Share capital and other equity instruments | 11. Share capital and other equity instruments a) Share capital Changes in the issued and outstanding common shares of the Company during the quarters ended June 30, 2021 and 2020 were as follows: June 30, 2021 June 30, 2020 Number Amount Number Amount Balance - beginning of period 29,943,839 $ 977,261 23,313,164 $ 932,951 Issued to acquire assets — — 96,833 1,240 Shares issued pursuant to a restricted share units plan (note 11b) — — 10,355 9,764 Balance - end of period 29,943,839 $ 977,261 23,420,352 $ 943,955 On January 29, 2020, the Company issued 96,833 common shares as a consideration for the final payment for the licence acquired on January 29, 2018. This transaction was accounted for as an extinguishment of the license acquisition payment obligation and the difference between the carrying value of the liability of $1,319 and the amount recorded for the shares issued of $1,240, which were valued at the market price of the shares on their date of issuance, was recorded as a gain on extinguishment of liabilities of $79 during the quarter ended March 31, 2020. b) Contributed surplus (Share-based payments) Stock options For stock options having a CA$ exercise price, the changes in the number of stock options outstanding during the quarters ended June 30, 2021 and 2020 were as follows: June 30, 2021 June 30, 2020 Weighted Weighted average average exercise price exercise price Number (in CA$) Number (in CA$) Balance - beginning of period 2,485,555 $ 18.70 2,209,864 $ 38.72 Granted — — 436,570 14.06 Forfeited (850,274 ) 15.11 (64,141 ) 24.42 Expired — — (1,435 ) 2,433.20 Repriced - options before repricing — — (1,929,685 ) 35.14 Repriced - options after repricing — — 1,929,685 15.21 Balance - end of period 1,635,281 $ 20.56 2,580,858 $ 18.67 For stock options having a US$ exercise price, the changes in the number of stock options outstanding during the quarter ended June 30, 2021 were as follows: June 30, 2021 Weighted average exercise price Number (in US$) Balance - beginning of period 305,000 $ 4.70 Granted 90,000 4.65 Balance - end of period 395,000 $ 4.69 2021 In January 2021, 40,000 stock options having an exercise price of US$5.34, of which 20,000 stock options vested immediately and the remaining stock options vest over a period up to one year, were issued to a member of the Board of Directors. In June 2021, 50,000 stock options having an exercise price of US$4.09, of which 25,000 stock options vested immediately and the remaining stock options vest over a period up to one year, were issued to a member of the Board of Directors. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options at the date of grant. The weighted average inputs into the model and the resulting grant date fair values during the six months ended June 30, 2021 were as follows: Expected dividend rate — Expected volatility of share price 115.5 % Risk-free interest rate 0.99 % Expected life in years 6.5 Weighted average grant date fair value $ 5.00 2020 In March 2020, Liminal’s Board of Directors approved a plan to reduce the exercise price of the stock options originally issued in June 2019, which were held by active employees and directors at the time of the repricing. On May 26, 2020, a revised exercise price, pending approval, of $15.21 was determined, changing the exercise price to the higher of (i) $15.21 and (ii) the five trading-day VWAP of Liminal common shares on the repricing date. On June 8, 2020, the repricing of 1,929,685 of the outstanding stock options having exercise prices of $27.00 and $36.00 to the revised exercise price was approved at the Company’s annual shareholder meeting. Although the stock options were not repriced until May 26, 2020, management concluded that the service period for employees and directors to earn the modified awards had commenced from the date the Company informed the holders of these stock options of the repricing proposal and the expense resulting from the repricing plan should be recognized starting from that date. Using the revised exercise price of $15.21, the Company calculated the final incremental fair value of the repricing on the grant date of May 26, 2020 to be $3,000. This incremental fair-value will be amortized from the services commencement date of March 25 over the remaining vesting period of the repriced options. The incremental grant date fair value of the repriced options was estimated based on the Black-Scholes option-pricing model calculated before and after the effect of the repricing. The following Black-Scholes assumption were used: Expected dividend rate — Expected volatility of share price 93.2 % Risk-free interest rate 0.4 % Expected life in years 6.3 Weighted average grant date incremental fair value $ 1.55 At June 30, 2021, stock options issued and outstanding denominated in CA$ and US$ by range of exercise price are as follows: Weighted average Weighted Weighted Range of exercise remaining average average price for stock option Number contractual life exercise price Number exercise price issued in CA$ outstanding (in years) (CA$) exercisable (CA$) $7.86 - $11.99 171,250 8.3 $ 9.58 68,672 $ 9.73 $ 14.06 323,926 8.9 14.06 112,972 14.06 $ 15.21 1,083,328 7.9 15.21 580,241 15.21 $27.00 - $3,170.00 56,777 7.6 192.87 56,303 189.91 1,635,281 8.2 $ 20.56 818,188 $ 26.61 Weighted average Weighted Weighted Range of exercise remaining average average price for stock option Number contractual life exercise price Number exercise price issued in US$ outstanding (in years) (US$) exercisable (US$) $4.09 - $5.34 375,000 9.5 $ 4.36 165,000 $ 4.37 $ 10.80 20,000 9.3 10.80 3,333 10.80 395,000 9.5 $ 4.69 168,333 $ 4.50 A share-based payment compensation expense of $957 and $1,866 was recorded for the stock options for the quarter and six months ended June 30, 2021 respectively ($2,407 and $4,770 for the quarter and six months ended June 30, 2020). Restricted share units Changes in the number of restricted share units or RSU outstanding during the six months ended June 30, 2021 and 2020 were as follows: June 30, June 30, 2021 2020 Balance - beginning of period 4,216 17,565 Forfeited (4,048 ) (24 ) Released — (10,355 ) Paid in cash (144 ) (2,948 ) Balance - end of period 24 4,238 There was no share-based payment compensation expense recorded during the quarter and six months ended June 30, 2021. During the first quarter of 2020, 2,948 RSU were paid in cash resulting in a reduction to contributed surplus of $40. At June 30, 2021, all outstanding RSU were vested. A share-based payment compensation expense of $17 and $31 was recorded during the quarter and the six months ended June 30, 2020. Share-based payments expense The total share-based payments expense, comprising the above-mentioned expenses for stock options and RSU, has been included in the consolidated statements of operations for the quarter and six months ended June 30, 2021 and 2020 as indicated in the following table: Quarter ended June 30, Six months ended June 30, 2021 2020 2021 2020 Research and development expenses $ 467 $ 904 $ 437 $ 1,920 Administration, selling and marketing expenses 899 1,340 1,873 2,696 Loss from discontinued operations (409 ) 180 (444 ) 185 $ 957 $ 2,424 $ 1,866 $ 4,801 c) Warrants There were no changes in the number of warrants having a CA$ exercise price during the six months ended June 30, 2021 and 2020. At June 30, 2021 and 2020, the number of warrants outstanding by exercise price were as follows: June 30, 2021 June 30, 2020 Weighted Weighted average average exercise price exercise price Number (CA$) Number (CA$) Balance of warrants - end of period 172,735 $ 84.33 172,735 $ 84.33 There were no changes in the number of warrants having a US$ exercise price during the six months ended June 30, 2021. These are the same warrants presented as a warrant liability (note 9) and they are listed here with the warrants classified as equity instruments, simply so the readers may see all the warrants outstanding together. There were no warrants having a US$ exercise price issued during the six months ended June 30, 2020. June 30, 2021 Weighted average exercise price Number (US$) Balance of warrants - end of period 7,894,734 $ 5.50 At June 30, 2021, the weighted average exercise prices (in CA$ or in US$) and expiry dates for the warrants outstanding are as follows: Number Expiry date Exercise price (CA$) 4,000 January 2023 3,000.00 168,735 April 2027 15.21 Warrants outstanding with an exercise price in CA$ 172,735 $ 84.33 Number Expiry date Exercise price (US$) Warrants outstanding with an exercise price in US$ 7,894,734 November 2025 $ 5.50 |