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

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2021.

The following is a summary of the common share issuances for the three and six months ended June 30, 2020:

•

75 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 Company’s warrants:


	June 30, 2021
	Units			Weighted Average Exercise Price (C$)
Warrants outstanding as of December 31, 2020		49,236		$	4.06
Granted		—			—
Exercised		—			—
Expired		(26,577	)		4.21

Warrants outstanding as of June 30, 2021		22,659		$	3.49

As of June 30, 2021 and December 31, 2020, warrants classified as derivative liabilities on the unaudited interim condensed consolidated balance sheets were revalued with the following inputs:


	June 30, 2021			December 31, 2020
Risk-free interest rate		0.4	%		0.2	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		88.9 - 203.0	%		148.0 - 251.1	%

The revaluation of the warrants classified as derivative liabilities resulted in a fair value of $0.1 million for these instruments as of June 30, 2021 (December 31, 2020 - $0.2 million). As a result of the revaluation, the Company recognized a gain of $0.1 million and $0.1 million for the three and six months ended June 30, 2021, respectively (June 30, 2020 - $0.1 million and $4.8 million, respectively), on the unaudited interim condensed consolidated statements of operations.

Full share equivalent warrants outstanding and exercisable are as follows:


	June 30, 2021				December 31, 2020
Year of expiration	Number Outstanding		Weighted Average Exercise Price (C$)		Number Outstanding		Weighted Average Exercise Price (C$)
2021		19	$	6.87		26,596	$	4.37
2022		20,855		3.40		20,855		3.62
2023		1,785		4.57		1,785		4.57

Warrants outstanding		22,659	$	3.49		49,236	$	4.06

(c)

Potentially Dilutive Securities

The following table summarizes potentially dilutive securities, and the resulting common share equivalents outstanding as of June 30, 2021:


	June 30, 2021		December 31, 2020
Common share options		10,578		11,510
Warrants		22,659		49,236
Secured notes		46,458		46,458
Debentures		10,135		10,135
MPX dilutive instruments (1)		408		408

Total		90,238		117,747

(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.

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 June 30, 2021, this would amount to 12.1 million common shares (December 31, 2020 – 8.0 million common shares).

(d)

Stock Options

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


	June 30, 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		(932	)		4.02		—		(8,203	)		4.99		—

Options outstanding, ending		10,578		$	4.93		6.46		11,510		$	4.86		7.34

The related share-based compensation expense for the three and six months ended June 30, 2021 was $1.6 million and $3.3 million, respectively (June 30, 2020, —$2.5 million and $7.7 million, respectively), and is presented in the selling, general and administrative expenses line on the unaudited interim condensed consolidated statements of operations.

As of June 30, 2021, the weighted average period over which compensation cost on

non-vested

stock options is expected to be recognized is 0.8 years and the unrecognized expense is $5.2 million.