| Capital Stock |
Authorized,
issued and outstanding
| (a) | The Company is authorized to issue an unlimited number of common shares,
all without nominal or par value and an unlimited number of preference shares. As at February 29, 2020, the Company had 23,678,105
(November 30, 2019 – 22,085,856) common shares issued and outstanding and no preference shares issued and outstanding. Two
officers and directors of the Company owned directly and through their family holding company 578,131 (November 30, 2019 –
578,131) common shares or approximately 2.4% (November 30, 2019 – 2.6%) of the issued and outstanding common shares of the
Company as at February 29, 2020. |
| (b) | In November 2013, the Company entered into an equity
distribution agreement with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company originally could
from time to time sell up to 530,548 of the Company’s common shares for up to an aggregate of $16.8 million (or such
lesser amount as may then be permitted under applicable exchange rules and securities laws and regulations) through
at-the-market issuances on Nasdaq or otherwise. Under the equity distribution agreement, the Company was able at its
discretion, from time to time, to offer and sell common shares through Roth or directly to Roth for resale to the extent
permitted under Rule 415 under the U.S. Securities Act of 1933, as amended, at such time and at such price as were acceptable
to the Company by means of ordinary brokers’ transactions on Nasdaq or otherwise at market prices prevailing at the
time of sale or as determined by the Company. The Company has paid Roth a commission, or allowed a discount, of 2.75% of the
gross proceeds that the Company received from any sales of common shares under the equity distribution agreement. The Company
also agreed to reimburse Roth for certain expenses relating to the at-the-market offering program. |
In March 2018, the Company terminated
its continuous offering under the prospectus supplement dated July 18, 2017 and prospectus dated July 17, 2017 in respect of its
at-the-market program.
The underwriting agreement relating
to the October 2018 offering described in Note 6(e) restricts the Company’s ability to use this equity distribution agreement.
It contains a prohibition on the Company: (i) for a period of two years following the date of the underwriting agreement, from
directly or indirectly in any at-the-market or continuous equity transaction, offer to sell, or otherwise dispose of shares of
capital stock of the Company or any securities convertible into or exercisable or exchangeable for its shares of capital stock
or (ii) for a period of five years following the closing, effecting or entering into an agreement to effect any issuance by the
Company of common shares or common share equivalents involving a certain variable rate transactions under an at-the-market offering
agreement, whereby the Company may issue securities at a future determined price, except that, on or after the date that is two
years after the closing, the Company may enter into an at-the-market offering agreement. Moreover, currently the Company does
not meet the requirements to utilize its Registration Statement on Form F-3 to issue any further securities under at-the-market
equity program (or otherwise) under the Form F-3.
| (c) | In October 2017, the Company completed a registered direct offering of 363,636 common shares
at a price of $11.00 per share. The Company also issued to the investors warrants to purchase an aggregate of 181,818 common
shares (the “October 2017 Warrants”). The warrants became exercisable six months following the closing date, will
expire 30 months after the date they became exercisable, have a term of three years and have an exercise price of $12.50 per
common share. The Company also issued to the placement agents warrants to purchase 18,181 common shares at an exercise price
of $13.75 per share (the “October 2017 Placement Agent Warrants”). 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 shares 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 October 2017 Warrants and the October 2017 Placement Agent
Warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC topic
480 Distinguishing Liabilities from Equity. |
The Company
recorded $3,257,445 as the value of common shares under Capital stock and $742,555 as the value of the October 2017 Warrants under
Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency).
The Company has disclosed the terms used to value the warrants in Note 9.
The direct
costs related to the issuance of the common shares, October 2017 Warrants and October 2017 Placement Agent Warrants were $500,492
and were recorded as an offset against the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency)
with $391,580 being recorded under Capital stock and $108,912 being recorded under Additional paid-in capital.
| (d) | In March 2018, the Company completed two registered direct offerings
of an aggregate of 883,333 common shares at a price of $6.00 per share. The Company also issued to the investors warrants to purchase
an aggregate of 441,666 common shares (the “March 2018 Warrants”). The 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 to the placement agents warrants to purchase 44,166 common shares at an exercise price of $7.50
per share (the “March 2018 Placement Agent Warrants”). 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 shares 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 March 2018 Warrants and March 2018 Placement Agent Warrants
are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC topic 480 Distinguishing
Liabilities from Equity.
The Company recorded $4,184,520
as the value of common shares under Capital stock and $1,115,480 as the value of the March 2018 Warrants under Additional paid-in
capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). The Company has
disclosed the terms used to value the warrants in Note 9.
The direct costs related to the
issuance of the common shares and warrants were $831,357 including the cost of warrants issued to the placement agents. These direct
costs were recorded as an offset against the condensed unaudited interim consolidated statements of shareholders’ equity
(deficiency) with $656,383 being recorded under Capital stock and $174,974 being recorded under Additional paid-in capital.
| (e) | 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 were comprised of one common
share and one warrant (the “2018 Unit Warrants”) exercisable at $0.75 per share. The Company concurrently sold an additional
1,947,261 common shares and warrants to purchase 2,608,695 common shares exercisable at $0.75 per share (the “2018 Option
Warrants’) pursuant to the overallotment option exercised in part by the underwriter. The price of the common shares issued
in connection with exercise of the overallotment option was $0.74 per share and the price for the warrants issued in connection
with the exercise of the overallotment option was $0.01 per warrant, less in each case the underwriting discount. In addition,
the Company issued 16,563,335 pre-funded units (“2018 Pre-Funded Units’), each 2018 Pre-Funded Unit consisting of one
pre-funded warrant (a “2018 Pre-Funded Warrant”) to purchase one common share and one warrant (a “2018 Warrant”,
and together with the 2018 Unit Warrants and the 2018 Option Warrants, the “2018 Firm Warrants”) 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 warrants to the placement agents to purchase
1,160,314 common shares at an exercise price of $0.9375 per share (the “October 2018 Placement Agent Warrants”), which
were exercisable immediately upon issuance. In aggregate, 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 Company raised $14,344,906
in gross proceeds as part of October 2018 underwritten public offering. The Company recorded $1,808,952 as the value of common
shares under Capital stock and $279,086 as the value of the 2018 Firm Warrants and $12,256,868 as the value of the 2018 Pre-Funded
Warrants under Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity
(deficiency).
The direct costs related to
the issuance of the common shares and warrants issued in October 2018 were $2,738,710 including the cost of October 2018
Placement Agent Warrants in the amount of $461,697. These direct costs were recorded as an offset against the condensed
unaudited interim consolidated statements of shareholders’ equity (deficiency) with $345,363 being recorded under
Capital stock and $2,393,347 being recorded under Additional paid-in capital.
During the three months ended February
29, 2020, 1,592,249 (three months ended February 28, 2019 – 2,643,334) common shares were issued upon the exercise of 2018
Pre-Funded Warrants. The Company has disclosed the terms used to value these warrants in Note 9.
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