Note 9 – StocK-BASED COMPENSATION

The Company accounted for its stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718, “Compensation – Stock Compensation.”

2017 Equity Incentive Plan

On November 10, 2017 the Company’s Board of Directors (the “Board”) approved the 2017 PureBase Corporation Stock Option Plan which is intended to be a qualified stock option plan (the “Option Plan”). The Board reserved up to 10,000,000 shares of the Company’s common stock to be issued pursuant to options granted under the Option Plan. The Option Plan was subsequently approved by shareholders on September 28, 2018. As of August 31, 2020, 50,000 options have been granted under the Option Plan.

The Company has also granted options to purchase an aggregate of 500,000 shares of common stock to certain employees pursuant to employment contracts prior to the adoption of the Option Plan.

The Company granted options to purchase an aggregate of 550,000 shares of common stock during the nine months ended August 31, 2020.

There were no stock options granted during the nine months ended August 31, 2019.

The weighted average grant date fair value of options granted and vested during the nine months ended August 31, 2020, was $21,438 and $22,446, respectively. The weighted average non-vested grant date fair value of non-vested options was $19,481 at August 31, 2020.

Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at August 31, 2020:

The compensation expense attributed to the issuance of the options is recognized as such options vest.

Stock options granted under the Option Plan are exercisable for ten years from the grant date and vest over various terms from the grant date to three years.

The aggregate intrinsic value of the options totaled $0 and was based on the Company’s closing stock price of $0.10 as of August 31, 2020, which would have been received by the option holders had all option holders exercised their options as of that date.

On April 8, 2020, the Company granted a director an option to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.10 per share and a fair value of $27,088. The options vest immediately at the grant date. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $0.11; strike price - $0.10; expected volatility – 305%; risk-free interest rate – 0.47%; dividend rate – 0%; and expected term – 2.50 years.

On April 15, 2020, the Company granted two advisory board members options to purchase an aggregate of 200,000 shares of the Company’s common stock at an exercise price of $0.10 per share and a fair value of $19,481. The options vest one year from the date of grant. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $0.099; strike price - $0.10; expected volatility – 304%; risk-free interest rate – 0.34%; dividend rate – 0%; and expected term – 2.50 years.

On June 2, 2020, the Company granted a director an option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.10 per share and a fair value of $10,739. The options vest immediately at the grant date. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $0.11; strike price - $0.10; expected volatility – 283%; risk-free interest rate – 0.20%; dividend rate – 0%; and expected term – 2.50 years.

Total compensation expense related to stock options was $10,739 and $62,177 for the three and nine months ended August 31, 2020, respectively. Total compensation expense related to stock options was $403 and $51,018 for the three and nine months ended August 31, 2019, respectively. As of August 31, 2020, there was $11,364 in future compensation cost related to non-vested stock options.