Annual report pursuant to Section 13 and 15(d)

EQUITY

v3.24.1
EQUITY
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
EQUITY
 14. EQUITY
Authorized, Issued and Outstanding
The authorized share capital of the Company consists of an unlimited number of SVS, Multiple Voting Shares, Super Voting Shares and Preferred Shares. As of December 31, 2023, the Company had 196,631,598 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding.
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 (1)
Total Number of Warrants Weighted - Average Exercise Price Per Warrant Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in Years)
Balance, January 1, 2022
 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
Granted (2)(4)
2,970,221  —  2,970,221  $ 0.63 
Cancelled (4)
(2,087,500) —  (2,087,500) $ 2.18 
Reclassified
 17,512,280 (17,512,280) —
Balance, December 31, 2023
 49,068,636 37,862,922 86,931,558 $ 1.12  $ —  3.0
Exercisable, December 31, 2023
 46,108,636 37,862,922 83,971,558 $ 1.11  $ —  3.0
(1)In June 2023, 5,890,922 warrants were repriced from $1.25 to $1.00. Additionally, 17,512,280 warrants were reclassified from derivative liability warrants to non-derivative (equity) warrants and repriced from $2.086 to $1.00. Refer to Note 13 - Derivative Liabilities for additional information.
(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 13 - Derivative Liabilities for more information.
(4)On November 15, 2023, the Company cancelled warrants to purchase 200,000 SVS at an exercise price of $1.75 held by the Company’s Chief Financial Officer, that were originally issued on December 9, 2022, and reissued warrants to purchase 200,000 SVS at an exercise price of $0.55 and an expiration date of December 17, 2028.

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,
2023 2022 2021
Weighted average stock price $0.55 $1.74 $4.18
Weighted average expected stock price volatility 77% 81% 73%
Expected annual dividend yield —% —% —%
Weighted average expected life of warrants 5.1 years 5.0 years 3.5 years
Weighted average risk-free annual interest rate 3.94% 3.48% 1.06%
Weighted average grant date fair value $0.28 $1.13 $2.14
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 2019 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 5,772,327 as of December 31, 2023.
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. Such options generally expire ten years from the date of grant and generally vest ratably over three years from the grant date.
On November 15, 2023, the Company’s board of directors approved a limited stock option cancellation and regrant program in which a limited number of the Company’s senior management team and the Company’s non-employee directors (the “Eligible Participants”) could elect to cancel each stock option held with an exercise price per SVS of $3.91 or greater, and to be granted a replacement option to purchase an identical number of SVS. On November 17, 2023, the Eligible Participants cancelled a total of 3,224,000 stock options under this program, and were regranted the same number of stock options on December 17, 2023 at an exercise price of $0.55, with an expiration date of ten years from the grant date.

The following table summarizes the status of stock 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, 2022
 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
Granted 11,507,429  $ 0.54 
Forfeited/expired (14,606,504) $ 3.20 
Balance, December 31, 2023
 27,653,184  $ 1.40  $ —  8.2
Exercisable, December 31, 2023
 12,536,225  $ 1.89  $ —  6.7

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,
2023 2022 2021
Weighted average stock price $0.53 $1.95 $4.16
Weighted average expected stock price volatility 76.6% 74.1% 73.0%
Expected annual dividend yield —% —% —%
Weighted average expected life 5.9 years 5.7 years 6.0 years
Weighted average risk-free annual interest rate 3.81% 2.88% 1.23%
Weighted average grant date fair value $0.30 $1.35 $2.61

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 estimated based on the SVS price at grant date. The following table summarized the status of 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, 2022
 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
Cancelled
 (54,774) $ 2.43 
Vested and Released (1,099,684) $ 2.45  $ 526 
Issued and Outstanding as of December 31, 2023
 1,861  $ 4.05  $ 1  0.7
Share-based compensation cost
The Company recorded share-based compensation costs related to previously issued stock options, restricted stocks and compensatory warrants totaling $8,092, $23,073 and $14,506 for the years ended December 31, 2023, 2022 and 2021, 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, 2023, the Company had $5,203 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 1.2 years as follows:

2024 $ 4,063 
2025 904 
2026 217 
2027 19 
$ 5,203 

Other Equity
Refer to Note 10 - Debt for details of a convertible promissory note classified as equity in relation to Dalitso.