Quarterly report pursuant to Section 13 or 15(d)

EQUITY

v3.24.3
EQUITY
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
EQUITY
 10. 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 September 30, 2024, the Company had 196,696,597 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding.
Warrants
Each warrant entitles the holder to purchase one SVS. Certain warrants may be net share settled. The following table summarizes the status of warrants and related transactions:
Non-Derivative (Equity) Warrants
Derivative Liabilities Warrants
 Total Number of Warrants Weighted - Average Exercise Price
Balance as of January 1, 2024
49,068,636 37,862,922 86,931,558 $ 1.12 
Granted (1)
2,500,000  19,400,000  21,900,000  $ 0.99 
Cancelled/forfeited/expired (416,667) —  (416,667) $ 1.56 
Balance as of September 30, 2024
 51,151,969 57,262,922 108,414,891 $ 1.09 
Exercisable as of September 30, 2024
49,241,969 57,262,922 106,504,891 $ 1.10 
(1)In July 2024, 19,400,000 warrants were issued in connection with the Term Loans. In February 2024, 1,800,000 warrants were issued in connection with the Debt Exchange. Refer to Note 8 - Debt 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 calculation at date of issuance:
Weighted average stock price $0.60
Weighted average expected stock price volatility 87.1%
Expected annual dividend yield 0%
Weighted average expected life of warrants
 4.8 years
Weighted average risk-free annual interest rate 4.0%
Weighted average grant date fair value $0.36
Share-based Payment Award Plans
Plan summary and description
Under the Company’s 2019 Equity Incentive Plan, as amended, (the “2019 Plan”), non-transferable options to purchase SVS and restricted SVS of the Company may be issued to directors, officers, employees, or consultants of the Company. 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 5,784,004 as of September 30, 2024.

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. The options generally may be net share settled.

On August 12, 2024, 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 equal to $1.91, $1.93, $2.00 and $5.71, and to be granted a replacement option to purchase an identical number of SVS. The Eligible
Participants cancelled a total of 9,136,758 stock options under this program, and were regranted the same number of stock options on September 13, 2024 at an exercise price of $0.54, with an expiration date of ten years from the grant date.

The following table summarizes the status of stock options and related transactions:
Number of Stock Options Weighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 2024 27,653,184  $ 1.40 
Granted 12,954,490  $ 0.57 
Exercised
 (64,999) $ 0.60 
Cancelled/forfeited/expired (12,888,258) $ 1.85 
Issued and Outstanding as of September 30, 2024 27,654,417  $ 0.80 
Exercisable as of September 30, 2024 10,587,967  $ 1.05 

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:
Nine Months Ended September 30,
2024 2023
Weighted average stock price $0.56 $0.51
Weighted average expected stock price volatility 86.9% 76.9%
Expected annual dividend yield 0% 0%
Weighted average expected life 5.0 years 6.0 years
Weighted average risk-free annual interest rate 3.6% 3.6%
Weighted average grant date fair value $0.21 $0.34
Restricted Stock

During the nine months ended September 30, 2024, 1,861 restricted stock vested and were released. There was no unvested restricted stock as of September 30, 2024.
Share-based Compensation Cost

The components of share-based compensation expense are as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Stock options $ 982  $ 712  $ 2,931  $ 4,170 
Restricted stock —  —  2  293 
Warrants 100  344  20  1,267 
Total share-based compensation expense $ 1,082  $ 1,056  $ 2,953  $ 5,730 
As of September 30, 2024, the Company had $3,781 of unrecognized share-based compensation cost related to unvested stock options and warrants, which is expected to be recognized as share-based compensation cost over a weighted average period of 1.9 years.