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

Derivative Liability

v3.22.2.2
Derivative Liability
12 Months Ended
Jun. 30, 2022
Derivative Liability [Abstract]  
Derivative Liability
10. Derivative Liability

 

Conversion feature of Debentures

 

Upon issuance of the Debentures in February 2021, the Company allocated the conversion feature component valued at $442,589 as a derivative liability.

 

During the year ended June 30, 2021, a gain on change in fair value on the conversion feature of $32,676 was recorded on the consolidated statements of loss and comprehensive loss.

 

During the year ended June 30, 2022, a gain on change in fair value on the conversion feature of $153,155 was recorded on the consolidated statements of loss and comprehensive loss up to the conversion of the Debentures. As a result of the conversion, a fair value of $256,758 was allocated to share capital.

 

IPO Finders’ Warrants

 

In connection with the IPO which closed on November 23, 2021, the Company issued 184,000 Finders’ Warrants exercisable at USD $9.375 before November 23, 2026. The fair value of these Finders’ Warrants was estimated at $1,237,681 using Black-Scholes with the following assumptions: expected volatility of 100% based on comparable companies, expected dividend yield of 0%, risk-free interest rate of 1.58%, and an expected life of five years.

 

As at June 30, 2022, the derivative liability related to the Finders’ Warrants was measured at a fair value of $286,997 using Black-Scholes with the following assumptions: share price of USD $2.40, exercise price of USD $9.375, expected volatility of 100% based on comparable companies, expected dividend yield of 0%, risk-free interest rate of 3.10% and an estimated remaining life of 4.40 years. During the year ended June 30, 2022, the Company recorded a fair value decrease of $950,684 on the derivative liability related to the Finders’ Warrants.

 

The changes to the derivative liabilities for the years ended June 30, 2022 and 2021 are as follows:

 

    $  
Balance, June 30, 2020  
-
 
Fair value of derivative liability on date of issuance     442,589  
Fair value changes of derivative liability – conversion feature     (32,676 )
Balance, June 30, 2021     409,913  
Fair value changes of derivative liability – conversion feature     (153,155 )
Fair value allocated on conversion of Debentures     (256,758 )
Fair value of derivative liability – Finders’ Warrants     1,237,681  
Fair value changes of derivative liability – Finders’ Warrants     (950,684 )
Balance, June 30, 2022     286,997