Share Capital, Warrants and Options | 10. SHARE CAPITAL, WARRANTS AND OPTIONS The authorized capital of the Company comprises an unlimited number of common shares without par value and 100,000,000 Series 1 convertible preferred shares without par value. a) Common shares issued and outstanding 2018 On April 19, 2018, the Company closed a non-brokered private placement equity financing of 233,333,333 units at a price of $0.075 per unit and raised aggregate gross proceeds of $17,500. Each unit consists of one common share and one-half of one common share purchase warrant of the Company. Each warrant will entitle the holder to acquire one common share of the Company at an exercise price of $0.12 for a period of 24 months from its date of issuance. The Company incurred total share issuance costs of $579, of which $250 is recorded in trade payables at December 31, 2018. The Company allocated a $2,572 fair value to the warrants issued in conjunction with the private placement. The fair value of warrants was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%, a risk-free interest rate of 1.91% and an expected volatility of 94.26%. Contemporary Amperex Technology Limited (“CATL”) subscribed for 200,000,000 units of the aforementioned private placement for a total purchase price of $15,000. At December 31, 2018, CATL beneficially owns, or exercises control or direction over approximately 25.38% of the currently issued and outstanding shares of the Company. As per the subscription agreement, CATL has pre-emptive rights and the right to nominate one director to the board of directors of the Company. Sentient subscribed for 13,333,333 units of the aforementioned private placement for a total purchase price of $1,000. At December 31, 2018, Sentient beneficially owns, or exercises control or direction over 369,809,820 common shares constituting approximately 46.93% of the currently issued and outstanding shares of the Company. As at December 31, 2018, the Company has 787,928,500 common shares issued and outstanding, (December 31, 2017 – 554,595,167). 2017 On June 8, 2017, the Company closed a brokered placement, through a prospectus, of units for total gross proceeds of $10,877. The Company issued 145,030,833 units at a price of $0.075 per unit. Each unit consists of one common share in the capital of the Company and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share at an exercise price of $0.12 until June 8, 2019. The Company paid share issuance costs of $533 and also issued 1,965,093 agent’s warrants, exercisable at $0.075 per warrant until June 8, 2019. The Company allocated a $1,500 fair value to the warrants issued in conjunction with the private placement and $61 to agent’s warrants. The fair value of warrants was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%, a risk-free interest rate of 0.71% and an expected volatility of 98.60%. The Company also granted the agent an overallotment option for a period of 30 days, which expired unexercised. The fair value of overallotment option of $39 was recorded as a share issuance cost and was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 30 days, expected dividend yield of 0%, a risk-free interest rate of 0.71% and an expected volatility of 66.6%. On August 15, 2017, the Company closed a non-brokered private placement of units for total proceeds of $3,074. The Company issued 40,982,448 units at a price of $0.075 per unit. Each unit consists of one common share in the capital of the Company and one-half of one common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share at an exercise price of $0.12 until August 15, 2019. The Company allocated a $519 fair value to the warrants issued from the private placement. Direct financing costs totalled $16 resulting in net proceeds to the Company of $3,058. The fair value of warrants was determined on a pro-rata basis using the Black-Scholes Option Pricing Model with the following assumptions; expected life of 2 years, expected dividend yield of 0%, a risk-free interest rate of 1.23% and an expected volatility of 98.64%. 2016 On April 28, 2016, the Company issued 952,380 common shares at a fair value of $95 as a finance fee. On July 21, 2016, the Company closed a private placement of 92,668,907 units at a price of $0.075 per unit for gross proceeds of $6,950. Each unit consists of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the purchaser to purchase an additional common share at a price of $0.12 per share until July 21, 2018. Share issuance costs of $571 were incurred in connection with the private placement. The Company also issued 1,203,695 agent’s warrants, exercisable at $0.075 per warrant until July 21, 2018. The Company allocated a fair value of $48 to the agent’s warrants using the Black-Scholes Option Pricing Model with the following assumptions: expected life of 2 years, expected dividend yield of 0%, a risk-free interest rate of 0.57% and an expected volatility of 91.06%. The Company also granted the agent an overallotment option, which expired unexercised. On September 12, 2016, the Company closed a private placement and issued 67,331,093 units at a price of $0.075 per unit for gross proceeds of $5,050. Each unit consists of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the purchaser to purchase an additional common share at a price of $0.12 per share until September 12, 2018. b) Preferred shares issued and outstanding As at December 31, 2018, December 31, 2017 and December 31, 2016, there are 590,931 series 1 preferred shares outstanding. The rights and restrictions of the preferred shares are as follows: i) dividends shall be paid at the discretion of the directors; ii) the holders of the preferred shares are not entitled to vote except at meetings of the holders of the preferred shares, where they are entitled to one vote for each preferred share held; iii) the shares are convertible at any time after 6 months from the date of issuance, upon the holder serving the Company with 10 days written notice; and iv) the number of the common shares to be received on conversion of the preferred shares is to be determined by dividing the conversion value of the share, $1 per share, by $0.90. c) Warrants A summary of common share purchase warrants activity during the years ended December 31, 2018, December 31, 2017 and December 31, 2016 is as follows: December 31, 2018 December 31, 2017 December 31, 2016 Number Outstanding Weighted Average Exercise Price ($) Number Outstanding Weighted Average Exercise Price ($) Number Outstanding Weighted Average Exercise Price ($) Outstanding, beginning of year 176,175,413 0.12 95,982,036 0.15 27,738,344 0.49 Issued 116,666,664 0.12 94,971,721 0.12 81,203,692 0.12 Cancelled / Expired (34,869,241 ) 0.12 (14,778,344 ) 0.30 (12,960,000 ) 0.71 Outstanding, end of year 257,972,836 0.12 176,175,413 0.12 95,982,036 0.15 At December 31, 2018, the Company had outstanding common share purchase warrants exercisable to acquire common shares of the Company as follows: Warrants Outstanding Expiry Date Exercise Price ($) Weighted Average remaining contractual life (years) 72,515,414 June 8, 2019 0.12 0.12 1,965,083 June 8, 2019 0.075 0.00 46,334,451 July 21, 2019 1,2 0.12 0.10 20,491,224 August 15, 2019 0.12 0.05 116,666,664 April 19, 2020 0.12 0.59 257,972,836 0.86 1 The warrants are subject to an acceleration clause such that if the volume-weighted average trading price of the Company’s common shares on the TSX-V exceeds $0.18 per common share for a period of 10 consecutive trading days at any date before the expiration date of such warrants, the Company may, at its option, accelerate the warrant expiry date to within 30 days. To December 31, 2018, the Company’s common shares have not met the criterion for acceleration. 2 On September 1, 2018, the TSXV approved an extension of the term of the warrants from July 21, 2018 to July 21, 2019. All other terms, including the exercise price, remain the same. d) Stock options The Company adopted a Stock Option Plan (the “Plan”), providing the authority to grant options to directors, officers, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the Plan, the exercise price of each option equals the market price or a discounted price of the Company’s stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years. A summary of option activity under the Plan during the years ended December 31, 2018, December 31, 2017 and December 31, 2016 is as follows: December 31, 2018 December 31, 2017 December 31, 2016 Number Outstanding Weighted Average Exercise Price Number Outstanding Weighted Average Exercise Price Number Outstanding Weighted Average Exercise Price Outstanding, beginning of year 20,720,500 0.23 12,823,000 0.30 9,872,500 0.37 Issued 6,425,000 0.12 9,137,500 0.12 6,058,000 0.21 Cancelled / Expired (1,200,000 ) 0.18 (1,240,000 ) 0.24 (3,107,500 ) 0.34 Outstanding, end of year 25,945,500 0.18 20,720,500 0.23 12,823,000 0.30 During the year ended December 31, 2018, the Company granted 6,425,000 incentive stock options to employees, directors and consultants with a maximum term of 5 years. All stock options vest immediately and are exercisable at $0.12 per common share. The Company calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of option granted amounted to $317 and was recorded as a share-based payments expense. During the year ended December 31, 2017, the Company granted 9,137,500 incentive stock options to employees, directors and consultants with a maximum term of 5 years. All stock options vest immediately and are exercisable at $0.12 per common share. The Company calculates the fair value of all stock options using the Black-Scholes Option Pricing Model. The fair value of this grant amounted to $504 and was recorded as a share-based payments expense. During the year ended December 31, 2016, the Company granted 6,058,000 incentive stock options to employees, directors and consultants with a maximum term of 5 years. The granting of these options resulted in a share-based payments expense of $278. During the year ended December 31, 2016, the Company recorded a further $31 in stock-based compensation for previously issued stock options that vested during the year. The fair value of stock options granted and vested during the years ended December 31, 2018, December 31, 2017 and December 31, 2016 was calculated using the following assumptions: December 31, 2018 December 31, 2017 December 31, 2016 Expected dividend yield 0 % 0 % 0 % Expected share price volatility 96.9% - 101 % 66.6% - 100.6 % 111% - 113 % Risk free interest rate 2.04% – 2.17 % 1.17% – 1.80 % 0.68% - 0.79 % Expected life of options 5 years 5 years 5 years Details of options outstanding as at December 31, 2018 are as follows: Options Outstanding Options Exercisable Expiry Date Exercise Price ($) Weighted average remaining contractual life (years) 2,440,000 2,440,000 Jul 9, 2019 0.62 0.05 200,000 200,000 Aug 27, 2019 0.37 0.01 100,000 100,000 Sep 26, 2019 0.26 0.00 350,000 350,000 Nov 5, 2019 0.21 0.01 1,000,000 1,000,000 Dec 19, 2019 0.22 0.04 900,000 900,000 Feb 3, 2020 0.275 0.04 450,000 450,000 Oct 5, 2020 0.20 0.03 5,443,000 5,443,000 Jan 28, 2021 0.21 0.44 7,637,500 7,637,500 Feb 21, 2022 0.12 0.93 1,000,000 1,000,000 Dec 20, 2022 0.12 0.15 5,725,000 5,725,000 Feb 28, 2023 0.12 0.92 500,000 500,000 May 1, 2023 0.12 0.08 200,000 200,000 May 4, 2023 0.12 0.03 25,945,500 25,945,500 2.73 e) Reserve The reserve records items recognized as stock-based compensation expense and other share-based payments until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital. Amounts recorded for forfeited or expired unexercised options and warrants are transferred to deficit. During the year ended December 31, 2018 the Company recorded $317 of share-based payments (December 31, 2017 - $504) (December 31, 2016 - $309) to the reserve. During the year ended December 31, 2018, the Company transferred $229 (December 31, 2017 - $301) (December 31, 2016 - $2,725) to deficit for expired options and warrants. During the year ended December 31, 2016, the Company initially recorded an amount of $265 to the reserve, which was amortized as interest expense over the term of the Loan and reallocated to share capital upon settlement. |