iAnthus Capital Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Share Capital

Share Capital

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Share Capital

Note 5 - 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. There were no common share issuances for the three months ended March 31, 2021.

The following is a summary of the common share issuances for the three months ended March 31, 2020:

•

75,000 common shares of the Company were issued to settle outstanding obligations, with share issuance costs of $0.2 million.

(b)

Warrants

The following table summarizes certain information in respect of the warrants for the Company’s shares:


	March 31, 2021
	Units			Weighted Average Exercise Price (C$)
Warrants outstanding as of December 31, 2020		49,236		$	4.06
Granted		—			—
Exercised		—			—
Expired		(9,411	)		2.52

Warrants outstanding as of March 31, 2021		39,825		$	4.24

As of March 31, 2021 and December 31, 2020, warrants classified as derivative liabilities in the unaudited interim condensed consolidated balance sheet were revalued, with the following inputs:


	March 31, 2021			December 31, 2020
Risk-free interest rate		0.2	%		0.2	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		139.0 - 209.6	%		148.0 - 251.1	%

The revaluation of the warrants classified as derivative liabilities resulted in a fair value of $0.3 million for these instruments as of March 31, 2021 (December 31, 2020 - $0.2 million). As a result of the revaluation, the Company recognized a loss of less than $0.1 million for the three months ended March 31, 2021 (March 31, 2020 - gain of $4.7 million) in the unaudited interim condensed consolidated statements of operations.

Full share equivalent warrants outstanding and exercisable are as follows:


	March 31, 2021				December 31, 2020
Year of expiration	Number Outstanding		Weighted Average Exercise Price (C$)		Number Outstanding		Weighted Average Exercise Price (C$)
2021		17,185	$	5.16		26,596	$	4.37
2022		20,855		3.44		20,855		3.62
2023		1,785		4.57		1,785		4.57

Warrants outstanding		39,825	$	4.24		49,236	$	4.06

(c)

Potentially Dilutive Securities

The following table summarizes potentially dilutive securities, and the resulting common share equivalents outstanding as of March 31, 2021:


	March 31, 2021		December 31, 2020
Common Share Options		10,825		11,510
Warrants		39,825		49,236
Secured Notes		46,458		46,458
Debentures		10,135		10,135
MPX dilutive instruments (1)		408		408

Total*		107,651		117,747

*	Total potentially dilutive securities does not include the shares that would potentially be issued upon conversion of the accrued interest on the Company’s long-term debt. As of March 31, 2021, this would amount into 10.1 million common shares (December 31, 2020 – 8.0 million common shares).

(1)	Prior to 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.

(d)

Stock Options

The following table summarizes certain information in respect of option activity under the Company’s stock option plan:


	March 31, 2021							December 31, 2020
	Units			Weighted Average Exercise Price (C$)		Weighted Average Contractual Life		Units			Weighted Average Exercise Price (C$)		Weighted Average Contractual Life
Options outstanding, beginning		11,510		$	4.86		—		19,578		$	4.80		—
Granted		—			—		—		135			0.82		—
Exercised		—			—		—		—			—		—
Forfeited/Expired		(685	)		4.09		—		(8,203	)		4.99		—

Options outstanding, ending		10,825		$	4.91		6.72		11,510		$	4.86		7.34

The related share-based compensation expense for the three months ended March 31, 2021 was $1.6 million (March 31, 2020 - $5.2 million) and is presented in the selling, general and administrative expenses line on the unaudited interim condensed consolidated statements of operations.

As of March 31, 2021, the weighted average period over which compensation cost on

non-vested

stock options is expected to be recognized is one year and the unrecognized expense is $6.9 million.