| UNITED STATES | OMB APPROVAL |
| SECURITIES AND EXCHANGE COMMISSION | OMB Number: |
| Washington, D.C. 20549 | Expires: |
|
| Estimated average |
|
| burden |
|
| hours per.… |
|
|
|
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 20192020
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 _______________________________
PLYMOUTH ROCK TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter)
_______________________________________
(Translation of Registrant's name into English)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
300Suite 206 - 2015 Burrard Street,1045 West 8th Avenue, Vancouver, British Columbia, Canada V6H 1C3Canada V6J 3H3 (Address(Address of principal executive offices)
Contact Person: Dana Wheeler, Tel: 774 404-7685, Email: dana@plyrotech.com
Suite 206 - 1045 West 8th Avenue, Vancouver, British Columbia, Canada V6H 1C3
(Name, telephone, e-mail and/or facsimile number and Address of Company Contact Person)
2
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class | Name of each exchange on which registered |
None | Not applicable |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Stock
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's capital or common stock as of the close period covered by the annual report.
On November 30, 2019,2020, there were a total of 32,796,60042,762,264 common shares issued and outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
[ ] YES [X] NO
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
[ ] YES [ ] NO
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ ] YES [X] NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [X] |
|
| Emerging Growth Company [X] |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. [ ] | ||
| † The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. | ||
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. [ ]3
† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP [ ] | International Financial Reporting Standards as issued by the International Accounting Standards Board [X] | Other [ ] |
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
[ ] ITEM 17 [ ] ITEM 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] YES [X] NO
4
TABLE OF CONTENTS
5
PART ISPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements, relate tomeaning statements that reflect our current expectations and views of future events orand future financial performance. These forward-looking statements are made under the applicable safe-harbor provisions of United States and Canadian securities laws. In some cases, you can identify forward-looking statements by terminology such as "estimate", "project", "believe", "anticipate", "intend", "expect", "plan", "predict", "may", "should", "potential", or "continue", the negative thereof or other variations thereon or comparable terminology.
These forward-looking statements include, but are not limited to, statements about:
Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. There can be no assurance that the forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.
Known and unknown risks, uncertainties and other factors include, but are not limited to:
Accordingly, shareholders and prospective investors should not place undue reliance on forward-looking statements. The forward-looking statements in this annual report speak only as to the date hereof. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
6
REPORTING CURRENCY AND IFRS
In this annual report, unless otherwise stated, all dollar amounts are expressed in Canadian dollars ("$"). "US$" refers to United States dollars. The financial statements and summaries of financial information contained in this annual report are also reported in Canadian dollars ("$") unless otherwise stated. All such financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), unless expressly stated otherwise.
FOREIGN PRIVATE ISSUER STATUS
As used in this annual report, the terms "we", "us", "our", "our company" and "the company" refer to Plymouth Rock Technologies Inc., a British Columbia corporation, and our wholly owned subsidiary, Plymouth Rock Technologies Inc., a Delaware corporation, unless otherwise stated. References to "Plymouth Rock USAUSA" refer to our wholly owned subsidiary.
More than 50% of the common shares of Plymouth Rock Technologies Inc., a British Columbia corporation, are held by non-United States residents as of May 31st 2020, being our latest second quarter end. As 50% or more of our common shares are not held by United States residents, we do not need to review the tests regarding directors and officer residence, location of the principal administration of our business, and the location of the majority of our assets. Based on the foregoing, we believe that we qualify as a "foreign private issuer" and, as a result, are able to continue to report regarding our common shares using this Form 20-F annual report.
EMERGING GROWTH COMPANY STATUS
Pursuant to The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), we are classified as an "Emerging Growth Company." Under the JOBS Act, Emerging Growth Companies are exempt from certain reporting requirements, including the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. Under this exemption, our auditor will not be required to attest to and report on management's assessment of our internal controls over financial reporting during a five-year transition period. We are also exempt from certain other requirements, including the requirement to adopt certain new or revised accounting standards until such time as those standards would apply to private companies. The company will remain an Emerging Growth Company for up to the last day of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement under the Securities Act of 1933, although it will lose that status earlier if revenues exceed $1 billion, or if the company issues more than $1 billion in non-convertible debt in a three year period, or the company will lose that status on the date that it is deemed to be a large accelerated filer.
PART I
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS |
Not applicable to Form 20-F filed as an Annual Report.
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
Not applicable to Form 20-F filed as an Annual Report.
ITEM 3. | KEY INFORMATION |
A. | Selected Financial Data |
The following table summarizes selected financial data for our company for the fiscal years ended November 30, 2020, 2019, 2018, 2017 and 2017,2016, respectively, prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"). The information in the table is expressed in Canadian Dollars was extracted from the detailed financial statements and related notes included in this annual report and should be read in conjunction with such financial statements and with the information appearing under the heading, "Item 5 - Operating and Financial Review and Prospects" beginning at page 1829 below.
7
Selected Financial Data
(CAD$)
Statements of (Loss) | Year Ended | Year Ended | ||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2020 | 2019 | 2018 | 2017 | 2016 | |
Revenues | Nil | Nil | Nil | 70,931 | 28,257 | Nil | ||||
Operating Expenses | (4,617,362) | (681,655) | (116,359) | (108,987) | (91,635) | (3,064,180) | (4,617,362) | (681,655) | (116,359) | (108,987) |
Comprehensive Loss | (4,320,563) | (986,901) | (115,989) | (108,087) | (89,433) | (2,924,236) | (4,320,563) | (986,901) | (115,989) | (108,087) |
Loss Per Share Basic and | (0.14) | (0.04) | (0.01) | (0.01) | (0.08) | (0.14) | (0.04) | (0.01) | ||
Common Shares Outstanding | 32,157,904 | 23,874,477 | 13,150,484 | 12,934,000 | 12,934,000 | 42,762,264 | 32,157,904 | 23,874,477 | 13,150,484 | 12,934,000 |
Statement of Financial Position Data | As at November 30 | As at November 30 | ||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2020 | 2019 | 2018 | 2017 | 2016 | |
Current Assets | 727,526 | 2,811,971 | 589,850 | 101,443 | 227,892 | 79,919 | 727,526 | 2,811,971 | 589,850 | 101,443 |
Current Liabilities | 227,058 | 166,941 | 51,171 | 15,525 | 33,887 | 322,738 | 227,058 | 166,941 | 51,171 | 15,525 |
Working Capital | 500,468 | 2,645,030 | 538, 679 | 85,918 | 194,005 | |||||
Working Capital (Deficit) | (242,819) | 500,468 | 2,645,030 | 538, 679 | 85,918 | |||||
Total Liabilities and Shareholders' Equity | 739,990 | 3,893,973 | 760,862 | 266,455 | 392,904 | 261,385 | 739,990 | 3,893,973 | 760,862 | 266,455 |
(Deficit) Retained Earnings | (5,968,892) | (1,602,085) | (615,184) | (499,195) | (391,108) | (8,893,128) | (5,968,892) | (1,602,085) | (615,184) | (499,195) |
B. | Capitalization and Indebtedness |
Not applicable to Form 20-F filed as an Annual Report.
C. | Reason for the Offer and Use of Proceeds |
Not applicable to Form 20-F filed as an Annual Report.
D. | Risk Factors |
In addition to the other information presented in this annual report, the following should be considered carefully in evaluating our company and its business. This annual report contains forward-looking statements and information within the meaning of U.S. and Canadian securities laws that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements and information. Factors that might cause such differences include those discussed below and elsewhere in this annual report.
8
Risks Associated with Our Business
There is substantial doubt as to whether we will continue operations. If we discontinue operations, you could lose your investment.
Our financial statements have been prepared on the going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business. However, as at November 30, 2020, we have not generated significant revenue or cash flow from operations since inception. As at November 30, 2020, the Company has a working capital deficiency of $242,819 and an accumulated deficit of $8,893,128. We anticipate that we will incur increased expenses and there is a risk we will not realize sufficient revenues to offset those expenses. Our ability to continue our operations is dependent on obtaining additional financing and generating future revenues, and no assurance can be given that we will successfully be able to do so. Accordingly, our financial statements contain disclosure regarding the auditor's substantial doubt about our ability to continue as a going concern. Importantly, the inclusion in our financial statements of a going concern reference may negatively impact our ability to raise future financing and achieve future revenue. The reference regarding the substantial doubt about our ability to continue as a going concern will be removed only when, in the opinion of our auditor, our revenues have reached a level that is able to sustain our business operations or we have raised substantial additional funds through our financing efforts.
Limited Operating History
The Company has no historya limited amount of business operations,income in the last two years, and had generated limited revenue generation or production history. The Company was incorporated on October 17, 2011since its inception in 2011. We have incurred operating and has yetnet losses in each year of our existence. We experienced a net loss of $2,924,236 for the year ended November 30, 2020, compared to generate a profit from its activities.net loss of $4,366,807 for the year ended November 30, 2019. The Company is subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. We expect to incur substantial and increasing losses for the foreseeable future as we research, develop and commercialize our products. If our products do not achieve market acceptance, we may never generate any revenue. We also cannot assure you that we will be profitable even if we successfully commercialize our products. The Company anticipates that it may take several years to achieve positive cash flow from operations. If we fail to generate sufficient revenues to operate profitability, or if we are unable to fund our continuing losses, you could lose all or part of your investment.
Substantial Capital Requirements and Liquidity
SubstantialWe will require substantial funds to develop, manufacture and market our products. If we do not raise sufficient funds, our plan of operation will be delayed until such time as we raise sufficient funds, provided we are able to do so. Further, the cost of carrying out our operating activities and development activities is not fixed, and our cash levels may at any time prove to be insufficient to finance them. Our financing needs may change substantially because a number of factors which are difficult to predict or which may be outside of our control. These include increased competition, the costs of inventory and protecting rights to our proprietary technology and the time required to obtain required licenses.
We may not succeed in raising the additional funds for the establishment of the Company's current and planned operations willthat we require because such funds may not be required. No assurances can be given that the Company will be ableavailable to raise theus on acceptable terms, if at all. We intend to seek additional funding that may be required for such activities, should such funding not be fully generated from operations. Environmental rehabilitationthrough strategic alliances or restitution, revenues, taxes, transportation costs, capital expenditures, operating expensesthrough public or private sales of our equity securities, and development costs are all factors which will have an impact on the amount of additional capital that may be required. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available,we may also involve restrictions onobtain equipment leases and pursue opportunities to obtain debt financing and operating activities. There is no assurance that additional financing will be available on terms acceptable toin the Company or at all.future. If the Company iswe are unable to obtain additional financing as needed, itsufficient funding on a timely basis, we may be requiredforced to reduce the scope of its operationssignificantly curtail or anticipated expansion, and pursue only those development plans that can be funded through cash flows generated from its existingcease our operations.
Regulatory Requirements
The currentWe operate in an industry which is highly regulated and is evolving rapidly. Sometimes new risks emerge and management may not be able to predict all of them, or future operationsbe able to predict how they may cause actual results to be different from those contained in any forward-looking statements. Failure to comply with the requirements of the CompanyState licensing agencies within which we operate would have a material adverse impact on the business, financial condition and operating results of the Company.
9
We will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with regulations may result in additional costs for corrective measures, penalties or in restrictions of our operations. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require permits from various governmental authorities,extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on the business, results of operations and such operations are and will be governed by lawsfinancial condition of the Company.
The industry is subject to extensive controls and regulations, governing development, production,which may significantly affect the financial condition of market participants. The marketability of any product may be affected by numerous factors that are beyond our control and which cannot be predicted, such as changes to government regulations, including those relating to taxes labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, site safety and other matters.government levies which may be imposed. Changes in government levies, including taxes, could reduce the Company's earnings and could make future capital investments or the Company's operations uneconomic. The industry is also subject to numerous legal challenges, which may significantly affect the financial condition of market participants and which cannot be reliably predicted.
Our technology platform may not perform in line with customer specifications or expectations.
Our technology platform, consisting of our security and threat technology, may not perform in line with customers' expectations. For example, our technologies may not be as easy to operate or maintain as customers expect. Customers may require performance specifications that we are unable to deliver. Some of these target specifications, such as those dependent on battery technology, are constrained by the pace of general technological advancement and the capabilities of our suppliers, which are largely beyond our control.
Our technology platform may contain design or manufacturing defects that result in unsatisfactory performance or require repair. Our technology platform uses a substantial amount of algorithms and software to operate. Software products are inherently complex and often contain defects and errors, especially when first introduced. While we have performed extensive internal testing on our UAS software and hardware systems, we have a limited frame of reference by which to evaluate the long-term performance of our technology platform. There can be no assurance that all permits which the Company may require for the facilities and conduct of operationswe will be obtainable on reasonable termsable to detect and fix any defects in our technology platform before we sell products and services to customers.
If our technology platform is defective or that such lawsotherwise fails to perform as expected or in accordance with prescribed technical specifications and regulation would not have antimetable, our UAS may experience accidents and we may suffer adverse effect on any development project which the Company might undertake.
Failure to comply with applicable laws, regulationspublicity, order cancellations, revenue declines, delivery delays, product recalls, product liability claims, and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed,significant warranty and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in operations may be required to compensate those suffering losses or damage, and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations. Amendments to current laws, regulation and permits governing operations and activities of companies, or more stringent implementation thereof,other expenses. These consequences could have a material adverse impact on our business, financial condition, operating results and prospects.
We may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and results of operations.
Our UASs may not perform in line with customers' expectations. Any product defects, accidents or any other failure of our UASs to perform as expected could harm our reputation and result in adverse publicity, revenue loss, delivery delays and product recalls, which could harm our brand and reputation. Any product recall or lawsuit seeking significant monetary damages either in excess of or outside of our insurance coverage may have a material adverse effect on our business and financial condition. In the Companyfuture, we may, voluntarily or involuntarily, initiate a recall if any of our UASs, including any systems or components sourced from our suppliers, prove to be defective or noncompliant with applicable laws and cause increasesregulations. Such recalls, whether voluntary or involuntary and whether caused by systems or components engineered or manufactured by us or our suppliers, could incur significant expenses and adversely affect our brand image in capital expendituresour target markets. They may also inhibit or development costsprevent commercialization of our current and future product candidates.
We may become subject to product liability claims or warranty claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may be exposed to significant product liability claims if our UASs do not perform as expected or malfunction. Any defects, errors, or failures in our products or the misuse of our UASs, operating systems and infrastructure could also result in injury, death or property damage. Our risks in this area are particularly pronounced given we have limited field experience in the operation of our UASs. A successful product liability claim against us could require abandonmentus to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our UASs and business and inhibit or prevent commercialization of our current and future UAS models. Our insurance coverage might not be sufficient to cover all potential product liability claims. In addition, the same level of insurance coverage may not be available in the future at economical prices, or at all. Even if we are fully insured as it relates to a claim, the claim could nevertheless diminish our brand and divert management's attention and resources, which could have a negative impact on our business, financial condition and result of operations.
10
If we fail to successfully develop and commercialize new products, services and technologies that are well received by customers, our operating results may be materially and adversely affected.
Our future growth depends on whether we can continually develop and introduce new generations of our existing product lines and update our operating systems and infrastructure with enhanced functionalities and value-added services. This is particularly important in the current industry landscape where technologies and consumer preferences evolve rapidly, which may shorten the lifecycles of our existing products. We plan to upgrade our current UAS models and introduce new models in order to continue to provide UASs with the latest technologies. As technological advancements can be complex and costly, we could experience delays in the development and introduction of new projects.products and services in the future.
Our ability to roll out new and innovative products and services depends on a number of factors, including significant investments in research and development, quality control of our products and services and effective management of our supply chain. We may need to devote more resources to the research and development of new or enhanced products, services and technologies, which may reduce our profitability. In addition, our research and development efforts may not yield the benefits we expect to achieve in a timely manner, or at all. To the extent that we are unable to execute our strategy of continuously introducing new and innovative products, diversifying our product portfolio and satisfying consumers' changing preferences, we may not be able to grow our user base, and our competitive position and results of operations may be adversely affected. Even if we are able to keep up with technological changes and develop new models, our prior models may as a result become obsolete sooner than expected, potentially reducing our return on investment.
Financing Risks and Dilution to Shareholders
The Company will have limited financial resources, no operations, and no revenues. There can be no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be available on favourablefavorable terms or at all. It is likely such additional capital will be raised through the issuance of additional equity, which will result in dilution to the Company's shareholders.
Competition
There is competition within theThe global market for security screening and threat detection market. The Company willis highly fragmented and intensely competitive. We compete with other companies, manyprincipally in the market for threat detection solutions and unmanned aircraft systems (UAS). Some of whichour competitors and potential competitors have greater research, development, financial technical and otherpersonnel resources, than the Company,including governmental support, as well as established greater penetration into certain vertical markets or geographical market segments. We cannot assure you that we will be able to compete effectively relative to our competitors or continue to develop and market new products effectively. Continued competitive pressures could cause us to lose significant market share or erode profitability margins.
An accident involving a UAS provided by us or another manufacturer could harm the UAS industry.
An accident involving a UAS provided by us or another manufacturer could cause regulatory agencies around the world to tighten restrictions on the use of UASs, particularly over populated areas, and could cause the public to lose confidence in our products and UASs generally. There are risks associated with autopilot, flight control, communications and other advanced technologies, and, from time to time, there have been accidents associated with these technologies. The safety of certain cutting-edge technologies depends in part on user interaction, and users may not be accustomed to using such technologies. We could face unfavorable and tightened regulatory control and intervention on the use of autopilot and other advanced technologies and be subject to liability and government scrutiny to the extent accidents associated with our autonomous navigation systems occur. Should a high profile accident occur resulting in substantial casualty or damages, either involving our UASs or products offered by other companies, public confidence in and regulatory attitudes toward UASs could deteriorate. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.
11
We rely on some third-party distributors for sales, marketing and distribution activities relating to our products
Some of our business partners are acting as third-party distributors that sell, market and distribute our products to their customers. Accordingly, we may be subject to a number of risks associated with third-party distributors, including a lack of day-to-day control over the activities of third-party distributors selling or using our products and solutions; third-party distributors may terminate their arrangements with us on limited or no notice, or may change the terms of these arrangements in a manner that is unfavorable to us for reasons outside of our control; and any disagreements with our third party distributors could lead to costly and time-consuming litigation or arbitration. If we fail to establish and maintain satisfactory relationships with our third-party distributors, we may not able to sell, market and distribute our products according to our internal budget and plans, our future revenues and market share may not grow at a pace that we expect, and we could be subject to increases in sales and marketing and other costs which would harm our results of operations and financial condition.
Our operations may be interrupted by production difficulties or delays due to mechanical failures, utility shortages or stoppages, fire, natural disaster or other calamities at or near our facilities.
Production difficulties, such as capacity constraints, mechanical and systems failures and the need for equipment upgrades, may suspend our production and/or reduce our output. There can be no assurance that we will not experience problems with our production facilities in the future or that we will be able to address any such problems in a timely manner. Problems with key equipment in one or more of our production facilities may affect our ability to produce our products or cause us to incur significant expenses to repair or replace such equipment. Scheduled and unscheduled maintenance programs may affect our production output. Any of these could have a material adverse effect on our business, financial condition, results of operations and prospects.
We depend on a continuous supply of utilities, such as electricity and water, to operate our production facilities. Any disruption to the supply of electricity or other utilities may disrupt our production, or cause the deterioration or loss of our inventory. This could adversely affect our ability to fulfill our sales orders and consequently may have an adverse effect on our business and results of operations. In addition, fire, natural disasters, pandemics or extreme weather, including droughts, floods, typhoons or other storms, or excessive cold or heat, could cause power outages, fuel shortages, water shortages, damage to our production, processing or distribution facilities or disruption of transportation channels, any of which could impair or interfere with our operations. We cannot assure you that such events will not happen in the future or that we will be able to take adequate measures to mitigate the likelihood or potential impact of such events, or to effectively respond to such events if they occur.
Our consumers may experience service failures or interruptions due to defects in the software, infrastructure, components or engineering system that compromise our products and services, or due to errors in product installation, any of which could harm our business.
Our products and services may contain undetected defects in the software, infrastructure, components or engineering system. Sophisticated software and applications, such as those adopted and offered by us, often contain "bugs" that can unexpectedly interfere with the software and applications' intended operations. Our internet services may from time to time experience outages, service slowdowns or errors. Defects may also occur in components or processes used in our products or for our services.
There can be no assurance that we will be able to detect and fix all defects in the hardware, software and services we offer. Failure to do so could result in decreases in sales of our products and services, lost revenues, significant warranty and other expenses, decreases in customer confidence and loyalty, losing market share to our competitors, and harm to our reputation.
12
Our business and prospects depend significantly on our ability to build our PRT brand.
Our business and prospects are heavily dependent on our ability to build, maintain and strengthen the PRT brand. If we do not continue to establish, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers. Promoting and positioning our brand will likely depend significantly on our ability to provide high-quality products and engage with our customers as intended. In addition, we expect that our ability to develop, maintain and strengthen the PRT brand will also depend heavily on the success of our user development and branding efforts. Such efforts mainly include building a community of engaged online and offline users as well as other branding initiatives, such as UAS shows and events. To promote our brand, we may be required to change our user development and branding practices, which could result in substantially increased expenses. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.
Our PRT brand could be subject to adverse publicity if incidents related to our products occur or are perceived to have occurred, whether or not we are at fault. In particular, given the popularity of social media, any negative publicity, regardless of its truthfulness, could quickly proliferate and harm consumer perceptions of and confidence in our brand. Furthermore, we may be affected by adverse publicity related to our manufacturing or other partners, whether or not such publicity is related to their collaboration with us. Our ability to successfully position our brand could also be adversely affected by perceptions of the quality of our partners' products and services. In addition, from time to time, our products are evaluated and reviewed by third parties. Any unfavorable reviews could adversely affect consumer perceptions of our products.
Any deterioration of our relationship with our strategic business partners could have a material adverse effect on our operating results.
We collaborate with various business partners to promote our products. For example, we collaborate with companies including SDS Group Australia Pty Ltd. and Trendset Communications Group to provide logistics services for last-mile delivery. There can be no guarantee that those business partners will continue to collaborate with us in the future. If we are unable to maintain good relationships with our business partners, or the business of our business partners declines, the reach of our products and services may be adversely affected and our ability to maintain and expand our user base may decrease.
Most of the agreements with our business partners do not prohibit them from working with our competitors or from offering competing services. If our partners change their standard terms and conditions in a manner that is detrimental to our business, or if our business partners decide not to continue working with us, or choose to devote more resources to supporting our competitors or their own competing products, we may not be able to find a substitute on commercially favorable terms, or at all, and our competitive advantages may diminish.
We are subject to risks associated with strategic alliances or acquisitions. If we cannot manage the growth of our business or execute our strategies effectively, our business and prospects may be materially and adversely affected.
We have entered into strategic alliances with various business partners including Hummingbird Drones Fire AI, and may in the future enter into joint research and development agreements or co-branding agreements with third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third parties and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties. If any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
Although we currently do not have any specific acquisition plans, if appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. In addition to any required shareholders' approval, we may also have to obtain approvals and licenses from relevant government authorities for the recruitmentacquisitions and retentionto comply with any applicable laws and regulations, which could result in delays and increased costs, and may derail our business strategy if we fail to do so. Furthermore, past and future acquisitions and the subsequent integration of qualified employeesnew assets and businesses into our own require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
13
We rely on external suppliers for raw materials and certain components and parts used in our UASs, and have limited control over the quality of these components and parts.
We purchase certain key components and raw materials, such as computers chips, batteries, motors and electronic displays, from external suppliers for use in our operations and production of UASs. A continuous and stable supply of components and raw materials that meet our standards is crucial to our operations and production. We cannot assure you that we will be able to maintain our existing relationships with our suppliers and continue to be able to stably source key components and raw materials at reasonable prices, or at all. We have integrated our suppliers' technologies within our products such that having to change to an alternative supplier may cause significant disruption to our operations. The supply of key components could be interrupted for any reason, or there could be significant increases in the prices of these key components. Additionally, changes in business conditions, force majeure, governmental changes and other personnel.factors beyond our control, or that we do not presently anticipate, could also affect our suppliers' ability to deliver components to us on a timely basis. If any of these events occurs, our business, financial condition, results of operations and prospects may be materially and adversely affected.
We cannot guarantee that the quality of components and parts manufactured by external suppliers will be consistent and maintained at a high standard. Any defects of or quality issues with these components or any noncompliance incidents associated with these third-party suppliers could result in quality issues with our UASs and hence compromise our brand image and results of operations. In extreme situations, we may be exposed to liabilities as a result of significant damages caused by certain components from external suppliers and we cannot assure you that we will be able to obtain sufficient insurance coverage at an acceptable cost in the future. A successful claim brought against us in excess of our available insurance coverage may have a material adverse effect on our business, financial condition and operating results.
We rely on third-party logistics providers to deliver our domestic sales orders and certain overseas orders. Inadequate third-party logistics services or failure to mitigate the risks of damage or disruption to our distribution logistics could adversely affect our business.
Our ability to transport and sell our UASs is critical to our success across our operations. We typically rely on third-party logistics service providers to deliver our domestic sales orders and certain overseas orders. Damage or disruption to our distribution logistics due to disputes, weather, natural disasters, fire, explosions, terrorism, pandemics or labor strikes could impair our ability to distribute or sell our UASs. Inadequate third-party logistics services could also potentially disrupt our distribution and sales and compromise our business reputation. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations, as well as require additional resources to restore our supply chain.
If our business partners, contractors, suppliers, sales agents, dealers or third-party logistics services providers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity beyond our own control.
Our reputation is sensitive to allegations of unethical business practices. We do not control the business practices of our business partners, independent contractors and suppliers, sales agents, dealers or third-party logistics services providers. Accordingly, we cannot guarantee their compliance with ethical business practices, such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative suppliers, sales agents or dealers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. Violation of labor or other laws by our suppliers, business partners, sales agent, dealers or third-party logistics services suppliers or the divergence of their labor or other practices from those generally accepted as ethical in the markets in which we do business could also attract negative publicity, diminish our brand image and reduce demand for our UASs and UAS products.
14
If customers modify our UASs or operating systems, the UASs may not operate properly, which may cause damage, create negative publicity and harm our business.
Our customers may try to modify our UASs or operating systems for various reasons, which could compromise the performance and safety of our UASs, as well as the safety of the users. During such modifications, they may use third-party parts that may not be compatible with our products. We do not test, nor do we endorse, such modification. In addition, the use of improper external cabling or unsafe charging outlets can expose our customers to injury from UAS malfunctioning. Any injuries or damages resulting from such modifications or misuses could result in adverse publicity, which would negatively affect our brand and harm our business, prospects, financial condition and operating results.
An inability to secure or defend intellectual property rights and protections for our technologies may negatively impact our business or financial position.
The CompanyWe has developed security screening technologies that are adequate to counter various threats. The CompanyWe may be unable to prevent competitors from independently developing or selling products similar to or duplicate of the Company,our technology, and there can be no assurance that the resources invested by the Companyus to protect theour Intellectual Property will be sufficient. The CompanyWe may be unable to secure or retain ownership or rights. In addition, the Companywe may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. If the Company iswe are found to infringe any third-party rights, itwe could be required to pay substantial damages or itwe could be enjoined from offering some of products and services. Also, there can be no assurances that the Companywe will be able to obtain or renew from third parties the licenses it needswe need in the future, and there is no assurance that such licenses can be obtained on reasonable terms.
Governmental RegulationsIn addition, the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. It is also possible that the intellectual property rights of others could bar us from licensing and Processing Licensesexploiting any patents that are issued from our pending applications. Numerous patents and Permitspending patent applications owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might have priority over our patent applications and could subject our patent applications to invalidation. Finally, in addition to those who may claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.
We have limited insurance coverage, which could subject us to significant costs and business disruption.
The activitiesWe have limited liability insurance coverage for our products and business operations. We may not be able to secure additional product liability insurance coverage on acceptable terms or at reasonable costs when needed. A successful liability claim against us due to injuries or damages suffered by our users could materially and adversely affect our financial conditions, results of operations and reputation. Even if unsuccessful, such a claim could cause us adverse publicity, require substantial costs to defend, and divert the Companytime and attention of our management. In addition, we do not have any business disruption insurance. Any business disruption could result in substantial cost to us and diversion of our resources. Furthermore, the United States, Canada or any other jurisdiction relevant to our business may impose requirements for maintaining certain minimum liability or other insurance relating to the operation of UASs. Such insurance policies could be costly, which would reduce the demand for our UASs. Alternatively, certain insurance products that would be desirable to UAS operators may not be commercially available, which would increase the risks of operating our UASs and also reduce the demand for them.
15
We are subject to various government approvals, variousanti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, governing prospecting, development, land resumptions, production taxes, labour standards and occupational health, toxic substancesnoncompliance with such laws can subject us to administrative, civil and other matters. Although the Company believes that its activities are currently carried out in accordance withcriminal fines and penalties, collateral consequences, remedial measures and legal expenses, all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner,of which could limit or curtail production or development. Amendmentsadversely affect our business, results of operations, financial condition and reputation.
We are subject to currentanti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations governingin various jurisdictions in which we conduct our business or sell our products, including the Canadian Corruption of Foreign Public Officials Act, the U.S. Foreign Corrupt Practices Act, or the FCPA, and other anti-corruption laws and regulations. These anti-corruption laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a "foreign official" for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and activities,reputation.
We have direct or more stringent implementation thereof,indirect interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary course of business. We have also entered into joint ventures and/or other business partnerships with government agencies and state-owned or affiliated entities. These interactions subject us to an increased level of compliance-related concerns. We are in the process of implementing policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could have a material adverse impact on the business, operations and financial performance of the Company. Further, the licenses and permits issuedengage in respect of its projectsimproper conduct for which we may be held responsible.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to conditionswhistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which if not satisfied, may lead tocould materially and adversely affect our business, results of operations, financial condition and reputation. In addition, changes in economic sanctions laws in the revocation of such licenses.future could adversely impact our business and investments in our shares.
Conflicts of interest may arise as a result of our directors and officers being directors and officers of other technology companies.
Certain of the directors and officers of the Company will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies and, as a result of these and other activities, such directors and officers of the Company may become subject to conflicts of interest. The British Columbia Business Corporations Act ("BCBCA") provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director must disclose his interest in such contract or agreement and refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA. We cannot assure you that such conflicts will resolve in our favor.
We have granted, and may continue to grant, stock options under our stock option plan, which may result in increased share-based compensation expenses.
We adopted a stock option plan on in 2014 (the "Option Plan"), to incentivize our employees, directors and consultants and align their interests with ours. We recognize expenses in our consolidated statement of loss in accordance with IFRS. Under the Option Plan, we are authorized to grant stock options to purchase up to 10% of our Company's issued and outstanding common shares. As of November 30, 2020, there were 2,950,000 stock options granted and outstanding. As of November 30, 2020, our unrecognized share-based compensation expenses relating to unvested awards, amounted to $479,107.
16
We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based awards to employees in the future. However, the number of shares reserved for issuance under our share incentive plan may not be sufficient to recruit new employees and to compensate existing employees. Furthermore, prospective candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. Thus, our ability to attract or retain highly skilled employees may be adversely affected by declines in the perceived value of our equity or equity awards. To attract and retain qualified employees, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.
Litigation
The Company and/or its directors may be subject to a variety of civil or other legal proceedings, with or without merit. We may be the subject of complaints or litigation from customers, employees or other third parties for various actions. The damages sought against us in some of these litigation proceedings could be substantial. We cannot assure you that we will always have meritorious defenses to the plaintiffs' claims. While the ultimate effect of these legal actions cannot be predicted with certainty, our reputation and the result of operations could be negatively impacted. The proceedings we may be involved in from time to time could incur substantial judgments, fines, legal fees or other costs and have a material adverse effect on our business, financial condition, results of operations and cash flows.
As certain of the Company's officers have other outside business activities and, thus, may not be in a position to devote all of their professional time to the Company, the Company's operations may be sporadic, which may result in periodic interruptions or suspensions.
Epidemics and pandemics, such as the COVID-19 pandemic, could materially disrupt the Company's business and have a negative impact on the Company's financial results and financial condition
We are vulnerable to the general economic effects of epidemics, pandemics and other public health crises, such as the COVID-19 pandemic. Due to the recent outbreak of COVID-19, there has been a substantial curtailment of travel and business activities, which is causing significant disruptions to the global economy. The extent to which COVID-19 impacts our results will depend primarily on future developments, which are highly uncertain and cannot be predicted with confidence, including the severity and duration of the crisis, the speed and effectiveness of vaccine and treatment developments and deployment, potential mutations of COVID-19, and the impact of actions taken and that will be taken to contain COVID-19 or treat its impact, among others. For example, if COVID-19 continues to spread, we may need to limit operations or implement additional restrictions as a result of widespread government restrictions.
We have been affected in a number of ways, such as the way in which we deal with our researchers and their activities, and planning for and carrying out clinical trials, all of which have experienced some short-term disruption and may suffer long-term changes in the way we will do business. Actions such as government lock downs have slowed or, in some cases, temporarily stopped research and development activities and clinical trials. Various safety protocols for personal interactions may hamper research and development activities. To date, since we are mostly focused on the activities related to research and development we have not experienced the larger adverse economics of a slowed economy; however, we do expect that timelines for our research and development, clinical trials, regulatory approvals and bringing our products to market will cause our operational costs to be greater than anticipated in this current fiscal year and going forward. The financial effect will be that our development expenses will increase and we will have to obtain additional capital funding. Any required additional equity funding will be dilutive to the equity of our investors and debt financing will have restrictive covenants that could adversely affect our business plans and operational objectives. Any further funding that we may need may not be available or even if available it may not be on terms that are acceptable to the Company.
Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and operational challenges faced by our customers. Continued outbreaks of COVID-19 could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn or a global recession that could cause significant volatility or decline in the trading price of our securities, affect our ability to execute strategic business activities, affect demand for our products and likely impact our operating results. These may further limit or restrict our ability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken demand, increase competition, cause us to reduce our capital spend further, or otherwise disrupt our business.
17
Risks Relating to the Common Shares
If our company's business is unsuccessful, our shareholders may lose their entire investment
Although shareholders will not be bound by or be personally liable for the our company's expenses, liabilities or obligations beyond their total original capital contributions, should our company suffer a deficiency in funds with which to meet our obligations, the shareholders as a whole may lose their entire investment in our company.
The price of our Common Sharescommon shares has been and may continue to be volatile.
The trading price for our common stock on the Canadian Securities Exchange (CSE) (where our stock has traded since March 10, 2016) has been and is likely to continue to be highly volatile. Although our common shares are currently quoted on the OTC Pink tier of theOTCQB electronic quotation servicefacility operated by OTC Markets Group, there is no active market for our common shares, and no significant U.S. market may develop. fIf such a market develops, prices on that market are also likely to be highly volatile. As a result, an investor may find it difficult to sell, or to obtain accurate quotations of the price of our common shares.
Factors that could adversely affect the price of our Common Shares include:
As a "foreign private issuer", our company is exempt from certain sections of the Securities Exchange Act of 1934 which results in shareholders having less complete and timely data than if the company were a domestic U.S. issuer.
AsBecause we are a "foreignforeign private issuer" as defined under the U.S. securities laws,Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
• the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
• the sections of the Securities Exchange Act, including Section 14, regulating the solicitation of 1934.proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
• the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
• the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In particular,addition, we publish our material events through press releases, distributed pursuant to the rules and regulations of the Canadian Securities Exchange. Press releases relating to material events will also be furnished to the SEC on Form 6-K. However, the information we are exempt from Section 14 proxy rulesrequired to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information which are applicablewould be made available to you were you investing in a U.S. domestic U.S. issuers. The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K has typically been more limited than the submissions required of U.S. issuers and results in shareholders having less complete and timely data, including, among others, with respect to disclosure of: (i) personal and corporate relationships and age of directors and officers; (ii) material legal proceedings involving the Company, affiliates of the Company, and directors, officers promoters and control persons; (iii) the identity of principal shareholders and certain significant employees; (iv) related party transactions; (v) audit fees and change of auditors; (vi) voting policies and procedures; (vii) executive compensation; and (viii) composition of the compensation committee. issuer.
In addition, due to the company's status as a foreign private issuer, the officers, directors and principal shareholders of our company are exempt from the short-swing insider disclosure and profit recovery provisions of Section 16 of the Securities Exchange Act of 1934.Act. Therefore, these officers, directors and principal shareholders are exempt from short-swing profits which apply to insiders of U.S. issuers. The foregoing exemption results in shareholders having less data in this regard than is available with respect to U.S. issuers.
19
We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.
The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.
We will incur increased costs after we cease to qualify as an "emerging growth company."
We are a public company and continue to incur significant legal, accounting and other expenses and costs associated with our public company reporting obligations. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting.
After we are no longer an "emerging growth company," we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if our company issues additional shares or raise funds through the sale of equity securities.
Our constating documents currently authorize the issuance of an unlimited number of Common Sharescommon shares without par value. If we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in control of our company.
Our company does not intend to pay dividends on any investment in our common shares.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the market price of our common shares. This may never happen, and investors may lose all of their investment in our company.
The risks associated with penny stock classification could affect the marketability of our common shares and shareholders could find it difficult to sell their shares.
20
Our common shares are subject to "penny stock" rules as defined in the Securities and Exchange Act of 1934 Rule 3a51-1. The SEC adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common Sharesshares in the United States and shareholders may find it more difficult to sell their shares.
Risks Relating to Management
We depend on key personnel to operate our business effectively in the competitive security and threat detection technology industry.
TheOur success of the Company will be largely dependentdepends upon on the performance of the directors and officers and theour continuing ability to attract and retain keyhighly qualified personnel. The loss of the services of these persons, or the failure to attract highly qualified personnel in the future, may have a material adverse effect on the Company'sour business and prospects. The Company willMoreover, our competitors may hire and gain access to the expertise of our former employees or our former employees may compete with numerous other companies for the recruitment and retention of qualified employees and contractors.us. There is no assurance that we will be successful in attracting, integrating, motivating and retaining key personnel or that former employees will not compete with in the Company can maintain the service of its directorsfuture. If we are unable to retain our key personnel and officers or otherattract additional qualified personnel required to operate its business. Failure to do so could have a material adverse effect on the Companyas and its prospects.when needed, our business may be adversely affected.
Since certain of our officers and directors are located in Canada, it may be difficult to enforce any United States judgment for claims brought against such officers and directors.
Our company is organized under the laws of the Province of British Columbia, Canada and certain of our officers and directors are residents of Canada. While a cross border treaty exists between the United States and Canada relating to the enforcement of foreign judgments, the enforcement process is cumbersome and in some cases has prevented the enforcement of judgments. As a result, while actions may be brought in Canada, it may be impossible to affect service of process within the United States on the company's officers and directors or to enforce against these persons any judgments in civil and commercial matters, including judgments under United States federal securities laws. In addition, a Canadian court may not permit an original action in Canada or enforce in Canada a judgment of a United States court based on civil liability provisions of United States federal securities laws.
Our management is free to devote time to other ventures and shareholders may not agree with their allocation of time.
Our officers and directors devote a substantial amount of their time to the management and operation of the company's business. Management is not however, contractually required to manage or direct the company as their sole and exclusive function and they may have other business interests and engage in other activities in addition to those relating to the company. This includes rendering advice or services of any kind to and creating or managing other businesses, including other businesses in the fiber optic industry. Our officers and directors are required by law to act honestly and in good faith with a view to the best interests of the company and to disclose any interests, which they may have in any project or opportunity of the company. If a conflict of interest arises, at a meeting of the board of directors of our company, any director with a conflict is required to disclose their interest in the matter and to abstain from voting on such matter.
21
ITEM 4. | INFORMATION ON THE COMPANY |
A. | History and Development of the Company |
The Company was incorporated as Alexandra Capital Corp. under the Business Corporations Act of British Columbia on October 17, 2011. The head office, principal address and registered and records office of the Company are located at 300Suite 206 - 2015 Burrard Street,1045 West 8th Avenue, Vancouver, B.C., V6J 3H4.British Columbia V6H 1C3. We have one wholly owned subsidiary, Plymouth Rock Technologies Inc., a Delaware corporation ("Plymouth Rock USA"USA").
Following incorporation,Former listing on the TSX Venture Exchange
On May 2, 2012, the Company was listed on the TSX Venture Exchange as a capital pool company ("CPC") as defined by Policy 2.4 of the TSX Venture Exchange (the "Exchange")(CPC). On August 11, 2014 the Company completed its qualifying transaction ("Qualifying Transaction") with arm's length vendor (the "Vendor") Eastland Management Limited, ("Eastland") and on August 13, 2014 commenced tradingwhereby the Company was granted an option to acquire a 100% interest in Eastland's Southern Belle exploration project.
Transition to listing on the Canadian Stock Exchange as a Tier 2 Mining Issuer (TSXV: AXC).
On March 7,10, 2016, the Company announced that it received final approval to list its common shareswas listed on the Canadian Securities Exchange (the "CSE""CSE") and voluntarily delisted its common shares from the TSXV. The Company's common shares commenced trading on the CSE at market open on March 10, 2016TSX Venture Exchange.
Business acquisition of Plymouth Rock USA and were delisted from the TSXV effective March 9, 2016. The Company's common shares were traded under symbol "AXC" on the CSE.name change
On October 31, 2018, the Company completed its business acquisition of Plymouth Rock USA and changed its name from Alexandra Capital Corp. to Plymouth Rock Technologies Inc. with newand changed its trading symbol "PRT" on November 1, 2018the CSE to "PRT" (See "Business Acquisition" section of this report).
Commencement of trading on the Frankfurt Stock Exchange in Germany
On January 8, 2019, the Company's common shares commenced trading on the Frankfurt Stock Exchange in Germany under the Symbol: 4XA, WKN# - A2N8RH.
Depositary Trust Company eligibility
On February 12, 2019, the Company's common shares became eligible for electronic clearing and settlement through the Depository Trust Company ("DTC"DTC") in the United States ("US"US"). DTC is a subsidiary of the Depository Trust & Clearing Corporation, a U.S. company that manages the electronic clearing and settlement of publicly traded companies. DTC eligibility is expected to simplify the process of trading and enhance liquidity of the Company's common shares.
Commencement of trading on the facilities of the OTCQB
Effective August 27, 2019, the Company's common shares commenced trading on the OTC Markets Group ("OTCQB"OTCQB") under the symbol: PLRTF.
22
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. Our website address is www.plyrotech.com.
Historical Development of our Business since Incorporation
Following our incorporation we became listed as a Capital Pool Company ("CPC)Qualifying Transaction on the TSX Venture Exchange (the "Exchange") on May 2, 2012. A CPC isand Status as a corporation formed by individuals acceptable to the Exchange with a history of successful involvement with listed corporations which have completed an offering of securities as an unallocated or uncommitted pool of investment funds to be used primarily to investigate business opportunities for acquisition by the CPC. The proposed acquisition must meet Exchange criteria for a "Qualifying Transaction" ("QT") acceptable to the Exchange.
On February 17, 2014 we entered into an Option Agreement, with Qualitas Holdings Corp. whereby we would acquire an option to earn an undivided 100% interest in and to the eight (8) mineral claims comprising the Southern Bell ("SB") Project, located approximately 25 kilometers west of Merritt, British Columbia totaling 3,517 hectares. The Option Agreement was amended on May 2, 2014 to substitute Eastland Management Ltd. for Qualitas Holdings Corp. as optionor of the claims.Mineral Resource Issuer
Concurrent with the completion of the Qualifying Transaction in 2014, when we arrangedwere listed on the TSX Venture Exchange, we completed a non-brokered private placement (the "Offering") of 2,400,000 flow-through units at a price of $0.05 per unit for aggregate gross proceeds of $120,000,$120,000. Each flow-through unit under the private placement consistsconsisted of one flow-through common share and one common share purchase warrant entitling the holder to acquire one additional non flow-through common share of the corporationCompany at an exercise price of $0.10 within 60 months of closing. A finder's fee of 240,000 non flow-through units with a deemed aggregate fair market value of $12,000 was paid in connection with the private placement.
Mineral Resource Property Expenditures as a CSE Listed Company
As at November 30, 2017, the Company, then classified as a mineral resource issuer, had incurred acquisition and exploration expenditures of $171,012 (November 30, 2016 - $165,012) on the Southern Bell Property. During the year ended November 30, 2017, we issued 300,000 common shares valued at $6,000 for the acquisition of exploration and evaluation assets. The Company fulfilled its obligation to earn the 100% interest in the Southern Belle Property with the share issuance.
Preliminary Steps Concerning Proposed Entry into the Digital Currency Business as a CSE Listed Company
On November 10, 2017, the Company entered into a non-binding Letter of Intent with WMC ApS ("WMC"WMC"), a private Danish company based in Copenhagen which has developed and operates a platform for trading digital assets including digital currencies. The LOI provided for the grant by WMC to the Company of an exclusive license to use, market, sub-license, sell and distribute the technology in Canada and the United States of America.
On November 20, 2017 Patrick Morris resigned from our board of directors. His resignation did not result from any disagreement with the Company regarding our operations, policies, practices or otherwise. Concurrently, Vivian Katsuris, our then Chief Financial Officer, was appointed to fill the ensuing vacancy on our board of directors.
On December 1, 2017, the Company completed a non-brokered private placement of 5,500,000 common shares at a price of $0.10 per share, for gross proceeds of $550,000.00. The Company also issued 490,500 common shares in respect of finder's fees payable in relation to the private placement.
Also on December 1, 2017, the Company entered into aan additional non-binding letter of intent with WMC ApS ("WMC"), a private Danish company based in Copenhagen which brokers and develops payment processes in crypto currency transactions.WMC. The agreement replaced the non-binding letter of intent between the parties dated November 10, 2017. Pursuant to the new Letter of Intent, the Company, WMC and its shareholders proposed to enter into a definitive agreement whereby the Company would acquire all of the issued and outstanding common shares of WMC in consideration for the issuance by the Company of 26,000,000 common shares at closing, and an additional 15,000,000 common shares on the 13th month after closing, subject to WMC achieving an average of $5,000,000.00 in gross monthly transaction volume over the preceding 12 months. Closing of the transaction was subject to several conditions precedent, including the completion of a definitive agreement and achievement of financing for gross proceeds of at least $3,000,000.00, among others. ONOn April 10, 2018 the Company announced its intention not to pursue the transaction with WMC.
On December 22, 2017 Jeremy Poirier was appointed as a directorSale of our board of directors.
On January 15, 2018 Blake Olafson resigned as president, chief executive officer, and as a director of the Company, and Vivian Katsuris resigned as Chief Financial Officer. The resignations did not result from any disagreement with the Company regarding our operations, policies, practices or otherwise. Concurrently, our board of directors appointed Vivian Katsuris as President and Chief Executive Officer, and Zara Kanji as Chief Financial Officer. Ms. Katsuris also continues as a director of the Company.
Recent Developments and Acquisition of Plymouth Rock USAMineral Resource Property
During the year ended November 30, 2018, the Company sold its entire interest in the SB Property for a cash payment of $15,000, incurring a loss on the disposition of exploration and evaluation assets of $156,012. With the business acquisition and the sale of the mineral interest of the SB Property, the Company no longer pursues the exploration and development of mineral properties.
On April 10, 2018 the23
Entry into Defense Technology Industry by Acquisition of Plymouth Rock USA as a CSE Listed Company entered into
Pursuant to a non-binding letter of intent on April 10, 2018 and a definitive agreement on June 21, 2018 with Plymouth Rock Technologies Inc. ("PRT"). PRT is a private Delaware corporation that is developing a system using Wi-Fi radar techniques for threat detection screening in Wi-Fi enabled zones in buildings and places, like airports, shopping malls, schools and sports venues. PRT is also developing a millimeter wave antenna with military and civilian applications which can be drone-mounted to detect weapons such as guns, suicide vests, and explosives in mass gatherings. PRT is also working on other threat detection systems and technologies that can be integrated into existing screening environments. Pursuant to the Letter of Intent, the Company, PRT and its shareholders propose to enter into a definitive agreement whereby the Company would acquire all of the issued and outstanding common shares of PRT in consideration for the issuance by the Company of 3,000,000 common shares of the Company at closing. All common shares issued as consideration for the PRT shares would be subject to escrow and resale restrictions under Canadian securities law and the policies of the Canadian Securities Exchange.
On June 21, 2018, the Company entered into a definitive agreement with Plymouth Rock USA. Pursuant to the agreement,USA, the Company will acquire all of the issued and outstanding common shares of Plymouth Rock USA in consideration of the issuance of 3,000,000 common shares of the Company. All shares issued as consideration for the Plymouth Rock USA shares will be subject toAs a resale restriction periodresult of four months from the closing of the transaction and will bear a restrictive legend to this effect.
On October 30, 2018, the Company received shareholder approval regarding our proposed change of business, change of name and symbol with the acquisition of Plymouth Rock USA. ForUSA, the acquisition,Company's principal business activity, through its subsidiary, was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company issued 3,000,000 common sharesfocuses on detection methods with and without the need for a checkpoint of the Company to the four shareholders of Plymouth Rock USA. The Company also issued 231,250 common shares of the Company as a finder's fee. The company changed its name from Alexandra Capital Corp. to Plymouth Rock Technologies Inc. with new trading symbol "PRT" on November 1, 2018.
On February 19, 2019, the Company signed a memorandum of understanding ("MOU") with Abicom International Ltd. ("Abicom International"), a Qualcomm authorized design partner, to assist in the continued development of the Plymouth Rock Wi-Ti (Wireless Threat Indication) system and prototype. Wi-Ti is a passive detection system that uses artificial-intelligence ("AI") to analyze the radio waves within an area. The system uses radar-based algorithms to filter common items such as cell phones and general pocket items from concealed threats items such as assault weaponry and improvised explosive devices ("IED'S").
On March 12, 2019, the Company announced that Manchester Metropolitan University assigned the Millimeter Wave, Shoe Scanning technology IP to the Company for the consideration of $30,000. The Millimeter Wave Shoe Scanner is a floor-mounted 3D imaging system that uses harmless millimeter wave imaging techniques to inspect footwear. The scanner is then able to identify if the footwear has been altered orsuspect who is being used to transport concealed items, such as weaponry, substances, compounds, or electronic items.
On March 12, 2019, Manchester Metropolitan University assignedscreened. The Company's planned products encompass the very latest radar, imaging, and on October 8, 2019, transferredUnmanned Aerial System ("UAS") technologies for quickly detecting, locating and identifying the Millimeter Wave, Shoe Scanning technology IP to the Companypresence of threats and for the consideration of $30,000. The Millimeter Wave Shoe Scanner is a floor-mounted 3D imaging system that uses harmless millimeter wave imaging techniques to inspect footwear. The scanner is then able to identify if the footwear has been altered or is being used to transport concealed items, such as weaponry, substances, compounds, or electronic items. As of October 8, 2019, the IPsearch and patent transferrescue missions for this technology was already completed.law enforcement.
On April 9, 2019, the Company was accepted as a member of the USA National Safe Skies Alliance, Inc, which is a non-profit organization that works with airports, government, and industry to maintain a safe and effective aviation security system.
On April 25, 2019, the Company was accepted as a member of the Canadian Association of Defense and Security Industries, which is dedicated to scientific, engineering, industrial, and management preparedness for the common defense of Canada.
On October 15, 2019, the Company announced the launch of its new product under development, the PRT-X1 which is a next level Unmanned Aerial System (UAS) drone designed with the direct input of law enforcement, intelligence agencies, military, and rescue services to address the global requirement for a multi-role, state-of-the-art aerial platform (See DEVELOPING TECHNOLOGIES).
On October 16, 2019, the Company entered into a binding agreement with Aerowave Corporation ("Aerowave") whereby the Company significantly acquired the finished goods and inventory, for aas consideration equal tothe Company will issue 50,000 shares to the principals of Plymouth RockAerowave.
During the quarter ended February 29, 2020, the Company designed, fabricated, and delivered millimeter-wave sensor components to NASA's Jet Propulsion Laboratory (JPL) and The National Institute of Standards and Technology (NIST).
During the quarter ended May 31, 2020, the Company was awarded a Gold Stevie Award from The 18th Annual American Business Awards® under the category of PR: Technology; and a Silver ADDY Award from The American Advertising Federation for its corporate video, which premiered to investors and global audiences in 2019.
During the quarter ended August 31, 2020, the UK Patent Office issued patent PM333755GB that covers the utilization of millimeter wave (MMW) technologies for fast, contactless screening of passengers and individuals in highly secure environments.
On September 17, 2020 the Company executed a Letter of Intent (LOI) with R3 Technologies Inc. times $0.46 per share which is("R3T") to collaborate on the average closing price on OTCQB market over the twenty days priorreadiness, alternative use and sale of stand-off threat detection solutions to the closing dateUS and international markets. R3T specializes in microwave radar detection systems, providing scientific and engineering capabilities to USA government laboratories and the US Department of Defense.
On October 29, 2020 the Company received a "Notice of Allowance" by the US Patent and Trademark Office of patent application No. 16/560,480 for the "Method and System for Determining Dielectric Properties of an Object". The invention uses millimeter wave ("MMW") shoe-scanning technologies for fast, contactless screening of passengers' footwear in highly secure environments such as airports, prisons, border points of entry and government buildings
During the quarter ended November 30, 2020, the Company agreed to collaborate on the strategic market placement of products and services with Qatar based STA QSTP LLC focusing on state security utilizing UAVs, sensors, and detectors from the Company.
On February 26, 2021, the Company signed a non-binding Letter of Intent (the "LOI") to acquire Tetra Drones Ltd. ("Tetra"), a company with which the Company has closely collaborated on sensor technology. Pursuant to the LOI, the Company will acquire Tetra for the sum of £350,000 GBP, payable on an installment basis. As a result of the sale.acquisition, the Company will own all outstanding shares of Tetra and will assume Tetra's existing liabilities. The principal owner of Tetra will become part of the Company's management and shall be paid a monthly salary along with bonus shares or other equity instruments at the discretion of the board. All expenses related to the transaction will be paid by the Company. The Company is currently in the process of seeking counsel regarding attaining the necessary capital through equity issuance.
24
B. | Business Overview |
We are a security and threat detection technology company listed on the Canadian Securities Exchange, trading under the symbol "PRT". Our common shares are also quoted under the symbol "PLRTF " on the OTCQB tier of the OTC Markets electronic quotation system, however there is no active market for our stock on the OTC Markets.company. Our current activities are focused on the development of security screening and threat detection technology solutions using radar imaging and signal processing technology. We are in the development phase and have not achieved revenue.
Our Technologies
The Company's core technologies include: (1) A Millimeter-wave Remote Imaginga wall or portal mounted sensor system from Airborne Dronethat will detect high-risk concealed threat items over an extended coverage area ("MiRIAD"); (2) A compact millimeter-wave radar system for scanning shoe's ("Shoe-Scanner"); and (3) Microwave radar techniques for threat detection screening in Wi-Fi enabled zones in buildings and places, such as airports, shopping malls, schools and sports venues ("Wi-Ti" - Wireless Threat Indication). In addition, the Company has announced on October 15, 2019 the launch; (2) a compact microwave radar system for scanning shoes ("Shoe Scanner"); (3) Millimeter Remote Imaging from Airborne Drone ("MiRIAD"); (4) X1 Multirotor UAS and XV Fixed-Wing VTOL UAS and (5) A compact modular radar utilized for a variety of its newest technology, the "PRT-X1", a next level Unmanned Aerial System (UAS) drone.applications, from aircraft to weapon detection ("CODA").
Wi-Ti1.Wi-Ti
On February 19, 2019, the Company signed a memorandum of understanding ("MOU") with Abicom International Ltd. ("Abicom International"International"), a Qualcomm authorized design partner, to assist in the continued development of the Plymouth Rock Wi-Ti (Wireless Threat Indication) system and prototype. Wi-Ti is a passive detection system that uses artificial-intelligence ("AI")(AI) to analyze the radio waves within an area. The system uses radar-based algorithms to filter common items such as cell phones and general pocket items from concealed threats items such as assault weaponry and improvised explosive devices ("IED'S")(IEDs).
The past three years have seen significant advances in the monitoring of Wi-Fi radio wave analysis. This includes Wi-Fi used to track and trace the movements of people in real time through walls. Similar techniques have used Wi-Fi radio waves to detect subtle changes in breathing and heart rates. The Plymouth Rock Wi-Ti technology advances that analysis to concealed threat detection. Unlike other emerging screening technologies Wi-Ti can be used in airport concourse areas, stadiums, and open spaces at stand-off distances. Our unique radar imaging and signal processing technology allows for none intrusivenon-intrusive screening of crowds in real time. Further, with Wi-Ti, there are no radio emissions, so this method of detection can be freely used in any Wi-Fi enabled environment without special license or regulatory approval.
Abicom International has worked with many prominent security and technology companies, including Bosch Security, Siemens Transportation, QinetiQ, Harris Systems and Northern Light Technologies. "Abicom International's status as a Qualcomm design center is an assurance of excellence that is granted to less than eleven companies globally". The partnership between Plymouth Rock and Abicom International is about the drive to continuously expand the realm of possibilities for Wi-Fi based technologies.
Millimeter Wave,2. Shoe Scanning TechnologyScanner - SS1 Footwear Imaging Radar
On March 12, 2019, the Company announced that Manchester Metropolitan University ("MMU") assigned the Millimeter Wave, Shoe Scanning technology IP to the Company for the consideration of $30,000. The Millimeter Wave Shoe Scanner is a floor-mounted 3D imaging system that uses harmless millimeter wave imaging techniques to inspect footwear. The scanner is then able to identify if the footwear has been altered or is being used to transport concealed items, such as weaponry, substances, compounds, or electronic items.
The Millimeter Wave Shoe Scanner allows for the rapid screening of footwear without necessitating removal of shoes. With a screening time of 30 PPM (Persons/Minute) the Shoe Scanner is ideal for airport terminals, prison/prisons/correctional facilities, public events and other high throughput, screening applications. This safe, proven technology is already sanctioned by US FDA, Health Canada, and EU Airport legislation.
MIRIADMIRIAD25
On October 8, 2019, the transfer of the intellectual property, including the U.K. patent, for the Shoe Scanner from MMU to the Company was completed.
On December 3, 2019, the Company announced the launch of SS1 Shoe Scanner. The Company also filed on September 4, 2019 the US Patent application No. 16/560,480 for its "Ellipsoidal" scanning technique under the title "Method and System for Determining Dielectric Properties of an Object." The scanning technique will be used in the SS1 Shoe-Scanner. In October 2020, we received a Notice of Allowance by the US Patent and Trademark Office for the Ellipsoidal scanning technique.
On December 17, 2019, the Company announced the SS-1 produced successful 3D images of potential threats of other concealments. In collaboration with the University of Chichester and Manchester Metropolitan University, these results have been published in a technical article "Thermography at Millimeter Wavelengths for Security Inspection of Footwear" in the online journal, Progress in Electromagnetics Research (PIER).
On or about September 7, 2020, the Company applied to the Transport Security Admission (TSA) Innovation Task Force (ITF) to have the SS1 Shoe-Scanner evaluated for use at security and identification checkpoints. On November 19, 2020, the SS1 Shoe-Scanner was accepted into the TSA ITF evaluation process.
3. MiRIAD (Millimeter-wave Remote Imaging from Airborne Drone)
MiRIAD is a compact, RF sensor package that is specifically designed for use on UAVs (Unmanned Aerial Vehicles). The basic sensor format will be designed to support a variety of missions but will be initially optimized to detect weaponry or suicide devices concealed on a person in an outdoor environment using passive millimeter wave radar.
MIRIADMiRIAD uses a unique ultra-lightweight antenna to capture radar images of target subjects within a wide field of view. The captured radar image data, along with high resolution video is then backhauled wirelessly over a high capacityhigh-capacity data link to a central processing center for data analysis. Using algorithm based digital signal processing techniques the radar signature is analyzed and overlaid onto the video imagery to display a real time image of the video capture that includes an indication of any concealed threat item. The technology uses both Artificial Intelligence (AI) and Augmented Reality (AR) techniques to positively Identifyidentify a threat and its exact location on subjects within its field of view. Multiple MIRIAD equipped UAV's can be supported by a single data processing facility to cover large areas.
MIRIAD'sMiRIAD's primary intended applications are outdoor public event crowd screening, special police and security service operations, and forward operating base protection,protection. Other planned applications include remote infrastructure inspection and analysis; oil and gas pipeline inspection, and search and rescue (land and sea).
On August 31, 2020, the Company announced that it has produced definitive images of infrastructure corrosion utilizing its prototype MiRIAD Sensor system. This technology is currently under development and the Company plans to begin testing and transition into production in mid 2021.
4. PRT-X1, UpdatesXV and XV-S
On October 15, 2019, the company announced the launch of its new product under development, the PRT-X1 which is a search and rescue grade Unmanned Aerial System (UAS) drone designed with the direct input of law enforcement, intelligence agencies, military, and rescue services to address the global requirement for a multi-role, state-of-the-art aerial platform. The production PRT-X1 has been unveiled live atAs of the 2019 International Security Conference (ISC), at the Javits Center in New York City onend of November 20-21, 2019. In 2020, the PRT-X1 UASwas starting its low-rate demonstration phase. Currently, the Company procuring materials to begin production of additional demonstration units. X1 systems will be submittedmanufactured for various applications and targeted customers.
On May 6, 2020, the Company announced that it has received permission to operate drone platform in UK airspace, for Commercial Operations (PfCO) from the Civil Aviation Authority (CAA) to operate Small Unmanned Aircraft (SUA) / Small Unmanned Surveillance Aircraft (SUSA). The Company can now utilize its X1 Platform for commercial operations, allowing our operators to demonstrate threat detection and surveillance in civilian airspace to both clients and potential partners. This also enables the Company to offer technical reconnaissance and non-destructive testing services for both civil and military applications.
26
On May 14, 2020, the Company announced that the X1 Platform will be used in a series airborne tests for the UK National Health Service (NHS) for emergency apparatus delivery. This will involve several test scenarios, that if successful will lead to on-scene delivery of defibrillators and other critical trauma assistance technologies.
On June 10, 2020, the Company announced that it has signed a Letter of Intent with SDS Group Australia Pty Ltd., a leading provider of best of breed products and equipment to the U.S Army's Unique Mission Cell Program, TSOA,Australian security and defense securities, to position X1 for war-fighter evaluations.procurement-focused evaluations following initial consultation with members of the Australian Government. The focus of the partnership is primarily centered around the need for the early detection and identification of remote wildfires.
During the quarter ended August 31, 2020, the Company began initial Low Rate Initial Production (LRIP) of its X1 platform for test equipment, with integrated command and control modules as standard. As at this date, the X1 is beyond the prototype stage, and is being built for testing in various scenarios with interested parties.
On July 16, 2020, the Company began a strategic alliance with Hummingbird Drones Fire AI for wildfire analysis from the Company's X1 and XV platforms, to get analytics to the fire fighters as close to real time as possible.
On August 25, 2020, the Company announced that it has signed a Re-seller and Purchase Agreement with Michigan-based Trendset Communications Group, a leading technology provider to the security, telecommunications, and technology sector.
On February 3, 2021, the Company announced the addition of MediMod to its X1 and XV UAV payload systems. MediMod is an active insulated refrigerated storage module that will have multiple medical uses and advantages, including assisting with the immediate need for rapid deployment of COVID-19 vaccine transportation to remote sites or between medical facilities as part of multiple national campaigns for mass vaccination. The transportation module will be dual-use and can be set for warm or cool state for the transportation of blood, human transplant organs and various vaccines across cities and remote destinations.
On February 24, 2021, the Company announced the launch of XV-S, a fixed-wing UAS platform with the added capability of vertical take-off and landing (VTOL). This capability removes the requirement for a large runway or expensive launch catapult and recovery nets, which are usually required by most fixed-wing drones.
5. CODA - Cognitive Object Detection Apparatus
CODA is a uniquely designed, ultra-compact radar device that can be utilized for a variety of applications across many industries, covering everything from traditional radar for drone or aircraft detection, to low-power stand-off weapon detection. The CODA system is a production status product - not a prototype and is the size of an electronic tablet, uses off the shelf high-speed processors and can be fitted to or inside a wall. It uses FCC allocated detection frequencies and has been demonstrated in several programs in the United States funded under the NATO Science for Peace and Security Program.
The CODA system has also been through rigorous testing by the US Army Night Vision and Electronic sensors directorate (NVESD) under the Adaptive Red Team / Technical Support and Operational Analysis (ART/TSOA) activity.
On September 17, 2020, the Company announced that it has executed a Letter of Intent with R3 Technologies Inc. to collaborate to bring CODA-1 to market. It is expected that the CODA-1 will commercially launch in the second quarter of 2021.
27
Sources and Availability of Raw Materials
We do not require or anticipate requiring any uncommon raw materials for manufacturing of our planned products. Our planned products will rely on common electronic components and materials which are not subject to significant price volatility. ,
Patents and Licenses; Industrial Commercial and Financial Contracts; and New Manufacturing Processes
In conducting our business operations, we are dependent on certain proprietary or licensed technology, designs, and other intellectual property. We currently hold the United Kingdom patent for the Millimeter Wave, Shoe Scanning technology for a term of 15 years. The patent number is GB2516410.
In October 2020, we received a Notice of Allowance by US Patent and Trademark Office of patent application No. 16/560,480 for the "Method and System for Determining Dielectric Properties of an Object" used for the Shoe Scanner. We have not obtained any other patents, patents applications or trademarks in connection with our products or planned products and have no plans to do so in the immediate future. We intend to protect our intellectual property primarily through a combination of trade secrets, license restrictions, and copyright.
Competition
We are a security and threat detection technology company. We compete with other technology companies for financing and for market share in our fields of specialization. . Many of the companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on the acquisition, development, and commercialization of technologies of merit,.merit. In addition, they may be able to afford more scientific or engineering expertise in the development of their technologies. This competition could result in competitors offering products of greater quality and interest to prospective investors who may finance additional development and commercialization. This competition could adversely impact on our ability to finance further product development and to achieve the financing necessary for us to develop our businessbusiness.
Compliance with Government Regulation
Our business is subject to laws and regulations governing the production, sale and use of surveillance, threat detection and security technology, including but not limited to regulation regarding public safety, personal privacy, public transportation, criminal law, consumer protection, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, environmental protection, and other matters. Legislation such as the Airport Security Federalization Act (United States), the Aviation and Transportation Security Act (United States) and the Aviation Security Act (Canada) and their respective associated regulations, and all other applicable Federal, State, Provincial and municipal laws. The testing, marketing, and sale of our current and future products may require permissions or permits from various governmental and nongovernmental authorities. There can be no assurance, however, that all permissions or permits will be obtainable or achievable on reasonable terms or that compliance with such laws and regulations would not have an adverse effect on the profitability of any product that we may develop or seek to market.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing the marketing, sale, or use of our products to be curtailed.
Amendments to current laws, regulations and permits governing the intended use of our technologies, or more stringent implementation thereof, could have a material adverse impact on our business and cause increases in capital expenditures or production costs, or require abandonment or delays in development of new products.
We are committed to complying with and are, to our knowledge, in compliance with, all governmental regulations applicable to our company and our planned products.
28
Research and Development Expenditures
The Company has acquired its technology and intellectual property through acquisition. We accordingly incurred $399,720$386,044 in research and development expenditures during the fiscal year ended November 30, 2019.2020.
Employees
Currently, we have two full time employees. Our directors and certain contracted individuals play an important role in the running of our company. We do not expect any material changes in the number of employees over the next 12 month period. We do and will continue to outsource contract employment as needed.
We engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with the development of our exploration programs.products.
C. | Organizational Structure |
The Company's subsidiary is as follows:
Entity | Country of Incorporation | Effective Economic Interest |
Plymouth Rock Technologies Inc. | USA | 100% |
Plymouth Rock USA was incorporated under the General Corporation Law of the State of Delaware on March 22, 2018.
D. | Property, Plants and Equipment |
Our company's operating office is located in an office space in Plymouth, Massachusetts. In November 2018, Plymouth Rock USA entered into a two-year lease agreement for leased premises in Plymouth, Massachusetts, commencing December 1, 2018 and endingended on November 30, 2020. The minimum base rent iswas US$2,917 per month for the period from December 1, 2018 to November 30, 2019 and US$3,005 per month from December 1, 2019 to November 30, 2020.
Effective December 1, 2020 the Company exercised its option to renew the lease for three additional years. After renewal, the minimum base rent is US$3,095 per month for the period from December 1, 2020 to November 30, 2021, US$3,188 per month from December 1, 2021 to November 30, 2022, and US$3,284 per month from December 1, 2022 to November 30, 2023.
We believe that our existing facilities are adequate to meet our needs for the foreseeable future.
Information Concerning the SB Project
On February 17, 2014, and further amended on May 2, 2014, the Company entered into an Option Agreement, with Eastland Management Ltd. whereby the Company acquired an option to earn an undivided 100% interest in and to the eight (8) mineral claims comprising the Southern Bell ("SB"SB") Property, located approximately 25 kilometers west of Merritt, British Columbia totaling 3,517 hectares. The Option Agreement was amended on May 2, 2014 to substitute Eastland Management Ltd. for Qualitas Holdings Corp. as the optionor of the claims.
On August 26, 2015, the Company and Eastland Management amended the Option Agreement so that on the first anniversary of Exchange approval (August 11, 2015) the Company must arrange for payment of $10,000 to Eastland Management in lieu of the original obligation to issue 200,000 common shares. All other aspects of the Option Agreement remain unchanged.
29
In order to maintain the Option in good standing and earn a 100% interest in the SB Property, the Company was required to incur exploration expenditures totaling $100,000 on or before August 11, 2015 (completed). The Company was also required to make cash payments to the vendors of the Option of $10,000 upon receipt of the Technical Report (paid), $15,000 at the time of Exchange approval (paid) and $10,000 on the first anniversary of Exchange approval (paid). Additionally, the Company had to issue 500,000 shares (200,000 upon Exchange approval (issued) and 300,000 on or before the second anniversary (issued).
During the year ended November 30, 2018, the Company sold its entire interest in the SB Property for a cash payment of $15,000, incurring a loss on the disposition of exploration and evaluation assets of $156,012. With the business acquisition and the sale of the mineral interest of the SB Property, the Company no longer pursues the exploration and development of mineral properties.
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
Not applicable.
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
|
|
The following discussion and analysis of our financial condition and results of operations for the fiscal year ended November 30, 20192020 should be read in conjunction with our financial statements and related notes included in this annual report in accordance with "Item 8 - Financial Information"). Our financial statements for the fiscal year ended November 30, 20192020 were prepared in accordance with IFRS and are expressed in Canadian Dollars.
A. | Operating Results |
Year Ended November 30, 20192020
During the year ended November 30, 2019,2020, the Company had a comprehensive loss of $4,320,563$2,904,690 compared to a comprehensive loss of $986,901$4,320,563 for the year ended November 30, 2018.2019. The increasedecrease in comprehensive losses were caused by the following:
30
B.Liquidity and Capital Resources
The Company's approach to managing its liquidity is to ensure that it has sufficient resources to meet its liabilities as they come due and have sufficient working capital to fund operations for the ensuing fiscal year. Financing of operations has been achieved solely by equity financing. The Company anticipates that it will require significant funds from either equity or debt financing for the development of its technologies and to support general administrative expenses.
As at November 30, 2019,2020, the Company had $727,526$79,919 in current assets (November 30, 20182019 - $2,811,971)$727,526) and $227,058$322,738 in current liabilities (November 30, 20182019 - $166,941)$227,058) for a working capitaldeficit position of $500,468$242,819 compared to a working capital position of $2,645,030$500,468 as at November 30, 2018.2019. Working capital decreased mostly due to lower cash balance at the end of the period due to use of cash in the Company's operating activities.
Current assets at November 30, 20192020 were represented by cash of $583,119$24,713 (November 30, 20182019 - $2,743,694)$583,119), accounts receivable of $1,488 (November$2,786. November 30, 20182019 - $Nil)$1,488), sales tax receivable of $12,310$4,317 (November 30, 20182019 - $10,986)$12,310), inventories of $19,695 (November 30, 2019 - $nil), prepaid expenses of $105,539$25,908 (November 30, 20182019 - $49,891)$105,539) and due from related parties of $25,070(November$2,500 (November 30, 20182019 - $7,400)$25,070). Current liabilities were comprised of $217,023$242,278 in accounts payable and accrued liabilities (November 30, 2018- $112,757)2019- $217,023), loan payablelease liability of $Nil$34,105 (November 30, 20182019 - $51,184)$nil), and due to related parties of $10,035$46,355 (November 30, 20182019 - $3,000)$10,035).
As at November 30, 2019,2020, the Company had a share capital balance of $5,676,498$7,376,763 (November 30, 20182019 - $5,311,034)$5,676,498) and an accumulated deficit of $5,968,892$8,893,128 (November 30, 20182019 - $1,602,085)$5,968,892).
Financing of operations has been achieved solely by equity financing. As the Company will not generate sufficient funds from operations for the foreseeable future, the Company is primarily reliant upon the sale of equity securities in order to fund future operations. Since inception, the Company has funded limited operations through the issuance of equity securities on a private placement basis. The Company's ability to raise funds through the issuance of equity will depend on economic, market and commodity prices at the time of financing. The Company expects to generate similar losses quarter over quarter for the next fiscal year in relation to the Company's development, administration and promotion of its technologies. As of report date, management anticipates that the funds raised to date will be not be sufficient to sustain operations and the development of the Companies technologies for the next fiscal year.
31
Detailed discussions related to the Company's cash flows during the year ended November 30, 20192020
Cash balances decreased by a total of $2,159,174$558,518 during the year ended November 30, 2019 (November 30, 20182020 (2019 - increased by $2,647,542)$2,159,174).
During the year ended November 30, 2019,2020, cash used in operating activities was $2,317,362$2,114,515 compared to cash used in operating activities of $663,765$2,317,362 during the year ended November 30, 2018.2019. The increase in cash used in operating activities is primarily attributedfor the year remained comparable to higher expenditures on wages, salary and benefits, research and development, business development andthat of the consulting fees during the year.prior year overall. (See Results of Operations for a detailed discussion of the expense variances.)
Cash used in investing activities during the year ended November 30, 20192020 was $14,175 (2018$109,567 (2019 - provided$14,175). The increase in cash used in investing activities is due to both recognition of $62,467). Thedemo equipment as a capital asset and lease payments relating to the Company's office premises. For the year ended November 30, 2019, cash used in investing activities was primarily attributed to the acquisition of equipment and development expenses on the Company's technologies during the year ended November 30, 2019.technologies.
Cash provided by financing activities during the year ended November 30, 20192020 was $172,363$1,635,564 compared to cash provided by financing activities of $3,248,840$172,363 during the prior year. The increase was primarily due to the private placement completed during the year in addition to option and warrant exercises. Additionally, the Company received proceeds relating to the Paycheck Protection Program. For the year ended November 30, 2018. The2019, cash provided by financing activities was primarily due to the warrants exercised of $187,120 and options exercised of $37,500 during the year ended November 30, 2019 partly offset by the payment of loan balance of $52,256. The cash provided by financing activities in the year ended November 30, 2018 was a result of the net proceeds from issuance of common shares of the Company from the private placement announced during the 4th quarter ended November 30, 2017.exercised.
The effect of foreign exchange rates on cash during the year ended November 30, 20192020 amounted to a$30,112 (2019 - decrease of $1,401 (2018 - $Nil)$1,401).
| Research and Development, Patents and Licenses, etc. |
Not applicable.
| Trend Information |
Other than as disclosed elsewhere in this registration statement and specifically in "Item 4.B. Business Overview," we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
| Off Balance Sheet Arrangements |
We do not have any off-balance sheets arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resource that is material to investors.
| Tabular Disclosure of Contractual Obligations |
In November 2018, Plymouth Rock USA entered into a two-year lease agreement for leased premises in Plymouth, Massachusetts, commencing December 1, 2018 and ending on November 30, 2020. The minimum monthly base rent is US$2,917 for the period from December 1, 2018 to November 30, 2019 and US$3,005 from December 1, 2019 to November 30, 2020. Effective December 1, 2020 the Company exercised its option to renew the lease for three additional years. After renewal, the minimum base rent is US$3,095 per month from December 1, 2020 to November 30, 2021, US$3,188 per month from December 1, 2021 to November 30, 2022, and US$3,284 per month from December 1, 2022 to November 30, 2023.
32
On April 1, 2019, the Company entered into a one-year lease agreement for leased premises in Vancouver, BC, commencing on April 1, 2019 and ending on March 31, 2020. The minimum monthly base rent iswas $2,500.
On October 17, 2019, At the end of the lease term, the Company entered intocontinued to pay the base rent on a binding agreement to acquire the intellectual property, finished goods and inventory, as well as name rights and goodwill from Massachusetts based aerospace and scientific component manufacturer Aerowave Corporation ("Aerowave"). Under the terms of the agreement, Plymouth Rock will pay Aerowave's principals 50,000 common shares. The shares will be restricted securities under the US Securities Act and subject to Canadian securities legislation. The fair value of these shares amounting to $22,811 is presented separately as shares to be issued in the balance sheet - equity section.month-to-month basis until December 2020.
| Safe Harbor |
Not applicable.
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. | Directors and senior management |
Name | Position(s) Held with Company | Principal Business Activities and Other |
Dana Wheeler | President, | President, Chief Executive Officer and Director of Plymouth Rock Technologies Inc. since October 30, 2018; Business Development Advisor, Serco, Inc. from June, 2017 to June, 2018; Chief Executive Officer and managing director, Radio Physics Solutions, October 2009 to December, 2016. |
|
|
|
Vivian Katsuris | Secretary | Secretary of the Company since
|
Douglas Smith | Chairman and Director | Managing Director at Kent Strategies LLC and Executive Vice President for MWW Group LLC. In the past he occupied the position of Managing Partner at T-Street Capital LLC and Assistant Secretary at United States Homeland Security Council. Douglas A. Smith received an undergraduate degree from Beloit College and an undergraduate degree from SIT Graduate Institute. |
33
|
|
|
Angelos Kostopoulos | Director | Partner with Nakou & Associates Law Firm from March 2004 to |
|
|
|
Tim Crowhurst | Director | President of Sea Level Communications Ltd., and a former Administrative Tribunal Judge of the Immigration Appeal Division of Canada's Immigration and Refugee Board |
Khalid M. Al-Ali | Director | Founder of Grupo Senseta, Inc. and Silicon Valley Space Business Roundtable, Khalid Al-Ali is Executive Chairman for Grupo Senseta, Inc. and Chairman for Silicon Valley Space Business Roundtable. |
Thomas Nash | Director | Founder of Xalles Holdings, Inc., Thomas W. Nash presently is Chairman, President, CEO, CFO & Secretary at this company and President for Xalles Technology, Inc., President at Xalles Financial Services, Inc. and President & Director at Co-Owners Rewards, Inc. (which are all subsidiaries of Xalles Holdings, Inc.). Mr. Nash is also on the board of 5 other companies. Thomas W. Nash previously was Chief Operating Officer of Three2N International, Inc. |
Dana Wheeler-President, Chief Executive Officer, Director
Dana Wheeler has been the President, Chief Executive Officer and a Director of our company since October 30, 2018.
Mr. Wheeler is a customer focused executive with over 35 years of experience in hands-on leadership and engineering roles including CEO, COO, and VP of Engineering. His extensive background includes helping technology start-ups and growth companies launch/establish engineering operations, raise capital, and develop products specialties. In 2009 he co-founded Radio Physics Solutions Inc., a threat detection technology company where he served as president until 2016. From 1997 to 2008, he served as Chief Operating Officer of Terabeam-HXI, a wireless data equipment company. Currently, in addition to his role at Plymouth Rock, he is the principal of Wheeler Engineering Services, a firm prodivingproviding engineering and business consulting services to the Microwave and Millimeter-Wave industry. Mr. Wheeler holds a Bachelor of Science in Electronics Engineering Technology from the University of Massachusetts Dartmouth.
34
Zara Kanji-Chief Financial Officer
Zara Kanji, CPA, CGA, has been Chief Financial Officer of our company since January 15, 2018.
Ms. Kanji, is a Member of the Chartered Professional Accountants of British Columbia and Canada and the owner of Zara Kanji & Associates, CPA, an accounting, tax and management consulting firm she founded in 2003. She holds a BachelorsBachelor of Technology in Accounting (honors) and a Diploma in Corporate Finance (Honors) from the British Columbia Institute of Technology. She is experienced in financial reporting compliance for junior listed companies, and has served as a director and officer for several public companies listed in Canada. She currently serves as Chief Financial Officer, Megastar Development Corp, (TSXV MDV), Chief Financial Officer, World Class Extractions (CNSX PUMP), Chief Financial Officer, INEO Tech Corp (TSXV INEO), Chief Financial Officer TechX Technologies Inc. (CSE TECX).
Vivian Katsuris -Secretary Director
Ms. Katsuris was appointed Chief Financial Officer and Secretary on August 11, 2014. On November 20, 2017 she resigned as CFO and was appointed President, Chief Executive Officer, and as a Director. On October 31, 2018, she resigned as President, CEO and Director, but remained Secretary.
Ms. Katsuris has over 29 years of experience in the brokerage industry, the North American capital markets & public financings. She was an Investment Advisor at Global Securities Corporation from 2003 to 2013 and worked at Canaccord Capital Corp. (Canada and US divisions) from 1993 to 2003. Ms. Katsuris has served on the board as an officer and director of Universal Ventures Inc (TSX-UN) and Plate Resources Inc (TSX-PLR) and also current serves as a director Kapa Capital Inc. (TSXV-KAPA.P) and, Zenith Capital Corporation Inc (TSXV-ZENI.P). and ACME Lithium Inc.
Douglas Smith-Chairman, Director
Douglas Smith has been a Director since April 29, 2020 and Chairman of the Board of Directors since May 13, 2020.
Mr. Smith is the former Assistant Secretary for the U.S. Department of Homeland Security. Douglas is currently the Managing Partner of Kent Strategies and brings over two decades of international experience in business development, communications, coalition building, public policy, and creating and managing public-private partnerships among Federal, State and local governments, and private industry. He has managed large-scale special projects and initiatives both within and outside of government. Douglas is a frequent public speaker both domestically and internationally and regularly appears on national television as an expert on national security and managing crisis.
Angelos Kostopoulos-Director
Angelos Kostopoulos has been a Director of our company since November 20, 2018.
Mr. Kostopoulos, is a Registered Tax Return Preparer as designated by the Internal Revenue Service, and has been a tax adviser listed by the US Embassy in Athens since 1992. Currently he is a partner at Nakou & Associates Law Firm (Athens, Greece), and Strati & Partner (Tirana, Albania), where he advised clients on a wide range tax and financial compliance matters. Since 2011 he has served as the president of Blue White Capital LLC a privately held, climate-friendly project developer, integrator, principal and boutique advisory firm. Mr. Kostopoulos holds a Bachelor of Arts (History) from Arizona State University, a Master of Arts (International Relations) from Indiana University Bloomington, a Master of Science (Military Science) from the Hellenic Army Supreme War College, and a Master of Laws (International Business) from the University of Cumbria.
George Stubos - Director35
George Stubos is the President of Stubos Capital Inc., in Vancouver, Canada and has 25 years of Capital Markets, Energy and Technology investing experience leading early stage companies in their growth strategies. Previously, he was an investment advisor with Canaccord Capital and was a founder of Business Financial Publishing, Investorlinks.com, San Telmo Energy, Rolling Thunder Exploration, and Argentex Mining. In 2007, he founded Shaman Energy LLC, which was awarded a Production Sharing Contract by the Government of Mongolia and was sold to Ivanhoe Energy. He is a member of the Association of International Petroleum Negotiators and the North America - Mongolia Business Council.
Tim Crowhurst, Director
Tim Crowhurst has been a Director of our company since July 13, 2019. He was also a Director of our company from October 17, 2011 to July 30, 2013.
Mr. Crowhurst is President of Sea Level Communications Ltd., and a former Administrative Tribunal Judge of the Immigration Appeal Division of Canada's Immigration and Refugee Board. He brings to Plymouth a long history in managing public companies, as well as a strong understanding of border security measures and international immigration movements. Prior to commencing a successful issue and crisis management consultancy in 1993, he was an advisor to several Canadian Cabinet MinistersMinisters.
Khalid M. Al-Ali, Director
Dr. Khalid M. Al-Ali has been a Director of our company since July 8, 2020.
Dr. Al-Ali brings deep experience and expertise to his roles in various organizations, having spent much of his career in Silicon Valley. He is the Co-Founder and Executive Chairman of Senseta, a world leader in mission-critical big data fusion, AI and drone-powered deep technologies. He is the Co- Founder and Chairman of the Silicon Valley Space Business Roundtable (SVSBR). He was the Executive Director of the University of California Office for NASA Partnerships and the University Affiliated Research Center (UARC). Dr. Al-Ali was the advisor to the Board of Directors of Qatar Foundation and CEO of the Qatar Science and Technology Park Project (QSTP). He was a founding member of both Qatar's Information Technology and Communication Committee and the Steering Committee of the Information Technology and Communication Project. Dr. Al-Ali is the principal inventor of U.S. and worldwide-patented technologies, along with a multitude of disclosed inventions not yet patented. He holds a Ph.D. in Mechanical and Electrical Engineering from the University of California at Berkeley and dual B.S. degrees in Mechanical and Aerospace Engineering from the University of Colorado at Boulder.
Thomas Nash, Director
Thomas W. Nash has been a Director of our company since July 31, 2020.
Mr. Nash is the Chairman and CEO of Xalles Holdings Inc., a Fintech holding company. Mr. Nash has provided strategic business advice to more than 200 firms worldwide from small firms to large organizations such as U.S. Bank, MasterCard, and Citibank. He also led the implementation of financial systems within the U.S. Government's Department of Defense and Department of Homeland Security as well as helped launch successful startup ventures in the payment, eCommerce and IT fields.
Family Relationships
There are no family relationships among any of our directors and senior management listed above.
B. | Compensation |
During the years ended November 31, 201930, 2020 and November 31, 2018,30, 2019, our directors and officers received the following compensation:
36
COMPENSATION TABLE | ||||||||||||||||
Name | Year | Salary | Bonus | Stock | Option | Non-Equity | Change in | All | Total | |||||||
Dana Wheeler, President, CEO and | 2020 2019 | 133,387 318,790 | Nil Nil | Nil Nil | 44,454 113,077 | Nil Nil | Nil Nil | Nil Nil |
| |||||||
Zara Kanji, Chief Financial Officer | 2020 2019 | 59,000 60,000 | Nil Nil | Nil Nil | 11,113 28,269 | Nil Nil | Nil Nil | 22,852* 24,490* |
| |||||||
Vivian Katsuris, Corporate Secretary | 2020 2019 | 55,125 63,000 | Nil Nil | Nil Nil | 11,113 28,269 | Nil Nil | Nil Nil | Nil Nil |
| |||||||
| 2020 2019 | Nil Nil | Nil Nil | Nil Nil |
Nil | Nil Nil | Nil Nil | 125,000**** Nil |
Nil | |||||||
| 2020 2019 | Nil Nil | Nil Nil | Nil Nil |
42,404 | Nil Nil | Nil Nil | Nil Nil |
| |||||||
Tim Crowhurst, Director | 2020 2019 | Nil Nil | Nil Nil | Nil Nil | 40,918 112 | Nil Nil | Nil Nil | Nil Nil |
| |||||||
| 2020 2019 | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | |||||||
| 2020 2019 |
|
|
|
|
|
|
| Nil
| Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil | Nil Nil |
George Stubos, FormerDirector** | 2020 2019 | Nil Nil | Nil Nil | Nil Nil | Nil 48,014 | Nil Nil | Nil Nil | 20,000*** Nil | 20,000 48,014 | |||||||
*This refers to accounting fees paid to a Companycompany controlled by the CFO.
** George Stubos ceased to be a director on July 30, 2020.
*** This refers to rent paid to a company controlled by a former director.
****This refers to shares with a deemed valued of CAD$0.25 per share based on CAD $125,000 paid to Douglas Smith as compensation pursuant to the consulting agreement with Mr. Smith. The amount represents payment owing under the consulting agreement for the fiscal year ended November 30, 2020.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
37
Written Management Agreements
Dana Wheeler, CEO has a services agreement with the Company. The agreement is to pay for services at $20,000 USD/ month. The CEO can terminate the agreement with a 30 days' notice,notice. The Company has to give 6 months' notice for any termination without cause.
Zara Kanji, CFO is engaged on a month to month agreement for compensation of $5,000 CAD per month.
Vivian Katsuris, Secretary has a consulting agreement with the Company for compensation of $5,250 CAD per month with a 60 day notice of termiantiontermination.
Douglas Smith, Chairman of the Board of Directors, entered into a consulting agreement with Plymouth Rock USA dated April 1, 2020, for consulting services to the Company. Pursuant to the agreement the Company will pay Mr. Smith $250,000 CAD per annum, which is payable at the Company's option by the issuance of 1,000,000 common shares of the Company in four equal quarterly instalments in arrears. If the agreement is terminated for any reason before the completion of a full year, the number of common shares to be issued will be reduced in proportion to the period of engagement. On July 8, 2020, our shareholders approved of the issuance of the 1,000,000 common shares to Mr. Smith. As of March 30, 2021, 750,000 shares were issued to Mr. Smith.
Stock Option Plan
Pursuant to the policy of the TSX Venture Exchange, where our common shares were traded from August 13, 2014 until March 9, 2016, we were required to adopt a stock option plan prior to granting incentive stock options and, accordingly, weWe adopted a stock option plan on November 12, 2014. The purpose of our stock option plan is to attract and motivate directors, senior officers, employees, management company employees, consultants and others providing services to our company and its subsidiaries, and thereby advance our interests, by affording such persons with an opportunity to acquire an equity interest in our company through the issuance of stock options.
Our stock option plan is a "rolling" stock option plan permitting the grant of incentive stock options to purchase up to 10% of our Company's issued and outstanding common shares.
Our stock option plan has the following terms and conditions:
| • | stock options may be issued to directors, senior officers, employees, consultants, affiliates or subsidiaries or to employees of companies providing management or administrative services to the Company; |
| • | the Board (or any committee delegated by the Board) in its sole discretion will determine the number of options to be granted, the optionees to receive the options, and term of expiry; |
| • | the options will be non-assignable except that they will be exercisable by the personal representative of the option holder in the event of the option holder's death; |
| • | options will be exercisable at a price which is not less than the |
| • | options granted to a person who is engaged in investor relations activities will expire within a maximum of 30 days after the optionee ceases to be employed and options granted to all other persons will expire within a reasonable period of time from the date the optionee ceases to hold his or her position or office; |
| • | the number of Common Shares reserved for issuance to any one person pursuant to options granted during the previous 12 months shall not exceed 5% of the issued and outstanding Common Shares at the time of grant; and the number of options granted to consultants or persons performing investor relations activities will not exceed 2% unless otherwise permitted by the |
| • | the aggregate number of Common Shares which may be subject to issuance pursuant to options granted under our stock option plan shall not exceed the equivalent of 10% of the issued and outstanding Common Shares of the Company; |
| • |
|
38
| • | every option granted under our stock option plan shall be evidenced by a written agreement between the Company and the optionee; |
| • | any consolidation or subdivision of Common Shares will be reflected in an adjustment to the stock options; |
| • | any reduction in exercise price of options granted to the Company's insiders will be subject to approval of disinterested shareholders of the Company. |
Option-Based Awards
During the year ended November 30, 2019,2020, the Company granted 1,350,000did not grant any new stock options to officers and directors.
During the CEO, CFO, the Corporate Secretary, and the Company's directors as follows):
| November 30, 2019 | ||||||
| Number of options granted | Expense for the period | |||||
| CEO | 400,000 | $ | 113,077 | |||
| CFO | 100,000 | 28,269 | ||||
| Corporate Secretary | 100,000 | 28,269 | ||||
| Directors | 750,000 | 90,530 | ||||
| 1,350,000 | $ | 260,145 | ||||
As atyear ended November 30, 2019,2020, no options were vested, and stock-based compensations amounting to $692,091$479,107 was recognized in profit or loss of which $260,145$271,993 were for the Company's officers and directors as above.
The following table sets forth the option based awards for each of directors and officers of the Company outstanding as at NovemberMarch 30, 2019.2021.
Name | Option Based Awards | |||
Number of | Option exercise | Option expiration | Value of unexercised | |
Dana Wheeler, | 400,000 | $0.60 | January 15, 2024(2) | Nil |
600,000 | $0.75 | January 20, 2026(5) | Nil | |
Zara Kanji, | 100,000 | $0.60 | January 15, 2024(2) | Nil |
50,000 | $0.75 | January 20, 2026(5) | Nil | |
Vivian Katsuris, | 100,000 | $0.60 | January 15, 2024(2) | Nil |
| 50,000 | $0.75 | January 20, 2026(5) | Nil |
Angelos Kostopoulos, Director | 150,000 | $0.60 | January 15, 2024(2) | Nil |
Douglas Smith Director | 150,000 | $0.60 | January 15, 2024(2) | Nil |
150,000 | $0.50 | March 20, 2024(3) | Nil | |
Tim Crowhurst, Director | 75,000 | $0.50 | November 28, 2024(4) | Nil |
Khalid M. Al-Ali, Director | 150,000 | $0.75 | January 20, 2026(5) | Nil |
Thomas Nash, Director | 150,000 | $0.75 | January 20, 2026(5) | Nil |
Name | Option Based Awards | |||
Number of | Option exercise | Option expiration | Value of unexercised | |
Dana Wheeler, | 400,000 | $0.60 | January 15, 2024(2) | Nil |
Zara Kanji, | 100,000 | $0.60 | January 15, 2024(2) | Nil |
Vivian Katsuris, | 100,000 | $0.60 | January 15, 2024(2) | Nil |
Angelos Kostopoulos, Director | 150,000 | $0.60 | January 15, 2024(2) | Nil |
George Stubos, Director | 200,000 | $0.60 | March 20, 2024(3) | Nil |
250,000 | $0.50 | November 28, 2024(4) | Nil | |
Tim Crowhurst, Director | 150,000 | $0.50 | November 28, 2024(4) | Nil |
|
|
|
|
|
39
(1) Value is calculated based on the difference between the market value of the securities underlying the options as at November 30, 2018, being $0.00, and the exercise price of the option.
(2) The options vest incrementally pursuant to the following schedule: (i) 50% on January 16, 2020; (ii) 12.5% on April 16, 2020; (iii) 12.5% on July 16, 2020; (iii) 12.5% on October 16, 2020; and (iv) 12.5 % on January 16, 2021.
(3) The options vest incrementally pursuant to the following schedule: (i) 50% on March 31, 2020; (ii) 12.5% on June 21, 2020; (iii) 12.5% on September 21, 2020; (iii) 12.5% on December 21, 2020; and (iv) 12.5 % on March 21, 2021.
(4) The options vest incrementally pursuant to the following schedule: (i) 50% on November 29, 2020; and (ii) 50 % on November 29, 2021.
(5)The options vest immediately upon grant on January 21, 2021.
Termination and Change of Control Benefits
Except as previously disclosed, we have no plans or arrangements in respect of remuneration received or that may be received by our directors and senior management in respect of compensating such person in the event of termination of employment (as a result of resignation, retirement, change of control, etc.) or a change in responsibilities.
Pension, Retirement or Similar Benefits
We have not set aside or accrued any amounts to provide pension, retirement or similar benefit for our directors or senior management during the fiscal year ended November 30, 2019.2020.
C. | Board Practices |
Term of Office
Each director of our company holds office until the next annual general meeting of our company or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the articles of our company or the provisions of the BCBCA. Each member of our senior management is appointed to serve at the discretion of our Board, subject to the terms of the employment agreements described above.
Service Contracts
Other than as disclosed herein, we do not have any service contracts with directors which provide for benefits upon termination of employment.
Committees
The audit committee is our only committee at this time. Our company does not have a remuneration committee.
Audit Committee
The members of our audit committee are Vivian Katsuris, Jeremy PoirierTimothy Crowhurst, Thomas Nash, and Angelos Kostopoulos As defined in National Instrument 52-110 - Audit Committees, Vivian Katsuris, is not "independent".Kostopoulos. All members are financially literate, meaning that they have the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by our financial statements.
We have adopted a charter for our audit committee.committee, which is filed as an exhibit to this Form 20-F. The audit committee is responsible for review of both interim and annual financial statements for our company. For the purposes of performing their duties, the members of the audit committee have the right at all times, to inspect all the books and financial records of our company and any subsidiaries and to discuss with management and the external auditors of our company any accounts, records and matters relating to the financial statements of our company. The audit committee members meet periodically with management and annually with the external auditors. Our audit committee has the overall duties and responsibilities to:
40
| • | review the financial reporting process to ensure the accuracy of the financial statements of our company; |
| • | assist the Board to properly and fully discharge its responsibilities; |
| • | strengthen the role of the Board by facilitating in depth discussions between directors, management and external auditors; |
| • | evaluate the independent auditor's qualifications, performance and independence; |
| • | facilitate the independence of the independent auditor; |
| • | assess the processes relating to the determination and mitigation of risks and the maintenance of an effective control environment; and |
| • | review the processes to monitor compliance with laws and regulations. |
D. | Employees |
As of November 30, 20192020 and as at the date of this report, we do not have anytwo employees. Our directors and certain contracted individuals play an important role in the running of our company. We do not expect any material changes in the number of employees over the next 12 month period. We do and will continue to outsource contract employment as needed.
We engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with the development of our products.
E. | Share Ownership |
As at March 30, 2020,2021, our directors and senior management beneficially owned the following common shares and stock options of our company:
Name and Office Held | Number of Common Shares Owned | Options Owned | Number of Common Shares Owned | Options Owned | ||
# of Shares | % of Class(1) | # of Shares | % of Class(1) | |||
Dana Wheeler, President, Chief Executive Officer, & Director | 1,350,000 | 4.1 | 400,000(2) | 1,350,000 | 2.6% | 1,000,000(2) |
Zara Kanji, Chief Financial Officer | Nil | 100,000(2) | Nil | 150,000(2) | ||
Vivian Katsuris, Secretary, & | 277,500(3) | (4) | 100,000(2) | |||
Vivian Katsuris, Secretary | 40,000(3) | (4) | 150,000(2) | |||
Douglas Smith, Chairman and Director | 750,000(5) | 1.4% | 300,000(2) | |||
Angelos Kostopoulos, Director | Nil | 150,000(2) | Nil | 150,000(2) | ||
George Stubos, Director | 901,500(5) | 2.7% | 450,000(2) | |||
Tim Crowhurst, Director | Nil | 150,000(2) | 75,000 | (4) | 75,000(2) | |
Khalid M. Al-Ali, Director | Nil | 150,000(2) | ||||
Thomas Nash, Director | Nil | 150,000(2) | ||||
41
Notes:
| (1) | Based on |
|
|
|
| (2) | Options are exercisable into common shares on a one-for-one basis and vest incrementally pursuant to the schedule outlined in Item 6 B. Compensation - Option-based Awards. |
|
|
|
| (3) | Includes 100,000 shares held in the name of Vivkor Holdings |
|
|
|
| (4) | Less than 1% |
|
|
|
The voting rights attached to the common shares owned by our directors and senior management do not differ from those voting rights attached to shares owned by people who are not directors or senior management of our company.
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. | Major Shareholders |
To the best of our knowledge, there are no persons or company who beneficially own, directly or indirectly, or exercise control or direction over, securities carrying more than 5% of the voting rights attached to any class of voting securities of the Company:Company.
Major Shareholder Voting Rights
The voting rights of our major shareholders do not differ from the voting rights of holders of our common shares who are not our major shareholders.
Residency of Shareholders
As at November 30, 2019 and March 31, 2020, the registrar and transfer agent for our company reported that there were 32,796,60042,762,264 common shares of our company issued and outstanding. Of the 32,796,60042,762,264 common shares issued and outstanding, on November 30, 2019, 27,483,55037,062,784 were registered to Canadian residents (11(16 recorded shareholders), 3,738,0503,417,980 were registered to residents of the United States (27(43 recorded shareholders), and 1,575,0002,281,500 were registered to non-United States or Canadian residents (6(9 recorded shareholders). Of the 32,796,600
As of November 30, 2020, our shareholder register indicates that our common shares of our company issued and outstanding on March 31, 2020, 27,483,550 were registered to Canadian residents (10 recorded shareholders), 3,738,050 were registered to residents of the United States (27 recorded shareholders), and 1,575,000 were registered to non-United States or Canadian residents (6 recorded shareholders).are held as follows:
Location | Number of Common Shares | Percentage of Total Common Shares | Number of Registered Shareholders of Record |
United States | 3,417,980 | 8.0% | 43 |
Canada | 37,062,784 | 86.7% | 16 |
Other | 2,281,500 | 5.3% | 9 |
Total | 42,762,264 | 100.0% | 68 |
42
Control and Control Arrangements
To the best of our knowledge, our company is not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly, except as disclosed in the above table regarding our major shareholders.
There are no arrangements known to us, the operation of which may at a subsequent date result in a change in control of our company.
B. | Related Party Transactions |
The Company recorded the following transactions with related parties during the period from the beginning of the Company's preceding three financial years up to the date of this Annual Report:
The amounts due to and from related parties are due to the directors and officers of the Company. The balances are unsecured, non-interest bearing and have no specific terms for repayment. These transactions are in the normal course of operations and have been valued in these consolidated financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
As at November 30, 2019, $10,0352020, $46,355 (November 30, 20182019 - $3,000)$10,035) was due to directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | November 30, 2020 | November 30, 2019 | |||||||||
| Company controlled by CFO | $ | 5,000 | $ | 3,000 | $ | 3,860 | $ | 5,000 | ||||
| CEO of the Company | 5,035 | $ | - | 823 | $ | 5,035 | ||||||
| Director | 41,667 | |||||||||||
| $ | 10,035 | $ | 3,000 | $ | 46,355 | $ | 10,035 | |||||
As at November 30, 2019, $25,0702020, $2,500 (November 30, 20182019 - $7,400)$25,070) was due from directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | November 30, 2020 | November 30, 2019 | |||||||||
| Company controlled by Corporate Secretary | $ | 5,250 | $ | 5,613 | $ | - | $ | 5,250 | ||||
| CEO of the Company | - | 1,787 | ||||||||||
| Director | 19,820 | - | 2,500 | 19,820 | ||||||||
| $ | 25,070 | $ | 7,400 | $ | 2,500 | $ | 25,070 | |||||
During the years ended November 30, 2020, 2019 2018 and 2017,2018, the Company entered into the following transactions with related parties:
| November 30, 2019 | November 30, 2018 | November 30, 2017 | |||||||
| Management fees | $ | 123,000 | $ | 71,842 | $ | 13,500 | |||
| Accounting fees | 24,490 | 20,748 | - | ||||||
| Share-based payments | 260,145 | - | - | ||||||
| Salaries and benefits to CEO | 318,790 | 13,200 | - | ||||||
| $ | 726,425 | $ | 105,790 | $ | 13,500 |
During the year ended November 30, 2019, the Company granted 1,350,000 options to the CEO, CFO, the Corporate Secretary, and the Company's directors as follows):
| November 30, 2019 | ||||||
| Number of options granted | Expense for the period | |||||
| CEO | 400,000 | $ | 113,077 | |||
| CFO | 100,000 | 28,269 | ||||
| Corporate Secretary | 100,000 | 28,269 | ||||
| Angelos Kostopoulos, Director | 150,000 | 42,404 | ||||
| George Stubos, Director | 450,000 | 48,014 | ||||
| Tim Crowhurst, Director | 150,000 | 112 | ||||
| 1,350,000 | $ | 260,145 | ||||
| November 30, 2020 | November 30, 2019 | November 30, 2018 | |||||||
| Management fees | $ | 114,125 | $ | 123,000 | $ | 71,842 | |||
| Consulting fees | 166,667 | - | - | ||||||
| Accounting fees | 22,852 | 24,490 | 20,748 | ||||||
| Rent | 20,000 | - | - | ||||||
| Share-based payments | 271,993 | 260,145 | - | ||||||
| Salaries and benefits to CEO | 133,387 | 318,790 | 13,200 | ||||||
| $ | 729,024 | $ | 726,425 | $ | 105,790 |
As at November 30, 2019,2020, no options were vested, and stock-based compensations amounting to $692,091$479,107 was recognized in profit or loss of which $260,145$271,993 were for the Company's officers and directors as above (Note 10).
On January 21, 2021, the Company granted 1,550,000 incentive stock options to directors, consultants, and employees with an exercise price of $0.75 per share for a period of five years from the date of grant.
43
Management fees consisted of the following:
| November 30, 2019 | November 30, 2018 | November 30, 2017 | November 30, 2020 | November 30, 2019 | November 30, 2018 | |||||||||||||
| Company controlled by Corporate Secretary | $ | 63,000 | $ | 36,842 | $ | 13,500 | $ | 55,125 | $ | 63,000 | $ | 36,842 | ||||||
| Company controlled by CFO | 60,000 | 30,000 | - | 59,000 | 60,000 | 30,000 | ||||||||||||
| Director fees paid to Former Director | - | 5,000 | - | |||||||||||||||
| Directors fees paid to former directors | - | - | 5,000 | |||||||||||||||
| $ | 123,000 | $ | 71,842 | $ | 13,500 | $ | 114,125 | $ | 123,000 | $ | 71,842 | |||||||
On October 16, 2019, Jeremy Poirier resigned asDouglas Smith, our Chairman, entered into a Director ofconsulting agreement with Plymouth Rock USA dated April 1, 2020, for consulting services to the Company. 100,000 stock options granted to him were forfeited.
As at November 30, 2019, $26,578 (November 30, 2018 - $Nil) prepayment was madePursuant to the CEOagreement the Company will pay Mr. Smith $250,000 CAD per annum, which is payable at the Company's option by the issuance of 1,000,000 common shares of the Company and $13,289 (November 30, 2018 - $Nil)in four equal quarterly instalments in arrears. If the agreement is terminated for any reason before the completion of a full year, the number of common shares to be issued will be reduced in proportion to the SVP for Engineering Operations.period of engagement. As of March 30, 2021, 750,000 common shares were issued to Mr. Smith.
We formerly rented the premises of our head office located in Vancouver, British Columbia, Canada from Wood & Associates, a company controlled by Suzanne Wood, our former President, Chief Executive Officer, Chief Financial Officer, Secretary, former director, and former major shareholder. We rented the office space on a month to month basis at the monthly rate of $100 until the third quarter of 2015.
Compensation
For information regarding compensation for our directors and senior management, see Item 6.B - Compensation.
C. | Interests of Experts and Counsel |
Not applicable
ITEM 8. | FINANCIAL INFORMATION |
A. | Financial Statements and Other Financial Information |
Our financial statements (included as Item 18 of this registration statement)Form 20-F) are stated in United StatesCanadian dollars and are prepared in accordance with IFRS, as issued by the IASB.
The following financial statements and notes thereto are filed with and incorporated herein as part of this registration statement:
| (a) | audited financial statements for the year ended November 30, |
These financial statements can be found under "Item 1718 - Financial Statements" below.
Legal Proceedings
There have not been any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings, those involving any third party, and governmental proceedings pending or known to be contemplated, which may have, or have had in the recent past, significant effect our financial position or profitability.
44
There have been no material proceedings in which any director, any member of senior management, or any of our affiliates is either a party adverse to our company or our subsidiaries or has a material interest adverse to our company or our subsidiaries.
Policy on Dividend Distributions
We have not declared any dividends since our inception and do not anticipate that we will do so in the foreseeable future. We currently intend to retain future earnings, if any, to finance the development of our business. Any future payment of dividends or distributions will be determined by our Board on the basis of our earnings, financial requirements and other relevant factors.
B. | Significant Changes |
We are not aware of any significant change that has occurred since November 30, 2018,2020, and that has not been disclosed elsewhere in this annual report.
ITEM 9. | THE OFFER AND LISTING |
A. | Offer and Listing Details |
| (a) | Our authorized share capital consists of an unlimited number of Common Shares, without par value. As of November 30, |
|
|
|
|
| Set forth below are the annual high and low market prices for our stock for each of our five most recent full financial years (ending November 30). |
|
| 2015 | 2016 | 2017 | 2018 | 2019 | 2016 | 2017 | 2018 | 2019 | 2020 |
High | 0.15 | 0.06 | 0.50 | 0.77 | 0.66 | 0.06 | 0.50 | 0.77 | 0.66 | 0.65 |
Low | 0.05 | 0.03 | 0.02 | 0.41 | 0.375 | 0.03 | 0.02 | 0.41 | 0.375 | 0.19 |
These numbers represent the annual high and low market prices for our stock as quoted on the TSXV and CSE, as applicable.
|
| Set forth below are the high and low market prices for each full financial quarter for the |
Year 2021
Quarter | February 28, 2021 | Through March 29, |
High | 1.82 | 1.27 |
Low | 0.185 | 0.62 |
45
Year 2020
Quarter | February 29, 2020 | Through March 28, | February | May | August | November |
High | 0.49 | 0.375 | 0.49 | 0.45 | 0.65 | 0.30 |
Low | 0.36 | 0.11 | 0.36 | 0.19 | 0.27 | 0.20 |
Year 2019
Quarter | February | May | August | November |
High | 0.66 | 0.63 | 0.48 | 0.50 |
Low | 0.52 | 0.45 | 0.38 | 0.37 |
Year 2018
Quarter | February | May | August | November |
High | n/a | n/a | n/a | 0.67 |
Low | n/a | n/a | n/a | 0.60 |
Year 2017
Quarter | February | May | August | November |
High | 0.03 | 0 05 | 0.10 | 0.50 |
Low | 0.02 | 0.02 | 0.05 | 0.09 |
Year 2016
Quarter | February | May | August | November |
High | 0.06 | 0.06 | 0.06 | 0.03 |
Low | 0.06 | 0.03 | 0.03 | 0.03 |
|
| Set forth below are the high and low market prices for each of the six most recent completed months: |
Month | October | November | December | January | February | March | October | November | December | January | February | March |
High | 0.50 | 0.49 | 0.485 | 0.44 | 0.375 | 0.275 | 0.245 | 0.285 | 1.12 | 1.82 | 1.27 | |
Low | 0.47 | 0.45 | 0.375 | 0.48 | 0.11 | 0.20 | 0.195 | 0.18 | 0.185 | 0.22 | 0.50 | 0.62 |
46
B. | Plan of Distribution |
Not applicable to Form 20-F filed as an Annual Report.
C. | Markets |
Our Common Shares are publically tradedcurrent trading symbol on the Canadian Securities Exchange under the symbolCSE is "PRT" Our common stock is not now listed or quoted on any other securities exchange or electronic quotation service in the United States or abroad. There is currently no market for our common stock in the United States. Following the effective date of this registration statement our management intends to seek the quotation of our common stock. We also trade on the OTCQB inter-dealer quotation service operated by OTC Markets Group. To achievewith the quotation of our common stocktrading symbol "PLRTF" and on the OTCQB a market maker must file a Form 15c211 on our behalfFrankfurt Stock Exchange with FINRA, and we must successfully complete an application and a management certification procedure with OTC Markets Group. We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 15c211with FINRA on our behalf but, as of the date of this registration statement, no filing has been made. There is no guarantee that any such filing will be made or, if made, approved by FINRA.trading symbol "4XA".
D. | Selling Shareholders |
Not applicable to Form 20-F filed as an Annual Report.
E. | Dilution |
Not applicable to Form 20-F filed as an Annual Report.
F. | Expenses of the Issue |
Not applicable to Form 20-F filed as an Annual Report.
ITEM 10. | ADDITIONAL INFORMATION |
A. | Share Capital |
Our authorized share capital consists of an unlimited number of Common Shares, without par value. As of November 30, 20192020 and March 31, 2020,30, 2021, we had 32,796,60042,762,264 and 32,796,60052,532,596 Common Shares issued and outstanding, respectively.
Common Shares
The holders of the common shares are entitled to one vote for each common share held on all matters to be voted on by such holders. The holders of common shares are entitled to receive, pro rata, the remaining property of our company on a liquidation, dissolution or winding-up of our company after the holders of Preferred Shares have been paid.company. There are no pre-emptive rights or redemption rights attached to the Common Shares.
Convertible Securities
As at November 30, 20192020 there were 32,796,60042,762,264 common shares outstanding.outstanding, options outstanding to purchase 3,150,0002,950,000 common shares, share purchase warrants outstanding to purchase 6,306,414 common shares and no other convertible securities outstanding. The 3,150,0002,950,000 options outstanding are described in the below table:
| Expiry Date | Exercise Price | Numbers of options outstanding | Numbers of options exercisable | Weighted average remaining contractual life (year) | Weighted average exercise price | ||||||||||
| January 15, 2024 | $ | 0.60 | 2,150,000 | 1,881,250 | 2.28 | $ | 0.44 | ||||||||
| March 20, 2024 | 0.60 | 150,000 | 93,750 | 0.17 | 0.03 | ||||||||||
| November 28, 2024 | 0.50 | 650,000 | 325,000 | 0.88 | 0.11 | ||||||||||
| 2,950,000 | 2,300,000 | 3.33 | $ | 0.58 |
| Expiry Date | Exercise Price | Numbers of options outstanding | Weighted average remaining contractual life (year) | Weighted average exercise price | ||||||||
| $ | $ | |||||||||||
| January 15, 2024 | 0.60 | 2,150,000 | 2.82 | 0.60 | ||||||||
| March 20, 2024 | 0.60 | 350,000 | 0.48 | 0.60 | ||||||||
| November 28, 2024 | 0.50 | 650,000 | 1.03 | 0.50 | ||||||||
| 3,150,000 | 4.33 | 0.58 |
47
Stock Options
On November 12, 2014 the Company adopted an incentive stock option plan (the "Option Plan""Option Plan") which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees, and consultants to the Company, nontransferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares in the capital of the Company at the time of granting of options.
On January 16, 2019, the Company granted 2,300,000 stock options, which are exercisable for a period of five years, at a price of $0.60 per share. During the year, 150,000 stock options were cancelled. The remaining 2,150,000 stock options vest as follows: (i) 1,075,000 options on January 15, 2020, (ii) 268,750 options on April 15, 2020, (iii) 268,750 options on July 15, 2020, (iv) 268,750 options on October 15, 2020, and (v) 268,750 options on January 15, 2021.
The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.54, volatility 100%, risk-free rate 1.93%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $913,140, which will be expensed over the vesting period.
On March 21, 2019, the Company granted an aggregate of 350,000 incentive stock options to consultants of the Company with an exercise price of $0.60 per share for a period of five years from the date of grant. The stock options vest as follows: (i) 175,000 options on March 20, 2020, (ii) 43,750 options on June 20, 2020, (iii) 43,750 options on December 20, 2020, (iv) 43,750 options on March 20, 2021, and (v) 43,750 options on June 20, 2021. The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.57, volatility 100%, risk-free rate 1.56%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $147,613, which will be expensed over the vesting period.
On November 29, 2019, the Company granted an aggregate of 650,000 incentive stock options to consultants and a director of the Company with an exercise price of $0.50 per share for a period of five years from the date of grant. The stock options vest as follows: (i) 325,000 options on November 30, 2020 and (ii) 325,000 options on November 30, 2021. The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.49, volatility 100%, risk-free rate 1.49%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $236,809, which will be expensed over the vesting period.
During the year ended November 30, 2019, 150,0002020, 200,000 options issued to a director and a consultant were cancelled before vested. Stock-based compensation recognized in profit or loss for the year ended November 30, 20192020 amounted to $692,091 (2018$479,107 (2019 - $Nil)$692,091).
Stock option transactions and the number of stock options outstanding as at November 30, 2020, 2019 and 2018 are summarized as follows:
| Number of | Weighted Average | |||||
| Options | Exercise Price | |||||
| Balance, November 30, 2017 | 750,000 | $ | 0.17 | |||
| Exercised | (625,000 | ) | 0.14 | |||
| Balance, November 30, 2018 | 125,000 | 0.30 | ||||
| Granted | 3,300,000 | 0.58 | ||||
| Exercised | (125,000 | ) | 0.30 | |||
| Cancelled | (150,000 | ) | 0.60 | |||
| Balance, November 30, 2019 | 3,150,000 | 0.58 | ||||
| Cancelled | (200,000 | ) | 0.60 | |||
| Balance, November 30, 2020 | 2,950,000 | $ | 0.58 |
| Number of | Weighted Average | |||||
| Options | Exercise Price | |||||
| Balance, November 30, 2017 | 750,000 | $ | 0.17 | |||
| Exercised | (625,000 | ) | $ | 0.14 | ||
| Balance, November 30, 2018 | 125,000 | $ | 0.30 | |||
| Granted | 3,300,000 | $ | 0.58 | |||
| Exercised | (125,000 | ) | $ | 0.30 | ||
| Expired | (150,000 | ) | $ | 0.60 | ||
| Balance, November 30, 2019 | 3,150,000 | $ | 0.58 |
48
Issuance of Common Shares
We have financed our operations through, among other things, funds raised in private placements of common shares and proceeds from shares issued upon exercise of stock options and share purchase warrants.
Since the date of incorporation of the company 32,796,600to November 30, 2020, 42,762,264 common shares have been issued, and 2,000,000 Common Shares have been repurchased for cancellation, as follows:
Date | Number of | Issue Price Per | Aggregate Issue | Consideration | Number of | Issue Price Per | Aggregate Issue | Consideration |
October 17, 2011 | 1 | $0.05 | Cash | 1 | $0.05 | Cash | ||
November 10, 2011 | 9,999,999 | $0.05 | $499,999.95 | Cash | 9,999,999 | $0.05 | $499,999.95 | Cash |
February 29, 2012(1) | (2,000,000) | ($0.05) | ($100,000.00) | (Cash) | (2,000,000) | ($0.05) | ($100,000.00) | (Cash) |
May 1, 2012 | 2,000,000 | $0.10 | $200,000.00 | Cash | 2,000,000 | $0.10 | $200,000.00 | Cash |
May 4, 2012 | 94,000 | $0.10 | $9,400.00 | Cash | 94,000 | $0.10 | $9,400.00 | Cash |
August 11, 2014 | 2,400,000 | $0.05 | $120,000.00 | Cash | 2,400,000 | $0.05 | $120,000.00 | Cash |
August 11, 2014 | 240,000 | $0.05 | $12,000.00 | Finder's Fee | 240,000 | $0.05 | $12,000.00 | Finder's Fee |
August 11, 2014 | 200,000 | $0.05 | $10,000.00 | Property Payment | 200,000 | $0.05 | $10,000.00 | Property Payment |
February 15, 2017 | 300,000 | $0.02 | $6,000 | Property Payment | 300,000 | $0.02 | $6,000 | Property Payment |
November 30, 2017 | 5,500,000 | $0.10 | $550,000 | Cash | 5,500,000 | $0.10 | $550,000 | Cash |
November 30, 2017 | 490,500 | $0.10 | $49,050 | Finder's Fee | 490,500 | $0.10 | $49,050 | Finder's Fee |
November 28, 2017 | 125,000 | $0.15 | $18,750 | Cash | 125,000 | $0.15 | $18,750 | Cash |
December 12, 2017 | 55,000 | $0.10 | $5,500 | Cash | 55,000 | $0.10 | $5,500 | Cash |
December 19, 2017 | 100,000 | $0.10 | $10,000 | Cash | 100,000 | $0.10 | $10,000 | Cash |
December 22, 2017 | 476,000 | $0.10 | $47,600 | Cash | 476,000 | $0.10 | $47,600 | Cash |
January 9, 2018 | 476,000 | $0.10 | $10,000 | Cash | 476,000 | $0.10 | $10,000 | Cash |
January 19, 2018 | 100,000 | $0.10 | $10,000 | Cash | 100,000 | $0.10 | $10,000 | Cash |
January 22, 2018 | 500,000 | $0.10 | $50,000 | Cash | 500,000 | $0.10 | $50,000 | Cash |
February 2, 2018 | 21,000 | $0.10 | $2,100 | Cash | 21,000 | $0.10 | $2,100 | Cash |
April 25,2018 | 4,475,000 | $0.40 | $1,790,000 | Cash | 4,475,000 | $0.40 | $1,790,000 | Cash |
May 18, 2018 | 2,035,550 | $0.40 | $814,220 | Cash | 2,035,550 | $0.40 | $814,220 | Cash |
May 29, 2018 | 125,000 | $0.30 | $37,500 | Cash | 125,000 | $0.30 | $37,500 | Cash |
May 30, 2018 | 317,000 | $0.10 | $31,700 | Cash, Warrants | ||||
August 23, 2018 | 500,000 | $0.10 | $50,000 | Cash | 500,000 | $0.10 | $50,000 | Cash |
49
Date | Number of | Issue Price Per | Aggregate Issue | Consideration | ||||
October 31, 2018 | 3,000,000 | $0.41 | $1,230,000 | Acquisition of Plymouth Rock USA | 3,000,000 | $0.41 | $1,230,000 | Acquisition of Plymouth Rock USA |
November 1, 2018 | 231,250 | $0.69 | $159,562.50 | Finder's Fee | 231,250 | $0.69 | $159,562.50 | Finder's Fee |
March 19, 2019 | 7,500 | $0.60 | $4,500 | Cash | 7,500 | $0.60 | $4,500 | Cash |
March 19, 2019 | 1,650 | $0.40 | $1,342 | Cash, Warrants | 1,650 | $0.40 | $1,342 | Cash, Warrants |
April 18, 2019 | 31,500 | $0.40 | $25,623 | Cash, Warrants | 31,500 | $0.40 | $25,623 | Cash, Warrants |
April 18, 2019 | 121,500 | $0.40 | $98,832 | Cash, Warrants | 121,500 | $0.40 | $98,832 | Cash, Warrants |
April 23, 2019 | 105,750 | $0.40 | $86,020 | Cash, Warrants | 105,750 | $0.40 | $86,020 | Cash, Warrants |
April 23, 2019 | 2,250 | $0.40 | $1,830 | Cash, Warrants | 2,250 | $0.40 | $1,830 | Cash, Warrants |
May 1, 2019 | 8,250 | $0.40 | $6,711 | Cash, Warrants | 8,250 | $0.40 | $6,711 | Cash, Warrants |
May 7, 2019 | 8,250 | $0.40 | $6,711 | Cash, Warrants | 8,250 | $0.40 | $6,711 | Cash, Warrants |
May 14, 2019 | 5,250 | $0.40 | $4,271 | Cash, Warrants | 5,250 | $0.40 | $4,271 | Cash, Warrants |
May 16, 2019 | 17,400 | $0.40 | $14,154 | Cash, Warrants | 17,400 | $0.40 | $14,154 | Cash, Warrants |
May 17, 2019 | 6,000 | $0.40 | $4,881 | Cash, Warrants | 6,000 | $0.40 | $4,881 | Cash, Warrants |
August 6, 2019 | 240,000 | $0.10 | 24,000 | Cash | 240,000 | $0.10 | 24,000 | Cash |
August 6, 2019 | 235,000 | $0.10 | 23,500 | Cash | 235,000 | $0.10 | 23,500 | Cash |
August 6, 2019 | 100,000 | $0.10 | 10,000 | Cash | 100,000 | $0.10 | 10,000 | Cash |
August 7, 2019 | 20,000 | $0.10 | 2,000 | Cash | 20,000 | $0.10 | 2,000 | Cash |
October 11, 2019 | 20,000 | $0.30 | $8,174 | Cash | 20,000 | $0.30 | $8,174 | Cash |
October 15, 2019 | 105,000 | $0.30 | $42,915 | Cash | 105,000 | $0.30 | $42,915 | Cash |
April 24, 2020 | 3,128,334 | $0.15 | $469,250 | Cash | ||||
May 15, 2020 | 3,718,831 | $0.15 | $557,825 | Cash | ||||
July 3, 2020 | 500,000 | $0.20 | $100,000 | Cash, Warrants | ||||
August 13, 2020 | 483,334 | $0.20 | $96,667 | Cash, Warrants | ||||
August 21, 2020 | 250,000 | $0.25 | $62,500 | Compensation | ||||
September 23, 2020 | 100,000 | $0.20 | $20,000 | Cash, Warrants | ||||
September 24, 2020 | 100,000 | $0.20 | $20,000 | Cash, Warrants | ||||
September 30, 2020 | 1,335,165 | $0.30 | $400,550 | Cash | ||||
September 30, 2020 | 50,000 | $0.30 | 15,000 | Asset acquisition | ||||
September 30, 2020 | 250,000 | $0.25 | $62,500 | Compensation | ||||
October 28, 2020 | 50,000 | $0.20 | $10,000 | Cash, Warrants | ||||
50
Notes:
| (1) | On February 29, 2012 a total of 2,000,000 common shares were surrendered to the company for cancellation and returned to the company's treasury for consideration of $0.05 per share. |
Resolutions/Authorizations/Approvals
Not Applicable.
B. | Memorandum and Articles of Association |
Incorporation
We are incorporated under the British Columbia Business Corporations Act (BCBCA). Our British Columbia incorporation number is BC0922905.
Objects and Purposes of Our Company
Our articles do not contain a description of our objects and purposes.
Voting on Proposals. Arrangements, Contracts or Compensation by Directors
Other than as disclosed below, our articles do not restrict directors' power to (a) vote on a proposal, arrangement or contract in which the directors are materially interested or (b) to vote compensation to themselves or any other members of their body in the absence of an independent quorum.
The BCBCA does, however, contain restrictions in this regard. The BCBCA provides that a director who holds a disclosable interest in a contract or transaction into which we have entered or proposes to enter is not entitled to vote on any directors' resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution. A director who holds a disclosable interest in a contract or transaction into which we have entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting. A director or senior officer generally holds a disclosable interest in a contract or transaction if (a) the contract or transaction is material to our company; (b) we have entered, or proposed to enter, into the contract or transaction, and (c) either (i) the director or senior officer has a material interest in the contract or transaction or (ii) the director or senior officer is a director or senior officer of, or has a material interest in, a person who has a material interest in the contract or transaction. A director or senior officer does not hold a disclosable interest in a contract or transaction merely because the contract or transaction relates to the remuneration of the director or senior officer in that person's capacity as director, officer, employee or agent of our company or of an affiliate of our company.
Borrowing Powers of Directors
Our articles provide that we, if authorized by our directors, may:
| • | borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate; |
| • | issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of our company or any other person and at such discounts or premiums and on such other terms as they consider appropriate; |
51
| • | guarantee the repayment of money by any other person or the performance of any obligation of any other person; and |
| • | mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of our company. |
Qualifications of Directors
Under our articles, a director is not required to hold a share in the capital of the Company as qualification for his or her office but must be qualified as required by the BCBCA to become, act or continue to act as a director.
Share Rights
See "Share Capital" above forAll holders of common shares are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as the board of directors may from time to time determine. All holders of common shares will share equally on a summaryper share basis in any dividend declared by the board of directors. The dividend entitlement time limit will be fixed by the board of directors at the time any such dividend is declared. Each outstanding common share is entitled to one vote on all matters submitted to a vote of our authorized capital and the specialshareholders in general meeting. There are no cumulative voting rights and restrictions attached to any of our Common Sharesshares and, Preferred Shares.accordingly, the holders of more than half of the shares represented at a general meeting can elect all of the directors to be elected in a general meeting. All directors stand for re-election annually. Upon any liquidation, dissolution or winding up, all common shareholders are entitled to share ratably in all net assets available for distribution after payment to creditors. The common shares are not convertible or redeemable and have no preemptive, subscription or conversion rights. In the event of a merger or consolidation, all common shareholders will be entitled to receive the same per share consideration.
Procedures to Change the Rights of Shareholders
Our articles state that the Company may by resolution of its directors:directors or Company shareholders: (a) create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares; (b) increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established; (c) if the Company is authorized to issue shares of a class of shares with par value: (i) decrease the par value of those shares, (ii) if none of the shares of that class of shares are allotted or issued, increase the par value of those shares, (iii) subdivide all or any of its unissued or fully paid issued shares with par value into shares of smaller par value, or (iv) consolidate all or any of its unissued or fully paid issued shares with par value into shares of larger par value; (d) subdivide all or any of its unissued or fully paid issued shares without par value; (e) change all or any of its unissued or fully paid issued shares with par value into shares without par value or all or any of its unissued shares without par value into shares with par value; (f) alter the identifying name of any of its shares; (g) consolidate all or any of its unissued or fully paid issued shares without par value; (h) create special rights or (h)restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; (i) vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued; (j) change the name of the Company; or (k) otherwise alter its shares or authorized share structure when required or permitted to do so by the BCBCA.
An amendment of our articles by shareholders would require the approval of holders of two-thirds of the votes of the Company's common shares cast at a duly called special meeting.
52
Meetings
Each director holds office until our next annual general meeting or until his office is earlier vacated in accordance with our articles or with the provisions of the BCBCA. A director appointed or elected to fill a vacancy on our board also holds office until our next annual general meeting.
Our articles and the BCBCA provide that our annual meetings of shareholders must be held at such time in each calendar year and not more than 15 months after the last annual general meeting and at such place as our Board may from time to time determine. Our directors may, at any time, call a meeting of our shareholders.
The holders of not less than five percent of our issued shares that carry the right to vote at a meeting may requisition our directors to call a meeting of shareholders for the purposes stated in the requisition.
Under our articles, the quorum for the transaction of business at a meeting of our shareholders is one or more persons who are, present in person or by proxy.proxy, shareholders who, in the aggregate hold at least 1% of the issued shares entitled to be voted at the meeting.
Our articles state that in addition to those persons who are entitled to vote at a meeting of our shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), any lawyer or auditor for our company, any persons invited to be present at the meeting by our directors or by the chair of the meeting and any person entitled or required under the BCBCA or our articles to be present at the meeting.
Limitations on Ownership of Securities
No share may be issued until it is fully paid.
Neither Canadian law nor our Articles limit the right of a non-resident to hold or vote common shares of the company,Company, other than as provided in the Investment Canada Act (the "Investment Act""Investment Act"), as amended by the World Trade Organization Agreement Implementation Act (the "WTOA Act""WTOA Act"). The purpose of the Investment Act is to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security. The Investment Act generally prohibits implementation of a direct reviewable investment (based on certain thresholds) by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a "Canadian," as defined in the Investment Act (a "non-Canadian""non-Canadian"), unless, after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the common shares of the company by a non-Canadian (other than a "WTO Investor," as defined below) would be reviewable under the Investment Act if it were an investment to acquire direct control of the company, and the value of the assets of the company were C$5.0 million or more (provided that immediately prior to the implementation of the investment the Company was not controlled by WTO Investors). An investment in common shares of the Company by a WTO Investor (or by a non-Canadian other than a WTO Investor if, immediately prior to the implementation of the investment the Company was controlled by WTO Investors) would be reviewable under the Investment Act if it were an investment to acquire direct control of the company and the value of the assets of the Company equaled or exceeded an amountcertain threshold amounts determined by the Minister of Finance (Canada) (the "Minister") on an annual basis.
The Minister has determinedthreshold for a pre-closing net benefit review depends on whether the purchaser is: (a) controlled by a person or entity from a member of the WTO; (b) a state-owned enterprise (SOE); or (c) from a country considered a "Trade Agreement Investor" under the Investment Act. A different threshold also applies if the Canadian business carries on a cultural business. The 2021 threshold for WTO investors that are SOEs is $415 million based on the thresholdbook value of the Canadian business' assets. The 2021 thresholds for review for direct acquisitions of control of Canadian businesses by private sector investor WTO Investors or vendors (other than Canadians)investors that are not SOEs is $1 billion (unless the WTO member is a party to be C$344 million forone of a list of certain free trade agreements, in which case the year 2013. amount is $1.5 billion), also based on the "enterprise value" of the Canadian business being acquired.
A non-Canadian, whether a WTO Investor or otherwise, would be deemed to acquire control of the company for purposes of the Investment Act if he or she acquired a majority of the common shares of the company. The acquisition of less than a majority, but at least one-third of the shares, would be presumed to be an acquisition of control of the company, unless it could be established that the company is not controlled in fact by the acquirer through the ownership of the shares. In general, an individual is a WTO Investor if he or she is a "national" of a country (other than Canada) that is a member of the World Trade Organization ("WTO Member"Member") or has a right of permanent residence in a WTO Member. A corporation or other entity will be a "WTO Investor" if it is a "WTO Investor-controlled entity," pursuant to detailed rules set out in the Investment Act. The U.S. is a WTO Member. Certain transactions involving our common shares would be exempt from the Investment Act, including:
53
| • | an acquisition of the shares if the acquisition were made in the ordinary course of that person's business as a trader or dealer in securities; |
| • | an acquisition of control of the Company in connection with the realization of a security interest granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and |
| • | an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control in fact of the Company, through the ownership of voting interests, remains unchanged. |
Change in Control
There are no provisions in our articles or in the BCBCA that would have the effect of delaying, deferring or preventing a change in control of our company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our company or our subsidiaries.
Ownership Threshold
Our articles or the BCBCA do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed. Securities legislation in Canada, however, requires every person or company who acquires beneficial ownership of, or control or direction over, voting or our common shares (or securities convertible into such securities) which, together with the acquiror's previously acquired securities, represents 10% or more of the outstanding securities of that we discloseclass to file, subject to certain exceptions, a press release and an early warning report, each of which contain certain prescribed information (including the acquiror's identity, intention and extent of holdings). In addition, such acquiror must make further disclosures where:
(i) | such acquiror or any person acting jointly or in concert with such acquiror, acquires or disposes beneficial ownership of, or acquires or ceases to have control or direction over securities (or securities convertible into such securities) in an amount equal to 2% or more of the outstanding securities of the class of securities that was the subject of such acquiror's most recent early warning report; | |
(ii) | such acquiror's beneficial ownership of, or control or direction over, the outstanding securities of the class of securities that was the subject of the acquiror's most recent early warning report decreases to less than 10%; or | |
(iii) | there is a change in a material fact contained in the acquiror's most recent early warning report. |
Securities legislation in ourCanada also requires insiders of the Company to file reports disclosing information circular for our annual general meeting, holders who beneficially ownabout transactions involving securities of the Company (or related financial instruments) held by such insider. Insiders of the Company include, among others, the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of the Company, directors of the Company and persons or companies that have beneficial ownership of, or control or direction over (or a combination thereof), whether direct or indirect, common shares of the Company carrying more than 10% of our issued andthe voting rights attached to all of the Company's outstanding shares. Most state corporation statutes do not contain provisions governingvoting securities. This threshold is higher than the 5% threshold aboveunder U.S. securities legislation at which shareholder ownershipshareholders must be disclosed. Upon the effectiveness of this registration statement on Form 20-F, we expect that the United States federal securities laws will require us to disclose, in our annual report on Form 20-F, holders who own 5% or more of our issued and outstanding shares.their share ownership.
54
C. | Material Contracts |
There are no otherExcept for contracts other than those disclosed below and those entered into by the Company in the ordinary course of business, that arethe only material tocontracts entered into by the Company and which were entered into in the most recently completed fiscal year or which were entered into beforeprevious two years are the most recently completed fiscal year but are still in effect as of the date of this registration statement.following:
|
|
|
|
| Assignment Agreement |
|
| Memorandum of understanding with Abicom International Ltd. dated February 19, 2019, to assist in the continued development of the Company's Wi-Ti system and prototype. |
(c) | Letter agreement with Aerowave Corporation dated October 17, 2019, whereby the Company acquired the finished goods and inventory held by Aerowave, in exchange the Company issued 50,000 common shares to Aerowave. | |
(d) | Letter of Intent with SDS Group Australia Pty Ltd dated June 9, 2020, to work together to position the Company's Unmanned Aircraft Systems (UAS) for procurement focused evaluations following initial consultation with members of the Australian Government. | |
(e) | Consulting agreement with Douglas Smith, Chairman and a director of the Company, dated April 1, 2020, for services to the Company. The Company will pay Mr. Smith CAD $250,000 per annum, which is payable at the Company's option by the issuance of 1,000,000 common shares of the Company in four equal quarterly instalments in arrears. |
D. | Exchange Controls |
There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident holders of our common shares. Any remittances of dividends to United States residents and to other non-residents are, however, subject to withholding tax. See "Taxation" below.
E. | Taxation |
Certain Canadian Federal Income Taxation
We consider that the following general summary fairly describes the principal Canadian federal income tax consequences applicable to a holder of our common shares who is a resident of the United States, who is not, will not be and will not be deemed to be a resident of Canada for purposes of the Income Tax Act (Canada) and any applicable tax treaty and who does not use or hold, and is not deemed to use or hold, his, her or its common shares in the capital of our company in connection with carrying on a business in Canada (a "non-resident holder""non-resident holder").
This summary is based upon the current provisions of the Income Tax Act (Canada), the regulations thereunder (the "Regulations"), the current publicly announced administrative and assessing policies of the Canada Revenue Agency and the Canada-United States Tax Convention as amended by the Protocols thereto (the "Treaty""Treaty"). This summary also takes into account the amendments to the Income Tax Act (Canada) and the Regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the "Tax Proposals""Tax Proposals") and assumes that all such Tax Proposals will be enacted in their present form. However, no assurances can be given that the Tax Proposals will be enacted in the form proposed, or at all. This summary is not exhaustive of all possible Canadian federal income tax consequences applicable to a holder of our common shares and, except for the foregoing, this summary does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax consequences described herein.
This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular holder or prospective holder of our common shares, and no opinion or representation with respect to the tax consequences to any holder or prospective holder of our common shares is made. Accordingly, holders and prospective holders of our common shares should consult their own tax advisors with respect to the income tax consequences of purchasing, owning and disposing of our common shares in their particular circumstances.
55
Dividends
Dividends paid on our common shares to a non-resident holder will be subject under the Income Tax Act (Canada) to withholding tax at a rate of 25% subject to a reduction under the provisions of an applicable tax treaty, which tax is deducted at source by our company. The Treaty provides that the Income Tax Act (Canada) standard 25% withholding tax rate is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as our company) to residents of the United States, and also provides for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation resident in the United States that owns at least 10% of the voting shares of the corporation paying the dividend.
Capital Gains
A non-resident holder is not subject to tax under the Income Tax Act (Canada) in respect of a capital gain realized upon the disposition of a common share of our company unless such share represents "taxable Canadian property", as defined in the Income Tax Act (Canada), to the holder thereof. Our common shares generally will be considered taxable Canadian property to a non-resident holder if:
| • | the non-resident holder; |
| • | persons with whom the non-resident holder did not deal at arm's length; or |
| • | the non-resident holder and persons with whom such non-resident holder did not deal at arm's length, |
owned, or had an interest in an option in respect of, not less than 25% of the issued shares of any class of our capital stock at any time during the 60 month period immediately preceding the disposition of such shares. In the case of a non-resident holder to whom shares of our company represent taxable Canadian property and who is resident in the United States, no Canadian taxes will generally be payable on a capital gain realized on such shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada.
United States Federal Income Taxation
The following is a general discussion of certain material United States federal foreign income tax matters under current law, generally applicable to a U.S. Holder (as defined below) of our common shares who holds such shares as capital assets. This discussion does not address all aspects of United States federal income tax matters and does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. See "Certain Canadian Federal Income Tax Consequences" above.
The following discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code""Code"), Treasury Regulations, published Internal Revenue Service ("IRS"IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. No assurance can be given that the IRS will agree with such statements and conclusions, or will not take, or a court will not adopt, a position contrary to any position taken herein.
Holders and prospective holders of common shares should consult their own tax advisors with respect to federal, state, local, and foreign tax consequences of purchasing, owning and disposing of our common shares.
56
U.S. Holders
As used herein, a "U.S. Holder" includes a holder of less than 10% of our common shares who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity which is taxable as a corporation for U.S. tax purposes and any other person or entity whose ownership of our common shares is effectively connected with the conduct of a trade or business in the United States. A U.S. Holder does not include persons subject to special provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our common shares is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their shares through the exercise of employee stock options or otherwise as compensation.
Distributions
The gross amount of a distribution paid to a U.S. Holder will generally be taxable as dividend income to the U.S. Holder for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions which are taxable dividends and which meet certain requirements will be "unqualified dividend income" and taxed to U.S. Holders at a maximum U.S. federal rate of 15%. Distributions in excess of our current and accumulated earnings and profits will be treated first as a tax-free return of capital to the extent of the U.S. Holder's tax basis in the common shares and, to the extent in excess of such tax basis, will be treated as a gain from a sale or exchange of such shares.
Capital Gains
In general, upon a sale, exchange or other disposition of common shares, a U.S. Holder will generally recognize a capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on the sale or other distribution and the U.S. Holder's adjusted tax basis in such shares. Such gain or loss will be U.S. source gain or loss and will be treated as a long-term capital gain or loss if the U.S. Holder's holding period of the shares exceeds one year. If the U.S. Holder is an individual, any capital gain will generally be subject to U.S. federal income tax at preferential rates if specified minimum holding periods are met. The deductibility of capital losses is subject to significant limitations.
Foreign Tax Credit
A U.S. Holder who pays (or has had withheld from distributions) Canadian income tax with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign income taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the tax credit, among which are an ownership period requirement and the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In determining the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income. The availability of the foreign tax credit and the application of these complex limitations on the tax credit are fact specific and holders and prospective holders of our common shares should consult their own tax advisors regarding their individual circumstances.
57
Passive Foreign Investment Company Status
We would be a passive foreign investment company (a "PFIC""PFIC") if (taking into account certain "look-through" rules with respect to the income and assets of our corporate subsidiaries in which we own 25 percent (by value) of the stock) either (i) 75 percent or more of our gross income for the taxable year was passive income or (ii) the average percentage (by value) of our total assets that are passive assets during the taxable year was at least 50 percent.
If we were a PFIC, each U.S. Holder would (unless it made one of the elections discussed below on a timely basis) be taxable on gain recognized from the disposition of our common shares (including gain deemed recognized if the common shares are used as security for a loan) and upon receipt of certain "excess distributions" (generally, distributions that exceed 125% of the average amount of distributions in respect to such common shares received during the preceding three taxable years or, if shorter, during the U.S. Holder's holding period prior to the distribution year) with respect to our common shares as if such income had been recognized ratably over the U.S. Holder's holding period for the common shares. The U.S. Holder's income for the current taxable year would include (as ordinary income) amounts allocated to the current taxable year and to any taxable year period prior to the first day of the first taxable year for which we were a PFIC. Tax would also be computed at the highest ordinary income tax rate in effect for each other taxable year period to which income is allocated, and an interest charge on the tax as so computed would also apply. Additionally, if we were a PFIC, U.S. Holders who acquire our common shares from decedents (other than non-resident aliens) would be denied the normally available step-up in basis for such shares to fair market value at the date of death and, instead, would have a tax basis in such shares equal to the decedent's basis, if lower.
As an alternative to the tax treatment described above, a U.S. Holder could elect to treat U.S. as a "qualified electing fund" (a "QEF""QEF"), in which case the U.S. Holder would be taxed currently, for each taxable year that we are a PFIC, on its pro rata share of our ordinary earnings and net capital gain (subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge). Special rules apply if a U.S. Holder makes a QEF election after the first taxable year in its holding period in which we are a PFIC. In the event that we conclude that we will be classified as a PFIC, we will make a determination at such time as to whether we will be able to provide U.S. Holders with the information that is necessary to make a QEF election. Amounts includable in income as a result of a QEF election will be determined without regard to our prior year losses or the amount of cash distributions, if any, received from us. A U.S. Holder's basis in its common shares will increase by any amount included in income and decrease by any amounts not included in income when distributed because such amounts were previously taxed under the QEF rules. So long as a U.S. Holder's QEF election is in effect with respect to the entire holding period for its common shares, any gain or loss realized by such holder on the disposition of its common shares held as a capital asset ordinarily will be capital gain or loss. Such capital gain or loss ordinarily would be long-term if such U.S. Holder had held such common shares for more than one year at the time of the disposition. For non-corporate U.S. Holders, long-term capital gain is generally subject to a maximum U.S. federal income tax rate of 15% for taxable years beginning on or before November 30, 2012. The QEF election is made on a shareholder-by-shareholder basis, applies to all common shares held or subsequently acquired by an electing U.S. Holder and can be revoked only with the consent of the IRS.
As an alternative to making the QEF election, a U.S. Holder of PFIC stock which is publicly traded may in certain circumstances avoid certain of the tax consequences generally applicable to holders of a PFIC by electing to mark the stock to market and recognizing as ordinary income or loss, each taxable year that we are a PFIC, an amount equal to the difference as of the close of the taxable year between the fair market value of the PFIC stock and the U.S. Holder's adjusted tax basis in the PFIC stock. Special rules apply if a U.S. Holder makes a mark-to-market election after the first taxable year in its holding period in which we are a PFIC. Losses would be allowed only to the extent of net mark-to-market gain previously included by the U.S. Holder under the election for prior taxable years. This election is available for so long as the Company's common shares constitute "marketable stock," which includes stock of a PFIC that is "regularly traded" on a "qualified exchange or other market." Generally, a "qualified exchange or other market" includes a national market system established pursuant to Section 11A of the Securities Exchange Act of 1934, or a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located and that has certain characteristics. A class of stock that is traded on one or more qualified exchanges or other markets is "regularly traded" on an exchange or market for any calendar year during which that class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter, subject to special rules relating to an initial public offering. It is not entirely clear whether either the OTCQB or TSXV are qualified exchanges or other markets, or whether there will be sufficient trading volume with respect to the Company's common shares, and accordingly, whether the common shares will be "marketable stock" for these purposes. Furthermore, there can be no assurances that the Company's common shares will continue to trade on any of the exchanges listed above.
58
We believe we were not a PFIC for the year ending November 30, 20132020 and do not expect to be classified as a PFIC for the year ending November 30, 2014.2021. However, PFIC status is determined as of the end of each taxable year and is dependent on a number of factors, including the value of our passive assets, the amount and type of our gross income, and our market capitalization. Therefore, there can be no assurance that we will not become a PFIC for the current taxable year ending November 30, 20142021 or in a future taxable year. We will notify U.S. Holders in the event we conclude that we will be treated as a PFIC for any taxable year.
F. | Dividends and Paying Agents |
There is no dividend restriction; however, we have not declared any dividends since our inception and do not anticipate that we will do so in the foreseeable future. We currently intend to retain future earnings, if any, to finance the development of our business. Any future payment of dividends or distributions will be determined by our Board on the basis of our earnings, financial requirements and other relevant factors. There is no special procedure for nonresident holders to claim dividends. Any remittances of dividends to United States residents and to other nonresidents are, however, subject to withholding tax. See "Taxation" above. | |
|
|
G. | Statements by Experts |
The financial statements of our company for the yearsyear ended November 30, 2019 and 20182020 included in this annual report have been audited by MNPManning Elliott LLP, Chartered Professional Accountants, with a business address at Suite 22001700 - 10211030 West HastingsGeorgia Street, Vancouver, British Columbia, Canada V6E 0C3,2Y3, as stated in their reports appearing in this registration statement and have been so included in reliance upon the reports of such firm given their authority as experts in accounting and auditing.
H. | Documents on Display |
Upon the effectiveness of this registration statement, we will beWe are subject to the informational requirements of the Securities Exchange Act of 1934 (United States), and we will thereafter file reports and other information with the Securities and Exchange Commission. You may read and copy any of our reports and other information at, and obtain copies upon payment of prescribed fees from, the Public Reference Room maintained by the SEC at 100 F Street, N.E., Room 1024, Washington, DC, 20549. In addition, the Securities and Exchange Commission maintains a web site that contains reports and other information regarding registrants that file electronically with the Securities and Exchange Commission at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The documents concerning our company referred to in this registration statementForm 20-F may be viewed at theour offices, of Salley Bowes Harwardt LLP, Suite 1750, 1185206 - 1045 West Georgia Street,8th Avenue, Vancouver, British Columbia Canada V6E 4E6, during normal business hours.V6H 1C3, or you may request them by calling our office at 604-729-2500. Copies of our financial statements and other continuous disclosure documents required under securities rules are available for viewing on the internet at www.sedar.com.
I. | Subsidiary Information |
Our company does not have any subsidiaries.Refer to the notes to the consolidated financial statements under Item 18.
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Financial instruments are agreements between two parties that result in promises to pay or receive cash or equity instruments. The Company classifies its financial instruments as follows: cash and short-term investments are classified as a financial asset at FVTPL, other receivables are classified as loans and receivables, and accounts payable is classified as other financial liabilities, which are measured at amortized cost. The carrying value of these instruments approximates their fair values due to their short term to maturity.
59
The Company has exposure to the following risks from its use of financial instruments:
| • | Credit risk; |
| • | Liquidity risk; and |
| • | Interest rate risk. |
Credit Risk
Credit risk is the risk of financial loss to our company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Our company reduces its credit risk on cash by placing these instruments with institutions of high credit worthiness.
Liquidity Risk
Liquidity risk is the risk that our company is not able to meet its financial obligations as they become due. There can be no assurance that our company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable.favorable. Our company may seek additional financing through equity offerings and advances from related parties, but there can be no assurance that such financing will be available on terms acceptable to the Company.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to risks associated with the effects of fluctuations in the prevailing levels of market interest rates. The Company has no significant interest rate risk. As of November 30, 2017, the Company had cash balance of $96,152 and $Nil in GICs (November 30, 2016: $10,276 and $90,000, respectively). The Company had no interest-bearing debt.
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Not applicable to Form 20-F filed as an Annual Report.
PART II
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
Not applicable.
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Not applicable.
ITEM 15. | CONTROLS AND PROCEDURES |
We have elected to report under Item 15T.
|
|
Evaluation of Disclosure Controls and Procedures
The phrase "disclosure controls and procedures" refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, or the Exchange Act, such as this Annual Report on Form 20-F, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, or SEC. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our chief executive officer, or CEO, and chief financial officer, or CFO, as appropriate to allow timely decision regarding required disclosure.
60
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)13a-15(e) and 15d- 15(e)15d-15(e) under the Exchange Act), as of November 30, 2019,2020, the end of the period covered by this Annual Report on Form 20-F. Based on such evaluation, our CEO and CFO have concluded that as of November 30, 2019,2020, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
Our management, with the participation of our CEO and CFO, has assessed the effectiveness of the internal control over financial reporting as of November 30, 2019.2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO")(COSO) in Internal Control - Integrated Framework (2013 Framework). Based on this evaluation, our management has concluded that the internal control over financial reporting has the following material weakness and significant deficiency in internal controls as of November 30, 2019:2020:
1) The Company does not have a formal policy on closing the general ledger at fiscal year-end which resulted into cut-off errors in the expenses and accounts payable balancesbalances.
2) The Company does not have proper review in place to ensure all the significant transactions and balances are accounted for in the financial statements, in accordance with IFRS, including the deferred tax balance.
This Annual Report on Form 20-F does not include an attestation report of our registered public accounting firm on our internal control over financial reporting due to an exemption established by the JOBS Act for "emerging growth companies."
Changes in Internal Controls over Financial Reporting
As a result of the material weakness and significant deficiency noted above, the Company will adopt the following measures:
1) The Company will develop formal closing procedures that should include a checklist to document who will perform each procedure, when completion of each procedure is due, and when it was accomplished.
2) The Company will develop formal review processes related to the accounting treatment for the significant non-routine transactions to ensure all the transactions are properly accounted for in accordance with IFRS.
Attestation Report of the Registered Accounting Firm
This Annual Report on Form 20-F does not include an attestation report of our registered public accounting firm on our internal control over financial reporting. Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report.
Changes in Internal Controls over Financial Reporting
During the period ended November 30, 2020, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
61
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 judgment in evaluating the benefits of possible controls and procedures relative to their costs.
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
The members of our audit committee are Vivian Katsuris, Tim Crowhurst, Thomas Nash and Angelos Kostopoulos. As defined in National Instrument 52-110 - Audit Committees, Vivian Katsuris, is not "independent". All members are financially literate, meaning that they have the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by our financial statements.
We have adopted a charter for our audit committee. The audit committee is responsible for review of both interim and annual financial statements for our company. For the purposes of performing their duties, the members of the audit committee have the right at all times, to inspect all the books and financial records of our company and any subsidiaries and to discuss with management and the external auditors of our company any accounts, records and matters relating to the financial statements of our company. The audit committee members meet periodically with management and annually with the external auditors. Our audit committee has the overall duties and responsibilities to:
| • | review the financial reporting process to ensure the accuracy of the financial statements of our company; |
| • | assist the Board to properly and fully discharge its responsibilities; |
| • | strengthen the role of the Board by facilitating in depth discussions between directors, management and external auditors; |
| • | evaluate the independent auditor's qualifications, performance and independence; |
| • | facilitate the independence of the independent auditor; |
| • | assess the processes relating to the determination and mitigation of risks and the maintenance of an effective control environment; and |
| • | review the processes to monitor compliance with laws and regulations. |
The Board of Directors has determined that Tim Crowhurst, and Angelos Kostopoulos, who are independent directors, are audit committee financial experts as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.
ITEM 16B. | CODE OF ETHICS |
Our company has not adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we do not believe that, given its current stageour small size and limited operations, a code of development.ethics is warranted. As our company grows, we may adopt a Code of Ethics in the future.
ITEM 16C. | PRINCIPAL |
Audit Fees
Our external auditors, Manning Elliott LLP, Chartered Professional Accountants, charged total fees of $28,000 for the audit engagement. Our previous external auditors, MNP LLP, Chartered Professional Accountants.,Accountants, charged total fees of $40,000 for the year ended November 30, 2018.2019. $32,000 of the $40,000 charged was for audit fees and $8,000 was for audit-related fees or income tax preparation fees. Our external auditors,
62
The following table sets forth the fees for professional audit services for the audit of the Company's annual financial statements by Manning Elliott LLP, Chartered Professional Accountants for the fiscal year 2020 and MNP LLP, Chartered Professional Accountants, charged totalAccountant for fiscal year 2019, respectively, and fees billed for other services rendered during 2020 and 2019.
| Fiscal 2020 | Fiscal 2019 |
Audit Fees (1) | $28,000 | $32,000 |
Audit Related Fees (2) | Nil | 8,000 |
Tax Fees (3) | Nil | Nil |
All Other Fees | Nil | Nil |
Total | $28,000 | $40,000 |
(1) On July 8, 2020, MNP LLP resigned as the auditors of $17,120the Company and Manning Elliott LLP was appointed as the auditors of the Company. Manning Elliott LLP was engaged as auditors for the fiscal year ended November 30, 2017. All2020 and going forward are the auditors for the Company. Manning Elliott LLP did not receive any fees in respect of the $17,120 was for auditfiscal year 2019.
(2) Includes fees associated with assurance and nonerelated services that are reasonably related to the performance of the amount wasaudit or review of the Company's financial statement. This category includes fees related to consultation regarding generally accepted accounting principles.
(3) Tax Fees consist of fees for audit-related fees ortax compliance, tax advice and tax planning. The fee includes the preparation of the Company's income tax preparation fees.returns, franchise tax reports, and other tax filings.
Audit-Related Fees
None.
Tax Fees
None.
All Other Fees
None.Our audit committee pre-approves all audit and non-audit services provided to the Company.
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
Not Applicable.
ITEM 16E. |
|
Not Applicable.
ITEM 16F. | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT |
Effective as of July 8, 2020, the Company did not reappoint MNP LLP as the Company's independent registered public accounting firm, and appointed Manning Elliott LLP to serve as its independent registered public accounting firm. The engagement of Manning Elliott LLP was approved by the board of directors of the Company.
The reports of MNP LLP on the Company's financial statements as of and for the fiscal year ended November 30, 2019 did not contain an adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles.
63
During the Company's fiscal year ended November 30, 2019 and the subsequent interim period from December 1, 2019 to July 8, 2020, (i) there were no disagreements, resolved or not, between the Company and MNP LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of MNP LLP, would have caused MNP LLP to make reference to the subject matter of such disagreements in connection with its report on the Company's financial statements for such year, and (ii) there were no reportable events within the meaning of Item 16F(a)(1)(v) of Form 20-F.
During the Company's fiscal year ended November 30, 2019 and through July 8, 2020, the Company did not consult with Manning Elliott LLP on either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that may be rendered on our financial statements, and Manning Elliott LLP did not provide either a written report or oral advice to us that Manning Elliott LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as defined in Item 16F(a)(1)(v) of Form 20-F and the related instructions, or a reportable event, as defined in Item 16F(a)(1)(v) of Form 20-F.
The Company provided MNP LLP with a copy of the disclosures in Item 16F of this Form 20-F and requested that MNP LLP furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not MNP LLP agrees with the statements in this Item 16F, and if not, stating the respects with which it does not agree. A copy of the letter provided from MNP LLP is filed as Exhibit 15.2 to this Form 20-F.
The Company provided Manning Elliott LLP with a copy of the disclosures in Item 16F of this Form 20-F and requested that Manning Elliott LLP furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not Manning Elliott LLP agrees with the statements in this Item 16F, and if not, stating the respects with which it does not agree. A copy of the letter provided from Manning Elliott LLP is filed as Exhibit 15.3 to this Form 20-F.
PART III
ITEM 17. | FINANCIAL STATEMENTS |
See "Item 18 - Financial Statements".
ITEM 18. | FINANCIAL STATEMENTS |
Our financial statements are stated in United StatesCanadian dollars and are prepared in accordance with IFRS, as issued by the IASB.
The following financial statements and notes thereto are filed with and incorporated herein as part of this registration statement:
| (a) | audited financial statements for the years ended November 30, |
PLYMOUTH ROCK TECHNOLOGIES INC.64
(FORMERLY ALEXANDRA CAPITAL CORP.)CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
November 30, 20192020 and 20182019
(Expressed in Canadian Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 |  |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
To the Board ofShareholders and Directors and Stockholders of Plymouth Rock Technologies Inc. (formerly Alexandra Capital Corp)
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial positionstatements of Plymouth Rock Technologies Inc. (formerly Alexandra Capital Corp)and its subsidiaries (the Company)"Company"), which comprise the consolidated statement of financial position as ofat November 30, 20192020, and 2018, and the related consolidated statements of loss and comprehensive loss, changes in shareholders' equity (deficiency), and cash flows for each of the years in the three year period ended November 30, 2019,2020, and the related notes, including a summary of significant accounting policies and other explanatory information (collectively referred to as the consolidated"consolidated financial statements)statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as ofat November 30, 2019 and 2018, and the results of its consolidated operations2020, and its consolidatedfinancial performance and its cash flows for each of the years in the three year period ended November 30, 2019,2020 in conformityaccordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Material Uncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discusseddescribed in Note 1 to the consolidated financial statements, the Company has incurred a net loss of $4,366,807 during the year endednot generated revenue or cash flow from operations since inception. As at November 30, 2019 and,2020, the Company hadhas a historyworking capital deficiency of losses$242,819 and an accumulated deficit of $5,968,892 that$8,893,128. These conditions raise significantsubstantial doubt about itsthe Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'sthese consolidated financial statements based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our auditsaudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.
The consolidated financial statements as at November 30, 2019 and for the years ended November 30, 2019 and 2018, which are presented for comparative purposes, were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on March 31, 2020.
/s/ Manning Elliott LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, British Columbia
March 24, 2021
We have served as the Company's auditor since 2020.
|
|
|
|
|
| PLYMOUTH ROCK TECHNOLOGIES INC. | |||||||
| (FORMERLY ALEXANDRA CAPITAL CORP.) | |||||||
| Consolidated Statements of Financial Position | |||||||
| (Expressed in Canadian dollars) | |||||||
| As at | Note | November 30, 2019 | November 30, 2018 | ||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash | $ | 583,119 | $ | 2,743,694 | |||
| Accounts receivable | 1,488 | - | |||||
| Sales tax receivable | 12,310 | 10,986 | |||||
| Prepaid expenses | 3 | 105,539 | 49,891 | ||||
| Due from related parties | 7 | 25,070 | 7,400 | ||||
| Total current assets | 727,526 | 2,811,971 | |||||
| Non-current assets | |||||||
| Equipment | 4 | 12,464 | - | ||||
| Intangible assets | 5 & 13 | - | 1,240,781 | ||||
| Goodwill | 5 & 13 | - | 253,975 | ||||
| Total assets | $ | 739,990 | $ | 4,306,727 | |||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Accounts payable | 6 | $ | 217,023 | $ | 112,757 | ||
| Due to related parties | 7 | 10,035 | 3,000 | ||||
| Loan payable | 8 | - | 51,184 | ||||
| Total current liabilities | 227,058 | 166,941 | |||||
| Non-current liabilities | |||||||
| Deferred tax liability | 16 | - | 245,813 | ||||
| Total liabilities | 227,058 | 412,754 | |||||
| SHAREHOLDERS' EQUITY | |||||||
| Share capital | 10 | 5,676,498 | 5,311,034 | ||||
| Shares to be issued | 14 | 22,811 | - | ||||
| Contributed surplus | 736,271 | 185,024 | |||||
| Accumulated other comprehensive loss | 46,244 | - | |||||
| Deficit | (5,968,892 | ) | (1,602,085 | ) | |||
| Total shareholders' equity | 512,932 | 3,893,973 | |||||
| Total liabilities and shareholders' equity | $ | 739,990 | $ | 4,306,727 | |||
Going concern - Note 1PLYMOUTH ROCK TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
| As at | Note | November 30, 2020 | November 30, 2019 | ||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash | $ | 24,713 | $ | 583,119 | |||
| Accounts receivable | 2,786 | 1,488 | |||||
| Sales tax receivable | 4,317 | 12,310 | |||||
| Inventories | 19,695 | - | |||||
| Prepaid expenses | 3 | 25,908 | 105,539 | ||||
| Due from related parties | 7 | 2,500 | 25,070 | ||||
| Total current assets | 79,919 | 727,526 | |||||
| Non-current assets | |||||||
| Equipment | 4 | 66,818 | 12,464 | ||||
| Right-of-use asset | 15 | 114,648 | - | ||||
| Total assets | $ | 261,385 | $ | 739,990 | |||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Accounts payable | 6 | $ | 242,278 | $ | 217,023 | ||
| Lease liability | 15 | 34,105 | - | ||||
| Due to related parties | 7 | 46,355 | 10,035 | ||||
| Total current liabilities | 322,738 | 227,058 | |||||
| Non-current liabilities | |||||||
| Lease liability | 15 | 90,735 | - | ||||
| Total liabilities | 413,473 | 227,058 | |||||
| SHAREHOLDERS' EQUITY (DEFICIENCY) | |||||||
| Share capital | 7, 10 | 7,376,763 | 5,676,498 | ||||
| Shares to be issued | 14 | - | 22,811 | ||||
| Contributed surplus | 10 | 1,298,487 | 736,271 | ||||
| Accumulated other comprehensive income | 65,790 | 46,244 | |||||
| Deficit | (8,893,128 | ) | (5,968,892 | ) | |||
| Total shareholders' equity (deficit) | (152,088 | ) | 512,932 | ||||
| Total liabilities and shareholders' equity (deficit) | $ | 261,385 | $ | 739,990 | |||
| Going concern - Note 1 | |||||||
| Commitments - Note 14 | |||||||
| Subsequent events - Note 18 |
These consolidated financial statements are authorized for issuance by the Board of Directors on March 31, 2020. 24, 2021.
Approved on behalf of the Board:
"Tim Crowhurst""Angelos Kostopoulos"
Tim Crowhurst, Director Angelos Kostopoulos, Director
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board:
PLYMOUTH ROCK TECHNOLOGIES INC. |
5. INTANGIBLE ASSETS AND GOODWILL (continued)
For impairment testing purpose,purposes, the Company identified that each intangible asset is a separate cash-generatingcash- generating unit ("CGU'). Management was unable to project cash flows that cancould be generated from each of the CGUs, and consequently a full impairment loss has been recognized. As of November 30, 2019, the intangible assets acquired from the business acquisition were determined to be fully impaired, and an impairment loss of $1,315,678to write-down the carrying amounts to $nil was charged forrecognized during the 2019 year.
For the purpose of impairment testing, goodwill has been allocated to the CGUs, and the entire goodwill balance has been impaired as management was unable to project cash flows that can be generated from each of the CGUs.year ended November 30, 2019.
During the year ended November 30, 2019, the2020, research and development costs of $399,720 are$386,044 (2019 - $399,720) were expensed as management was unable to demonstrate the future economic benefits to be generated from the utilization of the assets.
6.ACCOUNTS PAYABLE
As at November 30, 20192020 and 2018,2019, the Company's accounts payable relate toconsist of the following:
| November 30, 2019 | November 30, 2018 | 2020 | 2019 | |||||||||
| Professional fees | $ | 80,216 | $ | 32,000 | $ | 74,178 | $ | 80,216 | ||||
| Funds to be returned to investors | 38,646 | 38,646 | 43,046 | 38,646 | ||||||||
| Advertising costs | 8,556 | 3,436 | 5,164 | 8,556 | ||||||||
| Development costs | 42,430 | 13,301 | 77,675 | 42,430 | ||||||||
| Others | 47,174 | 25,374 | 42,215 | 47,175 | ||||||||
| $ | 217,023 | $ | 112,757 | $ | 242,278 | $ | 217,023 | |||||
7.RELATED PARTY TRANSACTIONS AND BALANCES
Key management compensation
The amounts due to and from related parties are due to the directors and officers of the Company. The balances are unsecured, non-interest bearing and due on demand. These transactions are in the normal course of operations and have been valued in these consolidated financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Key management is comprised of directors and officers of the Company.
As at November 30, 2019, $10,035 (November 30, 20182020, $46,355 (2019 - $3,000)$10,035) was due to directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | November 30, 2020 | November 30, 2019 | |||||||||
| Company controlled by CFO | $ | 5,000 | $ | 3,000 | $ | 3,865 | $ | 5,000 | ||||
| CEO of the Company | 5,035 | $ | - | 823 | 5,035 | |||||||
| Director | 41,667 | - | ||||||||||
| $ | 10,035 | $ | 3,000 | $ | 46,355 | $ | 10,035 | |||||
As at November 30, 2019, $25,070 (November 30, 20182020, $2,500 (2019 - $7,400)$25,070) was due from directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | November 30, 2020 | November 30, 2019 | |||||||||
| Company controlled by Corporate Secretary | $ | 5,250 | $ | 5,613 | $ | - | $ | 5,250 | ||||
| CEO of the Company | - | 1,787 | ||||||||||
| Director | 19,820 | - | 2,500 | 19,820 | ||||||||
| $ | 25,070 | $ | 7,400 | $ | 2,500 | $ | 25,070 | |||||
PLYMOUTH ROCK TECHNOLOGIES INC. |
7.RELATED PARTY TRANSACTIONS AND BALANCES (continued)
As at November 30, 2019, $26,578 (November 30, 20182020, $Nil (2019 - $Nil)$26,578) prepayment washad been made to the CEO of the Company and $13,289pertaining to expenses to be incurred on behalf of the SVP for Engineering Operations (November 30, 2018 - $Nil)Company (Note 3).
During the years ended November 30, 2020, 2019 2018 and 2017,2018, the Company entered into the following transactions with related parties:
| November 30, 2019 | November 30, 2018 | November 30, 2017 | November 30, 2020 | November 30, 2019 | November 30, 2018 | |||||||||||||
| Management fees | $ | 123,000 | $ | 71,842 | $ | 13,500 | $ | 114,125 | $ | 123,000 | $ | 71,842 | ||||||
| Consulting fees | 166,667 | - | - | |||||||||||||||
| Accounting fees | 24,490 | 20,748 | - | 22,852 | 24,490 | 20,748 | ||||||||||||
| Rent | 20,000 | - | - | |||||||||||||||
| Share-based payments | 260,145 | - | - | 271,993 | 260,145 | - | ||||||||||||
| Salaries and benefits to CEO | 318,790 | 13,200 | - | 133,387 | 318,790 | 13,200 | ||||||||||||
| $ | 726,425 | $ | 105,790 | $ | 13,500 | $ | 729,024 | $ | 726,425 | $ | 105,790 | |||||||
Accounting fees of $22,852 (2019 - $24,490) were paid to a Company controlled by the CFO and rent of $20,000 (2019 - $Nil) was paid to a Company controlled by a Former director. Consulting fees of $166,667 (2019 - $Nil) were paid or accrued to a Director in common shares. During the year ended November 30, 2020, 500,000 shares valued at $125,000 were issued for consulting services to a director of the Company (Note 10).
8.GOVERMENT ASSITANCE RECEIVED
On May 4, 2020, the Company received a CARES Act Paycheck Protection Program Loan ("PPP Loan") of USD$75,000. The PPP Loan bears interest at 1% per annum and is repayable monthly staring on December 4, 2020. The loan is forgivable if PRT USA meets the requirements outlined below:
i) The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 24-week period after the loan is made; and
ii) Employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee
During the year ended November 30, 2019,2020 it was determined that the Company granted 1,350,000 options tomet the CEO, CFO,requirements for loan forgiveness. As such, the Corporate Secretary,PPP Loan was treated as a government grant and recorded as other income on the Company's directors as follows:
| November 30, 2019 | ||||||
| Number of options granted | Expense for the period | |||||
| CEO | 400,000 | $ | 113,077 | |||
| CFO | 100,000 | 28,269 | ||||
| Corporate Secretary | 100,000 | 28,269 | ||||
| Directors | 750,000 | 90,530 | ||||
| 1,350,000 | $ | 260,145 | ||||
As at November 30, 2019, no options were vested,consolidated statement of loss and stock-based compensation amounting to $692,091 was recognized in profit orcomprehensive loss of which $260,145 were for the Company's officers and directors as above (Note 10).
Management fees consisted of the following:
| November 30, 2019 | November 30, 2018 | November 30, 2017 | |||||||
| Company controlled by Corporate Secretary | $ | 63,000 | $ | 36,842 | $ | 13,500 | |||
| Company controlled by CFO | 60,000 | 30,000 | - | ||||||
| Director fees paid to Former Director | - | 5,000 | - | ||||||
| $ | 123,000 | $ | 71,842 | $ | 13,500 |
8. LOAN PAYABLE
On September 19, 2018, the Company received a loan of $50,000, which is payable within 6 months and bears an annual interest rate of 12%. During the year ended November 30, 2019,2020.
During the year November 30, 2020, the Company fully repaidincurred the loan.following qualifying expenses:
- 24 -
| Expiry Date | Exercise Price | Numbers of warrants outstanding | Weighted average remaining contractual life (year) | Weighted average exercise price | ||||||||
| April 24, 2022 | $ | 0.20 | 2,145,000 | 0.48 | $ | 0.07 | ||||||
| May 15, 2022 | 0.20 | 3,468,831 | 0.80 | 0.11 | ||||||||
| September 30, 2022 | 0.50 | 692,583 | 0.20 | 0.05 | ||||||||
| 6,306,414 | 1.48 | $ | 0.23 |
PLYMOUTH ROCK TECHNOLOGIES INC. |
11. FINANCIAL RISK MANAGEMENT
The Company's financial assets consist of cash, accounts receivable and due from related parties. The estimated fair values of cash, subscription receivable, and due from related parties approximate their respective carrying values due to the short period to maturity.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
a. Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities;
b. Level 2 - inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
c. Level 3 - inputs that are not based on observable market data.
For the years ended November 30, 20192020 and 2018,2019, the fair value of the cash, accounts receivable, accounts payable, and due to and from related parties and loans payable approximate the book value due to the short termshort-term nature.
The Company is exposed to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of counterparty limits, controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, it will have sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company's holdings of cash. The Company believes that these sources will be sufficient to cover the likely short-term cash requirements.
The Company's cash is currently invested in business accounts which is available on demand by the Company for its operations.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company has no significant interest rate risk due to the short termshort-term nature of its interest generating assets.
Credit Risk
Credit risk is the risk of a loss when a counterparty to a financial instrument fails to meet its contractual obligations. The Company's exposure to credit risk is limited to its cash. The Company limits its exposure to credit risk by holding its cash in deposits with high credit quality Canadian financial institutions.
Foreign Currency Risk
The Company is exposed to foreign currency risk on fluctuations related to cash, leases, due from related parties and accounts payable and accrued liabilities that are denominated in US dollars. 10% fluctuations in the US dollar against the Canadian dollar have affected comprehensive loss for the nine-month periodyear by approximately $7,110.$13,325 (2019 - $7,110).
PLYMOUTH ROCK TECHNOLOGIES INC. |
12. SUPPLEMENTAL CASH FLOW INFORMATION
During the yearsyear ended November 30, 2020, 2019 2018 and 2017,2018 the Company incurredhas the following non-cash investing and financing activities as follows:activities:
| November 30 | ||||||||||||||||||
| November 30, 2019 | November 30, 2018 | November 30, 2017 | 2020 | 2019 | 2018 | |||||||||||||
| Non-cash financing activities: | ||||||||||||||||||
| Fair value of options cancelled and expired | $ | 59,553 | $ | - | $ | - | $ | - | $ | 59,553 | $ | - | ||||||
| Fair value of options exercised | 13,590 | 50,080 | 10,907 | - | 13,590 | 50,080 | ||||||||||||
| Fair value of agent warrants granted | 127,254 | - | - | - | 127,254 | - | ||||||||||||
| Shares issued for options exercised | 37,500 | - | - | - | 37,500 | - | ||||||||||||
| Shares issued for warrants exercised | 187,120 | - | 49,050 | - | 187,120 | - | ||||||||||||
| Share issuance costs | - | 128,995 | - | - | - | 128,995 | ||||||||||||
| Non-cash investing activities: | ||||||||||||||||||
| Shares issued for acquisition | - | 1,399,763 | - | - | 1,399,763 | |||||||||||||
| Shares to be issued for acquisition of inventory | 22,800 | - | - | - | 22,800 | - | ||||||||||||
| Shares issued for exploration and evaluations assets | $ | - | $ | - | $ | 6,000 | ||||||||||||
| Shares issued for consulting services | $ | 125,000 | $ | - | $ | - | ||||||||||||
13. BUSINESS ACQUISITIONACQUISITON
On October 31, 2018, the Company completed the acquisition of private Delaware corporation Plymouth Rock Technologies Inc. ("Plymouth Rock USA") in consideration of the issuance of 3,000,000 common shares of the Company (the "Transaction") at $0.413 per share. The Transaction has been accounted for as a business combination, using the acquisition method. The Financial Statements include the financial statements of the Company and from the date of acquisition its 100% interest in Plymouth Rock USA. To account for the Transaction, the Company determined the fair value of assets and liabilities of Plymouth Rock USA at the date of the acquisition.
The purchase price allocation of Plymouth Rock USA is as follows:
| Consideration | Consideration | ||||||
| Common shares | $ | 1,240,200 | |||||
| 1,240,200 | |||||||
| Common shares | $ | 1,240,200 | |||||
| Purchase Price Allocation: | Purchase Price Allocation: | ||||||
| Cash | 47,467 | ||||||
| Prepaid | 2,626 | ||||||
| Intangible assets: | |||||||
| Development assets | 304,000 | ||||||
| Intellectual and engineering development | 936,781 | ||||||
| Loan | (50,674 | ) | |||||
| 1,240,200 | |||||||
| Deferred tax liability | (253,975 | ) | |||||
| Net identifiable assets acquired | 986,225 | ||||||
| Cash | 47,467 | ||||||
| Prepaid | 2,626 | ||||||
| Intangible assets: | |||||||
| Development assets | 304,000 | ||||||
| Intellectual and engineering development | 936,781 | ||||||
| Loan | (50,674 | ) | |||||
| Deferred tax liability | (253,975 | ) | |||||
| Goodwill | Goodwill | 253,975 | 253,975 | ||||
| $ | 1,240,200 | $ | 1,240,200 | ||||
PLYMOUTH ROCK TECHNOLOGIES INC. |
13.BUSINESS ACQUISITIONACQUISITON (continued)
These fair value assessments require management to make significant estimates and assumptions as well as applying judgement in selecting appropriate valuation techniques. The Company issued 231,250 common shares at $0.69 per share as finder's fees to complete the acquisition and the cost related to acquisition were recognized as an expense in the year ended November 30, 2018.
During the year ended November 30, 2019, the Company recognized an impairment of Goodwill amounting toof $256,874 which brought down the carrying value of Goodwill to $Nil as at November 30,2019.$Nil.
14. COMMITMENTS
In November 2018, Plymouth Rock USA entered into two-year lease agreement for leased premises in Plymouth, Massachusetts, commencing December 1, 2018 and ending on November 30, 2020. The minimum base rent is US$2,917 per month for the period from December 1, 2018 to November 30, 2019 and US$3,005 per month from December 1, 2019 to November 30, 2020.
On April 1, 2019, the Company entered into one-year lease agreement for leased premises in Vancouver, British Columbia, commencing April 1,2019 and ending March 31, 2020. The minimum base rent is $2,500 per month.
Total remaining lease payments as of November 30, 2019 are as follows:
| Plymouth, MA | Vancouver, BC | |||||
| US $ | CA $ | |||||
| 2019 | 3,005 | 2,500 | ||||
| 2020 | 33,055 | 7,500 | ||||
| Total | 36,060 | 10,000 |
On October 17, 2019, the Company entered into a binding agreement to acquire the intellectual property, finished goods and inventory and name rights from Massachusetts based aerospace and scientific component manufacturer Aerowave Corporation ("Aerowave"). The acquisition is an asset acquisition. Under the terms of the agreement, Plymouth Rock will payissue Aerowave's principals 50,000 common shares. The common shares will be restricted securities under the US Securities Act and subject to Canadian securities legislation. The fair value of these common shares amounting to $22,811 is presented separately as shares to be issued in the consolidated statements of financial position - equity section.was $22,811. The entire purchase consideration was allocated to finished goods as of the acquisition date. As the Company was not able to sell any of the acquired inventory, and it has no evidence to support the value of these finished goods either, the entire amount has been expensed during the year.year ended November 30, 2019. On September 30, 2020, the Company issued 50,000 common shares to Aerowave (Note 10a).
On January 2, 2020, the Company entered into an advertising agreement with an arm's length party for 12 months. The Company shall pay a total of $36,000 in four equal installments - $9,000 on February 2, 2020, $9,000 on May 2, 2020, $9,000 on August 2, 2020 and $9,000 on November 2, 2020. As at November 30, 2020, $3,000 was included in prepaid (Note 3).
On April 1, 2020 the Company entered into an agreement with a Director of the Company to provide consulting services. The Company shall pay $250,000 annually either through cash in 12 monthly installments at the end of each calendar month or through the issuance of 1,000,000 common shares of the Company in four equal quarterly installments, in arrears (Note 7).
PLYMOUTH ROCK TECHNOLOGIES INC. |
15. RIGHT-OF-USE ASSETS AND LEASE LIABILITY
Right-of-use Assets
The following is the continuity of the cost and accumulated amortization of right-of-use assets, for the year ended November 30, 2020:
| 2020 | |||
| Recognition upon adoption of IFRS 16 | $ | 152,864 | |
| Amortization expense for the year | (38,216 | ) | |
| $ | 114,648 |
Lease liability
The following is the continuity of lease liability, for the year ended November 30, 2020:
| 2020 | |||
| Recognition upon adoption of IFRS 16 | $ | 152,864 | |
| Lease payments | (48,473 | ) | |
| Interest expense on lease liability | 20,449 | ||
| $ | 124,840 | ||
| Current portion | $ | 34,105 | |
| Long-term portion | $ | 90,735 |
As at November 30, 2020, the minimum lease payments for the lease liabilities are as follows:
| Year ending: | |||
| 2021 | $ | 49,925 | |
| 2022 | 51,425 | ||
| 2023 | 52,974 | ||
| $ | 154,324 | ||
| Less: Interest expense on lease liabilities | (29,484 | ) | |
| Total present value of minimum lease payments | $ | 124,840 |
In November 2018, Plymouth Rock USA entered into a two-year lease agreement for leased premises in Plymouth, Massachusetts, commencing December 1, 2018 and ending on November 30, 2020 which was extended for an additional three years. The minimum base rent is USD$2,917 per month for the period from December 1, 2018 to November 30, 2019, USD$3,005 per month from December 1, 2019 to November 30, 2020, USD$3,095 per month from December 1, 2020 to November 30, 2021, USD$3,188 per month from December 1, 2021 to November 30, 2022 and USD$3,284 per month from December 1, 2022 to November 30, 2023.
PLYMOUTH ROCK TECHNOLOGIES INC. |
16. SEGMENTED INFORMATION
The Company operates in one business segment, focusing on developing technologies as described in
Note 1. With the saleacquisition of PRT USA, the Company's principal business activity through its subsidiary was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company now focuses on detection methods with and without the need for a checkpoint of the entire mineral interestsuspect who is being screened. The Company's planned technologies encompass the very latest radar, imaging and Unmanned Aerial System (UAS) technologies for quickly detecting, locating and identifying the presence of the SB Property, the Company no longer pursues the explorationthreats and development of mineral properties.for search and rescue missions for law enforcement.
The Company's revenues were generated in the US and were mostly composed of sales of engineering design services and radar components to well-known US government agencies and prime contractors. All the long-lived assets are located in the U.S. as of November 30, 20192020 and 2018.2019.
17. |
16. INCOME TAXES
The following table reconciles the expected income taxes expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the statement of operations and comprehensive loss for the years ended November 30, 2019, 2018 and 2017:
| 2019 | 2018 | 2017 | |||||||
| Net loss before tax and comprehensive loss | $ | (4,612,286 | ) | $ | (998,225 | ) | $ | (115,989 | ) |
| Statutory tax rate | 27.00% | 26.92% | 26.00% | ||||||
| Expected income tax (recovery) | (1,245,317 | ) | (268,689 | ) | (30,157 | ) | |||
| Non-deductible items | 61,781 | 43,592 | - | ||||||
| Goodwill impairment | 186,864 | - | - | ||||||
| Change in estimates | (214,745 | ) | - | - | |||||
| Change in deferred tax assets not recognized | 965,938 | 213,774 | 30,157 | ||||||
| Income tax expense (recovery) | $ | (245,479 | ) | $ | (11,323 | ) | $ | - |
The statutory tax rate increased from 26.92% to 27.00% due to an increase in the BC corporate tax rate on January 1, 2018.
Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their corresponding values for tax purposes. Deferred tax assets (liabilities) at November 30,2020, 2019, and 2018 are comprised of the following:2018:
| 2018 | Tax recovery (expense) | Foreign exchange | 2019 | |||||||||
| $ | $ | $ | $ | |||||||||
| Intangible assets | (257,223 | ) | 256,875 | 348 | - | |||||||
| Non-capital losses carryforwards | 11,410 | (11,396 | ) | (14 | ) | - | ||||||
| Net deferred tax assets (liability) | (245,813 | ) | 245,479 | 334 | - |
| 2020 | 2019 | 2018 | |||||||
| Net loss before tax and comprehensive loss | $ | (2,924,236 | ) | $ | (4,612,286 | ) | $ | (998,225 | ) |
| Statutory tax rate | 27.00% | 27.00% | 26.92% | ||||||
| Expected income tax (recovery) | $ | (789,544 | ) | $ | (1,245,317 | ) | $ | (268,689 | ) |
| Non-deductible items and others | 44,866 | 61,781 | 43,592 | ||||||
| Goodwill impairment | - | 186,864 | - | ||||||
| Change in estimates | - | (214,745 | ) | - | |||||
| Change in deferred tax assets not recognized | 744,678 | 965,938 | 213,774 | ||||||
| Income tax expense (recovery) | $ | - | $ | (245,479 | ) | $ | (11,323 | ) |
PLYMOUTH ROCK TECHNOLOGIES INC. |
17.INCOME TAXES (continued)
The unrecognized deductible temporary differences as at November 30, 20192020 and 20182019 are comprised of the following:
| 2019 | 2018 | |||||
| Exploration and evaluation assets | $ | 35,000 | $ | 61,000 | ||
| Non-capital loss carryforwards | 2,258,584 | 1,350,310 | ||||
| Net operating losses | 1,426,074 | - | ||||
| Intangible assets | 1,316,280 | - | ||||
| Financing costs | 74,880 | 232,465 | ||||
| Capital losses | 78,006 | - | ||||
| Cumulative eligible capital | 270 | 270 | ||||
| Total unrecognized deductible temporary differences | $ | 5,189,094 | $ | 1,644,045 |
|
16. INCOME TAXES (continued)Non-capital losses carryforward:
The Company has non-capital loss carryforwards and net operating losses, for which no deferred tax asset has been recognized of approximately $3,684,658 (2018: $1,350,310)$6,111,538 (2019: $3,684,658) which may be carried forward to apply against future income for Canadian and US income tax purposes, subject to the final determination by taxation authorities, expiring in the following years:
Expiry |
|
| 2020 | ||
2030 | $ | 2,937 | |||
2031 |
| 15,506 | $ | 2,937 | |
2032 |
| 57,655 | 73,161 | ||
2033 |
| 59,622 | 59,622 | ||
2034 |
| 117,154 | 117,154 | ||
2035 |
| 122,790 | 122,790 | ||
2036 |
| 138,822 | 138,822 | ||
2037 |
| 127,413 | 127,413 | ||
2038 |
| 675,203 | 675,203 | ||
2039 |
| 2,367,556 | 2,350,798 | ||
| 2040 | 2,443,638 | ||||
TOTAL | $ | 3,684,658 | $ | 6,111,538 | |
PLYMOUTH ROCK TECHNOLOGIES INC. |
17. 18.SUBSEQUENT EVENTS
On February 4, 2020,26, 2021, the Company announced that itsigned a Letter of Intent (the "LOI") to acquire Tetra Drones Ltd. ("Tetra"), a company with which the Company has arrangedclosely collaborated on sensor technology. Pursuant to the LOI, the Company will acquire Tetra for the sum of £350,000 GBP, payable on an installment basis. As a non-brokered private placement financingresult of upthe acquisition, the Company will own all outstanding shares of Tetra and will assume Tetra's existing liabilities. The principal owner of Tetra will become part of the Company's management and shall be paid a monthly salary along with bonus shares or other equity instruments at the discretion of the board. All expenses related to 10,000,000 unitsthe transaction will be paid by the Company. The Company is currently in the process of securitiesseeking counsel regarding attaining the necessary capital through equity issuance.
On January 29, 2021, the Company issued 3,180,000 Units at a price of $0.40 CAD$0.20 per Unitunit for aggregate gross proceeds of up to $4,000,000 CAD (the "Offering").$636,000. Each Unit will beunit is comprised of one (1) common share and one-half of one (1/2)full non-transferable common share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $0.80 CAD$0.25 for two (2)five years. The Company paid finders' fees in the amount of $10,480, issued 170,000 common shares, and issued 8% broker warrants in connection with some subscribers of the Offering.
On January 21, 2021, the Company granted 1,550,000 incentive stock options to directors, consultants, and employees with an exercise price of $0.75 per share for a period of five years from closing of the Offering. The expiry date of the warrants may be accelerated bygrant.
Subsequent to November 30, 2020, the Company if theissued an aggregate of 350,000 common shares pursuant to the exercise of stock options at prices ranging from $0.50 to $0.60 per common share.
Subsequent to November 30, 2020, the Company achieve a volume weighted average trading price greater than $1.00 CAD for ten (10) consecutive trading days, after four months and one day following closingissued an aggregate of the Offering. Finders' fees of up to 7.0%, payable in cash or Units, may be payable on a portion of the Offering. On March 16, 2020, due5,700,666 common shares pursuant to the instability in the financial markets caused by the COVID-19 pandemic,exercise of warrants at prices ranging from $0.20 to $0.50 per common share.
On December 31, 2020, the Company cancelled this private placement.
In March 2020, the World Health Organization declaredissued 250,000 common shares for payment of consulting fees to a global pandemic known as COVID-19. The expected impacts on global commerce are expected to be far reaching. Material uncertainties may come into existence that could influence management's going concern assumption. The duration and impact of the COVID-19 outbreak is unknown at this time and it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its subsidiary, in future periods, such as:
The management is closely evaluating the impact of COVID-19 on the Company's business.Director.
PLYMOUTH ROCK TECHNOLOGIES INC.
(FORMERLY ALEXANDRA CAPITAL CORP.)
FORM 51-102F1
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Year Ended November 30, 20192020
|
INTRODUCTION
The following information, prepared as of March 31, 2020,24, 2021, should be read in conjunction with the audited consolidated financial statements of Plymouth Rock Technologies Inc. ("the Company" or "Plymouth Rock" or "PRT") for the yearsyear ended November 30, 2019 and 2018;2020 as well as the audited consolidated financial statements of the Company for the year ended November 30, 2019; including the notes thereto. The financial statements and financial data contained in this discussion and analysis are presented in accordance with International Financial Reporting Standards ("IFRS"). The reporting currency is the Canadian dollar.
The following discussion and analysis provide information that management believes is relevant to the assessment and understanding of the Company's results of operations and financial conditions.condition. Certain statements herein contain forward-looking statements relating to the operations or to the environment in which we operate, which are based on our operations, forecasts, and projections. Forward-looking statements are not guaranteed of future performance. They involve risks, uncertainties and assumptions; and actual results may differ materially from those anticipated in these forward-looking statements. The risks include those outlined under the "Risk Factors" section of this MD&A and elsewhere in the Company's public disclosure documents. Included in the risk factors is the public health crisis caused by the pandemic, COVID-19 which caused disruptions in global supply chain, business operations and financial markets. As of report date, the extent to which this crisis may impacthas delayed the ability of the Company is uncertain. However, itto progress and test its technologies development. It is possible that COVID-19 may have aother material adverse effect on the Company's business and financial condition.condition, however the full effects of the impact are uncertain.
BUSINESS OVERVIEW AND OVERALL PERFORMANCE
The Company was incorporated under the Business Corporations Act of British Columbia on October 17, 2011. The head office, principal address and registered and records office of the Company are located at300206 - 2015 Burrard Street,1045 West 8th Avenue, Vancouver, B.C., V6J 3H4.
On March 7, 2016, the Company announced that it received final approval to list its common shares on the Canadian Securities Exchange (the "CSE") and voluntarily delisted its common shares from the TSXV. The Company's common shares commenced trading on the CSE at market open on March 10, 2016 and were delisted from the TSXV effective March 9, 2016. The Company's common shares were traded under symbol "AXC" on the CSE.BC, V6H 1C3.
On October 31, 2018, the Company completed its business acquisition of Plymouth Rock Technologies Inc. (Plymouth Rock USA) and changed its name from Alexandra Capital Corp. to Plymouth Rock Technologies Inc. with new trading symbol "PRT" on November 1, 2018 (See "Business Acquisition" section of this report). As a result of the acquisition, the Company's principal business activity through its subsidiary, Plymouth Rock USA, was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company focuses on detection methods with and without the need for a checkpoint or the compliance of the suspect who is being screened. The Company's planned technologiesproducts encompass the very latest radar, imaging and Unmanned Aerial System (UAS) technologies for quickly detecting, locating and identifying the presence of threats.threats and for other applications such as, search and rescue missions for law enforcement, environmental and humanitarian missions for global government agencies, and inspection of infrastructure for structural damage.
On January 8, 2019, the Company's common shares commenced trading on the Frankfurt Stock Exchange in Germany under the Symbol: 4XA, WKN# - A2N8RH.
On March 12, 2019, Manchester Metropolitan University assigned and on October 8, 2019, transferred the Millimeter Wave, Shoe Scanning technology IP to the Company for the consideration of $30,000. The Millimeter Wave Shoe Scanner is a floor-mounted 3D imaging system that uses harmless millimeter wave imaging techniques to inspect footwear. The scanner is then able to identify if the footwear has been altered or is being used to transport concealed items, such as weaponry, substances, compounds, or electronic items. As of October 8, 2019, the IP and patent transfer for this technology was already completed.
On April 9, 2019, the Company was accepted as a member of the USA National Safe Skies Alliance, Inc, which is a non-profit organization that works with airports, government, and industry to maintain a safe and effective aviation security system.
|
On April 25, 2019, the Company was accepted as a member of the Canadian Association of Defense and Security Industries, which is dedicated to scientific, engineering, industrial, and management preparedness for the common defense of Canada.
Effective August 27, 2019, the Company's common shares commenced trading on the OTC Markets Group ("OTCQB") under the symbol: PLRTF.
On October 15, 2019, the Company announced the launch oflaunched its new product under development, the PRT-X1 which is a next level Unmanned Aerial System (UAS) drone designed with the direct input of law enforcement, intelligence agencies, military, and rescue services to address the global requirement for a multi-role, state-of-the-art aerial platform (See DEVELOPING TECHNOLOGIES).
On October 16,17, 2019, the Company entered into a binding agreement withto acquire the intellectual property, finished goods and inventory and name rights from Massachusetts based aerospace and scientific component manufacturer Aerowave Corporation ("Aerowave") whereby. The acquisition is an asset acquisition. Under the terms of the agreement, Plymouth Rock will pay Aerowave's principals 50,000 common shares. The shares will be restricted securities under the US Securities Act and subject to Canadian securities legislation. The fair value of these shares amounting to $22,811 is presented separately as shares to be issued in the consolidated statements of financial position - equity section. The shares were subsequently issued on September 30, 2020.
On December 3, 2019, the Company significantly acquiredlaunched its new SS1 Shoe-Scanner, floor-mounted 3D imaging system that uses harmless millimeter wave imaging techniques combined with artificial intelligence to inspect footwear without the finished goods and inventory,need for removal by the wearer. The Company also filed a consideration equal to 50,000 shares of Plymouth Rock Technologies Inc. times $0.46 per share which isUS Patent application for its "Ellipsoidal" scanning technique that will be used in the average closing price on OTCQB market overSS1 Shoe-Scanner (See DEVELOPING TECHNOLOGIES).
During the twenty days prior to the closing date of the sale.
Onquarter ended February 4,29, 2020, the Company announcedhad produced successful 3D Images of potential threats or other concealments utilizing its new SS1 Shoe-Scanner (See DEVELOPING TECHNOLOGIES).
During the quarter ended February 29, 2020, the Company designed, fabricated, and cancelleddelivered millimeter-wave sensor components to NASA's Jet Propulsion Laboratory (JPL) and The National Institute of Standards and Technology (NIST).
During the quarter ended May 31, 2020, the Company received Permission for Commercial Operations (PfCO) from the Civil Aviation Authority (CAA) to operate Small Unmanned Aircraft (SUA) / Small Unmanned Surveillance Aircraft (SUSA).
During the quarter ended May 31, 2020, the Company was awarded a non-brokered private placement financingGold Stevie Award from The 18th Annual American Business Awards® under the category of upPR: Technology; and a Silver ADDY Award from The American Advertising Federation for its corporate video, which premiered to 10,000,000 units (the "Units") of securities at a price of $0.40 CAD per Unit for aggregate gross proceeds of up to $4,000,000 (the "Offering"). Each Unit will be comprised of one (1) common shareinvestors and one-half of one (1/2) non-transferable common share purchase warrant, with each whole warrant entitlingglobal audiences in 2019.
During the holder to purchase one additional common share at a price of $0.80 CAD for two (2) years from closing of the Offering. Finders' fees of up to 7.0%, payable in cash or Units, may be payable on a portion of the Offering. On March 16,quarter ended August 31, 2020, due to instability in the financial markets caused by the COVID-19 pandemic, the company cancelled this private placement financing.
Letter of Intent
On December 1, 2017, the Company entered into a non-binding letterLetter of intentIntent (LOI) with SDS Group Australia Pty Ltd ("LOI"SDS"), which superseded and replaced to work together to position PRT's Unmanned Aircraft Systems (UAS) for procurement focused evaluations following initial consultation with members of the previous letter of intent announced on November 10, 2017, with WMC ApS ("WMC"), a private Danish company based in Copenhagen which brokers and develops payment processes in cryptocurrency transactions. On April 10, 2018,Australian Government.
During the quarter ended August 31, 2020, the Company announcedbegin initial production of its X1 platform with integrated 5G command and control modules as standard. Airbus Industries first showcased the 5G UAS technology in 2019 as a proof of concept.
On July 16, 2020, the Company began a strategic alliance with Hummingbird Drones Fire AI for wildfire analysis from the Company's fleet of drones.
|
During the quarter ended August 31, 2020, the UK Patent Office issued patent PM333755GB that it cancelledcovers the proposed acquisitionutilization of WMC.millimeter wave (MMW) technologies for fast, contactless screening of passengers and individuals in highly secure environments.
On September 17, 2020 the Company executed a Letter of Intent (LOI) with R3 Technologies Inc. ("R3T") to collaborate on the market readiness, alternative use and sale of stand-off threat detection solutions to the US and international markets. R3T specializes in microwave radar detection systems, providing scientific and engineering capabilities to USA government laboratories and the US Department of Defense.
On October 29, 2020 the Company received a "Notice of Allowance" by the US Patent and Trademark Office of patent application No. 16/560,480 for the "Method and System for Determining Dielectric Properties of an Object". The invention uses millimeter wave ("MMW") shoe-scanning technologies for fast, contactless screening of passengers' footwear in highly secure environments such as airports, prisons, border points of entry and government buildings (See DEVELOPING TECHNOLOGIES).
During the quarter ended November 30, 2020, the Company agreed to collaborate on the strategic market placement of products and services with Qatar based STA QSTP LLC ("STA") focusing on state security utilizing UAVs, sensors, and detectors from the Company.
On November 19, 2020, the SS1 Shoe-Scanner was accepted into the Transport Security Admission (TSA) Innovation Task Force (ITF) evaluation process (See DEVELOPING TECHNOLOGIES).
On January 28, 2021, the Company supplied its first Unmanned Aerial Vehicle (UAV) to the United Nations (UN) as part of UNSOM (United Nations Assistance Mission in Somalia) under the United Nations Environment Program (UNEP) for a tree-reseeding mission (See DEVELOPING TECHNOLOGIES).
As at February 3, 2021, the Company has reached a milestone in its progress of MediMod, the latest addition to its PRT X1 and XV UAV (Unmanned Aerial Vehicle) payload systems. MediMod is an active insulated refrigerated storage module that will have multiple medical uses and advantages, including assisting with the immediate need for rapid deployment of COVID-19 vaccine transportation to remote sites or between medical facilities as part of multiple national campaigns for mass vaccination (See DEVELOPING TECHNOLOGIES).
As at February 9, 2021, the Company's CODA-1(Cognitive Object Detection Apparatus) system has undergone further successful testing for detection of various concealed weaponry on a person at its laboratories. CODA is a uniquely designed, ultra-compact radar device that can be utilized for a variety of applications across many industries, covering everything from traditional radar for drone or aircraft detection, to low-power stand-off weapon detection.
On February 10, 2021 during the UN mission in Somalia a PRT drone broke the existing beyond visual line of sight (BVLOS) drone delivery record, and also believed to have set an additional new record for complete 'round trip' autonomous delivery capability. UN observers and aviation officials that monitor scheduled UN flights have agreed to supply the recorded flight data and witness statements required for the official recognition by adjudicators of Guinness World Records.
As at February 24, 2020, the Company's XV-S drone has passed more than 20 hours of flight testing. The XV-S is a fixed-wing UAS platform capable of vertical take-off and landing, removing the requirement for large runways or launch catapult and recovery nets, which are usually required by most fixed-wing drones. The XV-S can launch fully autonomously from an area as small as 100 square feet and operate for up to 4 hours.
Business Acquisition
On April 10, 2018, the Company entered into a non-binding letter of intent ("LOI") with Plymouth Rock Technologies Inc. ("Plymouth Rock USA"), followed by a definitive agreement on June 21, 2018. Plymouth Rock USA is a private Delaware corporation that is developing systems using microwave radar techniques for threat detection screening in Wi-Fi enabled zones in buildings and places, like airports, shopping malls, schools and sports venues. Plymouth Rock USA is also developing a millimeter-wave imaging system, which can be drone-mounted to detect weapons, such as guns, suicide vests, and explosives in mass gatherings and has both military and civilian applications. PRT is also working on a compact millimeter-wave radar imaging system for scanning shoes for concealed weapons and contraband.
On October 31, 2018, pursuant to the definitive agreement with Plymouth Rock USA, the Company received shareholder approval to change the name of the Company and symbol with the acquisition of Plymouth Rock USA. For the acquisition, the Company issued 3,000,000 common shares of the Company to the four shareholders of Plymouth Rock USA. The Company also issued 231,250 common shares of the Company as a finder's fee. The Company changed its name from Alexandra Capital Corp. to Plymouth Rock Technologies Inc. with the new trading symbol "PRT" on November 1, 2018.
|
With the acquisition, the Company's principal business activity through its subsidiary, Plymouth Rock USA, was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company now focuses on detection methods with and without the need for a checkpoint or the compliance of the suspect who is being screened. The Company's planned technologies encompass the very latest radar, imaging and imagingUnmanned Aerial System (UAS) technologies for quickly detecting, locating and identifying the presence of threats.threats and for search and rescue missions for law enforcement.
DEVELOPING TECHNOLOGIES
The Company's core technologies include: (1) A Millimeter-wave Remote Imaging system from Airborne Drone ("MiRIAD"); (2) A compact millimeter-wave radar system for scanning shoe's ("Shoe-Scanner"); and (3) Microwave radar techniques for threat detection screening in Wi-Fi enabled zones in buildings and places, such as airports, shopping malls, schools and sports venues ("Wi-Ti "Wi-Ti" - Wireless Threat Indication). In addition, the Company has announcedlaunched on October 15, 2019 the launch of its newest technology, the "PRT-X1", a next level Unmanned Aerial System (UAS) drone.
MiRIAD (Millimeter-wave Remote Imaging from Airborne Drone) Updates
On April 3, 2019, the Company announced that itsCompany's MiRIAD system has passed internal payload flight testing demonstrations in the Morongo and Coachella Valley, California, USA. The test allowed the Company to assess the stability and maneuverability of a UAS (Unmanned Aircraft System) with a MiRIAD system attached. With the successful payload test and lightweight antenna design, the Company's management and scientific advisors are confident that Plymouth Rock would be the first company to realize millimeter-wave imaging from commercial drones.
In Q4 2019, the Company fielded a multispectral imaging capability aboard a small Search & Rescue drone (the "PRT=X1") by combining visible, IR (infrared) and millimeter-wave imaging sensors on a single aerial vehicle. Chemical trace detection sensors are also being investigated along with sensors that measure human biometrics, which is the measurement and statistical analysis of people's unique physical and behavioral characteristics. The technology is mainly used for identification and access control, or for identifying individuals who are under surveillance.
Increasing threat of terrorist activities, rising territorial conflicts, and geopolitical instabilities have led to the rise in the demand for threat detection systems. Also, increasing need for large-scale surveillance systems at public and commercial places is driving the demand for threat detection equipment.
The threat detection systems market is led by the public infrastructure that is further segmented into airports, railway stations, sports stadiums, shopping malls, pilgrimages, and others. The high demand for threat detection devices from airports and shopping malls, especially for explosive detectors, video surveillance systems, and biometric systems, is one of the major factors driving the growth of the threat detection systems market for the public infrastructure application.
Millimeter Wave, Shoe Scanning Technology
On March 12, 2019, the Company announced that Manchester Metropolitan University assigned the Millimeter-wave, Shoe Scanning technology IP to the Company for the consideration of $30,000. The Millimeter-wave Shoe Scanner is a floor-mounted 3D imaging system that uses harmless millimeter-wave imaging techniques to inspect footwear. The scanner is then able to identify if the footwear has been altered or is being used to transport concealed items, such as weaponry, substances, compounds, or electronic items. As of October 8, 2019, the IP and patent transfer for this technology was completed.
|
The Millimeter-wave Shoe Scanner allows for the rapid screening of footwear without necessitating removal of shoes. With a screening time objective of 30 PPM (Persons/Minute) the Shoe Scanner is ideal for airport terminals, prison/correctional facilities, public events, theft prevention and other high throughput, screening applications.
Wi-Ti Updates
On February 19, 2019, the Company signed a memorandum of understanding ("MOU") with Abicom International Ltd. ("Abicom International"), a Qualcomm authorized design partner, to assist in the continued development of the Plymouth Rock Wi-Ti (Wireless Threat Indication) system and prototype. Wi-Ti is a passive detection system that uses artificial-intelligence ("AI") to analyze the radio waves within an area. The system uses radar-based algorithms to filter common items such as cell phones and general pocket items from concealed threats items such as assault weaponry and improvised explosive devices ("IED'S").
The past three years have seen significant advances in the monitoring of Wi-Fi radio wave analysis. This includes Wi-Fi used to track and trace the movements of people in real time through walls. Similar techniques have used Wi-Fi radio waves to detect subtle changes in breathing and heart rates. The Plymouth Rock Wi-Ti technology advances that analysis to concealed threat detection. Unlike other emerging screening technologies Wi-Ti can be used in airport concourse areas, stadiums and open spaces at stand-off distances. Our unique radar imaging and signal processing technology allows for non-intrusive screening of crowds in real time.
Abicom International has worked with many prominent security and technology companies, including Bosch Security, Siemens Transportation, QinetiQ, Harris Systems and Northern Light Technologies. "Abicom International's status as a Qualcomm design center is an assurance of excellence that is granted to less than eleven companies globally". The partnership between Plymouth Rock and Abicom International is about the drive to continuously expand the realm of possibilities for Wi-Fi based technologies.
PRT-X1 Updates
On October 15, 2019, the company announced the launch ofCompany launched its new product under development, the PRT-X1 which is a search and rescue grade Unmanned Aerial System (UAS) drone designed with the direct input of law enforcement, intelligence agencies, military, and rescue services to address the global requirement for a multi-role, state-of-the-art aerial platform. The productionprototype PRT-X1 has been unveiled live at the 2019 International Security Conference (ISC), at the Javits Center in New York City on November 20-21, 2019. In
As of the end of November 2020, the PRT-X1 UAS will be submitted to the U.S Army's Unique Mission Cell Program, TSOA,is starting its low rate demonstration phase. Multiple X1 systems are being manufactured for war-fighter evaluations.various applications and targeted customers.
INTEREST IN MINERAL PROPERTIES
On February 17, 2014, and further amended on May 2, 2014, the Company entered into an Option Agreement, with Eastland Management Ltd. whereby the Company acquired an option to earn an undivided 100% interest in and to the eight (8) mineral claims comprising the Southern Bell ("SB") Property, located approximately 25 kilometers west of Merritt, British Columbia totaling 3,517 hectares. The Option Agreement was amended on May 2, 2014 to substitute Eastland Management Ltd. for Qualitas Holdings Corp. as the optionor of the claims.
On August 26, 2015, the Company and Eastland Management amended the Option Agreement so that on the first anniversary of Exchange approval (August 11, 2015) the Company must arrange for payment of $10,000 to Eastland Management in lieu of the original obligation to issue 200,000 common shares. All other aspects of the Option Agreement remain unchanged.
In order to maintain the Option in good standing and earn 100% interest in the SB Property, the Company was required to incur exploration expenditures totaling $100,000 on or before August 11, 2015 (completed). The Company was also required to make cash payments to the vendors of the Option of $10,000 upon receipt of the Technical Report (paid), $15,000 at the time of Exchange approval (paid) and $10,000 on the first anniversary ofExchange approval (paid). Additionally, the Company had to issue 500,000 shares (200,000 upon Exchange approval (issued) and 300,000 on or before the second anniversary (issued).
During the year ended November 30, 2018, the Company sold its entire interest in the SB Property for a cash payment of $15,000, incurring a loss on the disposition of exploration and evaluation assets of $156,012. With the business acquisition and the sale of the mineral interest of the SB Property, the Company no longer pursues the exploration and development of mineral properties.
|
RESULTS OF OPERATIONS
Selected Annual Information
The following table provides a brief summary of the Company's financial operations for the last three fiscal years. This information has been presented in accordance with International Financial Reporting Standards ("IFRS"). The reporting currency is the Canadian dollar. For more detailed information, please refer to the November 30, 2020, 2019 2018 and 20172018 audited financial statements.
| Year Ended | Year Ended | Year Ended |
| November 30, 2019 | November 30, 2018 | November 30, 2017 |
Revenues | $ 28,257 | $ - | $ - |
Interest income | 14,226 | 8,630 | 370 |
Net income (loss) for the year | (4,366,807) | (986,901) | (115,989) |
Basic and diluted earnings (loss) |
|
|
|
per share | (0.14) | (0.04) | (0.01) |
Total assets | 739,990 | 4,306,727 | 760,862 |
Total long term liabilities | - | 245,813 | - |
Cash dividends | - | - | - |
| Year Ended | Year Ended | Year Ended |
| November 30, 2020 | November 30, 2019 | November 30, 2018 |
Revenues | $ 70,931 | $ 28,257 | $ - |
Interest income | 193 | 14,226 | 8,630 |
Net income (loss) for the year | (2,924,236) | (4,366,807) | (986,901) |
Basic and diluted earnings (loss) |
|
|
|
per share | (0.08) | (0.14) | (0.04) |
Total assets | 261,385 | 739,990 | 4,306,727 |
Total long term liabilities | 90,735 | - | 245,813 |
Cash dividends | - | - | - |
Year ended November 30, 2020 and 2019
During the year ended November 30, 2019,2020, the Company had a comprehensive loss of $4,320,563$2,904,690 compared to a comprehensive loss of $986,901$4,320,563 for the year ended November 30, 2018.2019. The increasedecrease in comprehensive losses were causedprimarily driven by the following:
|
Year ended November 30, 2018
During the year ended November 30, 2018, the Company had a comprehensive
During the year ended November 30, 2018 and 2017, the Company's expenses by category consisted of: business development of $11,326 (2017 - $Nil), accounting fees of $66,463 (2017 - $19,920), consulting fees of $187,015 (2017 - $14,742), general office expenses of $46,466 (2017 - $2,979), insurance fees of $9,500 (2017 - $Nil), legal fees of $166,124 (2017 - $43,691), management fees of $71,842 (2017 - $13,500), rent of $30,000 (2017 - $2,500), transfer agent and filing fees of $71,076 (2017 - $19,027), and Wages, salaries and benefits of $21,843 (2017 - $Nil).
The increase in net loss in the year ended November 30, 2018 compared with the year ended November 30, 2017income was lower primarily due to significant increases in consulting fees, legal fees, accounting fees, and transfer agent and filing fees associated with the due diligence, administration, filing and compliance related expensesfluctuations of the LOI with WMC and the acquisition of Plymouth Rock USA, and the non-brokered private placement closed on May 18, 2018. Business development costs and general office expenses increased as a result of increased activities associated with the due diligence and administration costs pursuant to new agreements and private placements. Rent expenses also increased for the Company's occupancy in Canada and the US.
Interest income earned for the year ended November 30, 2018 was $8,630 compared to $370 during the year ended November 30, 2017. The increase in interest income was primarily due to the increase of funds in the Company's bank accounts.
Year Ended November 30, 2017
During the year ended November 30, 2017, the Company had a comprehensive loss of $115,989 compared to a comprehensive loss of $108,087 of the year ended November 30, 2016.
During the years ended November 30, 2017 and 2016, the Company's expenses by category consisted of: accounting fees of $19,920 (2016 - $21,244), consulting fees of $14,742 (2016 - $Nil), legal fees of $43,691 (2016 - $21,584), general office expenses of $2,979 (2016 - $1,208), rent expenses of $2,500 (2016 - $Nil), and transfer agent and filing fees of $19,027 (2016 - $54,451). The increase in net loss in the year ended November 30, 2017 compared with the year ended November 30, 2016 was primarily due to the consulting fees incurred for the LOI with WMC.
Interest income earned for the years ended November 30, 2017 was $370 compared to $900 during the year ended November 30, 2016. The decrease in interest income was primarily due to the reduction of funds in the Company's short-term investment account.
Fourth Quarter Results
During the quarter ended November 30, 2019,2020, the Company had a net loss of $2,460,265$625,644 compared to a net loss of $557,166$2,460,265 of quarter ended November 30, 2018.2019. The operating expenses consist of accounting and audit fees of $46,264 (2018$32,000 (2019 - $37,165)$46,264), business development of $292,079 (2018$113,551 (2019 - $3,980)$292,079), consulting fees of $71,140 (2018$170,462 (2019 - $55,119)recovery of $55,379), legal fees of $36,497 (2018$39,848 (2019 - $48,957)$36,497), management fees of $31,590 (2018$36,000 (2019 - $21,618)$31,590), office and administrative expenses of $31,623 (2018$22,930 (2019 - $25,971)$31,623), insurance of $2,144 (2018$2,970 (2019 - $9,500)$2,745), rent of $19,589 (2018$Nil (2019 - $7,500)$19,589), stock-based compensation of $176,072 (2018$28,961 (2019 - $Nil)$176,073), research and development costs of $273,201 (2018$136,774 (2019 - $Nil)$399,720), wages, salaries and benefits of $103,914 (2018$142,975 (2019 - $21,843)$103,914), and transfer agent and filing fees of $27,191 (2018$21,965 (2019 - $23,903)$27,191). The Company's expenses for the quarter ended November 30, 2019 was significantly higher than the same period in the prior year primarily due to recognition of development expenses for the amount spent on the enhancement of the Company's current technologies as well as the recognition of expense for the options vested during the quarter. Both development expenses and stock-based compensation amounted to $Nil in the fourth quarter of last year.
During the quarter ended November 30, 2019,2020, the Company recognized an impairment loss of $1,572,552 on the goodwill arising from the business combination ($256,874) and intangible assets ($1,315,678) (See discussion on- Results of Operations). The Company also collected interestgovernment grant income of $1,500 (2018 - $5,966), incurred interest expense of $Nil (2018 - $1,184), and recognized forex gain of $2,332 (2018 - $8,441).$100,818 relating to the Paycheck Protection Program.
SUMMARY OF QUARTERLY RESULTS
The following table sets out selected financial data in respect of the last eight quarters of the Company. The data is derived from the financial statements of the Company prepared in accordance with IFRS.
| Qtr 4 | Qtr 3 | Qtr 2 | Qtr 1 | Qtr 4 | Qtr 3 | Qtr 2 | Qtr 1 |
November | August | May | February | November | August | May | February | |
30, 2019 | 31, 2019 | 31, 2019 | 28, 2019 | 30, 2018 | 31, 2018 | 31, 2018 | 28, 2018 | |
Total Revenues, including interest income | $ 9,651 | $ 16,638 | $ 10,041 | $ 6,153 | $ 5,966 | $ 798 | $ 1,226 | $ 640 |
Net loss | (2,460,265) | (885,806) | (626,323) | (394,413) | (557,166) | (85,672) | (186,002) | (158,061) |
Basic and diluted loss per common share |
|
|
|
|
|
|
|
|
(0.08) | (0.03) | (0.02) | (0.01) | (0.02) | (0.01) | (0.01) | (0.01) |
The increase net loss in the quarter ended February 28, 2018 compared with the quarter ended November 30, 2017 was primarily due to significant increase in consulting fees, legal fees, accounting fees, and transfer agent and filing fees associated with the LOI with WMC and the non-brokered private placement announced on December 27, 2017.
The significant increase in net loss in the quarter ended May 31, 2018 compared with the quarter ended February 28, 2018 was primarily due to significant increase in consulting fees, legal fees and accounting fees and transfer agent and filing fees associated with the LOI with WMC and PRT and the non-brokered private placement closed on May 18, 2018.
The decreased net loss in the quarter ended August 31, 2018 compared with the quarter ended May 31, 2018 was primarily due to decrease in consulting fees, legal fees, accounting fees, and transfer agent and filing fees, as the Company has substantially completed the LOI with PRT and the non-brokered private placement was closed on May 18, 2018.
The increased net loss in the quarter ended November 30, 2018 compared with the quarter ended August 31, 2018 was primarily due to increase in consulting expense, legal fees, management and salaries, transfer agent and regulatory fees, and acquisition costs for completing the transaction of the Plymouth Rock USA acquisition. The expenditures also increased due to the costs incurred associated with the development of the Company's technologies.
The decreased net loss in the quarter ended February 28, 2019 compared with the quarter ended November 30, 2018 was primarily due to loss on disposition of exploration and evaluation, the acquisition costs for completing the transaction of the Plymouth Rock USA acquisition and the high legal and accounting fees associated with the acquisition and year-end filing incurred in the three months ended November 30, 2018. Other costs increased in the quarter ended February 28, 2019 associated with the development and promotion of the Company's technology.
| Qtr 4 | Qtr 3 | Qtr 2 | Qtr 1 | Qtr 4 | Qtr 3 | Qtr 2 | Qtr 1 |
November | August | May | February | November | August | May | February | |
30, 2020 | 31, 2020 | 31, 2020 | 29, 2020 | 30, 2019 | 31, 2019 | 31, 2019 | 28, 2019 | |
Total Revenues, including interest income |
$ 25,206 | $ 20,777 | $ 24,585 | $ 556 | $ 9,651 | $ 22,791 | $ 3,888 | $ 6,153 |
Net loss | (625,644) | (823,776) | (626,880) | (847,936) | (2,460,265) | (885,806) | (626,323) | (394,413) |
Basic and diluted loss per common share |
(0.00) | (0.03) | (0.02) | (0.03) | (0.08) | (0.03) | (0.02) | (0.01) |
The increased net loss in the quarter ended May 31, 2019 compared with the quarter ended February 28, 2019 was primarily due to significant increase in business development and consulting fees for the Company's technology promotion and development, and higher legal and accounting fees associated with the year-end compliance incurred in the quarter ended May 31, 2019.
The increased net loss in the quarter ended August 31, 2019 compared with the quarter ended May 31, 2019 was primarily due to significant increase in stock-based compensation primarily due to the first time recognition of expenses relating to the Company's incentive stock option plan aggravated by the increase in consulting and legal fees incurred in the quarter ended August 31, 2019 brought about by operating activities and share issuances during the period.
|
The increased net loss in the quarter ended November 30, 2019 compared with the quarter ended August 31, 2019 was primarily due to the impairment loss recorded in the fourth quarter. The recognition was a result of inability to establish future cash flows to be generated from the business acquired and the future economic benefits from the Company's intangible assets.
The decrease in net loss for the quarter ended February 29, 2020 from the previous quarter is due to the absence of the impairment loss charges partially negated by the higher stock-based compensation and business development expenditures during this period.
The decrease in net loss for the quarter ended May 31, 2020 from the previous quarter is due to the decrease of business development expenditures and decrease of wages, salaries and benefits during this period. This was partially negated by the research and development expenditures during this period. The decreases relate in part to decreased operations and management decreasing compensation costs in response to the COVID-19 pandemic.
The increased net loss in the quarter ended August 31, 2020 compared with the quarter ended May 31, 2020 was primarily due to increase in business development, research and development expenses and consulting fees partially offset by decreases in stock-based compensation and wages, salaries and benefits. The increases were for business expansion activities undergone by the Company while the decreases mostly pertain to agreements with management for lower compensation due to the COVID-19 pandemic.
The decreased net loss in the quarter ended November 30, 2020 compared with the quarter ended August 31, 2020 was primarily due to decreases in business development, research and development expenses and consulting fees. This related to decreased operations and expenditures in response to the COVID-19 pandemic.
LIQUIDITY AND CAPITAL RESOURCES
The Company's approach to managing its liquidity is to ensure that it has sufficient resources to meet its liabilities as they come due and have sufficient working capital to fund operations for the ensuing fiscal year. Financing of operations has been achieved solely by equity financing. The Company anticipates that it will require significant funds from either equity or debt financing for the development of its technologies and to support general administrative expenses.
As at November 30, 2019,2020, the Company had $727,526$79,919 in current assets (November 30, 2018(2019 - $2,811,971)$727,526) and $227,058$322,738 in current liabilities (November 30, 2018(2019 - $166,941)$227,058) for a working capital positiondeficit of $500,468$242,819 compared to a working capital position of $2,645,030$500,468 as at November 30, 2018. Working2019. The change from the working capital decreased mostlyto current working deficit is primarily due to a significantly lower cash balance, at the end of the period due to use of cash in the Company's operating activities.
Current assets at November 30, 2019 were represented by cash of $583,119 (November 30, 2018 - $2,743,694), accounts receivable of $1,488 (November 30, 2018 - $Nil), sales tax receivable of $12,310 (November 30, 2018 - $10,986),lower prepaid expenses of $105,539 (November 30, 2018 - $49,891) and due from related parties of $25,070(November 30, 2018 - $7,400). Current liabilities were comprised of $217,023 inexpense balance, increased accounts payable and accrued liabilities (November 30, 2018- $112,757), loan payable of $Nil (November 30, 2018 - $51,184), and duebalance owing to related parties, and the recognition of $10,035 (November 30, 2018 - $3,000).a current portion of the lease liability for the Company's leased premises in Plymouth, Massachusetts.
As at November 30, 2019,2020, the Company had a share capital balance of $5,676,498 (November 30, 2018$7,376,763 (2019 - $5,311,034)$5,676,498) and an accumulated deficit of $5,968,892 (November 30, 2018$8,893,128 (2019 - $1,602,085)$5,968,892). The increase share capital is primarily due to private placements and warrant exercises that have occurred during the year.
Financing of operations has been achieved solely by equity financing. As the Company will not generate sufficient funds from operations for the foreseeable future, the Company is primarily reliant upon the sale of equity securities in order to fund future operations. Since inception, the Company has funded limited operations through the issuance of equity securities on a private placement basis. The Company's ability to raise funds through the issuance of equity will depend on economic, market and commodity prices at the time of financing.
The Company expects to generate similar losses quarter over quarter for the next fiscal year in relation to the Company's development, administration and promotion of its technologies. As of report date, management anticipates that the funds raised to date will be not be sufficient to sustain operations and the development of the Companies technologies for the next fiscal year.
The planned financing (private placement - see Business Overview and Overall Performance) was cancelled as a result of instability in the financial markets caused by the global pandemic, COVID-19. As of report date, management is considering alternatives to raise the necessary funds for the continuance of business operations.
|
Detailed discussions related to the Company's cash flows during the year ended November 30, 20192020
Cash balances decreased by a total of $2,159,174$588,518 during the year ended November 30, 20192020
(November 30, 20182019 - increased by $2,647,542)$2,159,174).
During the year ended November 30, 2019,2020, cash used in operating activities was $2,317,362$2,114,515 compared to cash used in operating activities of $663,765$2,317,362 during the year ended November 30, 2018.2019. The increase in cash used in operating activities is primarily attributedfor the year remained comparable to higher expenditures on wages, salary and benefits, research and development, business development and the consulting fees during the year. (See Results of Operations for a detailed discussionthat of the expense variances.)prior year overall.
Cash used in investing activities during the year ended November 30, 20192020 was $14,175 (2018$109,567 (2019 - provided$14,175). The increase in cash used in investing activities is due to both recognition of $62,467). Thedemo equipment as a capital asset and lease payments relating to the Company's office premises. For the year ended November 30, 2019, cash used in investing activities was primarily attributed to the acquisition of equipment and development expenses on the Company's technologies during the year ended November 30, 2019.technologies.
Cash provided by financing activities during the year ended November 30, 20192020 was $172,363$1,635,564 compared to cash provided by financing activities of $3,248,840$172,363 during the prior year. The increase was primarily due to the private placement completed during the year in addition to option and warrant exercises. For the year ended November 30, 2018. The2019, cash provided by financing activities was primarily due to the warrants exercised of $187,120 and options exercised of $37,500 during the year ended November 30, 2019 partly offset by the payment of loan balance of $52,256. The cash provided by financing activities in the year ended November 30, 2018 was a result of the net proceeds from issuance of common shares of the Company from the private placement announced during the 4th quarter ended November 30, 2017.exercised.
The effect of foreign exchange rates on cash during the year ended November 30, 20192020 amounted to a decrease of $1,401 (2018$30,112 (2019 - $Nil)$1,401).
Detailed discussions related to the Company's cash flows during the year ended November 30, 2018
Cash balances increased by $2,647,542 during the year ended November 30, 2018 (November 30, 2017 - $85,876).
During the year ended November 30, 2018, cash used in operating activities was $663,765 compared to cash used in operating activities of $126,124 during the year ended November 30, 2017. The increase in cash used in operating activities is primarily attributed to increased expenditures on consulting fees, professional fees and transfer agent and filing fees associated with the letter of intent with WMC, the business acquisition of Plymouth Rock USA, the development costs of technologies, and the non-brokered private placement closed on May 18, 2018.
Cash provided by investing activities during the year ended November 30, 2018 was $62,467 (2017 - $90,000). The change in cash provided in 2018 was due to the proceeds of the disposition of the SB property and acquisition of business.
Cash provided by financing activities during the year ended November 30, 2018 was $3,248,840 compared to cash provided by financing activities of $122,000 during the year ended November 30, 2017. The cash provided by financing activities was a result of the net proceeds from issuance of common shares of the Company from the private placement announced during the 4th quarter ended November 30, 2017, and options and warrants exercised during the year ended November 30, 2018. The Company also received $50,000 loan bearing annual interest rate of 12%.
PROPOSED TRANSACTIONS
The Company has no proposed transactions as at the report date.date of this report.
OFF-BALANCE SHEET ARRANGEMENTS
To the best of Management's knowledge, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company.
CONTRACTUAL COMMITMENTS
In November 2018, Plymouth Rock USA entered into a two-year lease agreement for leased premises in Plymouth, Massachusetts, commencing December 1, 2018 and ending on November 30, 2020. The minimum monthly base rent is US$was USD$2,917 per month for the periodyear from December 1, 2018 to November 30, 2019 and US$USD$3,005 per month from December 1, 2019 to November 30, 2020.
On April Effective December 1, 2019,2020 the Company entered into a one-yearexercised its option to renew the lease agreement for leased premises in Vancouver, BC, commencing on April 1, 2019 and ending on March 31, 2020. Thethree additional years. After renewal, the minimum monthly base rent is $2,500.USD$3,095 per month from December 1, 2020 to November 30, 2021, USD$3,188 per month from December 1, 2021 to November 30, 2022, and USD$3,284 per month from December 1, 2022 to November 30, 2023.
On October 17, 2019, the Company entered into a binding agreement to acquire the intellectual property, finished goods and inventory, as well as name rights and goodwill from Massachusetts based aerospace and scientific component manufacturer Aerowave Corporation ("Aerowave"). Under the terms of the agreement, Plymouth Rock will pay Aerowave's principals 50,000 common shares. The shares will be restricted securities under the US Securities Act and subject to Canadian securities legislation. The fair value of these shares amounting to $22,811 is presented separately as shares to be issued in the balance sheet - equity section.
|
On January 2, 2020, the Company entered into an advertising agreement with an arm's length party for 12 months. The Company shall pay a total of $36,000 in four equal installments - $9,000 on February 2, 2020, $9,000 on May 2, 2020, $9,000 on August 2, 2020 and $9,000 on November 2, 2020. As at November 30, 2020, $3,000 was included in prepaid (Note 3).
On April 1, 2020 the Company entered into an agreement with a Director of the Company to provide consulting services. In line with this, the Company shall pay $250,000 annually either through cash in 12 monthly installments at the end of each calendar month or through the issuance of 1,000,000 common shares of the Company in four equal quarterly installments, in arrears (see Transactions with Related Parties).
On June 9, 2020, the Company entered into a Letter of Intent (LOI) with SDS Groupe Australia Pty Ltd ("SDS"), a leading provider of best of breed products and equipment to the Australian security and defense industries. Pursuant to the LOI, the Company will work with SDS to position the Company's Unmanned Aircraft Systems (UAS) for procurement focused evaluations following initial consultation with member of the Australian Government.
On August 25, 2020, the Company signed the re-seller and purchase agreement with an arm's length company to become the first authorized re-seller of the Company's X1 Unmanned Aerial Vehicles (UAV) and related sensor payloads.
TRANSACTIONS WITH RELATED PARTIES
The amounts due to related parties are due to the directors and officers of the Company. The balances are unsecured, non-interest bearing and have no specific terms for repayment. These transactions are in the normal course of operations and have been valued in these financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
As at November 30, 2019, $10,035 (November 30, 20182020, $46,355 (2019 - $3,000)$10,035) was due to directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | November 30, 2020 | November 30, 2019 | |||||||||
| Company controlled by CFO | $ | 5,000 | $ | 3,000 | $ | 3,865 | $ | 5,000 | ||||
| CEO of the Company | 5,035 | - | 823 | 5,035 | ||||||||
| Douglas Smith, Director | 41,667 | - | ||||||||||
| $ | 10,035 | $ | 3,000 | $ | 46,355 | $ | 10,035 | |||||
As at November 30, 2019, $25,070 (November 30, 20182020, $2,500 (2019 - $7,400)$25,070) was due from directors and officers of the Company:
| November 30, 2019 | November 30, 2018 | |||||
| Company controlled by Corporate Secretary | $ | 5,250 | $ | 5,613 | ||
| CEO of the Company | - | 1,787 | ||||
| George Stubos, Director | 19,820 | - | ||||
| $ | 25,070 | $ | 7,400 |
| November 30, 2020 | November 30, 2019 | |||||
| Company controlled by Corporate Secretary | $ | - | $ | 5,250 | ||
| George Stubos, Former Director | 2,500 | 19,820 | ||||
| $ | 2,500 | $ | 25,070 |
As at November 30, 2020, $Nil (November 30, 2019 - $26,578) prepayment had been made to the CEO of the Company pertaining to expenses to be incurred on behalf of the Company. On November 30, 2019, $26,578 was presented in prepaid expenses on the financial statements.
|
During the yearyears ended November 30, 2020, 2019 2018 and 2017,2018, the Company entered into the following transactions with related parties:
| November 30, 2019 | November 30, 2018 | November 30, 2017 | November 30, 2020 | November 30, 2019 | November 30, 2018 | |||||||||||||
| Management fees | $ | 123,000 | $ | 71,842 | $ | 13,500 | $ | 114,125 | $ | 123,000 | $ | 71,842 | ||||||
| Consulting fees | 166,667 | - | - | |||||||||||||||
| Accounting fees | 24,490 | 20,748 | - | 22,852 | 24,490 | 20,748 | ||||||||||||
| Rent | 20,000 | - | - | |||||||||||||||
| Share-based payments | 260,145 | - | - | 271,993 | 260,145 | - | ||||||||||||
| Salaries and benefits to CEO | 318,790 | 13,200 | - | 133,387 | 318,790 | 13,200 | ||||||||||||
| $ | 726,425 | $ | 105,790 | $ | 13,500 | $ | 729,024 | $ | 726,425 | $ | 105,790 | |||||||
Management fees consisted of the following:
| November 30, 2020 | November 30, 2019 | November 30, 2018 | ||||||||
| Company controlled by Corporate Secretary | $ | 55,125 | $ | 63,000 | $ | 36,842 | ||||
| Company controlled by CFO | 59,000 | 60,000 | 30,000 | |||||||
| Director fees paid to Former Director | - | - | 5,000 | |||||||
| $ | 114,125 | $ | 123,000 | $ | 71,842 |
Accounting fees of $22,852 (2019 - $24,490) were paid to a Company controlled by the CFO and rent of $20,000 (2019 - $Nil) was paid to a Company controlled by a former Director. During the year, the Company issued 500,000 common shares valued at $125,000 as compensation for consulting fees to Douglas Smith, a Director.
During the year ended November 30, 2019,2020, the Company granted 750,0001,650,000 options to the CEO, CFO, the Corporate Secretary, and one of the Company's directors. The amount recognized as expense for these options for the year ended November 30, 2020 is as follows:
| November 30, 2019 | ||||||
| Number of options granted | Expense for the period | |||||
| CEO | 400,000 | $ | 113,077 | |||
| CFO | 100,000 | 28,269 | ||||
| Corporate Secretary | 100,000 | 28,269 | ||||
| Angelos Kostopoulos, Director | 150,000 | 42,404 | ||||
| George Stubos, Director | 450,000 | 48,014 | ||||
| Tim Crowhurst, Director | 150,000 | 112 | ||||
| 1,350,000 | $ | 260,145 | ||||
| November 30, 2020 | November 30, 2019 | |||||||||||
| Number of options granted | Expense for the year (vested) | Number of options granted | Expense for the year (vested) | |||||||||
| Dana Wheeler, CEO | 400,000 | $ | 44,455 | 400,000 | $ | 113,077 | ||||||
| Zara Kanji, CFO | 100,000 | 11,113 | 100,000 | 28,269 | ||||||||
| Vivian Katsuris, Corporate Secretary | 100,000 | 11,113 | 100,000 | 28,269 | ||||||||
| Angelos Kostopoulos, Director | 150,000 | 16,670 | 150,000 | 42,404 | ||||||||
| George Stubos, Former Director | 450,000 | 68,197 | 450,000 | 48,014 | ||||||||
| Tim Crowhurst, Director | 150,000 | 40,918 | 150,000 | 112 | ||||||||
| Douglas Smith, Director and Chairman | 300,000 | 79,527 | - | - | ||||||||
| 1,650,000 | $ | 271,993 | 1,350,000 | $ | 260,145 | |||||||
As at November 30, 2019, no2020, 2,468,750 options were vested, and stock-based compensation amounting to $692,091$479,107 was recognized in profit or loss for the year ended November 30, 2020 of which $260,145$271,993 were for the Company's officers and directors as above.
On October 16, 2019, Jeremy Poirier resigned as a Director of the Company. 100,000 stock options granted to him were cancelled.
|
Management fees consisted of the following:
| November 30, 2019 | November 30, 2018 | November 30, 2017 |
Vivian Katsuris, Corporate Secretary | $ 63,000 | $ 36,842 | $ 13,500 |
Zara Kanji, CFO | 60,000 | 30,000 | - |
Ioannis Tsitos, Former Director | - | 5,000 | - |
| $ 123,000 | $ 71,842 | $ 13,500 |
As at November 30, 2019, $26,578 (November 30, 2018 - $Nil) prepayment was made to Dana Wheeler, the CEOOn July 31, 2020, George Stubos resigned as a Director of the Company (see Directors). Out of 450,000 stock options granted to him and $13,289 (November 30, 2018 - $Nil) to David Russell, the SVP for Engineering Operations.a Company controlled by him, 200,000 expired.
SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
All significant accounting policies and critical accounting estimates are fully disclosed in Note 2 of the audited consolidated financial statements for the years ended November 30, 20192020 and 20182019 that are available on SEDAR at www.sedar.com.
FINANCIAL RISK MANAGEMENT
The Company's financial assets consist of cash, accounts receivable and due from related parties. The estimated fair values of cash, subscription receivable, and due from related parties approximate their respective carrying values due to the short period to maturity.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
a. Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities;
b. Level 2 - inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
c. Level 3 - inputs that are not based on observable market data.
For the years ended November 30, 20192020 and 2018,2019, the fair value of the cash, accounts receivable, accounts payable, and due to and from related parties and loans payable approximate the book value due to the short term nature.
The Company is exposed to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of counterparty limits, controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, it will have sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company's holdings of cash. The Company believes that these sources will be sufficient to cover the likely short-term cash requirements.
The Company's cash is currently invested in business accounts which is available on demand by the Company for its operations.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company has no significant interest rate risk due to the short termshort-term nature of its interest generating assets.
Credit Risk
Credit risk is the risk of a loss in a counterparty to a financial instrument when it fails to meet its contractual obligations. The Company's exposure to credit risk is limited to its cash. The Company limits its exposure to credit risk by holding its cash in deposits with high credit quality Canadian financial institutions.
|
Foreign Currency Risk
The Company is exposed to foreign currency risk on fluctuations related to cash, due from related parties and accounts payable and accrued liabilities that are denominated in US dollars. 10% fluctuations in the US dollar against the Canadian dollar have affected comprehensive loss for the nine-month periodyear by approximately $7,110.$13,325 (2019 - $7,110).
CAPITAL STOCK
The authorized capital of the Company consists of an unlimited number of common shares without par value.
During the year endedAs at November 30, 2019:
During the year ended November 30, 2019, the Company issued a total of 910,3002020, there were 42,762,264 common shares for gross proceedsissued and outstanding
(2019 - 32,796,600).
As of $187,120 for 7,500 warrants exercised at a pricethe date of $0.60 per share, 307,800 warrants exercised at a price of $0.40 per share and 595,000 warrants exercised at a price of $0.10 per share. The Company also issued a total of 125,000the report, there were 52,532,596 common shares for gross proceeds of $37,500 for 125,000 options exercised at a price of $0.30 per share.issued and outstanding.
During the year ended November 30, 2018:2020:
During the year ended November 30, 2018,On February 4, 2020, the Company issuedannounced that it has arranged a total of 2,045,000 common shares for gross proceeds of $204,500 for warrants exercised at a price of $0.10 per share.
On April 25, 2018, the Company closed the first tranche of its previously announced non-brokered private placement. The Company issued 4,475,000placement financing of up to 10,000,000 units of securities at a price of $0.40 per Unit for aggregate gross proceeds of up to $4,000,000 (the "Offering").. On March 16, 2020, due to the instability in the financial markets caused by the COVID-19 pandemic, the Company cancelled this private placement.
On April 24, 2020, the Company issued an aggregate of 3,128,334 units at a price of $0.15 per unit for gross proceeds of $1,790,000.$469,250. Each unit consists of one common share in the capital of the Company and one-halfone whole transferable common share purchase warrant with each(a "Warrant"). Each whole warrant entitling the holder to purchase one common share of the Company at a price of $0.60 for 1 year from closing. On April 15, 2019, the share purchase warrants were extended to six months. The new expiry date of the warrantsWarrant is October 25, 2019. Finder's fees of cash equal to 6% of proceeds and finder's warrants equal to 6% of the number of units issued were paid to five finders. Each finder's warrant will be exercisable to acquire one common share for a period of one year from closing at aan exercise price of $0.40. All securities issued are subject to a four month hold period expiring August 25, 2018. 266,850 finder's warrants were granted at an estimated fair value of $110,574, which has been included in contributed surplus. The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: expected life 1 year, volatility 166%, risk-free rate 1.88%, dividend yield 0%.$0.20 per share until April 24, 2022.
On May 18, 2018,15, 2020, the Company closed the second and final trancheissued an aggregate of its previously announced non-brokered private placement. The Company issued 2,035,5503,718,831 units at a price of $0.40$0.15 per unit for gross proceeds of $814,220.$557,825. Each unit consists of one common share in the capital of the Company and one-halfone whole transferable common share purchase warrant with each(a "Warrant"). Each whole warrant entitling the holder to purchase one common share of the Company at a price of $0.60 for 1 year from closing. On April 15, 2019, the share purchase warrants were extended to six months. The new expiry date of the warrantsWarrant is November 18, 2019. Finder's fees of cash in an amount equal to 6% of proceeds and finder's warrants equal to 6% of the number of units issued were paid to four finders. Each finder's warrant will be exercisable to acquire one common share at an exercise price of $0.20 per share until May 15, 2022.
In connection with the April 24, 2020 and May 15, 2020 private placements, the Company paid $38,727 in share issuance costs.
On July 3, 2020, the Company issued 500,000 common shares pursuant to the exercise of 500,000 share purchase warrants at $0.20 per share.
On August 13, 2020, the Company issued 483,334 common shares pursuant to the exercise of 483,334 share purchase warrants at $0.20 per share.
On August 21, 2020, the Company issued 250,000 common shares were issued as compensation for consulting fees to a periodDirector (Note 7) valued at a total of one year from closing$62,500.
On September 30, 2020, the Company issued an aggregate of 1,335,165 units at a price of $0.40. All securities issued are subject$0.30 per unit for gross proceeds of $400,550. Each Unit consists of one common share and one-half of one non-transferable common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to purchase one additional common share at a four month hold period expiringprice of $0.50 for two years until September 18, 2018. 45,150 finder's warrants were granted at an estimated fair value of $18,420, which has been included in contributed surplus.30, 2022. The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: expected life 1 year, volatility 168%, risk-free rate 1.99%, dividend yield 0%. With the closure of the second and final tranche of its previously announced non-brokered private placement, the subscription received of $38,646 has been reclassifiedis determined to accounts payable and accrued liabilities since investors overpaid for their subscription.be $81,609.
|
On May 29, 2018,September 30, 2020, the Company issued 250,000 common shares were issued as compensation for consulting fees to a director (Note 7) valued at a total of 125,000 common shares at $0.30 per share, for gross proceeds of $37,500, for options exercised by a former director of the Company.$62,500.
On August 23, 2018,September 30, 2020, the Company issued 500,00050,000 units at a fair value of $22,811 pursuant to the binding agreement with Aerowave Corporation as described in Note 14. Each Unit consists of one common sharesshare and one-half of one non-transferable common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to purchase one additional common share at a price of $0.10 per share,$0.50 for gross proceeds of $50,000, for options exercised by a former director of the Company.
On Octobertwo years until September 30, 2018, the Company issued 3,000,000 common shares at $0.41 per share for the acquisition of Plymouth Rock USA (Note 12). In addition, on November 1, 2018, the Company issued 231,250 common shares at $0.69 per share as finder's fees to complete the acquisition.
During the year ended November 30, 2017:
On February 15, 2017, the Company issued 300,000 common shares valued at $6,000 for the acquisition of exploration and evaluation assets.
On November 28, 2017, the Company issued a total of 125,000 common shares at a price of $0.15 per share, for gross proceeds of $18,750, for options exercised by a former director of the Company.
On November 30, 2017, the Company issued 5,500,000 common shares at a price of $0.10 per share for total gross proceeds of $550,000, pursuant to the private placement previously announced on November 10, 2017. The Company also issued 490,500 common shares at a price of $0.10 per share valued at $49,050 as finder's fees.
As of November 30, 2017, the Company had subscription receivable balance of $428,000 (2016: Nil) for the common shares issued for the private placement on November 30, 2017 and $18,750 for commons share issued for options exercised by a former director on November 28, 2017 recorded in due from related party.
As at November 30, 2019, the Company has 810,000 common shares (November 30, 2018 - 3,000,000) held in escrow.
Stock Options
On November 12, 2014 the Company adopted an incentive stock option plan (the "Option Plan") which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees, and consultants to the Company, nontransferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares in the capital of the Company at the time of granting of options.
On January 16, 2019, the Company granted 2,300,000 stock options, which are exercisable for a period of five years, at a price of $0.60 per share. During the year, 150,000 of these stock options were cancelled. The remaining 2,150,000 stock options vest as follows: (i) 1,075,000 options on January 15, 2020, (ii) 268,750 options on April 15, 2020, (iii) 268,750 options on July 15, 2020, (iv) 268,750 options on October 15, 2020, and (v) 268,750 options on January 15, 2021.
2022. The fair value was estimated usingof the Black-Scholes pricing model with estimated, stock price of $0.54, volatility 100%, risk-free rate 1.93%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options waswarrants is determined to be $913,140, which will be expensed over the vesting period.$1,500.
On March 21, 2019, the Company granted an aggregate of 350,000 incentive stock options to consultants of the Company with an exercise price of $0.60 per share for a period of five years from the date of grant. The stock options vest as follows: (i) 175,000 options on March 20, 2020, (ii) 43,750 options on June 20, 2020, (iii) 43,750 options on December 20, 2020, (iv) 43,750 options on March 20, 2021, and (v) 43,750 options on June 20, 2021. The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.57, volatility 100%, risk-free rate 1.56%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $147,613, which will be expensed over the vesting period.
On November 29, 2019, the Company granted an aggregate of 650,000 incentive stock options to consultants and a director of the Company with an exercise price of $0.50 per share for a period of five years from the date of grant. The stock options vest as follows: (i) 325,000 options on November 30, 2020 and (ii) 325,000 options on November 30, 2021. The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.49, volatility 100%, risk-free rate 1.49%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $236,809, which will be expensed over the vesting period.
During the year ended November 30, 2019, 150,000 options issued to a director and a consultant were cancelled before vested.Stock Options
Stock-based compensation recognized in profit or loss for the year ended November 30, 20192020 amounted to $692,091 (2018$479,107 (2019 - $Nil)$692,091).
Stock option transactions and the number of stock options outstanding as at November 30, 2020, 2019 and 2018 are summarized as follows:
| Number of | Weighted Average | Number of | Weighted Average | |||||||||
| Options | Exercise Price | Options | Exercise Price | |||||||||
| Balance, November 30, 2017 | 750,000 | $ | 0.17 | 750,000 | $ | 0.17 | ||||||
| Exercised | (625,000 | ) | $ | 0.14 | (625,000 | ) | 0.14 | |||||
| Balance, November 30, 2018 | 125,000 | $ | 0.30 | 125,000 | 0.30 | |||||||
| Granted | 3,300,000 | $ | 0.58 | 3,300,000 | 0.58 | |||||||
| Exercised | (125,000 | ) | $ | 0.30 | (125,000 | ) | 0.30 | |||||
| Expired | (150,000 | ) | $ | 0.60 | ||||||||
| Cancelled | (150,000 | ) | 0.60 | |||||||||
| Balance, November 30, 2019 | 3,150,000 | $ | 0.58 | 3,150,000 | 0.58 | |||||||
| Cancelled | (200,000 | ) | 0.60 | |||||||||
| Balance, November 30, 2020 | 2,950,000 | $ | 0.58 | |||||||||
As at the date of the report, there were 4,150,000 stock options issued and outstanding.
Expiry Date | Exercise Price | Numbers of | Numbers of | Weighted | Weighted |
January 15, 2024 | $ 0.60 | 2,150,000 | 1,881,250 | 2.28 | $ 0.44 |
March 20, 2024 | 0.60 | 150,000 | 93,750 | 0.17 | 0.03 |
November 28, 2024 | 0.50 | 650,000 | 325,000 | 0.88 | 0.11 |
|
| 2,950,000 | 2,300,000 | 3.33 | $ 0.58 |
Expiry Date | Exercise Price | Numbers of options outstanding | Numbers of options exercisable | Weighted average remaining contractual life (year) | Weighted average exercise price |
| $ |
|
|
| $ |
January 15, 2024 | 0.60 | 2,150,000 | - | 2.82 | 0.60 |
March 20, 2024 | 0.60 | 350,000 | - | 0.48 | 0.60 |
November 28, 2024 | 0.50 | 650,000 | - | 1.03 | 0.50 |
|
| 3,150,000 | - | 4.33 | 0.58 |
|
Share Purchase Warrants
AsOn April 24, 2020, the Company granted 3,128,334 common share purchase warrants as part of a non-brokered private placement. Each warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until April 24, 2022.
On May 15, 2020, the Company granted 3,718,831 common share purchase warrants as part of a non-brokered private placement. Each warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until May 15, 2022.
On September 30, 2020, the Company granted 692,583 common share purchase warrants as part of a non-brokered private placement and binding agreement with Aerowave Corporation. Each warrant is exercisable to acquire one common share at an exercise price of $0.50 per share until September 30, 2022.
During the year ended November 30, 2020, 1,233,334 warrants were exercised at $0.20 per share.
Share purchase warrant transactions and the number of share purchase warrants outstanding as at November 30, 2020, 2019 and 2018 are summarized as follows:
| Number of Warrants | Weighted Average Exercise Price | |||||
| Balance, November 30, 2017 | 2,640,000 | $ | 0.10 | |||
| Warrants granted | 3,567,275 | 0.58 | ||||
| Warrants exercised | (2,045,000 | ) | 0.10 | |||
| Balance, November 30, 2018 | 4,162,275 | 0.51 | ||||
| Warrants expired | (3,251,975 | ) | 0.60 | |||
| Warrants exercised | (910,300 | ) | 0.21 | |||
| Balance, November 30, 2019 | - | - | ||||
| Warrants granted | 7,539,748 | 0.90 | ||||
| Warrants exercised | (1,233,334 | ) | 0.11 | |||
| Balance, November 30, 2020 | 6,306,414 | $ | 0.23 |
Expiry Date | Exercise Price | Numbers of | Weighted average | Weighted |
April 24, 2022 | $ 0.20 | 2,145,000 | 0.48 | $ 0.07 |
May 15, 2022 | 0.20 | 3,468,831 | 0.80 | 0.11 |
September 30, 2022 | 0.50 | 692,583 | 0.20 | 0.05 |
|
| 6,306,414 | 1.48 | $ 0.23 |
As of the Company has no outstandingdate of the report, there were 4,037,748 common share purchase warrants. Transactions for the year are summarized below:warrants issued and outstanding.
| Number of Warrants | Weighted Average Exercise Price | ||||
| Balance, November 30, 2017 | 2,640,000 | $0.10 | |||
| Warrants granted | 3,567,275 | $0.58 | |||
| Warrants exercised | (2,045,000 | ) | $0.10 | ||
| Balance, November 30, 2018 | 4,162,275 | $0.51 | |||
| Warrants expired | (3,251,975 | ) | $0.60 | ||
| Warrants exercised | (910,300 | ) | $0.21 | ||
| Balance, November 30, 2019 | - | $0.00 |
|
RISKS RELATED TO OUR BUSINESS
The Company believes that the following risks and uncertainties may materially affect its success.
Limited Operating History
The Company has only started generating revenues this period.in the prior year. The Company was incorporated on October 17, 2011 and has yet to generate a profit from its activities. The Company is subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. The Company anticipates that it may take several years to achieve positive cash flow from operations.
Substantial Capital Requirements and Liquidity
Substantial additional funds for the establishment of the Company's current and planned operations will be required. No assurances can be given that the Company will be able to raise the additional funding that may be required for such activities, should such funding not be fully generated from operations. Revenues, taxes, transportation costs, capital expenditures, operating expenses and development costs are all factors which will have an impact on the amount of additional capital that may be required. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion and pursue only those development plans that can be funded through cash flows generated from its existing operations.
Regulatory Requirements
The current or future operations of the Company require permits from various governmental authorities, and such operations are and will be governed by laws and regulations governing development, production, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, site safety and other matters. There can be no assurance that all permits which the Company may require for the facilities and conduct of operations will be obtainable on reasonable terms or that such laws and regulation would not have an adverse effect on any development project which the Company might undertake.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in operations may be required to compensate those suffering losses or damages and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations. Amendments to current laws, regulation and permits governing operations and activities of companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or development costs or require abandonment or delays in the development of new projects.
Financing Risks and Dilution to Shareholders
The Company will have limited financial resources, no operations and hardly have revenues. There can be no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be available on favorable terms or at all. It is likely such additional capital will be raised through the issuance of additional equity, which will result in dilution to the Company's shareholders.
|
Competition
There is competition within the security screening and threat detection market. The Company will compete with other companies, many of which have greater financial, technical and other resources than the Company, as well as for the recruitment and retention of qualified employees and other personnel.
Intellectual Property
The Company has developed security screening technologies that are adequate to counter various threats. The Company may be unable to prevent competitors from independently developing or selling products similar to or duplicate of the Company, and there can be no assurance that the resources invested by the Company to protect the Intellectual Property will be sufficient. The Company may be unable to secure or retain ownership or rights. In addition, the Company may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. If the Company is found to infringe any third-party rights, it could be required to pay substantial damages, or it could be enjoined from offering some of products and services. Also, there can be no assurances that the Company will be able to obtain or renew from third parties the licenses it needs in the future, and there is no assurance that such licenses can be obtained on reasonable terms.
Reliance on Management and Dependence on Key Personnel
The success of the Company will be largely dependent upon on the performance of the directors and officers and the ability to attract and retain key personnel. The loss of the services of these persons may have a material adverse effect on the Company's business and prospects. The Company will compete with numerous other companies for the recruitment and retention of qualified employees and contractors. There is no assurance that the Company can maintain the service of its directors and officers, or other qualified personnel required to operate its business. Failure to do so could have a material adverse effect on the Company and its prospects.
Governmental Regulations and Processing Licenses and Permits
The activities of the Company are subject to various government approvals, various laws governing prospecting, development, land resumptions, production taxes, labor standards and occupational health, toxic substances and other matters. Although the Company believes that its activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner, which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities, or more stringent implementation thereof, could have a material adverse impact on the business, operations and financial performance of the Company. Further, the licenses and permits issued in respect of its projects may be subject to conditions that, if not satisfied, may lead to the revocation of such licenses.
Conflicts of Interest
Certain of the directors and officers of the Company will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies and, as a result of these and other activities, such directors and officers of the Company may become subject to conflicts of interest. The British Columbia Business Corporations Act ("BCBCA") provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director must disclose his interest in such contract or agreement and refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA.
|
Litigation
The Company and/or its directors may be subject to a variety of civil or other legal proceedings, with or without merit.
Public Health Crisis
In March 2020, the World Health Organization declared a global pandemic known as COVID-19. The expected impacts on global commerce are expected to be far reaching. This will impact demand for the Company's products and services and its ability to continue developing and testing their technologies in the near term and will impact the Company's supply chains. It may also impact expected credit losses on the Company's receivables. The duration and impact of the COVID-19 outbreak is unknown at this time and it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its subsidiary, in future periods. The management is closely evaluating the impact of COVID-19 on the Company's business.
As certain of the Company's officers have other outside business activities and, thus, may not be in a position to devote all of their professional time to the Company, the Company's operations may be sporadic, which may result in periodic interruptions or suspensions.
FORWARD-LOOKING STATEMENTS
This MD&A may include certain "forward-looking statements" within the meaning of applicable securities legislation. All statements, other than statements of historical facts, included in this MD&A that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future business strategies competitive strengths, goals, expansion and growth of the Company's businesses, operations, plans and other such matters are forward-looking statements. When used in this MD&A, the words "estimate", "plan", "anticipate", "expect", ''intend'', "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks that actual results of current exploration activities will differ, changes in project parameters as plans continue to be refined, unavailability of financing, fluctuations in precious and/or base metals prices and other factors, as outlined in the Company's preliminary long form prospectus filed on SEDAR. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
CAPITAL MANAGEMENT
The Company considers its capital structure to include net residual equity of all assets, less liabilities. The Company's objectives when managing capital are to (i) maintain financial flexibility in order to preserve its ability to meet financial obligations and continue as a going concern; (ii) maintain a capital structure that allows the Company to pursue the development of its projects and products; and (iii) optimize the use of its capital to provide an appropriate investment return to its shareholders commensurate with risk.
The Company's financial strategy is formulated and adapted according to market conditions in order to maintain a flexible capital structure that is consistent with its objectives and the risk characteristics of its underlying assets. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or acquire or dispose of assets.
|
DIRECTORS
Certain directors of the Company are also directors, officers and/or shareholders of other companies that may be engaged in the similar business of developing technologies. Such associations may give rise to conflicts of interest from time to time. The directors of the Company are required to act in good faith with a view to the best interests of the Company and to disclose any interest they may have in any project opportunity of the Company. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his/her interest and abstain from voting in the matter(s). In determining whether or not the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.
On December 22, 2017, the Company announced the election of Jeremy Poirier to the Company's Board of Directors.
On January 15, 2018 The Company announced strategic leadership changes by appointing Vivian Katsuris as President and Zara Kanji as Chief Financial Officer of the Company. Blake Olafson stepped down as a director, president and chief executive officer of the Company.
On October 31, 2018, the Company appointed Dana Wheeler as a director, President and the CEO of the Company. Vivian Katsuris has resigned as President of the Company but remains as the corporate secretary and a director.
On November 27, 2018, the Company appointed Angelos KostopoulosDouglas Smith to its Board of Directors on April 29, 2020 and Ioannis Tsitos resignednamed Douglas Smith as a director of the Company.Chairman on May 13, 2020.
On July 16, 2019, theThe Company appointed Tim CrowhurstDr. Khalid M. Al-Ali to its Board of Directors.Directors on July 9, 2020.
On October 16, 2019, Jeremy PoirierJuly 31, 2020, George Stubos resigned as a directorDirector of the Company.
On November 29, 2019, The Company then appointed Thomas Nash to the Company appointed George Stubos to its Board of Directors.Directors on the same date.
Current Directors and Officers of the Company are as follows:
Dana Wheeler, President, CEO and Director
Zara Kanji, CFO
Vivian Katsuris, Corporate Secretary and Director
Tim Crowhurst, Director
Angelos Kostopoulos, Director
George Stubos,Thomas Nash, Director
Douglas Smith, Director and Chairman
Dr. Khalid M. Al-Ali, Director
OUTLOOK
The Company's objective is to maximize the value of the Company for our shareholders, and our strategy to obtain this result is to focus on project evaluations and project generation. To proceed with this strategy, additional financings may be required during the current fiscal year.
ADDITIONAL INFORMATION
Additional information relating to the Company can also be found on SEDAR at www.sedar.com.
117
ITEM 19 | EXHIBITS | |
** Filed herewith.
118
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
PLYMOUTH ROCK TECHNOLOGIES INC.
(Registrant)
/s/Dana Wheeler |
Dana Wheeler |
President and Chief Executive Officer |
(Principal Executive Officer) |
/s/Zara Kanji |
Zara Kanji |
Chief Financial Officer |
(Principal Financial Officer and Principal Accounting Officer) |
Date: April 13, 2020March 30, 2021
