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 expense is 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 nine months ended August 31, 2020, the Company granted options to purchase 4,342,500 shares of common stock to its employees and directors, of which 3,417,500 options vested immediately and 925,000 options will vest over three years. The Company recorded stock-based compensation expense for options granted to its employees and directors of $624,738 and $27,302 during the nine months ended August 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 August 31, 2020 and 2019, respectively.

During the nine months ended August 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 $0 during the nine months ended August 31, 2020 and 2019, respectively. The Company recorded no stock-based compensation expense for options granted to non-employees during the three months ended August 31, 2020 and 2019.

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 nine months ended August 31, 2020 and 2019 were as follows:

Employee, Director and Non-Employee Options (Black-Scholes option pricing model)

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. In July 2020, the Company’s Board approved and the Company entered into an agreement with one of the consultants to allow a cashless exercise of 750,000 warrants, resulting in the issuance of 683,190 common shares of the Company’s stock.

During the nine months ended August 31, 2020, the Company issued 150,000 warrants valued at $37,500 with an exercise price of $0.25 per warrant 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 nine months ended August 31, 2020 and 2019 was $15,434 and $164,230, respectively. Stock-based compensation expense for the three months ended August 31, 2020 and 2019 was $0 and $22,395, respectively.

Incentive Warrants Valuation

The assumptions the Company used to determine the grant-date fair value of warrants granted to consultants during the nine months ended August 31, 2020 and 2019 were as follows:

Stock-Based Compensation Expense

Total stock-based compensation expense was $659,416 and $191,532 for the nine months ended August 31, 2020 and 2019, respectively. Total stock-based compensation expense was $11,315 and $41,243 for the three months ended August 31, 2020 and 2019, respectively. Total stock-based compensation expense was recorded in SG&A expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.