Quarterly report pursuant to Section 13 or 15(d)

Share Capital

v3.22.2.2
Share Capital
 6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Share Capital
Note 6 – Share Capital
(a) Share Capital
Authorized: Unlimited common shares. The shares have no par value.
The Company’s common shares are voting and dividend-paying. The following is a summary of the common share issuances for the three and six months ended June 30, 2022:
 
  •  
An aggregate of 6,072,580 common shares were issued to the Secured Lenders and Unsecured Lenders on June 24, 2022 in connection with the closing of the Recapitalization Transaction.
 
  •  
There were no common share issuances for the three and six months ended June 30, 2021.
(b) Warrants
The following table summarizes certain information in respect of the Company’s warrants:
 
    
June 30, 2022
  
    
Units
     
Weighted Average Exercise Price
(C$)
  
Warrants outstanding, beginning
      22,640      $ 3.56  
Granted
      —            —  
Forfeited
      (17,955 )       2.52  
Expired
      (4,685 )       7.53  
    
 
 
     
 
 
  
Warrants outstanding, ending
   
 
—  
 
   
$
—  
 
    
 
 
     
 
 
  
As of June 30, 2022 and December 31, 2021, warrants classified as derivative liabilities on the unaudited interim condensed consolidated balance sheets were revalued with the following inputs:
 
    
June 30, 2022
     
December 31, 2021
  
Risk-free interest rate
      —          0.9 % 
Expected dividend yield
      —          0.0 % 
Expected volatility
      —         
93.7 - 297.1
 % 
Expected life
      —          0.9 years  
The Company uses an expected volatility based on its historical trading data.
As per the terms of the Restructuring Support Agreement, all outstanding warrants were forfeited as of the Closing Date of the Recapitalization Transaction, and warrants classified as derivative liabilities were revalued to $Nil as of June 30, 2022 (December 31, 2021 – less than $0.1 million). As a result of the revaluation, the Company recognized a gain of less than $0.1 million and $0.1 million for the three and six months ended June 30, 2022, respectively (June 30, 2021 – gain of $0.1 million and $0.1 million, respectively), on the unaudited interim condensed consolidated statements of operations.
Full share equivalent warrants outstanding and exercisable are as follows:
 
    
June 30, 2022
     
December 31, 2021
  
Year of expiration
   
Number
Outstanding
     
Weighted Average
Exercise Price (C$)
     
Number
Outstanding
     
Weighted Average
Exercise Price (C$)
  
2022
      —          —          20,855        3.47  
2023
      —          —          1,785        4.57  
    
 
 
     
 
 
     
 
 
     
 
 
  
Warrants outstanding
   
 
—  
 
   
$
—  
 
   
 
22,640
 
   
$
3.56
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
 
(c) Potentially Dilutive Securities
The following table summarizes potentially dilutive securities, and the resulting common share equivalents outstanding as of June 30, 2022 and December 31, 2021:
 
 
 
 
 
 
 
 
 
 
    
June 30, 2022
     
December 31, 2021
  
Common share options
      —          10,504  
Restricted s
tock
 units
      320,165        —    
Warrants
      —          22,640  
Secured notes
      —          46,458  
Debentures
      —          10,135  
MPX dilutive instruments
(1)
      408        408  
    
 
 
     
 
 
  
Total
   
 
320,573
 
   
 
90,145
 
    
 
 
     
 
 
  
 
(1)
 
Prior to the acquisition of MPX Bioceutical Corporation (“MPX”) on February 5, 2019 (the “MPX Acquisition”), MPX had instruments outstanding that were potentially dilutive and as a result of the MPX Acquisition, the Company assumed certain of these instruments.
All outstanding warrants and other potentially dilutive securities related to debt were forfeited/cancelled as part of the closing of the Recapitalization Transaction pursuant to the terms of the Restructuring Support Agreement.
(d) Stock Options
The following table summarizes certain information in respect of option activity during the period:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
June 30, 2022
     
December 31, 2021
  
    
Units
    
Weighted
Average
Exercise Price
(C$)
     
Weighted
Average
Contractual
Life
     
Units
    
Weighted
Average
Exercise Price
(C$)
     
Weighted
Average
Contractual
Life
  
Options outstanding, beginning
      10,504     $ 4.95        —          11,510     $ 4.86        —    
Granted
      —         —          —          —         —          —    
Exercised
      —         —          —          —         —          —    
Cancellations
      (7,111 )      4.70        —          —         —          —    
Forfeitures
      (3,152 )      5.85        —          —         —          —    
Expirations
      (241 )      1.21        —          (1,006 )      3.96        —    
    
 
 
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
Options outstanding, ending
   
 
—  
 
  
$
—  
 
   
 
—  
 
   
 
10,504
 
  
$
4.95
 
   
 
6.24
 
    
 
 
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
The related share-based compensation expense for the three and six months ended June 30, 2022 was $0.3 million and $1.8 million, respectively (June 30, 2021 - $1.6 million and $3.3 million, respectively), and is presented in selling, general and administrative expenses on the unaudited interim condensed consolidated statements of operations.
Upon the closing of the Recapitalization Transaction, all issued and outstanding stock options were cancelled. As of June 30, 2022, the unrecognized compensation cost related to stock options was $Nil (June 30, 2021 - $5.2 million).
(e) Restricted Stock Units
On December 31, 2021, the Board approved a long-term incentive program, pursuant to which, on July 26, 2022, the Company issued certain employees of the Company and its subsidiaries, restricted stock units (“RSUs”), under the Company’s Amended and Restated Omnibus Incentive Plan dated October 15, 2018. RSUs represent a right to receive a single common share that is both
non-transferable
and forfeitable until certain conditions are satisfied. The allocation of RSUs was contingent on the closing of the Recapitalization Transaction and was subject to approval of the Canadian Securities Exchange and the Board.
 
On December 31, 2021 and June 23, 2022, the Board approved the allocations of RSUs to Board members, directors, officers, and key employees of the Company. The RSUs granted by the Company vest upon the satisfaction of both a service-based condition of three years and a liquidity condition, the latter of which was not satisfied until the closing of the Recapitalization Transaction. As the liquidity condition was not satisfied until the closing of the Recapitalization Transaction, in prior periods, the Company had not recorded any expense related to the grant of RSUs. Share-based compensation expense in relation to the RSUs is recognized using the graded vesting method, in which compensation costs for each vesting tranche is recognized ratably from the service inception date to the vesting date for that tranche. The fair value of the RSUs is determined using the Company’s closing stock price on the grant date.
Certain RSU recipients held stock options which were cancelled upon the closing of the Recapitalization Transaction (the “Original Awards”). The RSUs granted to these employees have been treated as replacement awards (the “Replacement Awards”) and are accounted for as a modification to the Original Awards. As the fair value of the Original Awards was $Nil on the modification dates, the incremental compensation cost recognized is equal to the Replacement Award’s fair value on the modification date, which shall be recognized over the remaining requisite service period. As of June 30, 2022, unrecognized compensation costs related to the Original Awards was $Nil (June 30, 2021 - $5.4 million).
During the three and six months ended June 30, 2022, upon the closing of the Recapitalization Transaction, the Company recognized $21.0 million and $21.0 million of share-based compensation expense associated with the RSUs, respectively, that vested in connection with the Recapitalization Transaction (June 30, 2020—$Nil and $Nil). Share-based compensation expense is presented in selling, general and administrative expenses on the unaudited interim condensed consolidated statements of operations.
As of June 30, 2022, there was approximately $8.6 million of total unrecognized compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted-average service period of 1.34 years.
The following table summarizes certain information in respect of RSU activity during the period:
 
 
 
 
 
 
 
 
 
 
    
June 30, 2022
  
    
Units
     
Weighted Average Grant
Price (C$)
  
Unvested balance, beginning
      —        $ —    
Granted
      390,802        0.12  
Vested
      (101,514 )       0.12  
Forfeited
      (70,637 )       0.12  
    
 
 
     
 
 
  
Unvested balance, ending
   
 
218,651
 
   
$
0.12