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Stock-Based Payments
12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Payments

12. Stock-based Payments

On December 3, 2021, the stockholders of the Company approved the 2021 Equity Incentive Plan to utilize the 35,000 shares reserved and unissued under the Torchlight 2015 Stock Option and Grant Plan and the 64,457 shares reserved and unissued under the MMI 2018 Stock Option and Grant plan to set the number of shares reserved for issuance under the 2021 Equity Incentive Plan at 349,457 shares.

The 2021 Equity Incentive Plan allows the grants of non-statutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to employees, directors, and consultants.

DSU Plan

Each unit is convertible at the option of the holder into one common share of the Company.

On March 28, 2013, we implemented a Deferred Stock Unit ("DSU") Plan for our directors, employees and officers. Each unit is convertible at the option of the holder into one common share of the Company. Eligible individuals are entitled to receive all DSUs (including dividends and other adjustments) no later than December 1st of the first calendar year commencing after the time of termination of their services.

The following table summarizes the change in DSUs of the Company:

 

 

Number of
DSUs (#)

 

 

Weighted
Average
grant date fair value

 

Outstanding, December 31, 2021

 

 

36,470

 

 

$

21.82

 

Granted

 

 

2,632

 

 

$

171.00

 

Outstanding, December 31, 2022

 

 

39,102

 

 

$

31.86

 

Granted

 

 

11,155

 

 

$

15.55

 

Outstanding, December 31, 2023

 

 

50,257

 

 

$

29.57

 

 

For the year ended December 31, 2023, we recorded $0.1 million of stock-based compensation expense. As of December 31, 2023, there was $0.1 million unrecognized compensation cost related to unvested DSUs.

RSU Plan

Each RSU unit is convertible at the option of the holder into one common share of the Company upon meeting the vesting conditions.

Total stock-based compensation expense related to RSUs included in the Consolidated Statements of Operations and Comprehensive Loss was as follows:

 

 

Year ended December 31,

 

 

 

2023

 

 

2022

 

Cost of sales

 

$

334,645

 

 

$

544,468

 

Selling & marketing

 

 

(35,411

)

 

 

376,449

 

General & administrative

 

 

(236,857

)

 

 

1,631,995

 

Research & development

 

 

(57,612

)

 

 

2,101,035

 

 

 

$

4,765

 

 

$

4,653,947

 

As of December 31, 2023 and 2022, the unrecognized compensation cost related to unvested RSUs was $2.1 million and $5.7 million, respectively. This cost will be recognized over the next four years.

The following table summarizes the change in outstanding RSUs:

 

 

Number of
RSUs #

 

 

Weighted
Average
grant date fair value

 

Outstanding, December 31, 2021

 

 

3,000

 

 

$

642.67

 

Granted

 

 

72,073

 

 

$

145.44

 

Forfeited

 

 

(3,264

)

 

$

159.84

 

Vested and settled

 

 

(6,739

)

 

$

115.11

 

Outstanding, December 31, 2022

 

 

65,070

 

 

$

171.00

 

Granted

 

 

170,925

 

 

$

18.05

 

Forfeited

 

 

(127,187

)

 

$

238.92

 

Vested and settled

 

 

(18,083

)

 

$

43.85

 

Outstanding, December 31, 2023

 

 

90,725

 

 

$

49.16

 

 

 

 

 

 

 

 

Vested but not yet settled, December 31, 2023

 

 

2,230

 

 

$

7.77

 

Employee Stock Option Plan

Each stock option is convertible at the option of the holder into one common share of the Company.

Total stock-based compensation expense included in the Consolidated Statements of Operations and Comprehensive Loss was as follows:

 

 

Year ended December 31,

 

 

 

2023

 

 

2022

 

Sales & marketing

 

$

6,022

 

 

$

195,041

 

General & administrative

 

 

(221,099

)

 

 

5,930,518

 

Research & development

 

 

133,777

 

 

 

2,490,979

 

 

 

$

(81,300

)

 

$

8,616,538

 

As of December 31, 2023 and 2022, the unrecognized compensation cost related to unvested stock options was $0.9 million and $4.1 million, respectively. This cost will be recognized over the next four years.

The following table summarizes the change in outstanding stock options of the Company:

 

 

 

 

 

Average

 

 

Average

 

 

 

 

 

 

 

 

 

exercise

 

 

exercise

 

 

 

 

 

 

 

 

 

price per

 

 

remaining

 

 

Aggregate

 

 

 

Number of
options #
1

 

 

stock
option

 

 

contractual
term
(years)

 

 

intrinsic
value

 

Outstanding, December 31, 2021

 

 

214,046

 

 

$

46.00

 

 

7.34

 

 

$

56,924,556

 

Granted

 

 

143,190

 

 

$

140.74

 

 

 

 

 

 

 

Exercised

 

 

(16,885

)

 

$

27.00

 

 

 

 

 

 

 

Forfeited

 

 

(4,401

)

 

$

102.37

 

 

 

 

 

 

 

Outstanding, December 31, 2022

 

 

335,950

 

 

$

80.00

 

 

9.31

 

 

$

17,611,251

 

Granted

 

 

62,961

 

 

$

15.58

 

 

 

 

 

 

 

Exercised

 

 

(26,351

)

 

$

27.00

 

 

 

 

 

 

 

Forfeited

 

 

(183,020

)

 

$

84.75

 

 

 

 

 

 

 

Outstanding, December 31, 2023

 

 

189,540

 

 

$

62.23

 

 

 

4.68

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, December 31, 2023

 

 

121,356

 

 

$

69.97

 

 

 

3.67

 

 

$

 

Below is a summary of the outstanding options as of December 31, 2023 and December 31, 2022:

 

 

As of December 31,

 

 

 

2023

 

 

2022

 

Range of exercise price

 

Number outstanding
#

 

 

Number exercisable
#

 

 

Number outstanding
#

 

 

Number exercisable
#

 

 $12.00 - $27.00

 

 

124,383

 

 

 

75,457

 

 

 

181,286

 

 

 

155,493

 

 $89.00 - $100.00

 

 

14,918

 

 

 

11,793

 

 

 

29,847

 

 

 

18,224

 

 $117.00 - $126.00

 

 

15,029

 

 

 

8,446

 

 

 

27,827

 

 

 

9,321

 

 $131.00 - $158.00

 

 

24,460

 

 

 

16,286

 

 

 

67,299

 

 

 

30,547

 

 $197.00 - 200.00

 

 

10,750

 

 

 

9,374

 

 

 

29,691

 

 

 

29,691

 

 

 

 

189,540

 

 

 

121,356

 

 

 

335,950

 

 

 

243,276

 

The fair value of options granted was estimated at the grant date using the following weighted-average assumptions:

 

 

Year ended December 31,

 

 

 

2023

 

 

2022

 

Weighted average grant date fair value

 

$

14.00

 

 

$

81.00

 

Weighted average expected volatility

 

87%

 

 

81%

 

Weighted average risk-free interest rate

 

4.16%

 

 

2.56%

 

Weighted average expected life of the options

 

5.07 years

 

 

4.19 years

 

Where possible, we use the simplified method to estimate the expected term of employee stock options. We do not have adequate historical exercise data to provide a reasonable basis for estimating the expected term for the current share options granted. The simplified method assumes that employees will exercise share options evenly between the period when the share options are vested and ending on the date when the options would expire.

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.