10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: August 31, 2020

or

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

For the transition period from ____________ to _____________

Commission File Number: 000-55535

Q BIOMED INC.

(Exact name of registrant as specified in its charter)

Nevada	30-0967746
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

c/o Ortoli Rosenstadt LLP

366 Madison Avenue, 3rd Floor

New York, NY 10017

(Address of principal executive offices)

(212) 588-0022

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Symbol	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant (1) 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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition 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	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $0.001 par value	23,410,573 shares
(Class)	(Outstanding as at October 12, 2020)

Q BIOMED INC.

Table of Contents

	Page
PART I - FINANCIAL INFORMATION		2
Item 1. Condensed Consolidated Financial Statements (Unaudited)		2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosure About Market Risk		24
Item 4. Controls and Procedures		24
PART II - OTHER INFORMATION		24
Item 1. Legal Proceedings		24
Item 1A. Risk Factors		24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 3. Defaults Upon Senior Securities		25
Item 4. Mine Safety Disclosures		25
Item 5. Other Information		25
Item 6. Exhibits		25
SIGNATURES		26

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Q BIOMED INC.
Condensed Consolidated Balance Sheets
(Unaudited)

	As of August 31,			As of November 30,
	2020			2019
ASSETS
Current assets:
Cash	$	1,326,359		$	172,636
Accounts receivable		12,300			-
Prepaid expenses and other current assets		133,964			17,662
Total current assets		1,472,623			190,298
Intangible assets, net		412,500			450,000
Total Assets	$	1,885,123		$	640,298
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	357,973		$	652,051
Accrued expenses		1,265,571			1,145,660
Accrued expenses - related party		4,000			7,500
Accrued interest payable		40,876			189,801
Convertible note payable, net		-			3,243,292
Total current liabilities		1,668,420			5,238,304
Long-term liabilities:
Convertible notes payable, net		90,096			447,335
Total long-term liabilities		90,096			447,335
Total Liabilities		1,758,516			5,685,639
Commitments and Contingencies (Note 6)
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of August 31, 2020 and November 30, 2019
Convertible Series A, 500,000 shares designated - 227,998 and 0 shares issued and outstanding at August 31, 2020 and November 30, 2019, respectively		2,189,846			-
Convertible Series B, 1,000,000 shares designated - 503,134 and 0 shares issued and outstanding at August 31, 2020 and November 30, 2019, respectively		5,024,973			-
Common stock, $0.001 par value; 250,000,000 shares authorized; 22,774,232 and 19,709,068 shares issued and outstanding as of August 31, 2020 and November 30, 2019, respectively		22,774			19,709
Additional paid-in capital		45,345,017			37,328,827
Accumulated deficit		(52,456,003	)		(42,393,877	)
Total Stockholders' Equity (Deficit)		126,607			(5,045,341	)
Total Liabilities and Stockholders' Equity (Deficit)	$	1,885,123		$	640,298

The accompanying notes are an integral part of these condensed consolidated financial statements

2

Q BioMed Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

	For the Three Months ended						For the Nine Months ended
	August 31, 2020			August 31, 2019			August 31, 2020			August 31, 2019
Net Sales	$	15,000		$	-		$	30,000		$	-
Cost of sales		158,516			-			193,211			-
Gross loss		(143,516	)		-			(163,211	)		-
Operating expenses:
General and administrative expenses		1,491,613			968,383			8,659,819			3,406,853
Research and development expenses		613,707			786,600			896,908			2,672,715
Total operating expenses		2,105,320			1,754,983			9,556,727			6,079,568
Loss from operations		(2,248,836	)		(1,754,983	)		(9,719,938	)		(6,079,568	)
Other (income) expenses:
Interest expense		9,025			476,627			291,626			1,137,271
Change in fair value of embedded derivatives		-			118,000			19,163			396,000
Loss on induced conversion of debt		-			197,078			-			197,078
Loss on debt extinguishment		-			-			31,399			-
Total other expenses		9,025			791,705			342,188			1,730,349
Net loss		(2,257,861	)		(2,546,688	)		(10,062,126	)		(7,809,917	)
Accumulated dividend on convertible preferred stock		(146,227	)		-			(230,699	)		-
Deemed dividend on convertible preferred stock due to beneficial conversion feature		-			-			(482,945	)		-
Net loss attributable to common stockholders	$	(2,404,088	)	$	(2,546,688	)	$	(10,775,770	)	$	(7,809,917	)
Net loss per share - basic and diluted	$	(0.11	)	$	(0.17	)	$	(0.50	)	$	(0.54	)
Weighted average shares outstanding, basic and diluted		22,433,141			14,756,302			21,731,159			14,580,630

The accompanying notes are an integral part of these condensed consolidated financial statements

3

Q BIOMED INC.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Unaudited)

	For the Three Months Ended August 31, 2020
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		in Capital			Deficit			Equity (Deficit)
Balance as of June 1, 2020		227,998	$	2,144,246		503,134	$	4,924,346		22,650,685	$	22,650	$	45,219,938		$	(50,198,142	)	$	2,113,038
Accumulated dividend on convertible preferred stock		-		45,600		-		100,627		-		-		(146,227	)		-			-
Share based compensation for services		-		-		-		-		123,547		124		271,306			-			271,430
Net loss		-		-		-		-		-		-		-			(2,257,861	)		(2,257,861	)
Balance as of August 31, 2020		227,998	$	2,189,846		503,134	$	5,024,973		22,774,232	$	22,774	$	45,345,017		$	(52,456,003	)	$	126,607

	For the Nine Months Ended August 31, 2020
	Series A Preferred Stock					Series B Preferred Stock					Common Stock				Additional Paid			Accumulated			Total Stockholders'
	Shares		Amount			Shares		Amount			Shares		Amount		in Capital			Deficit			Equity (Deficit)
Balance as of December 1, 2019		-	$	-			-	$	-			19,709,068	$	19,709	$	37,328,827		$	(42,393,877	)	$	(5,045,341	)
Issuance of Series A and Series B preferred stock for cash		100,000		975,000			300,000		2,975,000			-		-		-			-			3,950,000
Issuance of Series A and Series B preferred stock to convert notes payable and accrued interest		127,998		1,279,980			203,134		2,031,340			-		-		-			-			3,311,320
Offering cost related issuance of Series A and Series B preferred stock		-		(138,600	)		-		(138,600	)		-		-		277,200			-			-
Beneficial conversion feature of Series A convertible preferred stock		-		(252,786	)		-		-			-		-		252,786			-			-
Deemed dividends related to immediate accretion of beneficial conversion feature of Series A convertible preferred stock		-		252,786			-		-			-		-		(252,786	)		-			-
Beneficial conversion feature of Series B convertible preferred stock		-		-			-		(230,159	)		-		-		230,159			-			-
Deemed dividends related to immediate accretion of beneficial conversion feature of Series B convertible preferred stock		-		-			-		230,159			-		-		(230,159	)		-			-
Accumulated dividend on convertible preferred stock		-		73,466			-		157,233			-		-		(230,699	)		-			-
Issuance of common stock to convert notes payable		-		-			-		-			2,811,198		2,811		2,732,489			-			2,735,300
Cashless warrants exercise		-		-			-		-			20,860		21		(21	)		-			-
Share based compensation for services		-		-			-		-			233,106		233		4,982,213			-			4,982,446
Share based compensation related to warrants modification		-		-			-		-			-		-		255,008			-			255,008
Net loss		-		-			-		-			-		-		-			(10,062,126	)		(10,062,126	)
Balance as of August 31, 2020		227,998	$	2,189,846			503,134	$	5,024,973			22,774,232	$	22,774	$	45,345,017		$	(52,456,003	)	$	126,607

4

Q BIOMED INC.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Unaudited)

	For the Three Months Ended August 31, 2019
	Common Stock				Additional Paid in		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Deficit			Deficit
Balance as of June 1, 2019		14,677,136	$	14,676	$	33,002,224	$	(37,377,376	)	$	(4,360,476	)
Share based compensation for services		139,641		141		340,986		-			341,127
Issuance of common stock to partially convert notes payable		146,863		147		293,579		-			293,726
Issuance of common stock as inducement to partially convert notes payable		187,693		188		196,890		-			197,078
Issuance of common stock to defer monthly contingent payment of convertible note		30,894		30		32,408		-			32,438
Net loss		-		-		-		(2,546,688	)		(2,546,688	)
Balance as of August 31, 2019		15,182,227	$	15,182	$	33,866,087	$	(39,924,064	)	$	(6,042,795	)

	For the Nine Months Ended August 31, 2019
	Common Stock				Additional Paid in		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Deficit			Deficit
Balance as of December 1, 2018		14,290,236	$	14,290	$	31,994,129	$	(32,114,147	)	$	(105,728	)
Share based compensation for services		526,541		527		1,349,081		-			1,349,608
Issuance of common stock to partially convert notes payable		146,863		147		293,579		-			293,726
Issuance of common stock as inducement to partially convert notes payable		187,693		188		196,890		-			197,078
Issuance of common stock to defer monthly contingent payment of convertible note		30,894		30		32,408		-			32,438
Net loss		-		-		-		(7,809,917	)		(7,809,917	)
Balance as of August 31, 2019		15,182,227	$	15,182	$	33,866,087	$	(39,924,064	)	$	(6,042,795	)

The accompanying notes are an integral part of these condensed consolidated financial statements

5

Q BIOMED INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	For the Nine Months ended
	August 31, 2020			August 31, 2019
Cash flows from operating activities:
Net loss	$	(10,062,126	)	$	(7,809,917	)
Adjustments to reconcile net loss to net cash used in operating activities
Share based compensation for services		4,982,446			1,349,608
Share based compensation related to warrants modification		255,008			-
Change in fair value of embedded conversion option		19,163			396,000
Accretion of debt discount		136,705			907,437
Amortization expense		37,500			37,500
Loss on debt extinguishment		31,399			-
Loss on induced conversion of debt		-			197,078
Non-cash interest expense		-			32,438
Changes in operating assets and liabilities:
Accounts receivable		(12,300	)		-
Prepaid expenses		(116,302	)		(16,046	)
Accounts payable and accrued expenses		(187,667	)		1,646,699
Accrued expenses - related party		-			17,500
Accrued interest payable		154,897			165,713
Net cash used in operating activities		(4,761,277	)		(3,075,990	)
Cash flows from financing activities:
Proceeds from issuance of Series A and Series B convertible preferred stock, net of issuance costs		3,950,000			-
Proceeds received from issuance of convertible note		1,965,000			500,000
Proceeds from investor advances		-			193,250
Net cash provided by financing activities		5,915,000			693,250
Net increase (decrease) in cash		1,153,723			(2,382,740	)
Cash at beginning of period		172,636			2,684,413
Cash at end of the period	$	1,326,359		$	301,673
Supplemental disclosures:
Cash paid for interest	$	-		$	31,524.00
Cash paid for income taxes	$	-		$	-
Supplemental disclosures for noncash investing and financing activities:
Issuance of common stock to convert notes payable and accrued interest	$	2,735,300		$	293,726.00
Accrued debt issuance costs	$	-		$	15,000.00
Issuance of Series A and Series B preferred stock in exchange for outstanding convertible notes payable and accrued interest	$	3,311,320		$	-
Accumulated dividend on convertible preferred stock	$	230,699		$	-
Shares payable related to debt modification	$	10,000		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

6

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Note 1 - Organization of the Company and Description of the Business

Q BioMed Inc. (“Q BioMed”) and its wholly owned subsidiaries Q BioMed Cayman SEZC and QBMG Q BioMed Germany UG (collectively, “the Company”), is a biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. Q BioMed intends to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors. The Company intends to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spinoff new public companies.

The accompanying condensed consolidated financial statements include the accounts of the Company’s wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Note 2 - Financial Condition, Going Concern and Management Plans

The Company currently operates in one business segment focusing on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of business.

The accompanying condensed consolidated financial statements are prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has and is expected to incur net losses and cash outflows from operations in pursuit of extracting value from its acquired intellectual property. These matters, amongst others, raise doubt about the Company’s ability to continue as a going concern.

The Company does not generate material revenue from operations since inception and has limited assets upon which to commence its business operations. Management anticipates that the Company will have to raise additional funds and/or generate significant revenue from drug sales within twelve months to continue operations. Additional funding will be needed to implement the Company’s business plan that includes various expenses such as fulfilling our obligations under licensing agreements, legal, operational set-up, general and administrative, marketing, employee salaries and other related start-up expenses. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. If the Company is unable to raise sufficient funds, management will be forced to scale back the Company’s operations or cease its operations.

Management has determined that there is substantial doubt about the Company's ability to continue as a going concern within one year after the condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term strategic plans, operations and its liquidity due to the worldwide spread of COVID-19. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world and its assessment of the impact of COVID-19 may change. 

Note 3 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim period unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2019. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of the SEC. These unaudited consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

7

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended November 30, 2019 included in the Company’s Form 10-K.

Revenue Recognition

The core principle of Topic 606 (FASB ASC 606) is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revenue recognition guidance contained in Topic 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transportation price; (4) allocate the transportation price; (5) recognize revenue when or as the entity satisfies a performance obligation. Previous practices were broadly consistent with this approach, and the company determined the amount of revenue based on the amount customer paid or promised to pay.

The Company satisfies its performance obligation to deliver products when the customer has received the products, which is when title to the goods has transferred and the customer has control of the products. Payments from customers are generally received within 90 days of when the product is delivered.

Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash held in banks and accounts receivable. Cash is maintained in accounts with financial institutions, which, at times may exceed the federal depository insurance coverage of $250,000. At August 31, 2020, the Company has not experienced losses on these cash accounts.

The Company sells its product through a global marketer, wholesale distributors and specialty contracted pharmacies on 90-day or better payment terms. The Company continuously monitors the creditworthiness of its customers and adheres to internal policies regarding customer credit limits. The Company estimates an allowance for doubtful accounts primarily based on historical payment patterns, aging of receivable balances and general economic conditions. The Company has not experienced any credit losses to-date.

Recent Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The ASU is effective for the Company on December 1, 2022, Early adoption is permitted, but no earlier than December 1, 2021. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

8

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Recently Adopted Standards

On February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize all leases (with the exception of short-term leases) on the balance sheet as a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee¹s right to use, or control the use of, a specified asset for the lease term. The Company adopted ASC 842 on December 1, 2019, using the optional transition method to apply the new guidance as of December 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. The adoption of this standard on December 1, 2019 did not impact the Company’s condensed consolidated financial statements as the Company is not subject to any lease agreements on December 1, 2019.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The ASU allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted classified as liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The adoption of this standard on December 1, 2019, did not impact the Company’s condensed consolidated financial statements.

Note 4 - Loss per share

Basic net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. Diluted net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive.

Potentially dilutive securities	August 31, 2020		November 30, 2019
Series A convertible preferred stock		2,280,000		-
Series B convertible preferred stock		3,787,000		-
Warrants		9,801,000		7,180,000
Stock Options		2,150,000		1,200,000
Convertible Notes		56,000		5,732,000
Potentially dilutive securities		18,074,000		14,112,000

9

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Note 5 - Convertible Notes

	August 31, 2020			November 30, 2019
Convertible Notes Payable, current:
Principal value of 2018 Debenture	$	-		$	2,730,000
Fair value of bifurcated contingent put option		-			74,000
Debt discount		-			(61,000	)
Carrying value of 2018 Debenture		-			2,743,000
Principal value of 2019 August Debenture		-			550,000
Debt discount		-			(50,000	)
Carrying value of 2019 August Debenture		-			500,000
Total carrying value of convertible notes payable, current	$	-		$	3,243,000
Convertible Notes Payable, long-term:
Principal value of 2019 October Debenture	$	-		$	500,000
Fair value of bifurcated contingent put option		-			29,000
Debt discount		-			(82,000	)
Carrying value of 2019 October Debenture		-			447,000
Principal value of 2019 August Debenture		100,000			-
Debt discount		(10,000	)		-
Carrying value of 2019 August Debenture		90,000			-
Total carrying value of convertible notes, long-term	$	90,000		$	447,000

During the nine months ended August 31, 2020, the Company raised approximately $2.0 million from the issuance of various debentures (the “Debentures”). The Debentures have a maturity date of June 6, 2021. The Debentures bear interest at the rate of 5.5% per annum, and on issuance, the Company paid to the holder a commitment fee equal to 2.5% of the amount of the Debentures.

The Debentures may be converted at any time on or prior to maturity at the lower of $3.00 or 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that as long as we are not in default under the Debenture, the conversion price may never be less than $2.00. Any time after the six-month anniversary of the issuance of the Debentures that the daily VWAP is less than $2.00 for a period of twenty consecutive trading days (the “Triggering Date”) and only for so long as such conditions exist after a Triggering Date, the Company shall make monthly payments beginning on the last calendar day of the month when the Triggering Date occurred. Each monthly payment shall be in an amount equal to the sum of (i) the principal amount outstanding as of the Triggering Date divided by the number of such monthly payments until maturity, (ii) a redemption premium of 20% in respect of such principal amount and (iii) accrued and unpaid interest hereunder as of each payment date. The Company may, no more than twice, obtain a thirty-day deferral of a monthly payment due as a result of a Triggering Date through the payment of a deferral fee in the amount equal to 10% of the total amount of such monthly payment. Each deferral payment may be paid at the option of the Company in cash or by the issuance of such number of shares as is equal to the applicable deferral payment divided by a price per share equal to 93% of the average of the four lowest daily VWAPs during the 10 consecutive Trading Days immediately preceding the due date in respect of such monthly payment being deferred, provided that such shares issued will be immediately freely tradable shares in the hands of the holder.

Upon issuance of the Debentures, the Company recognized a debt discount of approximately $0.3 million, resulting from the recognition of issuance costs of $35,000 and a bifurcated embedded derivative of $0.3 million. The monthly payment provision within the Debentures is a contingent put option that is required to be separately measured at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value of the monthly payment provision by estimating the probability of the occurrence of a Triggering Date and applying the probability to the discounted maximum redemption premium for any given payment with the following key inputs:

10

Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

	January 15, 2020			December 6, 2019
Strike price	$	3.00		$	3.00
Terms (years)		1.4			1.5
Volatility		97	%		98	%
Risk-free rate		1.7	%		1.6	%
Dividend yield		0	%		0	%

The following table summarizes key inputs for embedded convers features on the date of conversions:

	Conversion Date
Strike price		$1.00 - $3.00
Terms (years)		0.8
Volatility		126	%
Risk-free rate		0.2	%
Dividend yield		0	%

As of August 31, 2020, there are no notes outstanding with embedded conversion features.

Debt Conversion

The following table summarizes debt conversion during the nine months ended August 31, 2020:

Principal value of 2018 Debenture	$	2,730,000
Remaining debt discount		(28,000	)
Accrued interest		223,000
Fair value of bifurcated contingent put option		126,000
Sub-total		3,051,000
Principal value of 2019 Debenture		1,950,000
Remaining debt discount		(220,000	)
Accrued interest		58,000
Fair value of bifurcated contingent put option		157,000
Sub-total		1,945,000
Principal value of 2020 Debenture		1,000,000
Remaining debt discount		(140,000	)
Accrued interest		22,000
Fair value of bifurcated contingent put option		137,000
Sub-total		1,019,000
Total debt conversion amount		6,015,000
Fair value of Series A convertible preferred stock issued (127,998 shares)		1,280,000
Fair value of Series B convertible preferred stock issued (2,031,340 shares)		2,031,000
Fair value of common stock issued (2,811,198 shares)		2,735,000
Loss on debt extinguishment during the nine months ended August 31, 2020	$	(31,000	)

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Debt Modification

On August 25, 2020, the Company entered into an extension agreement (the “Agreement”) with the holder of August 2019 debenture (the “Holder”) to extend the maturity date from August 29, 2020 to September 30, 2021. As a consideration, the Company agreed to issue the Holder $10,000 worth of common stock on or before September 30, 2020 based on the closing price on August 25, 2020. The Agreement was recognized as a debt modification. The Company recognized an additional $10,000 debt discount on the amendment date, which will be amortized to interest expense over the remaining term of the debt.

Interest expense

Interest expense, included in the accompanying Condensed Consolidated Statements of Operations, is comprised of the following for each period presented:

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Interest expense based on the coupon interest rate of the outstanding debt	$	6,000		55,000	$	156,000		166,000
Accretion of debt discount		3,000		390,000		136,000		907,000
Costs incurred to defer monthly contingent payments of convertible notes		-		32,000		-		64,000
Total interest expense	$	9,000	$	477,000	$	292,000	$	1,137,000

Note 6 - Commitments and Contingencies

Legal

Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation.

Note 7 - Related Party Transactions

The Company entered into consulting agreements with certain management personnel and stockholders for consulting and legal services. Consulting and legal expenses resulting from such agreements were included within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations as follows:

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Consulting and legal expenses	$	105,000	$	78,000	$	315,000	$	270,000

Note 8 - Stockholders’ Equity Deficit

Common Shares

Issuance of shares for services

During the nine months ended August 31, 2020, the Company issued an aggregate of 0.2 million shares of the Company common stock to various vendors for advisory services, valued at approximately $0.5 million based on the estimated fair market value of the stock on the date of grant and was recognized within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

Preferred Shares

Amendments to Articles of Incorporation or Bylaws

On April 3, 2020, the Company’s Board of Directors authorized the creation of up to 500,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Shares”) and up to 1,000,000 shares of Series B Convertible Preferred Stock (the “Series B Preferred Shares”). On April 6, 2020, the Company filed a Certificate of Designations with the Secretary of Nevada creating such Series A and Series B Preferred Shares (collectively, the “Preferred Shares”).

The original issue price and the liquidation value per share, as of August 31, 2020, of each class of preferred stock is as follows:

	Original Issue Price		Liquidation Value
	Per Share		Per Share
Series A Preferred Share	$	10.00	$	10.32
Series B Preferred Share	$	10.00	$	10.31

The following is a summary of the rights of the holders of the Preferred Shares:

Voting. Except to the extent required by law, the holders of the Preferred Shares do not have the right to vote on the matters that the holders of the common stock have the right to vote upon. The holders of the Preferred Shares may vote upon matters affecting the Preferred Shares, provided that if the vote concerns all Preferred Shares, the holders of the Series A Preferred Shares shall vote together with the holders of the Series B Preferred Shares.

Liquidation. The holders of the Preferred Shares have a liquidation preference over the holders of the common stock. Such preference consists of the right to receive upon the Company’s voluntary or involuntary liquidation, dissolution or winding up the liquidation value of each Series A and Series B Preferred Share prior to the payment of any amounts to the holders of the common stock. The liquidation value of each Series A and Series B Preferred Share shall be equal to $10 plus any accrued but unpaid dividends thereon.

Dividends. Every three months, the Company is required to pay each holder of Preferred Shares a dividend equal to 2% of the liquidation value of such shares (which is equal to 8% on annual basis). Such dividends shall be paid in shares of the Company’s common stock in an amount equal to the dollar amount of such payment divided by the VWAP of the Company’s common stock on the date that such dividend payment is due, provided that the Company may not issue such shares of common stock if such share issuance would cause the holder to beneficially own more than 9.99% of the Company’s common stock.

Conversion of Series A Preferred Shares. Each Series A Preferred Share may be converted into shares of the Company’s common stock in an amount that is equal to the liquidation value divided by $1.00. The Company may force the conversion of the Series A Preferred Shares if each of the following conditions (the “Forced Equity Conditions”) has been met:

(i)	on each trading day during the period beginning ten trading days prior to the forced conversion (the "Equity Conditions Measuring Period"), the VWAP of the Company’s common stock is in excess of $5.00,
(ii)	on each trading day during Equity Conditions Measuring Period, the dollar volume of the Company’s common stock traded is in excess of $750,000,
(iii)	on each day during the Equity Conditions Measuring Period, the shares of the Company’s common stock underlying the Series A Preferred Shares to be converted shall either (x) be registered for resale on an effective registration statement or (y) eligible for resale without restriction and without the need for registration under any applicable federal or state securities laws,
(iv)	on each day during the Equity Conditions Measuring Period, the Company’s common stock is designated for quotation on the Company’s principal market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; and

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Q BIOMED INC.

Notes to Condensed Consolidated Financial Statements

(v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default.

Conversion of Series B Preferred Shares. Each Series B Preferred Share may be converted into shares of the Company’s common stock in an amount that is equal to the liquidation value divided by the applicable conversion rate. The conversion rate shall be the lower of: (a) $2.70 or (b) 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than $1.00; further provided that if the VWAP of the Company’s common stock for any 40 consecutive trading days is less than $1.00 for 30 of those days, then such floor conversion price shall be reduced from $1.00 to $0.35.

The Company may not issue shares of common stock upon pursuant to the conversions discussed above if such conversion would cause a holder to beneficially own more than 9.99% of our then outstanding common stock.

Financing Agreements

On April 6, 2020, the Company entered into a securities purchase agreement (the “SPA”) with accredited investors (the “Investors”). Pursuant to the SPA, the Company issued the following securities:

• 127,998 shares of Series A Convertible Preferred Stock (the “Series A”) in exchange for convertible debentures with principal and interest of approximately $1.3 million;

• 100,000 Series A Preferred Shares for cash of $1.0 million,

• 203,134 shares of Series B Convertible Preferred Stock (‘the “Series B”) in exchange for convertible debentures with principal and interest of approximately $2.0 million;

• 300,000 Series B Preferred Shares for cash of $3.0 million

The fair value of the Company’s common stock on the issuance date is higher than the effective conversion price of both the Series A Preferred Shares and the Series B Preferred Shares (collectively, the “Preferred Shares”), therefore the Company recorded a beneficial conversion feature (“BCF”) of approximately $0.5 million on the Preferred Shares. The discount to the aggregate stated value of the Preferred Shares, resulting from recognition of the BCF was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Preferred Shares. The accretion is presented in the Consolidated Statement of Operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.

The Company had accumulated dividends payable on the Preferred Shares of approximately $0.2 million as of August 31, 2020.

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Q BIOMED INC.
Notes to Condensed Consolidated Financial Statements

Note 9 - Warrants and Options

Summary of warrants

The following represents a summary of all outstanding warrants to purchase the Company’s common stock, including warrants issued to vendors for services and warrants issued as part of the units sold in the private placements, at May 31, 2020 and the changes during the period then ended:

						Weighted Average
				Weighted Average		Remaining Contractual
	Warrants			Exercise Price		Life (years)		Intrinsic Value
Outstanding at December 1, 2019		7,180,000		$	2.22		3.2	$	2,463,000
Issued		3,065,000			2.13		4.3		-
Cashless exercise		(30,000	)		0.86		-		-
Forfeited/expired		(414,000	)		3.95		-		-
Outstanding at August 31, 2020		9,801,000		$	2.11		3.1	$	1,668,000
Exercisable at August 31, 2020		9,788,000		$	2.11		3.1	$	1,668,000

During the nine months ended August 31, 2020, the Company issued 1,500,000 warrants to the Company’s two officers in exchange for services rendered. The warrants are exercisable into shares of the Company’s common stock in six months from their issuance until five years from the date of issuance at an exercise price of $2.12 per share.

During the nine months ended August 31, 2020, the Company issued 901,000 warrants to certain consultants and service providers in exchange for services rendered. The warrants are exercisable into shares of the Company’s common stock between 3-5 years from the date of issuance at an exercise price between $2.00 to $2.12 per share.

During the nine months ended August 31, 2020, the Company issued 250,000 warrants to certain consultants for legal services provided regarding issuance of Preferred Shares and preparation of registration statement. The warrants are exercisable into shares of the Company’s common stock in six months from their issuance until five years from the date of issuance at an exercise price of $2.12 per share. The Company recorded approximately $0.1 million as a direct offering cost in Stockholders’ equity.

The following assumptions were used to estimate the fair value of warrants granted during the nine months ended August 31, 2020:

	For the Nine Months ended
	August 31, 2020
Strike price	$	2.12
Term (years)		5.0
Volatility		120	%
Risk-free rate		1.3	%
Dividend yield		0.0	%

Modification of Warrants

On February 12, 2020, the Company modified an aggregate of 245,625 warrants that were originally granted to certain investors and consultants. The exercise price of the warrants was reduced to $2.33 per share and the term of the warrants were extended for 2 years from the original expiration date. The Company received $20,000 cash from one of the investors as consideration for this modification.

On May 1, 2020, the Company modified an aggregated of 168,000 warrants that were originally granted to certain consultants. The exercise price of the warrants was reduced to $2.00 per share and the term of the warrants were extended for 2-3 years from the original expiration date.

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Q BIOMED INC.
Notes to Condensed Consolidated Financial Statements

The Company immediately recognized approximately $0.2 million of incremental stock-based compensation for the modifications during the nine months ended August 31, 2020 based on the following weighted average assumptions:

	After Modification			Before Modification
Strike price	$	2.20		$	4.20
Term (years)		3.7			1.5
Volatility		124	%		164	%
Risk-free rate		0.9	%		1.1	%
Dividend yield		0.0	%		0.0	%

Options Issued for Services

The following represents a summary of all outstanding options to purchase the Company’s common stock at August 31, 2020 and the changes during the period then ended:

					Weighted Average
			Weighted Average		Remaining Contractual
	Options		Exercise Price		Life (years)		Intrinsic Value
Outstanding at December 1, 2019		1,200,000	$	1.35		3.4	$	721,000
Issued		950,000		1.46		4.9		-
Outstanding at August 31, 2020		2,150,000	$	1.40		3.6	$	161,000
Exercisable at August 31, 2020		1,290,000	$	1.36		2.7	$	161,000

The following assumptions were used to compute the fair value of options granted during the nine months ended August 31, 2020:

	For the Nine Months ended
	August 31, 2020
Strike price	$	1.46
Term (years)		5.00
Volatility		115	%
Risk-free rate		0.5	%
Dividend yield		0.0	%

Stock-based Compensation

The Company recognized general and administrative expenses of approximately $5 million and $0.5 million as a result of the shares, outstanding warrants and options issued to consultants and employees during the nine months ended August 31, 2020 and 2019, respectively.

As of August 31, 2020, the estimated unrecognized stock-based compensation associate with these agreements is approximately $0.9 million and will be fully recognized over the next 12 months.

Note 10 – Subsequent Events

On September 15, 2020, the Company issued 416,667 shares of common stock to Mannin to settle outstanding payables of $0.75 million, which was net of $61,000 receivables. The fair value the common shares was approximately $0.55 million on September 15, 2020.

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

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about our business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. The expectations indicated by such forward-looking statements might not be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to create and expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, “believes,” “expects,” “intends,” “plans,” “anticipates,” “estimates” and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

Overview

Q BioMed Inc. (or “the Company”) was incorporated in the State of Nevada on November 22, 2013 and is a commercial stage biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. We intend to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors. We intend to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spin out.

Since our inception, we have been busy building value ranging from potential blockbuster drugs to revenue producing opportunities. Our mission is to solve problems by accelerating the development of important therapies and the availability of those therapies to patients.

We are extremely pleased to have reached our initial goal of becoming a commercial pharmaceutical company in the start of 2020.

Strontium89 - FDA Approved Drug Launched

The COVID-19 pandemic slowed the diagnosis and treatment of cancer in many patients throughout spring and into summer, and severely limited the industry’s access to physicians due to restrictions on access and availability. Despite these challenges, the reintroduction of Strontium89 has received a warm response and enthusiasm from physicians who are pleased that it is once again available for the benefit of their patients.

We are aware of free-standing clinics in at least eight states that are undergoing the required operational steps to become a ‘Strontium89 practice’, including having it on their radioactive materials license, with several clinics already up and running with patients being treated. Beginning in October, we expect treatment with Strontium89 in the hospital out-patient setting will be fully reimbursed by Medicare and Medicaid. Once this is approved, we will launch a hospital-focused marketing initiative and expect to see hospitals more actively treat patients as well.

We are deploying a multi-channel marketing campaign, driving awareness among our target audiences, both on the physician and the patient side. We will exhibit Strontium89 at several conferences including ASTRO (American Society of Therapeutic Radiation Oncology) and ONS (Oncology Nursing Society) and will begin speaker programs later this fall. Virtual and live sales calls have been ongoing since June within the confines of COVID-19 access and we intend to expand our field force efforts in the last quarter of 2020.

In September 2020, we launched our international ‘Named Patient’ program that enables physicians worldwide to order Strontium89 for their patients in need, and we consider the response to this program to be robust with orders pending from at least seven other countries (we had one order in the United Kingdom, but sadly the patient succumbed to his condition prior to treatment.) The regulatory registration process for full commercial access in the EU has commenced, with pan-EU approval expected by end of year. In parallel, we are midway through the registration process in many other countries, with approvals expected to begin in our fourth quarter of 2020 and to continue into our next fiscal year.

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We anticipate revenues from Strontium89 to continue to ramp up in our fourth quarter as we build capacity and demand worldwide. Looking towards 2021, we are assessing several potential clinical trial programs that may expand the indication beyond palliation into a therapeutic use that may increase patient survival, accessing the much larger therapeutic market.

Launching Strontium89 distinguishes us from publicly traded biotech companies that have yet to launch a regulatory approved commercial product and generate revenues. Building a robust pipeline, we continue to work closely with our technology partners to develop treatments for unmet needs in multi-billion-dollar markets.

Mannin Technology Collaboration - COVID19, Glaucoma and Others

Our technology partner Mannin Research Inc. (Mannin) was recently granted up to $7.7 million in Europe, which will fund 65 percent of every dollar incurred to advance a portfolio of therapeutic assets for vascular diseases currently in development at Mannin, including: glaucoma, cardiovascular diseases, acute kidney disease, and infectious diseases such as influenza and coronavirus, among others.

Given the urgent need for therapeutics to treat COVID-19, Mannin is rapidly accelerating the time to the first clinical milestone for MAN-19. An Investigational New Drug (IND) application (or similar clinical trial proposal) to regulators are planned for late 2020 with trials expected to begin in the first quarter of our 2021 fiscal year.

It is important to note that we believe that the MAN-19 therapeutic is virus-agnostic, which makes it relevant to other viral diseases today like influenza and future viral pandemic outbreaks. Therefore, a successful infectious disease application in COVID-19 could position MAN-19 as a potential government stockpile drug for inevitable future pandemics. Furthermore, a successful proof-of-concept clinical trial with MAN-19 in COVID-19 patients would provide the clinical dataset to quickly support the development of therapeutics for other vascular diseases such as sepsis, acute kidney injury, and of course glaucoma. All of these are large markets with significant potential.

We continue to support the development of Mannin’s MAN-01 and MAN-11 therapeutics, a novel small-molecule, and novel biologic therapeutic for glaucoma, respectively. There are over 60 million patients worldwide with primary open-angle glaucoma. The MAN-01 program is developing topical drops designed to reduce pressure build-up in the eye by assisting with, and correcting, drainage problems in tiny vessels in the eye. We have advanced this asset from ‘concept to compound’ and have seen very promising preliminary data that inspires confidence in the program and the market it addresses. Again, as we assess this against our mission, we have found a unique opportunity in a neglected market with significant potential and are advancing it towards real value.

Our next steps for the MAN-01 and MAN-11 programs are to initiate toxicology studies in 2021, with the goal of initiating a Phase 1 proof of concept trial in late 2021. These successful data points should command a significant value proposition with potential partner companies that have a specific interest in ophthalmology.

GDF 15 Diagnostic for Glaucoma - In Clinical Trial and Product Development and FDA approval anticipated early 2021

In early 2019, we licensed a diagnostic biomarker known as GDF-15 for determining the severity of glaucoma from Washington University in St. Louis. GDF-15 is a perfect companion diagnostic for the MAN-01 and MAN-11 drugs, as well as a novel tool for practicing ophthalmologists and drug developers, because it allows them to assess the efficacy of the treatment or disease progression in their practice. This product represents a unique opportunity and current clinical trials are yielding promising results. In partnership with Mannin Research Inc. and McMaster University, we are nearing the completion of development of an in-vitro-diagnostic (IVD) with both point-of-care (detection in a doctor’s office) as well as an external laboratory-based detection (i.e. for use in existing CLIA laboratories using existing diagnostic equipment). We anticipate completion of the IVD device by the end of March 2021 with submission to the FDA (510K) for in vitro diagnostic approval in late 2021.

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UTTROSIDE B - Liver Cancer Chemotherapeutic

We are innovating in the treatment of liver cancer, a disease indication that currently has a high unmet need. Currently, there are only two approved first-line therapies. We licensed and have advanced Uttroside-B, a new molecule that showed ten times the potency of the current standard of care in early pre-clinical investigation. Uttroside-B was discovered in the leaf of the Black Nightshade plant in India. As it is not feasible to use the plant as the source for a drug, we successfully synthesized the molecule thereby creating an exact replica of the naturally occurring chemical compound. We are now preparing to advance this into a pre-clinical program leading to an orphan drug application and IND application with the FDA and a proof of concept clinical program. Initiation of scale up and GMP material has begun. If we are successful in achieving a positive proof of concept, we would expect the commercial market to recognize the additional value created in this billion-dollar market.

QBM-001 - Early Stage Treatment for young minimally verbal children on the Autism Spectrum

While our immediate focus is on the above-mentioned assets, we are also developing a new drug candidate to treat young children with pediatric minimally verbal autism. The advancement of this program will depend on the availability of funds and resources as we prioritize our clinical development milestones. There is no effective treatment available to help an estimated 250,000 children born with the condition worldwide each year, 20,000 of them in the U.S. We are working on a discovery and development program to address this highly unmet need.

Corporate Strategic Goals

Since our inception seven years ago, we have been busy building value ranging from potential blockbuster drugs to revenue producing opportunities. Our mission is to solve problems by accelerating the development of important therapies and availability of those therapies to patients. We believe we are creating value for our shareholders as we approach some significant milestones and catalysts. To that end, early this year we completed a debt restructuring and financing resulting in the conversion of approximately $4 million in debt to equity and a new cash investment of $4 million. This transaction had a very positive impact on our balance sheet and shareholder equity improving from negative $5 million to a positive balance and positions us well for an up-listing once our share price reaches the required metric and we implement the necessary corporate structure and board composition. It is our goal to uplist as soon as possible and anticipate this milestone by year end, though we cannot guarantee that it will occur by then if at all.

Financial Overview

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments, research and development costs, accrued expenses and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Other than as set out in Note 3 to our accompanying unaudited condensed consolidated financial statements we believe there have been no significant changes in our critical accounting policies as described in the Form 10-K.

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Unaudited Results of Operations for the three months ended August 31, 2020 and 2019:

	For the Three Months ended
	August 31, 2020			August 31, 2019
Net Sales	$	15,000		$	-
Cost of sales		158,516			-
Gross loss		(143,516	)		-
Operating expenses:
General and administrative expenses		1,491,613			968,383
Research and development expenses		613,707			786,600
Total operating expenses		2,105,320			1,754,983
Loss from operations		(2,248,836	)		(1,754,983	)
Other (income) expenses:
Interest expense		9,025			476,627
Change in fair value of embedded derivatives		-			118,000
Total other expenses		9,025			791,705
Net loss	$	(2,257,861	)	$	(2,546,688	)

Net Sales

During the three months ended August 31, 2020, we recognized $15,000 revenue from sale of Strontium89.

Cost of Sales

During the three months ended August 31, 2020, we recognized approximately $0.2 million cost of sales. These costs were related to raw materials cost, manufacturing cost and distribution cost.

Operating expenses

We incur various costs and expenses in the execution of our business. The increase in general and administrative expenses was due to an increased charge in investor relations compared to the same period in the prior year. The decrease in research and development compared to the same period in the prior year was mainly due to less fees incurred in connection with the license agreements with Mannin.

Interest expenses

During the three months ended August 31, 2020, interest expense decreased to approximately $9,000 from $0.5 million in same period in the prior year due primarily to the exchange of outstanding Debentures for Series A and Series B preferred stock.

The following table summarizes interest expenses incurred during the three months ended August 31, 2020 and 2019, respectively:

	For the Three Months ended
	August 31, 2020		August 31, 2019
Interest expense based on the coupon interest rate of the outstanding debt	$	6,000	$	55,000
Accretion of debt discount		3,000		390,000
Costs incurred to defer monthly contingent payments of convertible notes		-		32,000
Total interest expense	$	9,000	$	477,000

Change in fair value of embedded derivatives

We recognized $0 and approximately $0.1 million loss resulting from the change in fair value of embedded contingent put options in convertible notes during the three months ended August 31, 2020 and 2019, respectively. All embedded derivatives were extinguished as of May 31, 2020.

20

Loss on Induced Conversion of Debt

During the three months ended August 31, 2019, we recognized a loss of $0.2 million resulting from the share settlement of deferral fee and additional shares issued beyond conversion terms for conversion of $0.2 million principal and accrued interest of $0.1 million on 2018 Debentures.

Net loss

During the three months ended August 31, 2020 and 2019, we incurred net losses of approximately $2.3 million and $2.5 million, respectively. Our management expects to continue to incur net losses for the foreseeable future, due to our need to continue to establish a broader pipeline of assets, expenditure on R&D and implement other aspects of our business plan.

Unaudited Results of Operations for the nine months ended August 31, 2020 and 2019:

	For the Nine Months ended
	August 31, 2020			August 31, 2019
Net Sales	$	30,000		$	-
Cost of sales		193,211			-
Gross loss		(163,211	)		-
Operating expenses:
General and administrative expenses		8,659,819			3,406,853
Research and development expenses		896,908			2,672,715
Total operating expenses		9,556,727			6,079,568
Loss from operations		(9,719,938	)		(6,079,568	)
Other (income) expenses:
Interest expense		291,626			1,137,271
Change in fair value of embedded derivatives		19,163			396,000
Loss on debt extinguishment		31,399			-
Total other expenses		342,188			1,730,349
Net loss	$	(10,062,126	)	$	(7,809,917	)

Net Sales

During the nine months ended August 31, 2020, we recognized $30,000 revenue from sale of Strontium89.

Cost of Sales

During the nine months ended August 31, 2020, we recognized approximately $0.2 million cost of sales. These costs were related to raw materials cost, manufacturing cost and distribution cost.

Operating expenses

We incur various costs and expenses in the execution of our business. The increase in general and administrative expenses was due to an increased charge in stock-based compensation and consulting expense compared to the same period in the prior year. We recorded approximately $5.2 million and $1.3 million of stock-based compensation under general and administrative expense during the nine months ended August 31, 2020 and 2019, respectively. The decrease in research and development compared to the same period in the prior year was mainly due to less fees incurred in connection with the license agreements with Mannin.

Interest expenses

During the nine months ended August 31, 2020, interest expense decreased to approximately $0.3 million from $1.1 million in the same period in the prior year due primarily to the exchange of outstanding Debentures for Series A and Series B preferred stock.

The following table summarizes interest expenses incurred during the nine months ended August 31, 2020 and 2019, respectively:

21

	For the Nine Months ended
	August 31, 2020		August 31, 2019
Interest expense based on the coupon interest rate of the outstanding debt	$	156,000	$	166,000
Accretion of debt discount		136,000		907,000
Costs incurred to defer monthly contingent payments of convertible notes		-		64,000
Total interest expense	$	292,000	$	1,137,000

Change in fair value of embedded derivatives

We recognized approximately $19,000 and $0.4 million loss resulting from the change in fair value of embedded contingent put options in convertible notes during the nine months ended August 31, 2020 and 2019, respectively. The fluctuation is mainly due the change of stock price during the reporting periods and conversion of existing debt, reducing the penalty payments due.

Loss on debt extinguishment

We recognized approximately $31,000 loss due to the exchange outstanding Debentures to common shares and preferred shares during the nine months ended August 31, 2020.

Net loss

During the nine months ended August 31, 2020 and 2019, we incurred net losses of approximately $10.1 million and $7.8 million, respectively. Our management expects to continue to incur net losses for the foreseeable future, due to our need to continue to establish a broader pipeline of assets, expenditure on R&D and implement other aspects of our business plan.

Liquidity and Capital Resources

We prepared the accompanying condensed consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

We have not yet established an ongoing source of significant revenues and must cover our operating through debt and equity financings to allow us to continue as a going concern. We had approximately $1.3 million in cash as of August 31, 2020. Our ability to continue as a going concern depends on the ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

We depend upon our ability, and will continue to attempt, to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management determined that there was substantial doubt about our ability to continue as a going concern within one year after the condensed consolidated financial statements were issued, and management’s concerns about our ability to continue as a going concern within the year following this report persist.

The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Cash Flows

The following table sets forth the significant sources and uses of cash for the periods addressed in this report:

22

	For the Nine Months ended
	August 31, 2020			August 31, 2019
Net cash (used in) provided by:
Operating activities	$	(4,761,000	)	$	(3,076,000	)
Financing activities		5,915,000			693,000
Net increase (decrease) in cash	$	1,154,000		$	(2,383,000	)

Net Cash Used in Operating Activities

During the nine months ended August 31, 2020, operating activities used $4.8 million of cash, resulting from a net loss of $10.1 million, partially offset by $5.2 million of share -based compensation, other non-cash expenses $0.2 million and changes in our operating assets and liabilities. During the nine months ended August 31, 2019, operating activities used $3.1 million of cash, resulting from a net loss of $7.8 million, partially offset by $1.3 million of share-based compensation, change in fair value of embedded conversion options of $0.4 million, and non-cash interest expense resulting from accretion of debt discounts of $0.9 million and changes in our operating assets and liabilities.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended August 31, 2020 and 2019 was $5.9 million and $0.6 million, respectively. The net cash provided in the 2020 period relates to proceeds received from the issuance of preferred shares and debentures.  The net cash provided in the 2019 period relates to proceeds received from the issuance of debentures and investor advances. 

Commitments and Contingencies

Legal

Periodically, we review the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation.

Office Facility Agreement

In December 2016, we entered into a license to occupy a shared office facility in Cayman Islands for $30,000 per annum. The initial term of the agreement ended in December 2019 and we renewed the agreement for another three years with the same terms.

This agreement does not identify a specific asset and does not convey the use of substantially all of the shared office capacity. As such, this agreement does not contain a lease under ASC 842. We recognize monthly license payments as incurred over the term of the arrangement.

The associated expense is classified within general and administrative expenses.

Related Party Transactions

We entered into consulting agreements with certain management personnel and stockholders for consulting and legal services. Consulting and legal expenses resulting from such agreements were included within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations as follows:

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Consulting and legal expenses	$	105,000	$	78,000	$	315,000	$	270,000

23

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

This item is not applicable as we are currently considered a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the period covered by this Report. Based on that evaluation, it was concluded that our disclosure controls and procedures are not effective to reasonably assure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We do not have an Audit Committee; our board of directors currently acts as our Audit Committee. Only one of our three directors is an independent director, and none of our directors is considered a “Financial Expert,” within the meaning of Section 407 of the Sarbanes-Oxley Act. We have interviewed additional potential independent directors, but have not engaged any.

Changes in internal controls over financial reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. We have engaged accounting and compliance consultants to review our internal controls over financial reporting and other compliance requirements.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As a Smaller Reporting Company, we are not required to provide this information.

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

On September 15, 2020, we issued 416,667 shares of common stock to Mannin to settle outstanding payables of $0.75 million , which was net of $61,000 receivables.

The issuance of the Securities mentioned above qualified for the exemption from registration continued in section 4(a) of the securities act of 1933.

24

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number Name and/or Identification of Exhibit

31.1	Rule 13a-14(a)/15d-14(a) Certifications
32.1	Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
101	Interactive Data File
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

25

SIGNATURES

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

	Q BIOMED INC.
Dated: October 14, 2020	By:	/s/ Denis Corin
		Denis Corin
		President, Chief Executive Officer, Acting Principal Accounting Officer, Principal Financial Officer

26

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Denis Corin, certify that:

(1) I have reviewed the quarterly report on Form 10-Q for the quarterly period ended August 31, 2020 of Q BioMed Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: October 14, 2020

/s/ Denis Corin

Denis Corin

Chief Executive Officer (Principal Executive Officer and Acting Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Q BioMed Inc. (the “Company”) for the quarterly period ended August 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Denis Corin, Chief Executive Officer (Principal Executive Officer and Acting Principal Financial and Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: October 14, 2020

/s/ Denis Corin

Denis Corin

Chief Executive Officer (Principal Executive Officer and Acting Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Aug. 31, 2020	Oct. 12, 2020
Document and Entity Information
Entity Registrant Name	Q BIOMED INC.
Document Type	10-Q
Document Period End Date	Aug. 31, 2020
Amendment Flag	false
Entity Central Index Key	0001596062
Current Fiscal Year End Date	--11-30
Entity Common Stock, Shares Outstanding		23,410,573
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Trading Symbol	QBIO
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false

XML

Condensed Consolidated Balance Sheets - USD ($)	Aug. 31, 2020	Nov. 30, 2019
Current assets:
Cash	$ 1,326,359	$ 172,636
Accounts receivable	12,300	0
Prepaid expenses and other current assets	133,964	17,662
Total current assets	1,472,623	190,298
Intangible assets, net	412,500	450,000
Total Assets	1,885,123	640,298
Current liabilities:
Accounts payable	357,973	652,051
Accrued expenses	1,265,571	1,145,660
Accrued expenses - related party	4,000	7,500
Accrued interest payable	40,876	189,801
Convertible note payable, net	0	3,243,292
Total current liabilities	1,668,420	5,238,304
Long-term liabilities:
Total long term liabilities	90,096	447,335
Total Liabilities	1,758,516	5,685,639
Commitments and Contingencies (Note 6)
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of August 31, 2020 and November 30, 2019
Common stock, $0.001 par value; 250,000,000 shares authorized; 22,774,232 and 19,709,068 shares issued and outstanding as of August 31, 2020 and November 30, 2019, respectively	22,774	19,709
Additional paid-in capital	45,345,017	37,328,827
Accumulated deficit	(52,456,003)	(42,393,877)
Total Stockholders' Equity (Deficit)	126,607	(5,045,341)
Total Liabilities and Stockholders' Equity (Deficit)	1,885,123	$ 640,298
Convertible Series A Preferred Stock
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of August 31, 2020 and November 30, 2019	2,189,846
Convertible Series B Preferred Stock
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value; 100,000,000 shares authorized as of August 31, 2020 and November 30, 2019	$ 5,024,973

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Aug. 31, 2020	Nov. 30, 2019
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	22,774,232	19,709,068
Common stock, shares outstanding	22,650,685	19,709,068
Convertible Series A Preferred Stock
Preferred stock, shares authorized	500,000	500,000
Preferred stock, issued	227,998	0
Preferred stock, outstanding	227,998	0
Convertible Series B Preferred Stock
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, issued	503,134	0
Preferred stock, outstanding	503,134	0

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Condensed Consolidated Statements of Operations
Net Sales	$ 15,000	$ 0	$ 30,000	$ 0
Cost of sales	158,516	0	193,211	0
Gross loss	(143,516)	0	(163,211)	0
Operating expenses:
General and administrative expenses	1,491,613	968,383	8,659,819	3,406,853
Research and development expenses	613,707	786,600	896,908	2,672,715
Total operating expenses	2,105,320	1,754,983	9,556,727	6,079,568
Loss from operations	(2,248,836)	(1,754,983)	(9,719,938)	(6,079,568)
Other (income) expenses:
Interest expense	9,025	476,627	291,626	1,137,271
Change in fair value of embedded derivatives	0	118,000	19,163	396,000
Loss on induced conversion of debt	0	197,078	0	197,078
Loss on debt extinguishment	0	0	31,399	0
Total other expenses	9,025	791,705	342,188	1,730,349
Net loss	(2,257,861)	(2,546,688)	(10,062,126)	(7,809,917)
Accumulated dividend on convertible preferred stock	(146,227)	0	(230,699)	0
Deemed dividend on convertible preferred stock due to beneficial conversion feature	0	0	(482,945)	0
Net loss attributable to common stockholders	$ (2,404,088)	$ (2,546,688)	$ (10,775,770)	$ (7,809,917)
Net loss per share - basic and diluted	$ (0.11)	$ (0.17)	$ (0.50)	$ (0.54)
Weighted average shares outstanding, basic and diluted	22,433,141	14,756,302	21,731,159	14,580,630

XML

Condensed Consolidated Statement of Changes in Shareholders' Equity (Deficit) - USD ($)	Common Stock	Additional Paid in Capital Series A convertible preferred stock	Additional Paid in Capital Series B convertible preferred stock	Additional Paid in Capital	Accumulated Deficit	Series A convertible preferred stock	Series B convertible preferred stock	Total
Beginning balance, Shares at Nov. 30, 2018	14,290,236
Beginning balance, Amount at Nov. 30, 2018	$ 14,290			$ 31,994,129	$ (32,114,147)			$ (105,728)
Share based compensation for services, Amount	$ 527			1,349,081				1,349,608
Share based compensation for services, Shares	526,541
Issuance of common stock to partially convert notes payable	$ 147			293,579				293,726
Issuance of common stock to partially convert notes payable (in shares)	146,863
Issuance of common stock as inducement to partially convert notes payable	$ 188			196,890				197,078
Issuance of common stock as inducement to partially convert notes payable (in shares)	187,693
Issuance of common stock to defer monthly contingent payment of convertible note	30			32,408				32,438
Issuance of common stock to defer monthly contingent payment of convertible note (in shares)	$ 30,894
Net loss					(7,809,917)			(7,809,917)
Ending balance, Shares at Aug. 31, 2019	15,182,227
Ending balance, Amount at Aug. 31, 2019	$ 15,182			33,866,087	(39,924,064)			(6,042,795)
Beginning balance, Shares at May. 31, 2019	14,677,136
Beginning balance, Amount at May. 31, 2019	$ 14,676			33,002,224	(37,377,376)			(4,360,476)
Share based compensation for services, Amount	$ 141			340,986				341,127
Share based compensation for services, Shares	139,641
Issuance of common stock to partially convert notes payable	$ 147			293,579				293,726
Issuance of common stock to partially convert notes payable (in shares)	146,863
Issuance of common stock as inducement to partially convert notes payable	$ 188			196,890				197,078
Issuance of common stock as inducement to partially convert notes payable (in shares)	187,693
Issuance of common stock to defer monthly contingent payment of convertible note	30			32,408				32,438
Issuance of common stock to defer monthly contingent payment of convertible note (in shares)	$ 30,894
Net loss					(2,546,688)			(2,546,688)
Ending balance, Shares at Aug. 31, 2019	15,182,227
Ending balance, Amount at Aug. 31, 2019	$ 15,182			33,866,087	(39,924,064)			(6,042,795)
Beginning balance, Shares at Nov. 30, 2019	19,709,068
Beginning balance, Amount at Nov. 30, 2019	$ 19,709			37,328,827	(42,393,877)			(5,045,341)
Issuance of Series A and Series B preferred stock for cash, Amount						$ 975,000	$ 2,975,000	3,950,000
Number of shares issued for cash						100,000	300,000
Issuance of Series A and Series B preferred stock to convert notes payable, Amount						$ 1,279,980	$ 2,031,340	3,311,320
Issuance of Series A and Series B preferred stock to convert notes payable, Shares						127,998	203,134
Offering cost related issuance of Series A and Series B preferred stock				277,200		$ (138,600)	$ (138,600)
Cashless warrants exercise, Amount	$ 21			(21)
Cashless warrants exercise, Shares	20,860
Beneficial conversion feature of convertible preferred stock		$ 252,786				(252,786)
Beneficial conversion feature of Series B convertible preferred stock			$ 230,159				(230,159)
Deemed dividends related to immediate accretion of beneficial conversion feature of convertible preferred stock		$ (252,786)	$ (230,159)			252,786	230,159
Accumulated dividend on convertible preferred stock				(230,699)		$ 73,466	$ 157,233
Share based compensation for services, Amount	$ 233			4,982,213				4,982,446
Share based compensation for services, Shares	233,106
Share based compensation related to warrants modification, Amount				255,008				255,008
Issuance of common stock to partially convert notes payable	$ 2,811			2,732,489				2,735,300
Issuance of common stock to partially convert notes payable (in shares)	2,811,198
Net loss					(10,062,126)			(10,062,126)
Ending balance, Shares at Aug. 31, 2020	22,774,232					227,998	503,134
Ending balance, Amount at Aug. 31, 2020	$ 22,774			45,345,017	(52,456,003)	$ 2,189,846	$ 5,024,973	126,607
Beginning balance, Shares at May. 31, 2020	22,650,685					227,998	503,134
Beginning balance, Amount at May. 31, 2020	$ 22,650			45,219,938	(50,198,142)	$ 2,144,246	$ 4,924,346	2,113,038
Accumulated dividend on convertible preferred stock				(146,227)		$ 45,600	$ 100,627
Share based compensation for services, Amount	$ 124			271,306				271,430
Share based compensation for services, Shares	123,547
Net loss					(2,257,861)			(2,257,861)
Ending balance, Shares at Aug. 31, 2020	22,774,232					227,998	503,134
Ending balance, Amount at Aug. 31, 2020	$ 22,774			$ 45,345,017	$ (52,456,003)	$ 2,189,846	$ 5,024,973	$ 126,607

XML

Condensed Consolidated Statement of Cash Flows - USD ($)	9 Months Ended
	Aug. 31, 2020	Aug. 31, 2019
Cash flows from operating activities:
Net loss	$ 10,062,126	$ 7,809,917
Adjustments to reconcile net loss to net cash used in operating activities
Share based compensation for services	4,982,446	1,349,608
Share based compensation related to warrants modification	255,008	0
Change in fair value of embedded conversion option	19,163	396,000
Accretion of debt discount	136,705	907,437
Amortization expense	37,500	37,500
Loss on debt extinguishment	31,399	0
Loss on induced conversion of debt	0	197,078
Non-cash interest expense	0	32,438
Changes in operating assets and liabilities:
Accounts receivable	(12,300)	0
Prepaid expenses	(116,302)	(16,046)
Accounts payable and accrued expenses	(187,667)	1,646,699
Accrued expenses - related party	0	17,500
Accrued interest payable	154,897	165,713
Net cash used in operating activities	(4,761,277)	(3,075,990)
Cash flows from financing activities:
Proceeds from issuance of Series A and Series B convertible preferred stock, net of issuance costs	3,950,000	0
Proceeds received from issuance of convertible note	1,965,000	500,000
Proceeds from investor advances	0	193,250
Net cash provided by financing activities	5,915,000	693,250
Net increase (decrease) in cash	1,153,723	(2,382,740)
Cash at beginning of period	172,636	2,684,413
Cash at end of the period	1,326,359	301,673
Supplemental disclosures:
Cash paid for interest	0	31,524.00
Cash paid for income taxes	0	0
Supplemental disclosures for noncash investing and financing activities:
Issuance of common stock to convert notes payable and accrued interest	2,735,300	293,726.00
Accrued debt issuance costs	0	15,000.00
Issuance of Series A and Series B preferred stock in exchange for outstanding convertible notes payable and accrued interest	3,311,320	0
Accumulated dividend on convertible preferred stock	230,699	0
Shares payable related to debt modification	$ 10,000	$ 0

XML

Organization of the Company and Description of the Business

9 Months Ended

Aug. 31, 2020

Organization of the Company and Description of the Business

Organization of the Company and Description of the Business

Note 1 - Organization of the Company and Description of the Business

Q BioMed Inc. (“Q BioMed”) and its wholly owned subsidiaries Q BioMed Cayman SEZC and QBMG Q BioMed Germany UG (collectively, “the Company”), is a biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. Q BioMed intends to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors.  The Company intends to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spinoff new public companies.

The accompanying condensed consolidated financial statements include the accounts of the Company’s wholly-owned subsidiary.  All intercompany balances and transactions have been eliminated in consolidation.

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Financial Condition, Going Concern and Management Plans

9 Months Ended

Aug. 31, 2020

Financial Condition, Going Concern and Management Plans

Financial Condition, Going Concern and Management Plans

Note 2 – Financial Condition, Going Concern and Management Plans

The Company currently operates in one business segment focusing on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of business.

The accompanying condensed consolidated financial statements are prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has and is expected to incur net losses and cash outflows from operations in pursuit of extracting value from its acquired intellectual property. These matters, amongst others, raise doubt about the Company’s ability to continue as a going concern.

The Company does not generate material revenue from operations since inception and has limited assets upon which to commence its business operations.  Management anticipates that the Company will have to raise additional funds and/or generate significant revenue from drug sales within twelve months to continue operations. Additional funding will be needed to implement the Company’s business plan that includes various expenses such as fulfilling our obligations under licensing agreements, legal, operational set-up, general and administrative, marketing, employee salaries and other related start-up expenses. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. If the Company is unable to raise sufficient funds, management will be forced to scale back the Company’s operations or cease its operations.

Management has determined that there is substantial doubt about the Company's ability to continue as a going concern within one year after the condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term strategic plans, operations and its liquidity due to the worldwide spread of COVID-19. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world and its assessment of the impact of COVID-19 may change.

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Summary of Significant Accounting Policies

9 Months Ended

Aug. 31, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 3 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim period unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended November 30, 2019. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of the SEC. These unaudited consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended November 30, 2019 included in the Company’s Form 10-K.

Revenue Recognition

The core principle of Topic 606 (FASB ASC 606) is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revenue recognition guidance contained in Topic 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transportation price; (4) allocate the transportation price; (5) recognize revenue when or as the entity satisfies a performance obligation. Previous practices were broadly consistent with this approach, and the company determined the amount of revenue based on the amount customer paid or promised to pay.

The Company satisfies its performance obligation to deliver products when the customer has received the products, which is when title to the goods has transferred and the customer has control of the products. Payments from customers are generally received within 90 days of when the product is delivered.

Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash held in banks and accounts receivable. Cash is maintained in accounts with financial institutions, which, at times may exceed the federal depository insurance coverage of $250,000. At August 31, 2020, the Company has not experienced losses on these cash accounts.

The Company sells its product through a global marketer, wholesale distributors and specialty contracted pharmacies on 90-day or better payment terms. The Company continuously monitors the creditworthiness of its customers and adheres to internal policies regarding customer credit limits. The Company estimates an allowance for doubtful accounts primarily based on historical payment patterns, aging of receivable balances and general economic conditions.  The Company has not experienced any credit losses to-date.

Recent Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The ASU is effective for the Company on December 1, 2022, Early adoption is permitted, but no earlier than December 1, 2021. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

Recently Adopted Standards

On February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize all leases (with the exception of short-term leases) on the balance sheet as a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee¹s right to use, or control the use of, a specified asset for the lease term.  The Company adopted ASC 842 on December 1, 2019, using the optional transition method to apply the new guidance as of December 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. The adoption of this standard on December 1, 2019 did not impact the Company’s condensed consolidated financial statements as the Company is not subject to any lease agreements on December 1, 2019.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.  The ASU allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted classified as liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The adoption of this standard on December 1, 2019, did not impact the Company’s condensed consolidated financial statements. 

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Loss per share

9 Months Ended

Aug. 31, 2020

Loss per share

Loss per share

Note 4 – Loss per share

Basic net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. Diluted net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive.

Potentially dilutive securities	August 31, 2020	November 30,  2019
Series A convertible preferred stock	2,280,000	—
Series B convertible preferred stock	3,787,000	—
Warrants	9,801,000	7,180,000
Stock Options	2,150,000	1,200,000
Convertible Notes	56,000	5,732,000
Potentially dilutive securities	18,074,000	14,112,000

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Convertible Notes

9 Months Ended

Aug. 31, 2020

Convertible Notes.

Convertible Notes

Note 5 - Convertible Notes

	August 31, 2020		November 30, 2019
Convertible Notes Payable, current:
Principal value of 2018 Debenture	$	—	$	2,730,000
Fair value of bifurcated contingent put option		—		74,000
Debt discount		—		(61,000)
Carrying value of 2018 Debenture		—		2,743,000
Principal value of 2019 August Debenture		—		550,000
Debt discount		—		(50,000)
Carrying value of 2019 August Debenture		—		500,000
Total carrying value of convertible notes payable, current	$	—	$	3,243,000
Convertible Notes Payable, long-term:
Principal value of 2019 October Debenture	$	—	$	500,000
Fair value of bifurcated contingent put option		—		29,000
Debt discount		—		(82,000)
Carrying value of 2019 October Debenture		—		447,000
Principal value of 2019 August Debenture		100,000		—
Debt discount		(10,000)		—
Carrying value of 2019 August Debenture		90,000		—
Total carrying value of convertible notes, long-term	$	90,000	$	447,000

During the nine months ended August 31, 2020, the Company raised approximately $2.0 million from the issuance of various debentures (the “Debentures”). The Debentures have a maturity date of June 6, 2021. The Debentures bear interest at the rate of 5.5% per annum, and on issuance, the Company paid to the holder a commitment fee equal to 2.5% of the amount of the Debentures.

The Debentures may be converted at any time on or prior to maturity at the lower of $3.00 or 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that as long as we are not in default under the Debenture, the conversion price may never be less than $2.00.  

Any time after the six-month anniversary of the issuance of the Debentures that the daily VWAP is less than $2.00 for a period of twenty consecutive trading days (the “Triggering Date”) and only for so long as such conditions exist after a Triggering Date, the Company shall make monthly payments beginning on the last calendar day of the month when the Triggering Date occurred. Each monthly payment shall be in an amount equal to the sum of (i) the principal amount outstanding as of the Triggering Date divided by the number of such monthly payments until maturity, (ii) a redemption premium of 20% in respect of such principal amount and (iii) accrued and unpaid interest hereunder as of each payment date. The Company may, no more than twice, obtain a thirty-day deferral of a monthly payment due as a result of a Triggering Date through the payment of a deferral fee in the amount equal to 10% of the total amount of such monthly payment. Each deferral payment may be paid at the option of the Company in cash or by the issuance of such number of shares as is equal to the applicable deferral payment divided by a price per share equal to 93% of the average of the four lowest daily VWAPs during the 10 consecutive Trading Days immediately preceding the due date in respect of such monthly payment being deferred, provided that such shares issued will be immediately freely tradable shares in the hands of the holder.

Upon issuance of the Debentures, the Company recognized a debt discount of approximately $0.3 million, resulting  from the recognition of issuance costs of $35,000 and a bifurcated embedded derivative of $0.3 million.The monthly payment provision within the Debentures is a contingent put option that is required to be separately measured at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statement of Operations. The fair value estimate is a Level 3 measurement. The Company estimated the fair value of the monthly payment provision by estimating the probability of the occurrence of a Triggering Date and applying the probability to the discounted maximum redemption premium for any given payment with the following key inputs:

	January 15, 2020			December 6, 2019
Strike price	$	3.00		$	3.00
Terms (years)		1.4			1.5
Volatility		97	%		98	%
Risk-free rate		1.7	%		1.6	%
Dividend yield		0	%		0	%

The following table summarizes key inputs for embedded convers features on the date of conversions:

	Conversion Date
Strike price	$1.00 - $3.00
Terms (years)	0.8
Volatility	126	%
Risk-free rate	0.2	%
Dividend yield	0	%

As of August 31, 2020, there are no notes outstanding with embedded conversion features.

Debt Conversion

The following table summarizes debt conversion during the nine months ended August 31, 2020:

Principal value of 2018 Debenture	$	2,730,000
Remaining debt discount		(28,000)
Accrued interest		223,000
Fair value of bifurcated contingent put option		126,000
Sub-total		3,051,000
Principal value of 2019 Debenture		1,950,000
Remaining debt discount		(220,000)
Accrued interest		58,000
Fair value of bifurcated contingent put option		157,000
Sub-total		1,945,000
Principal value of 2020 Debenture		1,000,000
Remaining debt discount		(140,000)
Accrued interest		22,000
Fair value of bifurcated contingent put option		137,000
Sub-total		1,019,000
Total debt conversion amount		6,015,000
Fair value of Series A convertible preferred stock issued (127,998 shares)		1,280,000
Fair value of Series B convertible preferred stock issued (2,031,340 shares)		2,031,000
Fair value of common stock issued (2,811,198 shares)		2,735,000
Loss on debt extinguishment during the nine months ended August 31, 2020	$	(31,000)

Debt Modification

On August 25, 2020, the Company entered into an extension agreement (the “Agreement”) with the holder of August 2019 debenture (the “Holder”) to extend the maturity date from August 29, 2020 to September 30, 2021. As a consideration, the Company agreed to issue the Holder $10,000 worth of common stock on or before September 30, 2020 based on the closing price on August 25, 2020. The Agreement was recognized as a debt modification. The Company recognized an additional $10,000 debt discount on the amendment date, which will be amortized to interest expense over the remaining term of the debt.

Interest expense

Interest expense, included in the accompanying Condensed Consolidated Statements of Operations, is comprised of the following for each period presented:

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Interest expense based on the coupon interest rate of the outstanding debt	$	6,000	$	55,000	$	156,000	$	166,000
Accretion of debt discount		3,000		390,000		136,000		907,000
Costs incurred to defer monthly contingent payments of convertible notes		—		32,000		—		64,000
Total interest expense	$	9,000	$	477,000	$	292,000	$	1,137,000

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Commitments and Contingencies

9 Months Ended

Aug. 31, 2020

Commitments and Contingencies

Commitments and Contingencies

Note 6 - Commitments and Contingencies

Legal

Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss.  Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict.  Because of such uncertainties, accruals are based on the best information available at the time.  As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation.

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Related Party Transactions

9 Months Ended

Aug. 31, 2020

Related Party Transactions

Related Party Transactions

Note 7 - Related Party Transactions

The Company entered into consulting agreements with certain management personnel and stockholders for consulting and legal services. Consulting and legal expenses resulting from such agreements were included within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations as follows:

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Consulting and legal expenses	$	105,000	$	78,000	$	315,000	$	270,000

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Stockholders' Equity Deficit

9 Months Ended

Aug. 31, 2020

Stockholders' Equity Deficit

Stockholders' Equity Deficit

Note 8 - Stockholders’ Equity Deficit

Common Shares

Issuance of shares for services

During the nine months ended August 31, 2020, the Company issued an aggregate of 0.2 million shares of the Company common stock to various vendors for advisory services, valued at approximately $0.5 million based on the estimated fair market value of the stock on the date of grant and was recognized within general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

Preferred Shares

Amendments to Articles of Incorporation or Bylaws

On April 3, 2020, the Company’s Board of Directors authorized the creation of up to 500,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Shares”) and up to 1,000,000 shares of Series B Convertible Preferred Stock (the “Series B Preferred Shares”). On April 6, 2020, the Company filed a Certificate of Designations with the Secretary of Nevada creating such Series A and Series B Preferred Shares (collectively, the “Preferred Shares”).

The original issue price and the liquidation value per share, as of August 31, 2020, of each class of preferred stock is as follows:

	Original Issue Price		Liquidation Value
	Per Share		Per Share
Series A Preferred Share	$	10.00	$	10.32
Series B Preferred Share	$	10.00	$	10.31

The following is a summary of the rights of the holders of the Preferred Shares:

Voting. Except to the extent required by law, the holders of the Preferred Shares do not have the right to vote on the matters that the holders of the common stock have the right to vote upon. The holders of the Preferred Shares may vote upon matters affecting the Preferred Shares, provided that if the vote concerns all Preferred Shares, the holders of the Series A Preferred Shares shall vote together with the holders of the Series B Preferred Shares.

Liquidation. The holders of the Preferred Shares have a liquidation preference over the holders of the common stock. Such preference consists of the right to receive upon the Company’s voluntary or involuntary liquidation, dissolution or winding up the liquidation value of each Series A and Series B Preferred Share prior to the payment of any amounts to the holders of the common stock. The liquidation value of each Series A and Series B Preferred Share shall be equal to $10 plus any accrued but unpaid dividends thereon.

Dividends. Every three months, the Company is required to pay each holder of Preferred Shares a dividend equal to 2% of the liquidation value of such shares (which is equal to 8% on annual basis). Such dividends shall be paid in shares of the Company’s common stock in an amount equal to the dollar amount of such payment divided by the VWAP of the Company’s common stock on the date that such dividend payment is due, provided that the Company may not issue such shares of common stock if such share issuance would cause the holder to beneficially own more than 9.99% of the Company’s common stock.

Conversion of Series A Preferred Shares. Each Series A Preferred Share may be converted into shares of the Company’s common stock in an amount that is equal to the liquidation value divided by $1.00. The Company may force the conversion of the Series A Preferred Shares if each of the following conditions (the “Forced Equity Conditions”) has been met:

(i) on each trading day during the period beginning ten trading days prior to the forced conversion (the "Equity Conditions Measuring Period"), the VWAP of the Company’s common stock is in excess of $5.00,

(ii) on each trading day during Equity Conditions Measuring Period, the dollar volume of the Company’s common stock traded is in excess of $750,000,

(iii) on each day during the Equity Conditions Measuring Period, the shares of the Company’s common stock underlying the Series A Preferred Shares to be converted shall either (x) be registered for resale on an effective registration statement or (y) eligible for resale without restriction and without the need for registration under any applicable federal or state securities laws,

(iv) on each day during the Equity Conditions Measuring Period, the Company’s common stock is designated for quotation on the Company’s principal market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; and

(v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default.

Conversion of Series B Preferred Shares. Each Series B Preferred Share may be converted into shares of the Company’s common stock in an amount that is equal to the liquidation value divided by the applicable conversion rate. The conversion rate shall be the lower of: (a) $2.70 or (b) 93% of the average of the four lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than $1.00; further provided that if the VWAP of the Company’s common stock for any 40 consecutive trading days is less than $1.00 for 30 of those days, then such floor conversion price shall be reduced from $1.00 to $0.35.  

The Company may not issue shares of common stock upon pursuant to the conversions discussed above if such conversion would cause a holder to beneficially own more than 9.99% of our then outstanding common stock.

Financing Agreements

On April 6, 2020, the Company entered into a securities purchase agreement (the “SPA”) with accredited investors (the “Investors”). Pursuant to the SPA, the Company issued the following securities:

· 127,998 shares of Series A Convertible Preferred Stock (the “Series A”) in exchange for convertible debentures with principal and interest of approximately $1.3 million;

· 100,000 Series A Preferred Shares for cash of $1.0 million,

· 203,134 shares of Series B Convertible Preferred Stock (‘the “Series B”) in exchange for convertible debentures with principal and interest of approximately $2.0 million;

· 300,000 Series B Preferred Shares for cash of $3.0 million

The fair value of the Company’s common stock on the issuance date is higher than the effective conversion price of both the Series A Preferred Shares and the Series B Preferred Shares (collectively, the “Preferred Shares”), therefore the Company recorded a beneficial conversion feature (“BCF”) of approximately $0.5 million on the Preferred Shares. The discount to the aggregate stated value of the Preferred Shares, resulting from recognition of the BCF was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Preferred Shares. The accretion is presented in the Consolidated Statement of Operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.

The Company had accumulated dividends payable on the Preferred Shares of approximately $0.2 million as of August 31, 2020.

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Warrants and Options

9 Months Ended

Aug. 31, 2020

Warrants and Options

Warrants and Options

Note 9 – Warrants and Options

Summary of warrants

The following represents a summary of all outstanding warrants to purchase the Company’s common stock, including warrants issued to vendors for services and warrants issued as part of the units sold in the private placements, at May 31, 2020 and the changes during the period then ended:

				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Warrants	Exercise Price		Life (years)	Intrinsic Value
Outstanding at December 1, 2019	7,180,000	$	2.22	3.2	$	2,463,000
Issued	3,065,000		2.13	4.3		—
Cashless exercise	(30,000)		0.86	—		—
Forfeited/expired	(414,000)		3.95	—		—
Outstanding at August 31, 2020	9,801,000	$	2.11	3.1	$	1,668,000
Exercisable at August 31, 2020	9,788,000	$	2.11	3.1	$	1,668,000

During the nine months ended August 31, 2020, the Company issued 1,500,000 warrants to the Company’s two officers in exchange for services rendered. The warrants are exercisable into shares of the Company’s common stock in six months from their issuance until five years from the date of issuance at an exercise price of $2.12 per share.

During the nine months ended August 31, 2020, the Company issued 901,000 warrants to certain consultants and service providers in exchange for services rendered. The warrants are exercisable into shares of the Company’s common stock between 3-5 years from the date of issuance at an exercise price between $2.00 to $2.12 per share.

During the nine months ended August 31, 2020, the Company issued 250,000 warrants to certain consultants for legal services provided regarding issuance of Preferred Shares and preparation of registration statement. The warrants are exercisable into shares of the Company’s common stock in six months from their issuance until five years from the date of issuance at an exercise price of $2.12 per share. The Company recorded approximately $0.1 million as a direct offering cost in Stockholders’ equity.

The following assumptions were used to estimate the fair value of warrants granted during the nine months ended August 31, 2020:

	For the Nine Months ended
	August 31, 2020
Strike price	$	2.12
Term (years)		5.0
Volatility		120	%
Risk-free rate		1.3	%
Dividend yield		0.0	%

Modification of Warrants

On February 12, 2020, the Company modified an aggregate of 245,625 warrants that were originally granted to certain investors and consultants. The exercise price of the warrants was reduced to $2.33 per share and the term of the warrants were extended for 2 years from the original expiration date. The Company received $20,000 cash from one of the investors as consideration for this modification.

On May 1, 2020, the Company modified an aggregated of 168,000 warrants that were originally granted to certain consultants. The exercise price of the warrants was reduced to $2.00 per share and the term of the warrants were extended for 2-3 years from the original expiration date.

The Company immediately recognized approximately $0.2 million of incremental stock-based compensation for the modifications during the nine months ended August 31, 2020 based on the following weighted average assumptions:

	After Modification			Before Modification
Strike price	$	2.20		$	4.20
Term (years)		3.7			1.5
Volatility		124	%		164	%
Risk-free rate		0.9	%		1.1	%
Dividend yield		0.0	%		0.0	%

Options Issued for Services

The following represents a summary of all outstanding options to purchase the Company’s common stock at August 31, 2020 and the changes during the period then ended:

				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Options	Exercise Price		Life (years)	Intrinsic Value
Outstanding at December 1, 2019	1,200,000	$	1.35	3.4	$	721,000
Issued	950,000		1.46	4.9		—
Outstanding at August 31, 2020	2,150,000	$	1.40	3.6	$	161,000
Exercisable at August 31, 2020	1,290,000	$	1.36	2.7	$	161,000

The following assumptions were used to compute the fair value of options granted during the nine months ended August 31, 2020:

	For the Nine Months ended
	August 31, 2020
Strike price	$	1.46
Term (years)		5.00
Volatility		115	%
Risk-free rate		0.5	%
Dividend yield		0.0	%

Stock-based Compensation

The Company recognized general and administrative expenses of approximately $5 million and $0.5 million as a result of the shares, outstanding warrants and options issued to consultants and employees during the nine months ended August 31, 2020 and 2019, respectively.

As of August 31, 2020, the estimated unrecognized stock-based compensation associate with these agreements is approximately $0.9 million and will be fully recognized over the next 12 months.

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Subsequent Events

9 Months Ended

Aug. 31, 2020

Subsequent Events

Subsequent Events

Note 10 – Subsequent Events

On September 15, 2020, the Company issued 416,667 shares of common stock to Mannin to settle outstanding payables of $0.75 million, which was net of $61,000 receivables. The fair value the common shares was approximately $0.55 million on September 15, 2020.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Aug. 31, 2020

Summary of Significant Accounting Policies

Revenue Recognition

Revenue Recognition

The core principle of Topic 606 (FASB ASC 606) is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revenue recognition guidance contained in Topic 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transportation price; (4) allocate the transportation price; (5) recognize revenue when or as the entity satisfies a performance obligation. Previous practices were broadly consistent with this approach, and the company determined the amount of revenue based on the amount customer paid or promised to pay.

The Company satisfies its performance obligation to deliver products when the customer has received the products, which is when title to the goods has transferred and the customer has control of the products. Payments from customers are generally received within 90 days of when the product is delivered.

Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash held in banks and accounts receivable. Cash is maintained in accounts with financial institutions, which, at times may exceed the federal depository insurance coverage of $250,000. At August 31, 2020, the Company has not experienced losses on these cash accounts.

The Company sells its product through a global marketer, wholesale distributors and specialty contracted pharmacies on 90-day or better payment terms. The Company continuously monitors the creditworthiness of its customers and adheres to internal policies regarding customer credit limits. The Company estimates an allowance for doubtful accounts primarily based on historical payment patterns, aging of receivable balances and general economic conditions.  The Company has not experienced any credit losses to-date.

Recent Accounting Standards and Recently Adopted Standards

Recent Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The ASU is effective for the Company on December 1, 2022, Early adoption is permitted, but no earlier than December 1, 2021. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

Recently Adopted Standards

On February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize all leases (with the exception of short-term leases) on the balance sheet as a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee¹s right to use, or control the use of, a specified asset for the lease term.  The Company adopted ASC 842 on December 1, 2019, using the optional transition method to apply the new guidance as of December 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. The adoption of this standard on December 1, 2019 did not impact the Company’s condensed consolidated financial statements as the Company is not subject to any lease agreements on December 1, 2019.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.  The ASU allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted classified as liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The adoption of this standard on December 1, 2019, did not impact the Company’s condensed consolidated financial statements.

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Loss per share (Tables)

9 Months Ended

Aug. 31, 2020

Loss per share

Schedule of potentially dilutive securities not considered in the computation of diluted net loss per share

The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive.

Potentially dilutive securities	August 31, 2020	November 30,  2019
Series A convertible preferred stock	2,280,000	—
Series B convertible preferred stock	3,787,000	—
Warrants	9,801,000	7,180,000
Stock Options	2,150,000	1,200,000
Convertible Notes	56,000	5,732,000
Potentially dilutive securities	18,074,000	14,112,000

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Convertible Notes (Tables)

9 Months Ended

Aug. 31, 2020

Convertible Notes.

Schedule of convertible notes payable, current and long-term

	August 31, 2020		November 30, 2019
Convertible Notes Payable, current:
Principal value of 2018 Debenture	$	—	$	2,730,000
Fair value of bifurcated contingent put option		—		74,000
Debt discount		—		(61,000)
Carrying value of 2018 Debenture		—		2,743,000
Principal value of 2019 August Debenture		—		550,000
Debt discount		—		(50,000)
Carrying value of 2019 August Debenture		—		500,000
Total carrying value of convertible notes payable, current	$	—	$	3,243,000
Convertible Notes Payable, long-term:
Principal value of 2019 October Debenture	$	—	$	500,000
Fair value of bifurcated contingent put option		—		29,000
Debt discount		—		(82,000)
Carrying value of 2019 October Debenture		—		447,000
Principal value of 2019 August Debenture		100,000		—
Debt discount		(10,000)		—
Carrying value of 2019 August Debenture		90,000		—
Total carrying value of convertible notes, long-term	$	90,000	$	447,000

Schedule of discounted maximum redemption premium

	January 15, 2020			December 6, 2019
Strike price	$	3.00		$	3.00
Terms (years)		1.4			1.5
Volatility		97	%		98	%
Risk-free rate		1.7	%		1.6	%
Dividend yield		0	%		0	%

The following table summarizes key inputs for embedded convers features on the date of conversions:

	Conversion Date
Strike price	$1.00 - $3.00
Terms (years)	0.8
Volatility	126	%
Risk-free rate	0.2	%
Dividend yield	0	%

Schedule of debt conversion

The following table summarizes debt conversion during the nine months ended August 31, 2020:

Principal value of 2018 Debenture	$	2,730,000
Remaining debt discount		(28,000)
Accrued interest		223,000
Fair value of bifurcated contingent put option		126,000
Sub-total		3,051,000
Principal value of 2019 Debenture		1,950,000
Remaining debt discount		(220,000)
Accrued interest		58,000
Fair value of bifurcated contingent put option		157,000
Sub-total		1,945,000
Principal value of 2020 Debenture		1,000,000
Remaining debt discount		(140,000)
Accrued interest		22,000
Fair value of bifurcated contingent put option		137,000
Sub-total		1,019,000
Total debt conversion amount		6,015,000
Fair value of Series A convertible preferred stock issued (127,998 shares)		1,280,000
Fair value of Series B convertible preferred stock issued (2,031,340 shares)		2,031,000
Fair value of common stock issued (2,811,198 shares)		2,735,000
Loss on debt extinguishment during the nine months ended August 31, 2020	$	(31,000)

Schedule of interest expense

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Interest expense based on the coupon interest rate of the outstanding debt	$	6,000	$	55,000	$	156,000	$	166,000
Accretion of debt discount		3,000		390,000		136,000		907,000
Costs incurred to defer monthly contingent payments of convertible notes		—		32,000		—		64,000
Total interest expense	$	9,000	$	477,000	$	292,000	$	1,137,000

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Related Party Transactions (Tables)

9 Months Ended

Aug. 31, 2020

Related Party Transactions

Schedule of general and administrative expenses

	For the Three Months ended				For the Nine Months ended
	August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019
Consulting and legal expenses	$	105,000	$	78,000	$	315,000	$	270,000

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Stockholders' Equity Deficit (Tables)

9 Months Ended

Aug. 31, 2020

Stockholders' Equity Deficit

Schedule original issue price and the liquidation value per share for each class of preferred stock

The original issue price and the liquidation value per share, as of August 31, 2020, of each class of preferred stock is as follows:

	Original Issue Price		Liquidation Value
	Per Share		Per Share
Series A Preferred Share	$	10.00	$	10.32
Series B Preferred Share	$	10.00	$	10.31

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Warrants and Options (Tables)

9 Months Ended

Aug. 31, 2020

Schedule of fair value outstanding warrants and options issued to non-employees for services

	For the Nine Months ended
	August 31, 2020
Strike price	$	2.12
Term (years)		5.0
Volatility		120	%
Risk-free rate		1.3	%
Dividend yield		0.0	%

	After Modification			Before Modification
Strike price	$	2.20		$	4.20
Term (years)		3.7			1.5
Volatility		124	%		164	%
Risk-free rate		0.9	%		1.1	%
Dividend yield		0.0	%		0.0	%

Warrants

Summary of warrants

				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Warrants	Exercise Price		Life (years)	Intrinsic Value
Outstanding at December 1, 2019	7,180,000	$	2.22	3.2	$	2,463,000
Issued	3,065,000		2.13	4.3		—
Cashless exercise	(30,000)		0.86	—		—
Forfeited/expired	(414,000)		3.95	—		—
Outstanding at August 31, 2020	9,801,000	$	2.11	3.1	$	1,668,000
Exercisable at August 31, 2020	9,788,000	$	2.11	3.1	$	1,668,000

Stock Options

Schedule of fair value outstanding warrants and options issued to non-employees for services

	For the Nine Months ended
	August 31, 2020
Strike price	$	1.46
Term (years)		5.00
Volatility		115	%
Risk-free rate		0.5	%
Dividend yield		0.0	%

Schedule of Options issued for services

				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Options	Exercise Price		Life (years)	Intrinsic Value
Outstanding at December 1, 2019	1,200,000	$	1.35	3.4	$	721,000
Issued	950,000		1.46	4.9		—
Outstanding at August 31, 2020	2,150,000	$	1.40	3.6	$	161,000
Exercisable at August 31, 2020	1,290,000	$	1.36	2.7	$	161,000

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Summary of Significant Accounting Policies (Details)	Aug. 31, 2020 USD ($)
Summary of Significant Accounting Policies
Federal depository insurance coverage	$ 250,000

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Loss per share (Details) - shares	9 Months Ended	12 Months Ended
	Aug. 31, 2020	Nov. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	18,074,000	14,112,000
Series A convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	2,280,000
Series B convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	3,787,000
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	9,801,000	7,180,000
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	2,150,000	1,200,000
Convertible Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities	56,000	5,732,000

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Convertible Notes (Details) - USD ($)	Aug. 31, 2020	Aug. 25, 2020	Nov. 30, 2019
Notes and Loans Payable, Current [Abstract]
Carrying value	$ 0		$ 3,243,292
Total carrying value of convertible notes payable, current			3,243,000
Notes and Loans, Noncurrent [Abstract]
Principal value	6,015,000
Debt Instrument, Unamortized Discount		$ 10,000
2018 Debentures
Notes and Loans Payable, Current [Abstract]
Principal value			2,730,000
Fair value of bifurcated contingent put option			74,000
Debt discount			(61,000)
Carrying value			2,743,000
Notes and Loans, Noncurrent [Abstract]
Principal value	3,051,000
2019 August Debenture
Notes and Loans Payable, Current [Abstract]
Principal value			550,000
Debt discount			(50,000)
Carrying value			500,000
Notes and Loans, Noncurrent [Abstract]
Principal value	100,000
Debt discount	(10,000)
Carrying value	$ 90,000
2019 October Debenture
Notes and Loans, Noncurrent [Abstract]
Principal value			500,000
Fair value of bifurcated contingent put option			29,000
Debt discount			(82,000)
Carrying value			$ 447,000

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Convertible Notes - Fair Value Measurement Inputs (Details)	Aug. 31, 2020 $ / shares	Jan. 15, 2020 $ / shares	Dec. 06, 2019 $ / shares
Strike price
Convertible Notes
Input		3.00	3.00
Strike price | Minimum
Convertible Notes
Input	1.00
Strike price | Maximum
Convertible Notes
Input	3.00
Terms (years)
Convertible Notes
Input	0.8	1.4	1.5
Volatility
Convertible Notes
Input	126	97	98
Risk-free rate
Convertible Notes
Input	0.2	1.7	1.6
Dividend yield
Convertible Notes
Input	0	0	0

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Convertible Notes - Summary of debt conversion (Details)	9 Months Ended
	Aug. 31, 2020 USD ($) shares
Total	$ 6,015,000
Issuance of preferred stock to convert notes debt along with interest (in shares) | shares	0
Loss on debt extinguishment	$ (31,000)
2018 Debentures
Principal value	2,730,000
Remaining debt discount	(28,000)
Accrued interest	223,000
Fair value of bifurcated contingent put option	126,000
Total	3,051,000
2019 Debenture
Principal value	1,950,000
Remaining debt discount	(220,000)
Accrued interest	58,000
Fair value of bifurcated contingent put option	157,000
Total	1,945,000
2020 Debenture
Principal value	1,000,000
Remaining debt discount	(140,000)
Accrued interest	22,000
Fair value of bifurcated contingent put option	137,000
Total	1,019,000
Series A convertible preferred stock
Fair value of convertible shares	$ 1,280,000
Issuance of preferred stock to convert notes debt along with interest (in shares) | shares	127,998
Series B convertible preferred stock
Fair value of convertible shares	$ 2,031,000
Issuance of preferred stock to convert notes debt along with interest (in shares) | shares	2,031,340
Common Stock
Fair value of convertible shares	$ 2,735,000
Issuance of preferred stock to convert notes debt along with interest (in shares) | shares	2,811,198

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Convertible Notes - Interest expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Convertible Notes.
Interest expense based on the coupon interest rate of the outstanding debt	$ 6,000	$ 55,000	$ 156,000	$ 166,000
Accretion of debt discount	3,000	390,000	136,000	907,000
Total interest expense	$ 9,000	$ 477,000	$ 292,000	$ 1,137,000
Costs incurred to defer monthly contingent payments of convertible notes	-	32,000	-	64,000

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Convertible Notes - Additional Information (Details)		3 Months Ended		9 Months Ended
	Aug. 25, 2020 USD ($)	Aug. 31, 2020 USD ($) $ / shares	Aug. 31, 2019 USD ($)	Aug. 31, 2020 USD ($) D $ / shares shares	Aug. 31, 2019 USD ($)
Debt Instruments [Line Items]
Conversion of note				$ 2,735,300	$ 293,726.00
Embedded conversion option has a fair value				(19,163)	(396,000)
Loss on induced conversion of debt		$ 0	$ 197,078	$ 0	197,078
Number of notes outstanding with embedded conversion features | shares				0
Shares payable related to debt modification	$ 10,000			$ 10,000	$ 0
Debt discount	$ 10,000
Debentures
Debt Instruments [Line Items]
Issue Of Debentures, Amount		$ 2,000,000		$ 2,000,000
Conversion price | $ / shares		$ 2.00		$ 2.00
Debt Instrument, Interest Rate, Stated Percentage		5.50%		5.50%
Commitment fee (as percent)				2.50%
Debt discount				$ 300,000
Embedded conversion option has a fair value				$ 300,000
Percent of average of the four lowest daily VWAPs during the 10 consecutive trading days				93.00%
Redemption premium (as percent)				20.00%
Loss on extinguishment of debt				$ 35,000
Percent of monthly payment of deferral fee				10.00%
Percentage of average of the four lowest daily VWAPs on basis of which conversion price is reduced				93.00%
Number of lowest daily VWAPs during the 10 consecutive trading days on basis of which conversion price is reduced				4
Number of consecutive trading days on basis of which conversion price is reduced | D				10
Debentures | Maximum
Debt Instruments [Line Items]
Conversion price | $ / shares		$ 3.00		$ 3.00
Debentures | Minimum
Debt Instruments [Line Items]
Conversion price | $ / shares		$ 2.00		$ 2.00
2018 Debentures
Debt Instruments [Line Items]
Issue Of Debentures, Amount		$ 2,730,000		$ 2,730,000

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Related Party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Related Party Transactions
Consulting and legal expenses	$ 105,000	$ 78,000	$ 315,000	$ 270,000

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Stockholders' Equity Deficit (Details) - USD ($)	3 Months Ended		9 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019	Apr. 03, 2020	Nov. 30, 2019
Share based compensation for services, Amount	$ 271,430	$ 341,127	$ 4,982,446	$ 1,349,608
Number of preferred shares authorized	100,000,000		100,000,000			100,000,000
Preferred shares dividend (as a percent)			2.00%
Annual preferred shares dividend (as a percent)			8.00%
Percentage of beneficial ownership	9.99%		9.99%
Series A convertible preferred stock
Number of preferred shares authorized					500,000
Original Issue Price Per Share	$ 10.00		$ 10.00
Liquidation Value Per Share	10.32		10.32
Liquidation value per share before accrued but unpaid dividends thereon			10
Series B convertible preferred stock
Number of preferred shares authorized					1,000,000
Original Issue Price Per Share	10.00		10.00
Liquidation Value Per Share	$ 10.31		10.31
Liquidation value per share before accrued but unpaid dividends thereon			$ 10
General and Administrative Expense
Share based compensation for services, Shares			200,000
Share based compensation for services, Amount			$ 500,000

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Stockholders' Equity Deficit - Conversion of Series A preferred Shares (Details) - Series A convertible preferred stock	9 Months Ended
	Aug. 31, 2020 USD ($) D $ / shares
Liquidation value	$ 1.00
Number of consecutive trading days | D	10
VWAP of common stock	$ 5.00
Common shares trading value | $	$ 750,000

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Stockholders' Equity Deficit - Conversion of Series B Preferred Shares (Details) - Series B convertible preferred stock	9 Months Ended
	Aug. 31, 2020 D item $ / shares
Conversion price	$ 2.70
Percentage of beneficial ownership	9.99%
10 Consecutive trading days
Conversion price	$ 1.00
Percent of average of the four lowest daily VWAPs during the 10 consecutive trading days	93.00%
Number of lowest daily VWAPS during the specified consecutive trading days | item	4
Number of consecutive trading days | D	10
40 Consecutive trading days
Conversion price	$ 1.00
Number of consecutive trading days | D	40
Number of trading days | D	30
Conversion price decrease	$ 0.35

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Stockholders' Equity Deficit - Financing Agreements (Details) - USD ($)		9 Months Ended
	Apr. 06, 2020	Aug. 31, 2020	Aug. 31, 2019
Issuance of preferred stock to convert notes debt along with interest (in shares)		0
Issuance of common stock to convert notes payable and accrued interest		$ 2,735,300	$ 293,726.00
Preferred shares for cash		3,950,000
Preferred stock
Amount of beneficial conversion option for convertible preferred shares		500,000
Accumulated dividends payable		$ 200,000
Series A convertible preferred stock
Issuance of preferred stock to convert notes debt along with interest (in shares)		127,998
Number of shares issued for cash		100,000
Preferred shares for cash		$ 975,000
Series B convertible preferred stock
Issuance of preferred stock to convert notes debt along with interest (in shares)		2,031,340
Number of shares issued for cash		300,000
Preferred shares for cash		$ 2,975,000
Securities Purchase Agreement | Series A convertible preferred stock
Issuance of preferred stock to convert notes debt along with interest (in shares)	127,998
Issuance of common stock to convert notes payable and accrued interest	$ 1,300,000
Number of shares issued for cash	100,000
Preferred shares for cash	$ 1,000,000
Securities Purchase Agreement | Series B convertible preferred stock
Issuance of preferred stock to convert notes debt along with interest (in shares)	203,134
Issuance of common stock to convert notes payable and accrued interest	$ 2,000,000
Number of shares issued for cash	300,000
Preferred shares for cash	$ 3,000,000

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Warrants and Options - Summary of warrants (Details) - $ / shares	9 Months Ended	12 Months Ended
	Aug. 31, 2020	Nov. 30, 2019
Intrinsic Value
Beginning balance		$ 2,463,000
Ending balance	$ 1,668,000
Exercisable at May 31, 2020	$ 1,668,000
Warrants
Warrants
Beginning balance	7,180,000
Issued	3,065,000
Cashless exercise	(30,000)
Forfeited/expired	(414,000)
Ending balance	9,801,000	7,180,000
Exercisable at May 31, 2020	9,788,000
Weighted Average Exercise Price
Beginning balance	$ 2.22
Issued	2.13
Cashless exercise	0.86
Forfeited/expired	3.95
Ending balance	$ 2.11	$ 2.22
Exercisable at May 31, 2020	2.11
Weighted Average Remaining Contractual Life (years)
Beginning balance		3 years 2 months 12 days
Issued	4 years 3 months 18 days
Ending balance	3 years 1 month 6 days
Exercisable at May 31, 2020	3 years 1 month 6 days

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Warrants and Options - Fair value of warrants (Details) - Warrants	9 Months Ended
	Aug. 31, 2020 $ / shares
Strike price	$ 2.12
Term (years)	5 years
Volatility	120.00%
Risk-free rate	1.30%
Dividend yield	0.00%

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Warrants and Options - Modfication of warrants (Details) - $ / shares		9 Months Ended
	Feb. 12, 2020	Aug. 31, 2020
After Modification
Strike price	$ 2.20
Term (years)	3 years 8 months 12 days
Volatility	124.00%
Risk-free rate	0.90%
Dividend yield	0.00%
Before Modification
Strike price	$ 4.20
Term (years)	1 year 6 months
Volatility	164.00%
Risk-free rate	1.10%
Dividend yield	0.00%
Stock Options
Strike price		$ 1.46
Term (years)		5 years
Volatility		115.00%
Risk-free rate		0.50%
Dividend yield		0.00%

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Warrants and Options - Summary of outstanding options (Details) - $ / shares	9 Months Ended	12 Months Ended
	Aug. 31, 2020	Nov. 30, 2019
Intrinsic Value
Beginning balance		$ 2,463,000
Ending balance	$ 1,668,000
Exercisable at May 31, 2020	$ 1,668,000
Stock Options
Options
Beginning balance	1,200,000
Issued	950,000
Ending balance	2,150,000	1,200,000
Exercisable at May 31, 2020	1,290,000
Weighted Average Exercise Price
Beginning balance	$ 1.35
Issued	1.46
Ending balance	$ 1.40	$ 1.35
Exercisable at May 31, 2020	1.36
Weighted Average Remaining Contractual Life (years)
Beginning balance		3 years 4 months 24 days
Issued	4 years 10 months 24 days
Ending balance	3 years 7 months 6 days
Exercisable at May 31, 2020	2 years 8 months 12 days
Intrinsic Value
Beginning balance		$ 721,000
Ending balance	$ 161,000
Exercisable at May 31, 2020	$ 161,000

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Warrants and Options - Additional Information (Details) - USD ($)			3 Months Ended		9 Months Ended
	May 01, 2020	Feb. 12, 2020	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Share based compensation related to warrants modification, Amount					$ 255,008
Number of modified warrants	168,000	245,625
General and administrative expenses			$ 1,491,613	$ 968,383	8,659,819	$ 3,406,853
Research and development expenses			613,707	$ 786,600	896,908	2,672,715
Unrecognized stock-based compensation			$ 900,000		$ 900,000
Certain consultants and service providers
Number of warrants issued in exchange for services rendered					901,000
Certain consultants and legal service providers
Number of warrants issued in exchange for services rendered					250,000
Exercise price of warrant			$ 2.12		$ 2.12
Direct offering cost			$ 100,000		$ 100,000
Minimum | Certain consultants and service providers
Warrants exercisable term			3 years		3 years
Exercise price of warrant			$ 2.00		$ 2.00
Minimum | Certain consultants and legal service providers
Warrants exercisable term			6 months		6 months
Maximum | Certain consultants and service providers
Warrants exercisable term			5 years		5 years
Exercise price of warrant			$ 2.12		$ 2.12
Maximum | Certain consultants and legal service providers
Warrants exercisable term			5 years		5 years
After Modification
Warrants exercisable term		2 years
Exercise price of warrant	$ 2.00	$ 2.33
Share based compensation related to warrants modification, Amount					$ 200,000
Amount of consideration received		$ 20,000
After Modification | Minimum
Warrants exercisable term	2 years
After Modification | Maximum
Warrants exercisable term	3 years
Options and Warrants
General and administrative expenses					$ 5,000,000
Research and development expenses						$ 500,000
Officers
Number of warrants issued in exchange for services rendered					1,500,000
Exercise price of warrant			$ 2.12		$ 2.12
Officers | Minimum
Warrants exercisable term			6 months		6 months
Officers | Maximum
Warrants exercisable term			5 years		5 years

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Subsequent Events (Details) - Subsequent events	Sep. 15, 2020 USD ($) shares
Subsequent Event [Line Items]
Common stock issued to settle outstanding payables (in shares) | shares	416,667
Outstanding payables	$ 750,000
Outstanding receivable	61,000
Fair value the common shares issued	$ 550,000