Annual report pursuant to Section 13 and 15(d)

Warrants

v3.21.1
Warrants
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Warrants

17. Warrants

 

In connection with the convertible debenture agreements entered into with accredited investors in the first and second quarters of 2018, for each $1,000 debenture unit the Company issued two-year warrants to purchase up to 135.28 shares of the Company’s common stock and for each CDN $1,000 debenture unit the Company issued two-year warrants to purchase up to 104.06 shares of the Company’s common stock at an exercise price of $4.00 per share. These warrants expired unexercised.

 

On May 31, 2020, in terms of convertible debt extension agreements entered into with investors, the Company granted two year warrants exercisable for 301,644 shares of common stock at an exercise price of $3.75 per share until May 31, 2022 and three year warrants exercisable for 72,729 shares of common stock at an exercise price of $5.00 per share until May 31, 2023.

 

In terms of the underwritten public offering disclosed in note 16 above, the Company granted 4,166,666 five year warrants, exercisable at $2.50 per share to the subscribers. In addition, the Company granted the underwriter 208,333 three year warrants exercisable at $3.00 per share, and in terms of the underwriters’ over-allotment option, the Company granted an additional 624,999 five year warrants exercisable at $2.50 per share to the Underwriter.

 

The warrants issued during the year ended December 31, 2020, were assessed in terms of ASC480-10,Distinguishing between Liabilities and Equity, and ASC 815-10,Derivatives and Hedging Transactionsto determine if they met equity classification or liability classification. After considering the guidance provided by the ASC under both ASC 480-10 and ASC 815-10, the Company determined that equity classification was appropriate. 

 

The warrants awarded during the year ended December 31, 2020 were valued using a Black-Scholes option pricing model.

 

The following assumptions were used in the Black-Scholes model:

 

   

Year ended

December 31, 2020

Exercise price     $2.50 to $5.00  
Risk free interest rate     0.16 to 0.29
Expected life of warrants     2 to 5 years  
Expected volatility of underlying stock     139.5 to 183.5  
Expected dividend rate     0 %

  

A summary of all of the Company’s warrant activity during the period January 1, 2019 to December 31, 2020 is as follows:

 

    Number of shares   Exercise price per share   Weighted average exercise price  
Outstanding January 1, 2019       1,089,474       $ 4.00     $ 4.00  
Granted       —           —         —    
Forfeited/cancelled       —           —         —    
Exercised       —           —         —    
Expired       —           —         —    
Outstanding December 31, 2019       1,089,474       $ 4.00     $ 4.00  
Granted       5,374,371         2.50 to 5.00       2.62  
Forfeited/cancelled       (1,089,474 )       4.00       4.00  
Exercised       (3,321,226 )       2.50 - 5.00       2.62  
Outstanding December 31, 2020       2,053,145       $ 2.50 to 5.00     $ 2.63  
                                         

  

The following tables summarize information about warrants outstanding as of December 31, 2020:

 

    Warrants outstanding   Warrants exercisable

 

Exercise price

    Number of shares       Weighted average remaining years       Weighted average exercise price       Number of shares       Weighted average exercise price  
$2.50     1,747,949       4.65     $ 2.50       1,747,949     $ 2.50  
$3.00     208,333       2.63       3.00       208,333       3.00  
$3.75     57,761       1.41       3.75       57,761       3.75  
$5.00     39,102       2.17       5.00       39,102       5.00  
      2,053,145       4.31     $ 2.63       2,053,145     $ 2.63