Stockholders' Deficit

6 Months Ended

Feb. 28, 2019

Equity [Abstract]

Stockholders' Deficit

Note 11 – Stockholders’ Deficit

Convertible preferred stock

The Company has authorized 1,000,000 shares of $0.001 par value convertible preferred stock. At February 28, 2019 and August 31, 2018 there were 0 and 0 convertible preferred shares issued and outstanding, respectively.

Common stock

The Company has authorized 499,000,000 shares of $0.001 par value common stock. At February 28, 2019 and August 31, 2018 there were 223,048,205 and 207,881,743 common shares issued and outstanding, respectively.

During the six months ended February 28, 2019, the Company issued:

● 2,708,113 restricted shares of common stock for cash proceeds of $2,579,923

● 12,000,000 restricted shares of common stock as consideration for the Assignment, to the Company, of a Joint Venture Agreement with a value of $21,600,000 based on the closing share price of $1.80 on the execution date of the Closing Certificate

● 458,349 restricted shares of common stock as consideration for a Licensing Agreement based on a per share price of $1.655 with a value of $758,567.

Stock options/warrants

On September 8, 2015, the Company adopted the 2015 Incentive Compensation Plan (the “2015 Plan”), which authorizes the issuance of up to 5,000,000 shares of common stock to employees, officers, directors or independent consultants of the Company, provided that no person can be granted shares under the 2015 Plan for services related to raising capital or promotional activities. As of February 28, 2019, 4,987,500 shares were available under the 2015 Plan for future grants, awards, options or share issuances. However, because the shares issuable under the 2015 Plan or issuable upon conversion of awards granted under the 2015 Plan are no longer registered under the Securities Exchange Act of 1934, as amended, the Company does not intend to issue any additional grants under the 2015 Plan.

On January 16, 2018, the Company adopted the Novo Integrated Sciences, Inc. 2018 Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 10,000,000 shares of common stock are authorized for issuance to employees, non-employees, directors and key consultants to the Company or its subsidiaries. The 2018 Plan authorizes equity-based and cash-based incentives for participants. There were 9,875,000 shares available for award at February 28, 2019 under the 2018 Plan.

The following is a summary of stock option/warrant activity:

						Weighted
				Weighted		Average
	Options/			Average		Remaining		Aggregate
	Warrants			Exercise		Contractual		Intrinsic
	Outstanding			Price		Life		Value
Outstanding, August 31, 2018		10,030,000			0.30		4.56	$	7,045,500
Granted		75,000			0.95
Forfeited		(10,000	)		2.00
Exercised		-
Outstanding, February 28, 2019		10,095,000			0.30		4.08	$	13,106,250
Exercisable, February 28, 2019		10,095,000		$	0.30		4.08	$	13,106,250

The exercise price for options/warrants outstanding at February 28, 2019:

Outstanding and Exercisable
	Number of
	Options/		Exercise
	Warrants		Price
	5,500,000	$	0.16
	1,000,000		0.32
	50,000		0.33
	120,000		0.40
	2,000,000		0.42
	100,000		0.50
	1,000,000		0.62
	250,000		0.80
	75,000		0.95
	10,095,000

For options granted during the fiscal year ending August 31, 2019 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.94 and the weighted-average exercise price of such options/warrants was $0.95. No options were granted during the fiscal year ending August 31, 2019 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

For options granted during the fiscal year ended August 31, 2018 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.39 and the weighted-average exercise price of such options/warrants was $0.40. No options were granted during the fiscal year ended August 31, 2018 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

The fair value of the stock options is being amortized to stock option expense over the vesting period. The Company recorded stock option expense of $70,846 and $1,109,416 during the six months ended February 28, 2019 and 2018, respectively. At February 28, 2019, the unamortized stock option expense was $0.

The assumptions used in calculating the fair value of options granted during the current fiscal year ending August 31, 2019 using the Black-Scholes option-pricing model for options granted, through February 28, 2019, are as follows:

Risk-free interest rate	2.78	%
Expected life of the options	3.5 years
Expected volatility	294	%
Expected dividend yield	0	%