Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Note 14 - Warrants

v3.10.0.1
Note 14 - Warrants
12 Months Ended
Nov. 30, 2018
Warrants [Abstract]  
Warrants

All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms.

 

In the registered direct unit offering completed in March 2013, gross proceeds of $3,121,800 were received through the sale of the Company’s units comprised of common share and warrants.

 

The offering was the sale of 181,500 units at a price of $17.20 per unit, with each unit consisting of one common share and a five year warrant to purchase 0.25 of a common share at an exercise price of $21.00 per share (the “March 2013 Warrants”).

The fair value of the March 2013 Warrants of $407,558 were initially estimated at closing using the Black-Scholes Option Pricing Model, using volatilities of 63%, risk free interest rates of 0.40%, expected life of 5 years, and dividend yield of Nil. As at November 30, 2018, no March 2013 Warrants are outstanding.

In the underwritten public offering completed in July 2013, gross proceeds of $3,075,000 were received through the sale of the Company’s units comprised of common shares and warrants. The offering was the sale of 150,000 units at a price of $20.50 per unit, each unit consisting of one common share and a five year warrant to purchase 0.25 of a common share at an exercise price of $25.50 per share (the “July 2013 Warrants”). As at November 30, 2018, no July 2013 Warrants are outstanding.

The fair value of the July 2013 Warrants of $328,350 were initially estimated at closing using the Black-Scholes Option Pricing Model, using volatilities of 62.4%, risk free interest rates of 0.58%, expected life of 5 years, and dividend yield of Nil.

In the underwritten public offering completed in June 2016, gross proceeds of $5,200,000 were received through the sale of the Company’s units comprised of common shares and warrants. The Company issued at the initial closing of the offering an aggregate of 322,981 common shares and warrants to purchase an additional 161,490 common shares, at a price of $16.10 per unit. The warrants are currently exercisable, have a term of five years and an exercise price of $19.30 per common share. The underwriter also purchased at such closing additional warrants (collectively with the warrants issued at the initial closing, the “June 2016 Warrants”) at a purchase price of $0.01 per warrant to acquire 24,223 common shares

pursuant to the over-allotment option exercised in part by the underwriter. The fair value of the June 2016 Warrants of $1,175,190 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 64.1%, risk free interest rates of 0.92%, expected life of 5 years, and dividend yield of Nil. The June 2016 Warrants currently outstanding are detailed below.

In the registered direct offering completed in October 2017, gross proceeds of $4,000,000 were received through the sale of the Company’s common shares and warrants. The Company issued at the closing of the offering an aggregate of 363,636 common shares at a price of $11.00 per share and warrants to purchase an additional 181,818 common shares. The October 2017 Warrants became exercisable six months following the closing date, will expire 30 months after the date they became exercisable, and have an exercise price of $12.50 per common share. The Company also issued the October 2017 Placement Agents Warrants to purchase 18,181 common shares at an exercise price of $13.75 per share. The holders of October 2017 Warrants and October 2017 Placement Agent Warrants are entitled to a cashless exercise under which the number of shares to be issued will be based on the number of share for which warrants are exercised times the difference between the market price of the common share and the exercise price divided by the market price. The fair value of the October 2017 Warrants of $742,555 was initially estimated at closing using the Black- Scholes Option Pricing Model, using volatility of 73.67%, risk free interest rates of 1.64%, expected life of 3 years, and dividend yield of Nil.

The fair value of the October 2017 Placement Agents Warrants was estimated at $86,196 using the Black-Scholes Option Pricing Model, using volatility of 73.67%, a risk free interest rate of 1.64%, an expected life of 3 years, and a dividend yield of Nil.

The October 2017 Warrants and the October 2017 Placement Agent Warrants currently outstanding are detailed below.

In the two registered direct offerings completed in March 2018, gross proceeds of $5,300,000 were received through the sale of the Company’s common shares and warrants. The Company issued at the closing of the offering an aggregate of 883,333 common shares at a price of $6.00 per share and the March 2018 Warrants to purchase an additional 441,666 common shares. The March 2018 Warrants became exercisable six months following the closing date, will expire 30 months after the date they became exercisable and have an exercise price of $6.00 per common share. The Company also issued the March 2018 Placement Agent Warrants to purchase 44,166 common shares at an exercise price of $7.50 per share. The holders of March 2018 Warrants and March 2018 Placement Agent Warrants are entitled to a cashless exercise under which the number of shares to be issued will be based on the number of share for which warrants are exercised times the difference between the market price of the common share and the exercise price divided by the market price. The fair value of the March 2018 Warrants of $1,115,480 was initially estimated at closing using the Black- Scholes Option Pricing Model, using volatility of 70%, risk free interest rates of 2.44% and 2.46%, expected life of 3 years, and dividend yield of Nil.

The fair value of the March 2018 Placement Agent Warrants was estimated at $141,284 using the Black-Scholes Option Pricing Model, using volatility of 70%, risk free interest rates of 2.44% and 2.46%, an expected life of 3 years, and a dividend yield of Nil. The March 2018 Warrants and the March 2018 Placement Agent Warrants currently outstanding are detailed below.

In October 2018, the Company completed an underwritten public offering in the United States, resulting in the sale to the public of 827,970 Units at $0.75 per Unit, which are comprised of one common share and one 2018 Unit Warrant (as defined above) exercisable at $0.75 per share. The Company concurrently sold an additional 1,947,261 common shares and 2,608,695 2018 Option Warrants exercisable at $0.75 per share pursuant to the over-allotment option exercised in part by the underwriter. The price of the common shares issued in connection with exercise of the over-allotment option was $0.74 per share and the price for the warrants issued in connection with the exercise of the over-allotment option was $0.01 per warrant, less in each case the underwriting discount. In addition, the Company issued 16,563,335 2018 Pre-Funded Units (as defined above), each 2018 Pre-Funded Unit consisting of one 2018 Pre-Funded Warrant (as defined above) to purchase one common share and one 2018 Warrant (as defined above) to purchase one common share. The 2018 Pre-Funded Units were offered to the public at $0.74 each and a 2018 Pre-Funded Warrant is exercisable at $0.01 per share. Each 2018 Firm Warrant is exercisable immediately and has a term of five years and each 2018 Pre-Funded Warrant is exercisable

immediately and until all 2018 Pre-Funded Warrants are exercised. The Company also issued the October 2018 Placement Agent Warrants to the placement agents to purchase 1,160,314 common shares at an exercise price of $0.9375 per share, which were exercisable immediately upon issuance. In aggregate, in October 2018, the Company issued 2,775,231 common shares, 16,563,335 2018 Pre-Funded Warrants and 20,000,000 2018 Firm Warrants in addition to 1,160,314 October 2018 Placement Agent Warrants.

The fair value of the 2018 Firm Warrants of $279,086 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 92%, risk free interest rates of 3.02%, expected life of 5 years, and dividend yield of Nil. The fair value of the October 2018 Placement Agents Warrants was estimated at $461,697 using the Black-Scholes Option Pricing Model, using volatility of 92%, risk free interest rates of 3.02%, an expected life of 5 years, and a dividend yield of Nil.

The fair value of the 2018 Pre-Funded Warrant of $12,256,868 and the fair value of the 2018 Firm Warrants of $279,086, respectively, were recorded under Additional paid-in-capital in the consolidated statements of shareholders’ equity (deficiency).

During the year ended November 30, 2018, 12,153,334 2018 Pre-Funded Warrants were exercised for proceeds of $121,553, and the Company recorded a charge of $4,262,526 from Additional paid-in-capital to common shares under Capital stock.

As at November 30, 2018, 4,410,001 2018 Pre-Funded Warrants are outstanding which are exercisable immediately at $0.01 per share. In addition, the following table provides information on the 22,123,623 warrants including 2018 Firm Warrants outstanding and exercisable as of November 30, 2018:

 

         Number         Shares issuable 
Warrant Exercise price    outstanding     Expiry     upon exercise 
                 
June 2016 Warrants  $             19.30             277,478   June 2, 2021                 138,739
October 2017 Warrants  $             12.50             181,818   October 13, 2020                 181,818
October 2017 Placement               
  Agent Warrants  $           13.750               18,181   October 13, 2020                   18,181
March 2018 Warrants  $               6.00             291,666   March 16, 2021                 291,666
March 2018 Warrants  $               6.00             150,000   March 21, 2021                 150,000
March 2018 Placement               
  Agent Warrants  $               7.50               29,166   March 16, 2021                   29,166
March 2018 Placement              
   Agent Warrants  $               7.50               15,000   March 21, 2021                   15,000
2018 Firm Warrants  $               0.75        20,000,000   October 16, 2023            20,000,000
2018 Pre-Funded Warrants  $               0.01          4,410,001   October 16, 2023              4,410,001
October 2018 Placement               
  Agent Warrants  $           0.9375          1,160,314   October 16, 2023              1,160,314
             26,533,624                  26,394,885

 

During the year ended November 30, 2018, other than Pre-Funded Warrants as noted above, there were no cash exercises in respect of warrants (2017 – 33,602; 2016 – 83,210) and no cashless exercise (2017 - Nil; 2016 - Nil) of warrants, resulting in the issuance of Nil (2017 – 16,801; 2016 – 35,791) and Nil (2017 - Nil; 2016 - Nil) common shares, respectively. For the warrants exercised, the Company recorded a charge to capital stock of $Nil (2017 - $430,573; 2016 - $1,030,719) comprised of proceeds of $Nil (2017 - $324,258; 2016 - $700,653) and the associated amount of $Nil (2017 - $106,315; 2016 - $330,066) previously recorded in Additional paid-in-capital.

Details of warrant transactions for the years ended November 30, 2018 and 2017 are as follows:

 

    Outstanding,  December 1, 2017 Issued Expired Exercised Rounding on consolidation Outstanding,  November 30, 2018
March 2013 Warrants                      149,174                     -        (149,174)                      -                         -                                -   
July 2013 Warrants                        87,000                     -          (87,000)                      -                         -                                -   
June 2016 Warrants                      277,872                     -                   -                         -                     (394)                   277,478
October 2017 Warrants                      181,818                     -                   -                         -                         -                      181,818
October 2017 Placement            
   Agent Warrants                        18,181                     -                   -                         -                         -                        18,181
March 2018 Warrants                                -              441,666                -                         -                         -                      441,666
March 2018 Placement             
  Agent Warrants                                -                44,166                -                         -                         -                        44,166
2018 Firm Warrants                                -         20,000,000                -                         -                         -                 20,000,000
2018 Pre-Funded Warrants                                -         16,563,335                -         (12,153,334)                      -                   4,410,001
October 2018 Placement            
  Agent Warrants                                -           1,160,314                -                         -                         -                   1,160,314
                         714,045      38,209,481     (236,174)      (12,153,334)                  (394)              26,533,624

 

  March 2013 Warrants July 2013 Warrants June 2016 Warrants October 2017 Warrants October 2017 Placement Agent Warrants

 

Total

Outstanding, December 1, 2016

 

149,174

 

87,000

 

311,474

 

-

 

-

 

547,648

Issued - - - 181,818 18,181 199,999
Exercised - - (33,602) - - (33,602)
Outstanding, November 30, 2017

 

149,174

 

87,000

 

277,872

 

181,818

 

18,181

 

714,045