| SHARE CAPITAL AND RESERVES |
| 11. |
SHARE
CAPITAL AND RESERVES |
|
a) |
Authorized
share capital |
An
unlimited number of common shares without par value and 5,057 Class “A” shares, Series 1. The Class “A” shares,
Series 1 are non-voting and are non-voting and do not have any special rights or restrictions associated with them.
During
the year ended December 31, 2020, the Company:
|
i) |
issued,
150,000 units at a price of $4.00 per unit for total proceeds of $600,000. Each unit consisted
of one common share and a one half share purchase warrant for each share purchased. Each
whole warrant entitles the holder to purchase one additional common share at a price of $6.40
until February 17, 2021. |
| |
ii) |
issued, 172,532 units at
a price of $4.00 per unit for total proceeds of $690,125. Each unit consisted of one common share and one
share purchase warrant for each share purchased. Each warrant entitles the holder to purchase one additional common share at a price
of $6.40 until July 17, 2022. |
| |
iii) |
issued, 625,000 units at
a price of $4.00 per unit for total proceeds of $2,500,000. Each unit consisted of one common share and a one half share purchase
warrant for each share purchased. Each whole warrant entitles the holder to purchase one additional common share at a price of $6.40
until November 17, 2022. |
| |
iv) |
entered into a Mutual Investment
Agreement with Animoca Brands Inc. (Animoca) in which the Company issued 181,547 shares of the Company’s common stock with
a value of $698,557 in exchange for 4,327,431 shares of Animoca common stock. On the same date, the Company issued an additional
89,088 shares of the Company’s common stock with a value of $349,225 to Animoca in exchange for services (included in professional
fees). The Company subsequently sold all of its shares of Animoca and recognized a loss of $508,050. |
| |
v) |
Issued, 1,058,993 common
shares pursuant to exercise of 1,056,143 warrants and 3,750 stock options for total proceeds of $4,596,193. |
During
the year ended December 31, 2019, the Company:
| |
i) |
issued, 624,228 units at
a price of $2.88 per unit for total proceeds of $1,797,778. Each unit consisted of one common share and a one common stock warrant
for each share purchased. Each warrant entitles the holder to purchase one additional common share at a price of $4.80 until February
14, 2021. |
| |
ii) |
issued,
1,094,844 units pursuant to a private placement at a price of $3.20 per unit for total proceeds of $3,503,500. Each unit consisted
of one common share and a one common stock warrant for each share purchased. Each warrant entitles the holder to purchase one
additional common share at a price of $5.60 until July 26, 2021. |
| |
iii) |
issued, 284,092 units at
a price of $3.52 per unit for total proceeds of $1,000,000. Each unit consisted of one common share and one common stock warrant
for each share purchased. Each warrant entitles the holder to purchase one additional common share at a price of $5.60 until August
9, 2021. |
| |
v) |
issued 576,834 common shares
at a value of $1,892,012 on acquisition of Versus LLC shares (Note 6). |
| |
vi) |
issued 158,115 common shares
pursuant to the exercise of share purchase warrants and stock options for total proceeds of $425,417. |
During
the year ended December 31, 2018, the Company:
|
i) |
issued,
766,231 units at a price of $4.80 per unit for total proceeds of $3,677,900. Each unit consisted
of one common share and a one half common stock warrant for each share purchased. Each whole
warrant entitles the holder to purchase one additional common share at a price of $6.40 until
April 12, 2020. A residual value of $78,957 was allocated to the warrants. |
|
ii) |
issued
153,750 common shares pursuant to the exercise of share purchase warrants for total proceeds
of $384,000. |
Escrow
At
December 31, 2020, 313 common shares (December 31, 2019 and 2018 – 313) of the Company are held in escrow due to misplaced share
certificates originally issued to three individual shareholders.
Pursuant
to the policies of the CSE, the Company may grant incentive stock options to its officers, directors, employees and consultants. The
Company has implemented a rolling Stock Option Plan (the “Plan”) whereby the Company can issue up to 10% of the issued and
outstanding common shares of the Company. Options have a maximum term of ten years and vesting is determined by the Board of Directors.
A
continuity schedule of outstanding stock options is as follows:
| |
|
Number
Outstanding |
|
|
Weighted
Average
Exercise Price |
|
| |
|
|
|
|
($) |
|
| Balance –
December 31, 2017 |
|
|
531,559 |
|
|
|
4.96 |
|
| Granted |
|
|
72,284 |
|
|
|
5.92 |
|
| Forfeited |
|
|
(54,319 |
) |
|
|
5.28 |
|
| Balance – December
31, 2018 |
|
|
549,524 |
|
|
|
4.96 |
|
| Granted |
|
|
482,500 |
|
|
|
5.28 |
|
| Exercised |
|
|
(3,125 |
) |
|
|
3.52 |
|
| Forfeited |
|
|
(15,500 |
) |
|
|
6.72 |
|
| Balance –December
31, 2019 |
|
|
1,013,399 |
|
|
|
5.12 |
|
| Granted |
|
|
470,083 |
|
|
|
4.11 |
|
| Exercised |
|
|
(3,750 |
) |
|
|
3.49 |
|
| Forfeited |
|
|
(125,907 |
) |
|
|
6.04 |
|
| Balance
– December 31, 2020 |
|
|
1,353,825 |
|
|
|
4.70 |
|
During
the year ended December 31, 2020, 470,083 stock options were granted by the Company with a fair value of $1,216,228 (or $2.69 per option).
During the year ended December 31, 2020, the Company recorded share-based compensation of $1,407,414 (December 31, 2019 - $826,360) relating
to options vested during the year.
During
the year ended December 31, 2019, the Company granted a total of 482,500 stock options with a fair value of $1,724,580 (or $3.52 per
option).
During
the year ended December 31, 2018, the Company granted a total of 72,284 stock options with a fair value of $343,711 (or $5.92 per option).
During
the year ended December 31, 2018, the Company recorded share-based compensation of $651,316 relating to options vested during the year.
The
Company used the following assumptions in calculating the fair value of stock options for the years ended:
| |
|
December 31,
2020 |
|
|
December 31,
2019 |
|
|
December 31, 2018 |
|
| Risk-free interest rate |
|
|
0.26% - 0.37% |
|
|
|
1.59 |
% |
|
|
2.18 |
% |
| Expected life of options |
|
|
2.0 – 5.0 years |
|
|
|
5.0 years |
|
|
|
5.0 years |
|
| Expected dividend yield |
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
| Volatility |
|
|
79.44% - 87.79% |
|
|
|
95.8 |
% |
|
|
111.6 |
% |
At
December 31, 2020, the Company had incentive stock options outstanding as follows:
| Expiry
Date |
|
Options Outstanding
|
|
|
Options
Exercisable
|
|
|
Exercise
Price
|
|
|
Weighted
Average
Remaining Life |
|
| |
|
|
|
|
|
|
|
($) |
|
|
(years) |
|
| July 13, 2021 |
|
|
325,147 |
|
|
|
316,066 |
|
|
|
4.32 |
|
|
|
0.53 |
|
| March 17, 2022 |
|
|
13,063 |
|
|
|
12,451 |
|
|
|
6.96 |
|
|
|
1.21 |
|
| May 18, 2022 |
|
|
5,750 |
|
|
|
5,301 |
|
|
|
7.84 |
|
|
|
1.38 |
|
| July 31, 2022 |
|
|
171,114 |
|
|
|
103,381 |
|
|
|
4.00 |
|
|
|
1.58 |
|
| September 14, 2022 |
|
|
74,156 |
|
|
|
64,216 |
|
|
|
5.52 |
|
|
|
1.70 |
|
| November 19, 2022 |
|
|
12,500 |
|
|
|
521 |
|
|
|
6.00 |
|
|
|
1.88 |
|
| June 6, 2023 |
|
|
14,063 |
|
|
|
8,789 |
|
|
|
7.36 |
|
|
|
2.43 |
|
| September 4, 2023 |
|
|
12,813 |
|
|
|
6,204 |
|
|
|
4.00 |
|
|
|
2.68 |
|
| April 2, 2024 |
|
|
107,500 |
|
|
|
52,500 |
|
|
|
3.36 |
|
|
|
3.26 |
|
| June 27, 2024 |
|
|
6,250 |
|
|
|
4,688 |
|
|
|
3.36 |
|
|
|
3.49 |
|
| July 24, 2024 |
|
|
148,344 |
|
|
|
15,453 |
|
|
|
4.00 |
|
|
|
3.57 |
|
| September 27, 2024 |
|
|
312,500 |
|
|
|
98,828 |
|
|
|
6.00 |
|
|
|
3.74 |
|
| October 22, 2024 |
|
|
12,500 |
|
|
|
5,078 |
|
|
|
5.28 |
|
|
|
3.81 |
|
| July 24, 2025 |
|
|
113,125 |
|
|
|
24,076 |
|
|
|
4.00 |
|
|
|
4.57 |
|
| August 10, 2025 |
|
|
12,500 |
|
|
|
2,083 |
|
|
|
4.00 |
|
|
|
4.61 |
|
| November 19, 2024 |
|
|
12,500 |
|
|
|
260 |
|
|
|
6.00 |
|
|
|
3.89 |
|
| |
|
|
1,353,825 |
|
|
|
719,895 |
|
|
|
4.70 |
|
|
|
2.53 |
|
|
d) |
Share
purchase warrants |
A
continuity schedule of outstanding share purchase warrants is as follows:
| |
|
Number
Outstanding |
|
|
Weighted
Average Exercise Price |
|
| |
|
|
|
|
($) |
|
| Balance –
December 31, 2017 |
|
|
1,711,690 |
|
|
|
4.80 |
|
| Exercised |
|
|
(153,750 |
) |
|
|
2.56 |
|
| Expired |
|
|
(517,000 |
) |
|
|
6.40 |
|
| Issued |
|
|
427,598 |
|
|
|
6.24 |
|
| Balance
– December 31, 2018 |
|
|
1,468,538 |
|
|
|
4.96 |
|
| Exercised |
|
|
(154,990 |
) |
|
|
2.72 |
|
| Expired |
|
|
(347,732 |
) |
|
|
3.20 |
|
| Issued |
|
|
2,349,365 |
|
|
|
5.12 |
|
| Balance – December
31, 2019 |
|
|
3,315,181 |
|
|
|
5.28 |
|
| Exercised |
|
|
(1,056,143 |
) |
|
|
2.40 |
|
| Expired |
|
|
(438,948 |
) |
|
|
4.32 |
|
| Issued |
|
|
872,532 |
|
|
|
6.13 |
|
| Balance
– December 31, 2020 |
|
|
2,692,622 |
|
|
|
5.88 |
|
During
the year ended December 31, 2020, the Company:
|
i) |
On
February 17, 2020, the Company, completed a unit private placement which included 75,000
share purchase warrants exercisable at $6.40 per share for a period of two years. The share
purchase warrants were determined to have a fair value of $Nil using the residual value method. |
|
ii) |
On
July 17, 2020, the Company, completed a unit private placement which included 172,532 share
purchase warrants exercisable at $4.00 per share for a period of two years. The share purchase
warrants were determined to have a fair value of $55,210 using the residual value method. |
|
ii) |
On
November 17, 2020, the Company, completed a unit private placement which included. 625,000
share purchase warrants exercisable at $4.00 per share for a period of two years. |
During
the year ended December 31, 2019, the Company:
| |
i) |
On February 14, 2019, the
Company completed a unit private placement which included 624,228 share purchase warrants exercisable at $4.80 per share for a period
of two years. The share purchase warrants were determined to have a fair value of $199,753 using the residual value method. |
| |
ii) |
On February 14, 2019, the
Company completed a unit private placement which included 43,696 broker warrants exercisable at $2.88 per share for a period of two
years. The share purchase warrants were determined to have a fair value of $61,843 using the Black Scholes option pricing model.
|
| |
iii) |
On July 26, 2019, the Company
completed a unit private placement which included 1,094,844 share purchase warrants exercisable at $5.60 per share for a period of
two years. The share purchase warrants were determined to have a fair value of $Nil using the residual method. |
| |
iv) |
On July 26, 2019, the Company
issued 14,088 agent warrants exercisable to purchase additional shares at a price of $5.60 per share for a period of 24 months from
closing. The agent warrants were determined to have a fair value of $20,985. |
| |
v) |
On August 9, 2019, the
Company completed a unit private placement which included 284,093 share purchase warrants exercisable at $5.60 per share for a period
of two years. The share purchase warrants were determined to have a fair value of $Nil using the residual method. |
| |
vi) |
The Company issued 288,416
warrants at a value of $159,778 for the acquisition of Newco shares (Note 7). |
During
the year ended December 31, 2018, the Company:
| |
i)
|
On March
29, 2018 and April 12, 2018, completed a unit private placement which included 383,120 share purchase warrants exercisable at $6.40
per share for a period of two years. The share purchase warrants were determined to have a fair value of $140,531 using
the residual value method. |
| |
ii)
|
On March
29, 2018 and April 12, 2018, completed a unit private placement which included 44,463 brokers’ warrants exercisable at $4.80
per share for a period of two years. The broker warrants were determined to have a fair value of $116,226 using the Black
Scholes option pricing model. |
The
Company used the following assumptions in calculating the fair value of the warrants for the period ended:
| |
|
December 31,
2019 |
|
|
December 31,
2018 |
|
| Risk-free interest rate |
|
|
1.77 |
% |
|
|
1.85 |
% |
| Expected life of options |
|
|
2.0 years |
|
|
|
2.0 years |
|
| Expected dividend yield |
|
|
Nil |
|
|
|
Nil |
|
| Volatility |
|
|
107.14 |
% |
|
|
86.44 |
% |
| Weighted average fair value per warrant |
|
$ |
0.64 |
|
|
$ |
2.56 |
|
At
December 31, 2020, the Company had share purchase warrants outstanding as follows:
| Expiry
Date |
|
Warrants Outstanding
|
|
|
Exercise
Price
|
|
|
Weighted
Average Remaining Life |
|
| |
|
|
|
|
($) |
|
|
(years) |
|
| February
13, 2021 |
|
|
75,000 |
|
|
|
6.40 |
|
|
|
0.13 |
* |
| February
14, 2021 |
|
|
247,133 |
|
|
|
4.80 |
|
|
|
0.13 |
* |
| February
14, 2021 |
|
|
6,883 |
|
|
|
2.88 |
|
|
|
0.13 |
* |
| July 26,
2021 |
|
|
952,117 |
|
|
|
5.60 |
|
|
|
0.57 |
|
| July 26,
2021 |
|
|
9,866 |
|
|
|
5.60 |
|
|
|
0.57 |
|
| August 9,
2021 |
|
|
247,841 |
|
|
|
5.60 |
|
|
|
0.63 |
|
| March 17,
2022 |
|
|
356,250 |
|
|
|
6.40 |
|
|
|
1.21 |
|
| July 17,
2022 |
|
|
172,532 |
|
|
|
6.40 |
|
|
|
1.54 |
|
| November
17, 2022 |
|
|
625,000 |
|
|
|
6.40 |
|
|
|
1.88 |
|
| |
|
|
2,692,622 |
|
|
|
5.88 |
|
|
|
0.97 |
|
On
September 30, 2016, the Company issued 625,250 performance warrants with a fair value of $1,725,496. These performance warrants vested
during the year ended December 31, 2019.
At
December 31, 2020, the Company had performance warrants outstanding as follows:
| Expiry
Date |
|
Performance
Warrants Outstanding
|
|
|
Performance
Warrants Exercisable
|
|
|
Exercise
Price
|
|
|
Remaining
Life |
|
| |
|
|
|
|
|
|
|
($) |
|
|
(years) |
|
| June
30, 2021 |
|
|
625,250 |
|
|
|
625,250 |
|
|
|
4.00 |
|
|
|
0.50 |
|
|