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

EQUITY

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EQUITY
12 Months Ended
Dec. 31, 2022
Stockholders’ Equity  
EQUITY

NOTE 22 — EQUITY

 

Contributed Capital

 

Equity Issued

 

During the years ended December 31, 2022 and 2021, the Company issued ordinary shares for net cash proceeds of $15,473,334 and $3,127,442, respectively.

 

During the year ended December 31, 2022, the Company issued the company ordinary shares with a gross value of $22,581,816 (net $15,202,858) from the IPO proceeds. The company also raised cash proceed of $270,476 from the share issuance during the IPO. GeniusU Limited issued ordinary shares with a value of $2,655,739 (2021 - $3,308,617) in exchange of cash and conversion from a loan to equity.

 

 

During the year ended December 31, 2022, Genius Group Ltd entered into a Securities Purchase Agreement to issue convertible loan in the principal amount of $18,130,000 in face amount of a senior secured convertible note purchased for $17,000,000. In relation to the offering, the company has classified the equity portion of the debt note valued at $6,893,064 net of debt discount and cost of fund raise.

 

During the year ended December 31, 2022, the Company issued Genius Group Ltd ordinary shares with a value of $35,098,001 in exchange for the 5 acquisitions that the company closed. Genius Group Ltd shares were valued using the market approach based on the price per share paid by third parties for Genius Group Ltd shares as of the acquisition date and share delivery date.

 

See below for discussions regarding additional equity issuances.

 

Shares Issued Related to Debt Conversions

 

During the year December 31, 2022, convertible debt obligations consisting of $936,543 (2021-$177,689) of principal and accrued interest were converted into Genius Group shares pursuant to conversion offers extended by Genius Group Ltd and Entrepreneur Resorts Limited. See Note 20 — Convertible Debt Obligations for additional information.

 

Shares Issued in Satisfaction of a Liability

 

During the year December 31, 2020, the Company issued $350,000 of Genius Group Ltd ordinary shares as partial settlement of a loan with the seller of Tau Game Lodge. The Company also granted a put option over shares issued in satisfaction of this liability and reported a liability of $250,000 payable in cash upon exercise. The seller of Tau Game Lodge exercised the put option in 2022 and the Company cancelled the shares valued at $350,000 and paid the liability of $250,000 in cash.

 

Stock-Based Compensation

 

During the year ended December 31, 2022 and 2021, the Company granted 560,188 and 14,306 Genius Group share options. The fair value of the options granted in 2022 was $2,189,351 and 2021 was $181,559, with the fair value expensed over the vesting period. During the year ended December 31, 2022, the Company issued 1,511,664 Restricted Stock Units (RSUs) to new hires. The RSUs fair value of $2,600,000 is being expensed over the applicable vesting period.

 

The Company values stock options using the Black-Scholes option pricing model and used the following assumptions during the reporting periods:

 SCHEDULE OF STOCK OPTIONS USING THE BLACK-SCHOLES OPTION PRICING MODEL AND USED THE ASSUMPTIONS

    2022     2021  
    Years Ended
December 31,
 
    2022     2021  
Risk-free interest rate     4.41 %     0.73 %
Contractual term (years)     1-3       1-3  
Expected volatility     177.30 %     66.00 %
Expected dividends     0.00 %     0.00 %

 

 

A summary of the option activity during the year ended December 31, 2022 was as follows:

 

 SUMMARY OF OPTION ACTIVITY

    No of Options     Weighted Average Share Price     Weighted Average Remaining Life     Aggregate Intrinsic Value  
Outstanding as of January 1, 2022     539,760     $ 4.74       1     $ 0  
Granted     560,188       4.22       3       0  
Exercised     (73,428 )     5.81       -       0
Outstanding as of December 31, 2022     1,026,520     $ 4.38       2     $  0  

 

SCHEDULE OF INFORMATION RELATED TO OPTIONS OUTSTANDING

    Options Outstanding           Options Exercisable  
Year   Exercise Price     Outstanding Number of Options     Underlying Common Stock     Weighted Average Remaining Life in Years     Exercisable Number of Warrants  
                                         
2019 Share Option   $ 3.56     257,478       GNS       1     $ 257,478  
2020 Share Option     5.81       74,640       GNS       1       74,640  
2021 Share Options     5.81       134,214       GNS       3       134,214  
2022 Employee Grants (Options)     4.22       560,188       GNS       3       0  
    $ 4.38     1,026,520               2     $ 466,332  

 

The Company recorded stock-based compensation in the amount of $1,308,784 and $293,837 during the years ended December 31, 2022 and 2021, respectively, in connection with the amortization of the grant date value of the stock options. The amount of $3,975,722 to be recognized as stock based compensation expense over the period 2023, 2024 and 2025.