Advances from majority stockholder

Mr. Daniel Solomita, or companies controlled by him, previously made advances to the Company, which were unsecured, non-interest bearing with no formal terms of repayment. During the nine months ended November 30, 2017, the Company repaid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $250 thousand. A balance of $73 thousand was due as at November 30, 2017. Additionally, accrued compensation due to Mr. Solomita of $360 thousand was paid during the nine months ended November 30, 2017.

Employment Agreement

On June 29, 2015, the Company entered into an employment agreement with Mr. Daniel Solomita, the Company’s President and Chief Executive Officer. The employment agreement is for an indefinite term.

The Company and Mr. Solomita entered into an amendment and restatement of the employment agreement on July 13, 2018. The amended and restated employment agreement provides for an increase in Mr. Solomita’s base salary and eligibility to participate in an annual cash bonus subject to performance measures. Mr. Solomita’s base salary and bonus opportunity are deemed retroactively effective to March 1, 2018. For the three and nine months ended November 30, 2018, compensation expense for the Company’s CEO amounted to $172 thousand and $522 thousand, respectively, inclusive of the retroactive adjustment in accordance with the employment agreement as amended and restated on July 13, 2018. For the three and nine months ended November 30, 2017, compensation expense was $45 thousand and $135 thousand, respectively.

In addition, the employment agreement provided for a long-term incentive grant of 4,000,000 shares of the Company’s common stock, upon the achievement of certain performance milestones. This was modified to provide a grant of 4,000,000 restricted stock units covering 4,000,000 shares of the Company’s common stock while the performance milestones remained the same. The Company’s board of directors approved the grant of the restricted stock units, effective and contingent upon approval by the Company’s shareholders at the Company’s 2019 annual meeting of an increase in the number of shares available for grant under the Plan. The restricted stock units vest upon the achievement of applicable performance milestones. During the nine months ended November 30, 2018 and 2017, no milestones became probable of being met and, accordingly, the Company did not record any compensation expense in relation to the restricted stock units. As at November 30, 2018, one out of the four milestones was met.