
3
years |
|
| Market
price of the Company’s common stock on date of grant |
|
$ |
0.22 |
|
|
|
0.16 |
|
| Exercise
price |
|
$ |
0.25 |
|
|
|
0.16 |
|
|
Stock-Based
Compensation Expense |
|
Total
stock-based compensation expense was $648,101 and $164,910 for the six months ended May 31, 2020 and 2019, respectively. Total
stock-based compensation expense was $11,315 and $41,243 for the three months ended May 31, 2020 and 2019, respectively. Total
stock-based compensation expense was recorded in SG&A expenses. |
|