Annual report pursuant to Section 13 and 15(d)

EQUITY

v3.23.1
EQUITY
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
EQUITY
 15. EQUITY
Authorized, Issued and Outstanding
The authorized share capital of the Company consists of an unlimited number of Preferred Shares, SVS, Multiple Voting Shares, and Super Voting Shares. As of December 31, 2022, the Company had 196,686,372 SVS issued and outstanding and no Preferred Shares, Multiple Voting Shares, or Super Voting Shares issued and outstanding. In August 2021, all of the 149,000 previously issued and outstanding Super Voting Shares and all of the 4,000,000 previously outstanding Multiple Voting Shares were converted into SVS in accordance with their terms as described in Jushi Holdings Inc.’s
Articles of Incorporation. All previously outstanding warrants to acquire Super Voting Shares and Multiple Voting Shares were also converted into warrants to acquire SVS, without any other amendment to the terms of such warrants.

Private Placements
In January 2022, the Company closed non-brokered private placement offerings for an aggregate 3,717,392 SVS at a price of $3.68 per share to an existing investor group for aggregate gross proceeds to the Company of $13,680.
Warrants
Each warrant entitles the holder to purchase one share of the same class of common share. The following table summarizes the status of our warrants and related transactions for each of the presented years:
Non-Derivative Warrants Derivative Warrants Total Number of Warrants Weighted - Average Exercise Price Per Warrant Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in Years)
Balance, January 1, 2021 (1)
36,764,244 42,017,892 78,782,136 $ 1.31  $ 358,319  5.3
Granted (2)
300,000 —  300,000 $ 4.18 
Exercised (7,658,196) (1,893,537) (9,551,733) $ 2.26  $ 31,343 
Cancelled (250,000) —  (250,000) $ 1.50 
Balance, December 31, 2021
 29,156,048 40,124,355 69,280,403 $ 1.19  $ 142,791  4.7
Granted (2)(3)
1,600,000  19,512,280  21,112,280  $ 2.06 
Exercised (82,413) (4,261,433) (4,343,846) $ 1.26  $ 9,746 
Balance, December 31, 2022
 30,673,635 55,375,202 86,048,837 $ 1.40  $ 1,081  3.9
Exercisable, December 31, 2022
 28,323,635 55,375,202 83,698,837 $ 1.38  $ 1,081  3.9
(1)Total number of outstanding warrants reflects the conversion of warrants to acquire Super Voting Shares and Multi-Voting shares into warrants to acquire Subordinate Voting Shares.
(2)The non-derivative warrants were issued for consulting or other services, therefore, these compensatory warrants are accounted for as share-based payment arrangements.
(3)Derivative warrants were issued to the Second Lien Notes Holders and the Acquisition Facility Lender. Refer to Note 14 - Derivative Liabilities for more information.

The grant date fair value of the non-derivative warrants issued was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculations at date of issuance.
Year Ended December 31,
2022 2021 2020
Weighted average stock price $1.74 $4.18 $2.08
Weighted average expected stock price volatility 81% 73% 81%
Expected annual dividend yield —% —% —%
Weighted average expected life of warrants 5.0 years 3.5 years 2.7 years
Weighted average risk-free annual interest rate 3.48% 1.06% 0.35%
Weighted average grant date fair value $1.13 $2.14 $1.00
Share-based payment award plans
Plan summary and description
The Company’s 2019 Equity Incentive Plan (the “2019 Plan”) was initially adopted in April 2019, and was amended in June 2022. The 2019 Plan is administered by the Board of Directors, who have delegated to the Compensation Committee the ability to grant awards with Board of Directors’ review for directors and officers.
The purpose of the 2019 Plan is to: (i) promote and retain employees, directors and consultants capable of assuring our future success; (ii) motivate management to achieve long-range goals; and (iii) to provide compensation and opportunities for ownership and alignment of interests with shareholders. The 2019 Plan permits the grant of: (i) Stock Options; (ii) Restricted Stock Awards; (iii) Restricted Stock Units; (iv) Stock Appreciation Rights; and (v) Other Awards. Any of the Company’s employees, officers, directors, and consultants are eligible to participate (each a Participant) in the 2019 Plan if selected by the board of directors or the Compensation Committee. The basis of participation of an eligible recipient of an Award under the 2019 Plan, and the type and amount of any Award that an individual will be entitled to receive under the 2019 Plan, will be determined by board of directors and/or Compensation Committee. The Board may suspend or terminate the 2019 Plan at any time.
The Plan authorizes the issuance of up to 15% (plus an additional 2% inducements for hiring employees and senior management) of the number of outstanding shares of common stock (of all classes) of the Company (the “Share Reserve”). Incentive stock options are limited to the Share Reserve, and the maximum number of incentive awards available for issuance under the 2019 Plan, including additional awards available for certain new hires, was 1,549,777 as of December 31, 2022.
Stock Options
The stock options issued by the Company are options to purchase SVS of the Company. All stock options issued have been issued to directors and employees under the Company’s 2019 Plan. The following table summarizes the status of the Company’s options and related transactions for each of the presented years:
Stock Options Weighted Average Exercise Price per Stock Options Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in Years)
Balance, January 1, 2021
 9,573,834  $ 2.00  $ 36,909  8.4
Granted 11,486,952  $ 4.16 
Exercised (291,664) $ 1.90  $ 881 
Forfeited/expired (340,002) $ 3.23 
Balance, December 31, 2021
20,429,120  $ 3.20  $ 11,583  8.7
Granted 13,686,806  $ 1.95 
Exercised (324,998) $ 1.67  $ 620 
Forfeited/expired (3,038,669) $ 4.02 
Balance, December 31, 2022
 30,752,259  $ 2.58  $ —  8.5
Exercisable, December 31, 2022
 12,166,594  $ 2.46  $ —  7.2

The fair value of the stock options granted was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculation at date of grant:
Year Ended December 31,
2022 2021 2020
Weighted average stock price $1.95 $4.16 $2.78
Weighted average expected stock price volatility 74.1% 73.0% 80.9%
Expected annual dividend yield —% —% —%
Weighted average expected life 5.7 years 6.0 years 5.9 years
Weighted average risk-free annual interest rate 2.88% 1.23% 0.52%
Weighted average grant date fair value $1.35 $2.61 $1.78
Restricted Stock
The Company grants restricted SVS to independent directors, management, former owners of acquired businesses or assets, and to consultants and other employees. The restricted SVS are included in the issued and outstanding SVS, and the fair value of the restricted stock granted was SVS price at grant date. The following table summarized the status of our restricted stock and related transactions for each presented years:
Unvested Restricted Stock Weighted-Average Grant-date Fair Value Price per Restricted Stock Average Intrinsic Value Weighted Average Remaining Vesting Term
(in Years)
Issued and Outstanding as of January 1, 2021 6,438,186 $ 1.85  $ 37,728  1.7
Granted 65,398 $ 3.66 
Vested and Released (3,424,954) $ 1.63  $ 14,251 
Cancelled (219,479) $ 2.45 
Issued and Outstanding as of December 31, 2021 2,859,151 $ 2.13  $ 9,292  1.2
Granted 86,952  $ 2.05 
Vested and Released (1,789,784) $ 1.96  $ 3,601 
Issued and Outstanding as of December 31, 2022 1,156,319  $ 2.45  $ 881  0.3
Share-based compensation cost
The Company recorded share-based compensation costs related to previously issued stock options, restricted stocks and compensatory warrants totaling $23,073, $14,506 and $9,592 for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in selling, general and administrative operating expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

As of December 31, 2022, the Company had $19,246 of unrecognized share-based compensation cost related to unvested stock options, restricted stocks and warrants and is expected to be recognized as share-based compensation cost over a weighted average period of 1.4 years as follows:

2023 $ 13,485 
2024 4,333 
2025 1,128 
2026 275 
2027 25 
$ 19,246 
Other Equity
Refer to Note 12 - Debt for details of a convertible promissory note classified as equity.