Stockholders Deficit

9 Months Ended

Feb. 28, 2022

Note 8 - Stockholders' Deficit

Note 8 – Stockholders’ Deficit

The Company has one class of common stock:

- Unlimited shares authorized

- No par value

- Voting at 1 vote per share

- Eligible for dividends if declared by the Board of Directors

Equity Transactions for the Nine Months February 28, 2022

Stock Issued for Services

The Company issued 14,962,409 shares of common stock for services rendered, having a fair value of $29,924,818 ($2/share), based upon recent third-party cash offerings. The Company expensed these services as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Stock Issued for Services – Related Parties

The Company issued 1,900,000 shares of common stock for services rendered, having a fair value of $3,800,000 ($2/share), based upon recent third-party cash offerings. The Company expensed these services as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Debt Conversion – Related Party

On October 19, 2021, the Company’s Former Chairman and Chief Executive Officer converted $39,531,029 of loan payable into 4,517,831 shares of common stock having a fair value of $9,035,662 ($2/share), based upon recent third-party cash offerings. The conversion resulted in a gain on debt settlement of $30,495,367. Since the transaction occurred with a related party, accordingly, the gain is recorded as an increase to additional paid in capital.

Plan of Arrangement

To account for the Plan of Arrangement that closed on December 31, 2021, the Company issued 190,940,653 shares to reflect the share conversion at 1.34 for every share held by Instadose Canada shareholders prior to the share exchange and to include the 75,001,200 shares outstanding in the public company prior to the share exchange. The issuance of shares was retroactively restated to reflect the recapitalization.

Stock Options

In June 2021, the Company executed a three (3) year consulting agreement with a service provider. The Company granted 3,000,000 stock options, having a fair value of $4,830,000. The options vest ratably at 1,000,000 per year at the end of year 1, 2 and 3, respectively. The options have an exercise price equal to $2. All options expire five (5) years from issuance in June 2026.

Fair value was based upon the following assumptions using a Black-Scholes option pricing model:

	Nine Months Ended
	February 28, 2022
Exercise Price	$	2.00
Expected Volatility		150	%
Expected Dividends		0	%
Expected Life in Years		3
Risk-free Interest rate		0.31	%

This consultant also received 1,500,000 shares of common stock having a fair value of $3,000,000 ($2/share), based upon recent third-party cash offerings. This amount was included in the above stock issued for services total.

Stock option transactions under the Company’s Plan for the three months ended February 28, 2022, and the year ended May 31, 2021, are summarized as follows:

					Weighted				Weighted
					Average				Average
			Weighted		Remaining		Aggregate		Grant
	Number of		Average		Contractual		Intrinsic		Date
Stock Options	Options		Exercise Price		Term (Years)		Value		Fair Value
Outstanding - May 31, 2021		-	$	-		-	$	-	$	-
Exercisable - May 31, 2021		-	$	-		-	$	-	$	-
Granted		3,000,000	$	2.00		4.25	$	-	$	1.61
Exercised		-	$	-		-	$	-	$	-
Cancelled Forfeited		-	$	-		-	$	-	$	-
Outstanding - February 28, 2022		3,000,000	$	2.00		4.25	$	-	$	-
Vested and Exercisable - February 28, 2022		-	$	-		-	$	-	$	-
Unvested and non-exercisable - February 28, 2022		3,000,000	$	2.00		4.25	$	-	$	-

Compensation expense recorded for stock-based compensation is as follows for the nine months ended February 28, 2022, and 2020, respectively:

As of February 28, 2022, compensation cost related to the unvested options not yet recognized was as follows:

3,622,500

Weighted average period in which unrecognized compensation will vest (in years)

2.25

The unvested stock option expense is expected to be recognized through June 2024.

Equity Transactions for the Year Ended May 31, 2021

Stock Issued for Services

The Company issued 6,723,423 shares of common stock for services rendered, having a fair value of $13,446,846 ($2/share), based upon recent third-party cash offerings. The Company expensed these services as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Stock Issued for Services – Related Parties

The Company issued 7,772,856 shares of common stock for services rendered, having a fair value of $15,545,713 ($2/share), based upon recent third-party cash offerings. The Company expensed these services as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Nine Months Ended

February 28, 2022

February 28, 2021

Instadose Pharma Corp. 10-Q