| SHARE CAPITAL AND RESERVES | 19. SHARE
CAPITAL AND RESERVES Authorized share capital The Company is authorized to issue 500,000,000
common shares without par value. The Company is authorized to issue the following
preferred shares:
Preferred shares without par value 9,999,900
Series “A” preferred shares 1,000,000
Series “B” preferred shares 100
Series “C” preferred shares 1,000,000
Series “D” preferred shares 4,000,000
Series “E” preferred shares 4,000,000
20,000,000 Issued share capital Common shares The Company had the following share issuances
during the year ended November 30, 2020:
a) On January 22, 2020, the Company issued 57,125 common shares valued at $148,198 to settle debt of $190,706 (Note 15) resulting in a gain of $42,508 which is included in gain (loss) on debt settlements.
b) On January 22, 2020, the Company issued 11,764 common shares valued at $39,615 to a consultant of the Company for public relations services provided to the Company of which $33,058 of services were rendered during the year ended November 30, 2019 and was included in commitment to issue shares.
c) On April 27, 2020, the Company issued 50,103 common shares valued at $183,769 to settle debt of $180,294 (Notes 15 and 16) resulting in a loss of $3,476 which is included in gain (loss) on debt settlements.
d) On June 8, 2020, the Company closed a registered direct offering, under its F-3 registration statement in the United States, by issuing 2,666,672 common shares of the Company at US$1.50 per common share for total proceeds of $5,353,203 (US$4,000,002). Concurrent with this offering, the Company issued to the investors 1,333,334 share purchase warrants exercisable for US$1.88 per common share with a maturity date of June 9, 2025 (“Cashless Warrants”). In connection with these offerings, the Company paid legal fees of $409,200 (US$305,761), agent fees of $428,256 (US$320,000), and issued 213,333 agent warrants with a value of $338,558 and an exercise price of US$1.88 per common share with a maturity date of June 4, 2025 of which $103,424 related to the issuance of the Cashless Warrants and was expensed to professional fees.
e) On July 29, 2020, the Company issued 29,536 common shares valued at $60,000 to a consultant of the Company for advisory services provided to the Company.
f) On September 16, 2020, the Company issued 250,001 common shares valued at $482,272 in relation to the vesting of 250,001 restricted share units. As a result, the Company transferred $482,272 representing the fair value of the vested RSUs from reserves to share capital.
g) On November 17, 2020, the Company issued 84,375 common shares valued at $176,769 to a consultant of the Company for services provided to the Company.
h) During the year ended November 30, 2020, the Company issued the following for exercised stock options, warrants, and conversions:
· issued 515,000 units on the conversion of $961,186 (US$681,980) worth of net convertible debentures (Note 17) and 12,402 units on the conversion of $26,130 (US$18,605) worth of interest on the convertible debentures. As a result, the Company transferred $134,198 from reserves to share capital representing the proportionate balance of the equity component. Each unit comprised of one common share and one warrant with each warrant entitling the holder to acquire one common share of the Company for US$1.75 up to February 26, 2021.
· issued 493,111 common shares for total proceeds of $1,111,476 in connection with the exercise of 493,111 share purchase warrants at US$1.75 per warrant of which $104,139 was received during the year ended November 30, 2019. As a result, the Company transferred $28,056 representing the fair value of the exercised warrants from reserves to share capital.
· issued 573,171 common shares for total proceeds of $907,036 in connection with the exercise of 573,171 share purchase warrants at US$1.20 per warrant.
· received $574,457 for the exercise of 367,084 share purchase warrants with an exercise price of US$1.20 and an expiry date of August 30, 2020 which is included in commitment to issue shares. In December 2020, the shares were issued (Note 29).
· issued 53,505 common shares for total proceeds of $196,427 in connection with the exercise of 53,505 stock options at US$2.55 per option. As a result, the Company transferred $144,245 representing the fair value of the exercised options from reserves to share capital. The Company had the following share issuances
during the year ended November 30, 2019:
a) On February 28, 2019, the Company issued 113,334 common shares valued at $391,013 to settle debt of $335,792 resulting in a loss of $55,221 which is included in loss on debt settlements.
b) On April 30, 2019, the Company issued 46,539 common shares valued at $243,162 to settle debt of $199,896 resulting in a loss of $43,266 which is included in loss on debt settlements.
c) On April 30, 2019, the Company issued 17,222 common shares valued at $73,980 to various consultants of the Company for consulting and public relations services provided to the Company.
d) During the year ended November 30, 2019, the Company issued the following for exercised warrants and conversions:
· issued 158,291 common shares valued at $368,617 in connection to the exercise of 158,291 share purchase warrants with an exercise price of US$1.75 per warrant.
· issued 1,000,167 units on the conversion of $1,795,455 (US$1,133,761) worth of net convertible debentures (Note 17). As a result, the Company transferred $244,890 from reserves to share capital representing the proportionate balance of the unamortized equity component. Additionally, the Company allocated $30,779 to reserves representing the value of the warrants issued. Each unit comprised of one common share and one warrant with each warrant entitling the holder to acquire one common share of the Company for US$1.75 up to February 26, 2021. The Company had the following share issuances
during the year ended November 30, 2018:
a) On January 9, 2018, the Company issued 66,667 common shares valued at $415,000 pursuant to the December 12, 2017 share purchase agreement for Majesco (Note 5).
b) On August 9, 2018, a reverse acquisition transaction was completed whereby LBIX issued 1,288,497 common shares valued at $4,277,319 in exchange for all of the issued and outstanding shares of Liquid Canada (Note 3). Warrants held by Liquid Canada were transferred to the Company as part of the Arrangement valued at $96,303.
c) On October 15, 2018, the Company completed a brokered private placement which consisted of the issuance of 800,000 units at a price of US$4.00 per unit for gross proceeds of $4,157,760 (US$3,200,000). Each unit consisted of one common share and one share purchase warrant exercisable for a three-year period at an exercise price of US$5.00 per warrant. The Company incurred agents’ fees of $410,218, legal fees of $36,353, issued 10,000 common shares valued at $41,531 to an agent, and issued 8,000 agents warrants valued at $24,774 in connection with the closing of this private placement.
d) On October 15, 2018 the Company issued 888,000 common shares valued at $4,880,639 for licenses (Note 9).
e) On October 15, 2018, the Company issued 113,764 common shares valued at $623,771 to settle debt of $833,487 resulting in a gain of $209,716 which is included in gain on debt settlements and issued 28,451 common shares valued at $156,000 for a commitment to issue shares.
f) On October 15, 2018, the Company issued 268,000 common shares valued at $1,469,456 for the purchase of video games in connection with two separate purchase agreements (Note 13).
g) During the year ended November 30, 2018, the Company issued the following for exercised warrants and conversions:
· issued 51,148 common shares in connection with the exercise of share purchase warrants for proceeds of $154,320. As a result, the Company transferred $23,854 representing the fair value of the exercised share purchase warrants from reserves to share capital.
· issued 1,837 common shares in connection with the exercise of 1,837 agents’ warrants at $1.25 per warrant for proceeds of $2,296. As a result, the Company transferred $2,985 representing the fair value of the exercised share purchase warrants from reserves to share capital. Preferred shares As at November 30, 2020, 2019, and 2018,
no preferred shares were issued and outstanding. Treasury shares On November 27, 2019, the Company issued
215,000 common shares into treasury as security against a loan in accordance with a Forbearance Agreement (Note 16). In February 2021,
the Company transferred these shares to the lender as full and final payment of the Forbearance Agreement (Note 30). Profit (loss) per share
Year ended November 30,
2020 2019 2018
$ $ $
Basic and diluted loss per share attributable to the Company from continuing operations (Note 29) (0.68 ) (1.77 ) (3.16 )
Basic and diluted loss per share attributable to the Company (Note 29) (0.82 ) (1.78 ) (3.14 )
Basic and diluted loss per share attributable to the non-controlling interest (0.23 ) (0.01 ) 0.02
Weighted average number of common shares outstanding 7,845,300 4,255,297 2,397,117 Stock options Prior to the Arrangement described in Note
3, the Company had a stock option plan whereby the Company could grant share options to directors, officers, employees, and consultants
enabling them to acquire up to 15% of the issued common shares of the Company. The exercise price of each option is set
by the Board of Directors at the time of grant subject to a minimum price of $0.10 per share but cannot be less than the market price
(less permissible discounts) on the Canadian Stock Exchange. Options can have a maximum term of five years and typically terminate ninety
days following the termination of the optionee’s employment or engagement (thirty days for options granted for investor relations
services), except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the
options are granted. All stock options outstanding in Liquid Canada
were cancelled upon the completion of the Arrangement. Following the Arrangement, the Company does
not have a formal stock option plan. The Company occasionally grants stock options to its employees, officers, directors and consultants
to purchase common shares of the Company. The options granted are exercisable at a price which is equal to or greater than the fair market
value of the common shares at the date the options are granted. The options are granted with varied vesting periods but generally vest
immediately on grant. Options granted generally have a life of five years. During fiscal 2018 and in connection with
the Arrangement, the Company granted 117,000 stock options, with a total fair value of $236,345, to former option holders of LBIX of which
89,000 stock options vest 25% on grant date, 25% on October 2, 2018, 25% on January 2, 2019, and 25% on April 2, 2019. Of the total fair
value granted, $96,303 was considered to be part of the cost of acquisition of LBIX (Note 3). During the year ended November 30, 2020,
the Company recorded share-based compensation of $Nil (2019 -$36,781; 2018 - $111,135) in relation to these options. During the year ended November 30, 2019,
the Company granted 461,500 stock options with a total fair value of $1,136,731 that vested immediately on grant. During the year ended November 30, 2020,
the Company granted 550,000 stock options with a total fair value of $1,011,582 that vested immediately on grant. The following weighted average assumptions
were used in the Black-Scholes option-pricing model for the valuation of the stock options granted:
2020 2019 2018
Risk-free interest rate 0.47 % 1.82 % 2.09 %
Dividend yield Nil Nil Nil
Expected life (years) 5.0 5.0 0.94
Volatility 103 % 92 % 127 %
Weighted average fair value per option $ 1.79 $ 2.46 $ 2.08 Stock option transactions are summarized
as follows:
Number of Stock Options Weighted Average Exercise Price
$
Balance, November 30, 2017 220,000 3.75
Cancelled – Plan of Arrangement (220,000 ) 3.75
Granted 117,000 17.24 (US$13.30)
Balance, November 30, 2018 117,000 17.24 (US$13.30)
Granted 461,500 3.31 (US$2.55)
Cancelled (117,000 ) 17.24 (US$13.30)
Balance, November 30, 2019 461,500 3.39 (US$2.55)
Granted 550,000 3.31 (US$2.55)
Exercised (53,505 ) 3.31 (US$2.55)
Balance, November 30, 2020 957,995 3.31 (US$2.55) A summary of the share options outstanding
and exercisable at November 30, 2020 is as follows:
Number of Stock Options Exercise Price Expiry Date
$
407,995 3.31 (US$2.55) February 28, 2024
25,000 3.31 (US$2.55) January 8, 2025
25,000 3.31 (US$2.55) February 13, 2025
25,000 3.31 (US$2.55) March 10, 2025
25,000 3.33 (US$2.57) April 13, 2025
450,000 3.31 (US$2.55) July 23, 2025
957,995 The weighted average life of share options
outstanding at November 30, 2020 was 4.01 years. Warrants Agents’ warrants During the year ended November 30, 2020,
the Company issued 213,333 agents warrants with a total fair value of $338,558 and an exercise price of US$1.88 per warrant in connection
with the private placement which closed on June 8, 2020. During the year ended November 30, 2018,
the Company issued 8,000 agents’ warrants with an exercise price of US$4.00 per warrant with a total fair value of $24,774 in connection
with the October 15, 2018 private placement. The following weighted average assumptions
were used in the Black-Scholes option-pricing model for the valuation of the warrants granted:
2020 2019 2018
Risk-free interest rate 0.48 % - 2.30 %
Dividend yield Nil - Nil
Expected life (years) 5.0 - 2
Volatility 103 % - 105 %
Weighted average fair value per warrant $ 1.59 - $ 3.10 Agents’ warrant transactions are summarized
as follows:
Number of Agents’ Warrants Weighted Average Exercise Price
$
Balance, November 30, 2017 4,574 1.25
Issued 8,000 5.19 (US$4.00)
Exercised (1,837 ) 1.25
Balance, November 30, 2018 10,737 4.35
Cancelled (2,737 ) 1.25
Balance, November 30, 2019 8,000 5.32 (US$4.00)
Issued 213,333 2.44 (US$1.88)
Cancelled (8,000 ) 5.19 (US$4.00)
Balance, November 30, 2020 213,333 2.44 (US$1.88) A summary of the agents’ warrants outstanding
and exercisable at November 30, 2020 is as follows:
Number of Agent’s Warrants Exercise Price Expiry Date
$
213,333 2.44 (US$1.88) June 4, 2025
213,333 The weighted average life of agent’s
warrants outstanding at November 30, 2020 was 4.52 years. Share purchase warrants During the year ended November 30, 2018,
the Company issued 800,000 share purchase warrants with an exercise price of US$5.00 per warrant in connection with the October 15, 2018
private placement. The Company provided an anti-dilution clause
on 132,043 warrants issued during the year ended November 30, 2017 that are triggered on exercise of such warrants. During the year ended
November 30, 2018, 72,800 additional warrants with an exercise price of US$2.50 were issued under this provision. During the year ended November 30, 2019,
the Company issued 1,000,167 share purchase warrants with an exercise price of US$1.75 per warrant in connection with the conversion of
various convertible debentures. On October 18, 2019, the Company repriced
six tranches of share purchase warrants to US$1.20. During the year ended November 30, 2020,
the Company:
· issued 527,402 share purchase warrants with an exercise price of US$1.75 per warrant in connection with the conversion of various convertible debentures;
· 621,865 share purchase warrants with an exercise price of US$1.20 per warrant in connection with the exercise of the “B” share purchase warrants described under Derivative liability below; and
· 1,333,334 share purchase warrants with an exercise price of US$1.88 per warrant in connection with the registered direct offering which closed in June 2020. Share purchase warrant transactions are summarized
as follows:
Number of Share Purchase Warrants Weighted Average Exercise Price
$
Balance, November 30, 2017 320,946 4.36
Granted 800,000 6.65
Granted on anti-dilution clause 72,800 3.24 (USD$2.50)
Exercised (51,148 ) 3.01
Balance, November 30, 2018 1,142,598 6.05
Issued 1,000,167 2.33 (US$1.75)
Exercised (158,291 ) 2.33 (US$1.75)
Balance, November 30, 2019 1,984,474 1.92 (US$1.81)
Issued 2,482,601 2.18 (US$1.68)
Exercised (1,433,366 ) 1.80 (US$1.39)
Balance, November 30, 2020 3,033,709 2.15 (US$1.66) A summary of the share purchase warrants
outstanding and exercisable at November 30, 2020 is as follows:
Number of Share Purchase Warrants Exercise Price Expiry Date
$
800,000 1.56 (US$1.20) October 15, 2021
876,167 2.27 (US$1.75) February 26, 2021
24,208 1.56 (US$1.20) April 6, 2022
1,333,334 2.44 (US$1.88) June 9, 2025
3,033,709 The weighted average life of share purchase
warrants outstanding at November 30, 2020 was 2.30 years. Restricted share units (“RSUs”) During the year ended November 30, 2020,
the Company granted 1,000,001 RSUs to certain directors, officers, and consultants of the Company which vest 25% on grant (September 3,
2020) and 25% each six months thereafter. The granted RSUs convert to common shares of the Company upon vesting, accordingly, 250,001
common shares were issued upon grant. During the year ended November 30, 2020,
the Company recorded share-based compensation expense of $905,590 in relation to the issued RSUs. The fair value of the RSUs was measured
using the value on the grant date of US$1.47 per common share.
Number of RSUs
Balance, November 30, 2017, 2018, and 2019 -
Granted 1,000,001
Vested (250,001 )
Balance, November 30, 2020 750,000 Derivative liability
a) On August 30, 2017, the Company completed a non-brokered private placement of 132,043 units for cash proceeds of $126,000. Each unit consisted of one “A” share purchase warrant and one “B” share purchase warrant. Each “A” warrant entitles the holder to purchase one share of the Company for a period of three years from closing at a price of $3.00 per warrant. Each “B” warrant entitles the holder to purchase one share of the Company for a period of three years from closing at a price of $6.00, repriced to USD$1.20 on October 18, 2019. The warrant agreement provides an anti-dilution clause for each of the A and B warrants that, upon exercise of the warrants, will cause the Company to issue additional warrants sufficient to entitle the warrant holder to acquire 10% of the issued and outstanding common shares of the Company. Such right is limited to one exercise of either of the A and B warrants and all of the A warrants must be exercised prior to exercising any of the class B warrants. The anti-dilution right for the A and B share
purchase warrants was valued at $126,000 as at November 30, 2017 as the acquisition price approximated fair value due to the recency of
the transaction. During the year ended November 30, 2018, certain A warrants were exercised causing the rights to expire resulting in
a decrease to the liability. During the year ended November 30, 2020,
certain B warrants were exercised causing the rights to expire resulting in the elimination of the liability. As at November 30, 2020, the rights attached
to the B warrants were valued at $Nil (2019 - $1,102,277) resulting in a derivative gain of $1,102,277 for the year ended November 30,
2020 (2019 – loss of $1,001,365; 2018 - gain of $25,088). The following weighted average assumptions
were used in the Black-Scholes option-pricing model for the revaluation of the derivative liability as at November 30, 2020, 2019 and
2018:
2020 2019 2018
Risk-free interest rate - 1.70 % 2.16 %
Dividend yield - Nil Nil
Expected life (years) - 0.75 1.75
Volatility - 106 % 114 %
Probability of exercise - 75 % 20 %
b) Due to the Company changing its functional currency from the CAD to the USD during the year ended November 30, 2018, a derivative liability occurred on the date of change on the Company’s previously issued share purchase warrants with CAD exercise prices. During the year ended November 30, 2019, the share purchase warrants with a CAD exercise price was repriced to USD resulting in the elimination of the derivative liability. As at November 30, 2019, the Company revalued
the derivative liability to $Nil and recorded a gain of $551,846 (2018 - $1,005,240). The following weighted average assumptions
were used in the Black-Scholes option-pricing model for the revaluation of the derivative liability as at November 30, 2020, 2019, and
2018:
2020 2019 2018
Risk-free interest rate - - 2.08 %
Dividend yield - - Nil
Expected life (years) - - 2.25
Volatility - - 102 %
c) On June 8, 2020, the Company closed a registered direct offering, under its F-3 registration statement in the United States, by issuing 2,666,672 common shares of the Company at US$1.50 per common share for total proceeds of $5,353,203 (US$4,000,002). Concurrent with this offering, the Company issued to the investors 1,333,334 share purchase warrants exercisable for US$1.88 per common share with a maturity date of June 9, 2025. The holders of the Cashless Warrants may elect, if the Company does not have an effective registration statement registering or the prospectus contained therein is not available for the issuance of the Cashless Warrant shares to the holder, in lieu of exercising the Cashless Warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the Cashless Warrants. The fair value is determined by multiplying the number of Cashless Warrants to be exercised by the previous day’s volume weighted average price (“VWAP”) less the exercise price with the difference divided by the VWAP. If a Cashless Warrant holder exercises this option, there will be variability in the number of shares issued per Cashless Warrant. On initial recognition (Note 29), the Company
allocated $470,785, being the fair value of the Cashless Warrants, from the proceeds of the offering included in share capital to set
up the derivative liability. As at November 30, 2020, the Company revalued the derivative liability to $341,163 and recorded a gain of
$129,622. The following weighted average assumptions
were used in the Black-Scholes option-pricing model for the initial valuation and the valuation of the derivative liability as at November
30, 2020:
2020
Risk-free interest rate 0.15 %
Dividend yield Nil
Expected life (years) 0.33
Volatility 94 %
Discount rate 20 %
Weighted average fair value per warrant 0.36 |
