Stockholders' Deficiency | 15. Stockholders’ Deficiency As at August 31, 2018, the Company was authorized to issue 300,000,000 (August 31, 2017 - 300,000,000) shares of common stock at a par value of $US0.001. See Note 20. On August 25, 2016, the Company completed a reverse split of the Company’s common stock at the ratio of one new share for every two existing shares. All share and per share amounts have been adjusted to reflect this reverse split. At August 31, 2018, the Company had 57,532,843 shares of common stock legally issued and outstanding (2017 - 56,892,843 shares). On June 28, 2013, pursuant to the Exchange Agreement, the Company acquired 39,015,439 common shares of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. As a result of the Exchange Agreement, TSI became the Company’s majority-owned subsidiary. Each preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to certain restrictions. As at August 31, 2018 and 2017, none of the preferred shares had been exchanged. As a condition of the closing of the Exchange Agreement, the Company also entered into a Support Agreement and a Voting and Exchange Trust Agreement on the Closing Date. The Support Agreement ensures that the obligations of Subco remain effective until all of the preferred shares have been exchanged. The Voting and Exchange Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of the Company’s common stock are exercisable by the registered holders of the preferred shares of Subco. The Trustee (as defined in the Voting and Exchange Trust Agreement) holds legal title to a Special Voting Share to which voting rights are attached for the benefit of those shareholders. The Trustee holds the Special Voting Share solely for the use and benefit of the those shareholders. Common Stock Issuances During the year ended August 31, 2018, the Company completed the following common stock transactions: ● On September 21, 2017, the Company closed a US dollar financing pursuant to which the Company issued 630,000 units at US$1.00 per unit for gross proceeds of $830,674 (US$630,000), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until September 7, 2019. $491,041 was allocated to common stock and $339,633 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $6,435 (US$5,000) and issued 5,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until July 17, 2019, valued at $2,581 and credited to stock purchase warrants. ● On September 21, 2017, the Company issued 10,000 shares of common stock at $0.80 per share for gross proceeds of $8,000 pursuant to the exercise of warrants during the year ended August 31, 2017. $2,049 of the gross proceeds received that was allocated to these warrants has been deducted from additional paid-in capital. At August 31, 2017, the gross proceeds received of $838,674 for the financings that closed September 7, 2017 and September 21, 2017 were reported as stock subscribed. During the year ended August 31, 2017, the Company completed the following common stock transactions: ● On October 31, 2016, the Company closed a concurrent Canadian and US dollar financing as follows: o Canadian financing – the Company issued 140,000 units at $0.50 per unit for gross proceeds of $70,000, with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of $0.80 per share until October 31, 2018. $41,314 was allocated to common stock and $28,686 was allocated to additional paid-in capital. US financing – the Company issued 220,770 units at US$0.50 per unit for gross proceeds of $146,716 (US$110,385), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$0.80 per share until October 31, 2018. $86,027 was allocated to common stock and $60,689 was allocated to stock purchase warrants. ● On November 2, 2016, the Company closed a US dollar financing pursuant to which the Company issued 400,000 units at US$1.00 per unit for gross proceeds of $524,230 (US$400,000), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until November 2, 2018. $286,950 was allocated to common stock and $237,280 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $19,899 and issued 15,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until September 28, 2018, valued at $8,742 and credited to stock purchase warrants. Stock Subscribed During the year ended August 31, 2018, $10,000 in stock subscriptions was received pursuant to the exercise of 12,500 warrants at a price of $0.80 per share in February 2018. This stock remained subscribed for as at August 31, 2018. During the year ended August 31, 2017, $838,674 ($8,000 and US$630,000) in stock subscriptions was received pursuant to individual private placements. These subscriptions were for a total of: ● 10,000 shares of common stock of the Company at a price of $0.80 per share pursuant to the exercise of stock purchase warrants. These shares were issued on September 21, 2017. ● 630,000 units of the Company at a price of US$1.00 per unit. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share for a period of 24 months from the closing date of the financing. These units were issued on September 7, 2017. Stock Purchase Warrants The continuity of Canadian dollar denominated stock purchase warrants for the year ended August 31, 2018 is as follows: Expiry Date Price August 31, 2017 Issued Exercised August 31, 2018 October 31, 2018 $ 0.80 130,000 — (12,500 ) 117,500 At August 31, 2018, the weighted-average remaining contractual life of Canadian dollar warrants outstanding was 0.17 years (August 31, 2017 - 1.17). The continuity of US dollar denominated stock purchase warrants for the year ended August 31, 2018 is as follows: Expiry Date Price August 31, 2017 Issued Exercised August 31, 2018 September 30, 2018 – Finder US$1.40 15,000 — — 15,000 October 31, 2018 US$0.80 220,770 — — 220,770 November 2, 2018 US$1.40 400,000 — — 400,000 July 17, 2019 – Finder US$1.40 — 5,000 — 5,000 September 7, 2019 US$1.40 — 630,000 — 630,000 635,770 635,000 — 1,270,770 At August 31, 2018, the weighted-average remaining contractual life of US dollar warrants outstanding was 0.59 years (August 31, 2017 - 1.17 years). The Company used the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’s warrants issued pursuant to private placements during the years ended August 31, 2018 and 2017 with the following assumptions: August 31, 2018 August 31, 2017 Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 1.47% - 2.04 % 0.54% - 0.55 % Expected stock price volatility 100.00 % 100.00 % Expected life of warrants 0.08 – 2 years 2 years See Notes 4 and 20. |