Share-based Payments | Share-based Payments (a) Warrants The following is a summary of the changes in warrants during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of warrants Balance as of January 1, 2020 $ 0.26 18,066,662 Exercise of warrants — — Expiry of warrants — — Balance as of March 31, 2020 $ 0.26 18,066,662 Balance as of January 1, 2019 $ 0.26 25,457,623 Exercise of warrants 0.27 (4,390,961) Expiry of warrants — — Balance at March 31, 2019 $ 0.26 21,066,662 As of March 31, 2020, the Company had outstanding warrants as follows. For a description of the Altria Warrant, see Note 11. Grant Date Expiry date Weighted average exercise price (C$) Number of warrants October 8 – 28, 2015 October 8 – 28, 2020 $ 0.31 2,976,610 May 13 – 27, 2016 May 13 – 27, 2021 0.25 15,090,052 As of March 31, 2020 $ 0.26 18,066,662 (b) Stock options (i) Stock option plans The Company adopted an amended and restated stock option plan dated May 26, 2015 (the “2015 Stock Option Plan”) which was approved by shareholders of the Company at the annual general meeting of shareholders held on June 28, 2017. The 2015 Stock Option Plan allowed the Board to award options to purchase shares to directors, officers, key employees and service providers of the Company. As of June 28, 2018, no further awards will be granted under the 2015 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2015 Stock Option Plan. As of March 31, 2020, options to purchase 12,319,230 Company common shares were outstanding under the 2015 Stock Option Plan. On June 28, 2018, the shareholders of the Company approved a new stock option plan (the “2018 Stock Option Plan”) under the terms and valuation methods detailed in the Annual Financial Statements. Upon approval of the 2020 Omnibus Plan (as defined below) by the shareholders of the Company, no further awards will be granted under the 2018 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2018 Stock Option Plan. As of March 31, 2020, options to purchase 1,787,383 Company common shares were outstanding under the 2018 Stock Option Plan. On March 29, 2020, the Company’s Board of Directors adopted a new omnibus equity incentive plan (the “2020 Omnibus Plan”), subject to approval by the shareholders of the Company. As of March 31, 2020, no grants have been made under the 2020 Omnibus Plan. For the three months ended March 31, 2020, the total stock-based compensation expense associated with the stock option plans was $1,730 (March 31, 2019 – $1,771). (ii) Summary of changes The following is a summary of the changes during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of options Weighted average remaining contractual term (years) Balance as of January 1, 2020 $ 4.84 14,149,502 2.56 Cancellation, forfeiture and expiry of options 17.17 (42,889) Balance as of March 31, 2020 $ 4.80 14,106,613 2.06 Exercisable at March 31, 2020 3.11 9,783,544 1.66 Balance as of January 1, 2019 $ 2.99 12,902,995 3.35 Issuance of options 24.75 51,830 Exercise of options 5.60 (125,715) Cancellation, forfeiture and expiry of options 1.40 (2,500) Balance at March 31, 2019 $ 3.06 12,826,610 3.11 Exercisable at March 31, 2019 2.28 5,838,386 2.91 No stock options were exercised during the three months ended March 31, 2020. The weighted average share price at the dates the options were exercised during the three months ended March 31, 2019 was C$26.12 per share. (iii) Fair value of options issued The fair value of the options issued was determined using the Black-Scholes option pricing model, using the following inputs: For the three months ended March 31, 2019 Share price at grant date (per share) $24.75 Exercise price (per option) $24.75 Risk-free interest rate 1.51% Expected life of options (in years) 5 Expected annualized volatility 80% Expected dividend yield —% Weighted average Black-Scholes value at grant date (per option) $15.91 Forfeiture rate —% No stock options were granted under the 2018 Stock Option Plan during the three months ended March 31, 2020. The expected life of the awards represents the period of time stock options are expected to be outstanding and is estimated considering vesting terms and employees’ and non-employees’ historical exercise and post-vesting employment termination behavior. Volatility was estimated by using the historical volatility of the Company, adjusted for the Company’s expectation of volatility going forward. The risk-free interest rate was based on the Bank of Canada government bonds with a remaining term equal to the expected life of the options at the grant date. (c) Restricted share units On September 5, 2019, the Company issued an aggregate of 732,972 restricted stock units (“RSUs”) to certain employees in connection with the acquisition of four Redwood Holding Group, LLC subsidiaries (collectively, “Redwood”) and pursuant to Employment Inducement Award Plan. Each RSU entitles the holder to receive upon vesting one common share of the Company. The fair value of these RSUs has been determined based on the quoted market price on the date of issuance of C$15.34 per share. The RSUs vest over a three The following is a summary of the changes in RSUs from January 1, 2020 to March 31, 2020: Number of RSUs Share-based reserve Balance as of January 1, 2020 732,972 $ 889 Vesting of issued RSUs — 706 Balance as of March 31, 2020 732,972 $ 1,595 No RSUs were granted or outstanding during three months ended March 31, 2019. (d) Deferred share units On August 10, 2019, the Company established a cash-settled deferred share unit plan (“DSU Plan”) pursuant to which its non-executive directors receive deferred share units (“DSUs”). The DSU Plan is designed to promote a greater alignment of long-term interests between non-executive directors and shareholders. The number of DSUs granted under the DSU Plan (including fractional DSUs) is determined by dividing the amount of remuneration payable by the closing price as reported by the TSX on the trading day immediately preceding the day of grant. DSUs are payable at the time a non-executive director ceases to hold the office of director for any reason and are settled by a lump-sum cash payment, in accordance with the terms of the DSU Plan, based on the fair value of the DSUs at such time. The fair value of the cash payout is determined by multiplying the number of DSUs vested at the payout date by the closing price as reported by the TSX on the trading day immediately preceding the payout date. The fair value of the cash payout is determined at each reporting date based on the fair value of the Company’s common shares at the reporting date and is recorded within other liabilities. The following is a summary of the changes in DSUs from January 1, 2020 to March 31, 2020: Number of DSUs Financial liability Balance as of January 1, 2020 33,397 $ 255 Gain on revaluation — (50) Balance as of March 31, 2020 33,397 $ 205 No DSUs were granted or outstanding during the three months ended March 31, 2019. |