|
British Columbia
|
| |
83-2097293
|
|
|
(State or other jurisdiction of incorporation or organization)
|
| |
(I.R.S. employer identification no.)
|
|
|
2801 E. Camelback Road #180
Phoenix, Arizona 85016 |
| |
(623) 887-4990
|
|
|
(Address of principal executive offices and zip code)
|
| |
(Registrant’s telephone number, including area code)
|
|
|
Large accelerated filer
☐
|
| |
Accelerated filer ☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company ☒
|
|
| | | |
Emerging growth company ☒
|
|
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Country
|
| |
Patent No.
|
| |
Issued Date
|
| |
Duration of Patent
|
| |
Title
|
|
1
|
| |
U.S.
|
| |
D800310
|
| |
October 17, 2017
|
| |
October 17, 2032
|
| | Electronic Vaporizer | |
2
|
| |
U.S.
|
| |
10398178
|
| |
September 3, 2019
|
| |
October 31, 2037
|
| | Electronic Vaporizer | |
3
|
| |
U.S.
|
| |
10750788
|
| |
August 25, 2020
|
| |
October 31, 2037
|
| | Electronic Vaporizer | |
4
|
| |
U.S.
|
| |
11044943
|
| |
June 29, 2021
|
| |
October 31, 2037
|
| | Electronic Vaporizer | |
5
|
| |
U.S.
|
| |
16573787
|
| |
March 19, 2020
|
| |
February 21, 2040
|
| | Pod Vaping System | |
6
|
| |
U.S.
|
| |
D908278
|
| |
September 21, 2020
|
| |
September 21, 2035
|
| | Electronic Vaporizer | |
7
|
| |
U.S.
|
| |
10689243
|
| |
June 23, 2020
|
| |
February 22, 2039
|
| | Metered Dispensing Device for Plant Extracts | |
8
|
| |
U.S.
|
| |
10875759
|
| |
September 10, 2020
|
| |
February 22, 2039
|
| | Metered Dispensing Device for Plant Extracts | |
9
|
| |
European Union
|
| |
DM/212544
|
| |
February 5, 2021
|
| |
November 16, 2035
|
| | Monolithic Electronic Vaporizer | |
10
|
| |
U.S.
|
| |
D942,677
|
| |
February 1, 2022
|
| |
February 1, 2037
|
| | Liquid Medical Device | |
11
|
| |
European Union
|
| |
DM/214262
|
| |
May 19, 2021
|
| |
February 9, 2036
|
| | Liquid Medical Device | |
12
|
| |
Australia
|
| |
202110730
|
| |
May 14, 2021
|
| |
February 12, 2031
|
| | Liquid Medical Device | |
13
|
| |
U.S.
|
| |
11131612
|
| |
April 26, 2022
|
| |
February 22, 2039
|
| | Metered Dispensing Device for Plant Extracts | |
14
|
| |
U.S.
|
| |
D948783
|
| |
April 12, 2022
|
| |
April 12, 2037
|
| | Monolithic Electronic Vaportizer | |
| | |
Country
|
| |
Registration Number /
Serial Number |
| |
Registration Date
|
| |
Duration of
Trademark |
| |
Mark
|
|
1
|
| |
U.S.
|
| |
5326028
|
| |
October 31, 2017
|
| |
October 31, 2033
|
| | Liquid | |
2
|
| |
U.S.
|
| |
5367649
|
| |
January 2, 2018
|
| |
January 2, 2034
|
| | Liquid 9 | |
3
|
| |
U.S.
|
| |
5218409
|
| |
June 6, 2017
|
| |
June 6, 2033
|
| | Tear Shape (design) | |
4
|
| |
U.S.
|
| |
5941427
|
| |
December 24, 2019
|
| |
December 24, 2025
|
| | Klik | |
5
|
| |
European Union
|
| |
18054132
|
| |
September 5, 2019
|
| |
September 5, 2029
|
| | Infinity | |
6
|
| |
U.S.
|
| |
90128914
|
| |
January 4, 2022
|
| |
January 4, 2028
|
| | Dose-cti | |
State
|
| |
License Type held Directly and
Indirectly by Company |
| |
Number of Licenses Allowed by
Law in State |
| |
Number of Licenses/ Applications
arising out of Company Direct and Indirect Involvement |
|
Massachusetts | | |
Vertically Integrated Medical Marijuana Treatment Center
Cultivator, Product Manufacturer, Retailer (Adult-Use)
|
| |
A Person or Entity Having Direct or Indirect Control may not hold more than three licenses of the same license type
|
| |
3 Medical Marijuana Treatment Centers (2 open; 1 final license);
4 adult-use Marijuana Establishment Final licenses with authorization to commence operations (1 cultivator license; 1 product manufacturer license; and 2 retailer licenses; all operational) |
|
Ohio | | |
Stand Alone Processor (Medical)
|
| |
A person, entity or subsidiary thereof may only hold a financial interest in or be an owner of one processor license
|
| |
1 license
|
|
Pennsylvania | | |
Grower/Processor (Medical)
|
| |
A person may only be issued one grower/processor license
|
| |
1 license
|
|
| | |
Three Months Ended
|
| |
Years Ended
|
| ||||||||||||||||||
($ in thousands)
|
| |
Mar 31,
2022 |
| |
Mar 31,
2021 |
| |
Dec 31,
2021 |
| |
Dec 31,
2020 |
| ||||||||||||
Revenue
|
| | | | 42,352 | | | | | | 46,817 | | | | | | 202,705 | | | | | | 158,409 | | |
Cost of goods sold
|
| | | | (32,999) | | | | | | (33,272) | | | | | | (152,502) | | | | | | (112,270) | | |
Gross profit
|
| | | | 9,353 | | | | | | 13,545 | | | | | | 50,203 | | | | | | 46,139 | | |
Loss from operations
|
| | | | (7,482) | | | | | | (324) | | | | | | (39,793) | | | | | | (36,294) | | |
Total other income (expense)
|
| | | | (5,484) | | | | | | (16,755) | | | | | | (9,236) | | | | | | (21,938) | | |
Net loss from continuing operations before income taxes
|
| | | | (12,966) | | | | | | (17,079) | | | | | | (49,029) | | | | | | (58,232) | | |
Net loss from discontinued operations, net of taxes
|
| | | | — | | | | | | — | | | | | | — | | | | | | (56,490) | | |
Net loss
|
| | | | (11,634) | | | | | | (17,057) | | | | | | (35,126) | | | | | | (116,418) | | |
| | |
Three Months Ended
|
| |||||||||
($ in thousands)
|
| |
Mar 31,
2022 |
| |
Mar 31,
2021 |
| ||||||
Wages and benefits
|
| | | $ | 5,168 | | | | | $ | 4,083 | | |
General and administrative
|
| | | | 4,779 | | | | | | 4,317 | | |
Sales and marketing
|
| | | | 407 | | | | | | 155 | | |
Share-based compensation expense
|
| | | | 1,226 | | | | | | 882 | | |
Depreciation and amortization
|
| | | | 4,558 | | | | | | 4,432 | | |
Impairment loss
|
| | | | 697 | | | | | | 0 | | |
Total Operating Expenses
|
| | | $ | 16,835 | | | | | $ | 13,869 | | |
| | |
Years Ended
|
| |||||||||
($ in thousands)
|
| |
Dec 31,
2021 |
| |
Dec 31,
2020 |
| ||||||
Wages and benefits
|
| | | $ | 17,407 | | | | | $ | 12,927 | | |
General and administrative
|
| | | | 19,073 | | | | | | 22,170 | | |
Sales and marketing
|
| | | | 1,457 | | | | | | 839 | | |
Share-based compensation expense
|
| | | | 3,804 | | | | | | 4,200 | | |
Depreciation and amortization
|
| | | | 17,857 | | | | | | 18,356 | | |
Impairment loss
|
| | | | 30,398 | | | | | | 23,941 | | |
Total Operating Expense
|
| | | $ | 89,996 | | | | | $ | 82,433 | | |
| | |
March 31,
2022 |
| |
March 31,
2021 |
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||||||||
Revenues, net
|
| | | $ | 42,352 | | | | | $ | 46,817 | | | | | $ | 202,705 | | | | | $ | 158,409 | | |
Cost of goods sold
|
| | | | (32,999) | | | | | | (33,272) | | | | | | (152,502) | | | | | | (112,270) | | |
Gross profit
|
| | | | 9,353 | | | | | | 13,545 | | | | | | 50,203 | | | | | | 46,139 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Wages and benefits
|
| | | | 5,168 | | | | | | 4,083 | | | | | | 17,407 | | | | | | 12,927 | | |
General and administrative
|
| | | | 4,779 | | | | | | 4,317 | | | | | | 19,073 | | | | | | 22,170 | | |
Sales and marketing
|
| | | | 407 | | | | | | 155 | | | | | | 1,457 | | | | | | 839 | | |
Share-based compensation
|
| | | | 1,226 | | | | | | 882 | | | | | | 3,804 | | | | | | 4,200 | | |
Depreciation and amortization
|
| | | | 4,558 | | | | | | 4,432 | | | | | | 17,857 | | | | | | 18,356 | | |
Impairment loss
|
| | | | 697 | | | | | | — | | | | | | 30,398 | | | | | | 23,941 | | |
Total operating expenses
|
| | | | 16,835 | | | | | | 13,869 | | | | | | 89,996 | | | | | | 82,433 | | |
Loss from operations
|
| | | | (7,482) | | | | | | (324) | | | | | | (39,793) | | | | | | (36,294) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income
|
| | | | 18 | | | | | | 603 | | | | | | 593 | | | | | | 3,835 | | |
Other income
|
| | | | 3 | | | | | | 44 | | | | | | 74 | | | | | | 1,053 | | |
Change in fair value of warrant liability
|
| | | | (2,163) | | | | | | (13,916) | | | | | | 6,001 | | | | | | — | | |
Gain (loss) on sale of assets
|
| | | | 1 | | | | | | (67) | | | | | | 163 | | | | | | (70) | | |
Unrealized loss on investment
|
| | | | (45) | | | | | | (705) | | | | | | (891) | | | | | | (337) | | |
Loan receivable losses
|
| | | | (517) | | | | | | — | | | | | | (4,562) | | | | | | (16,416) | | |
Loss on termination of lease
|
| | | | — | | | | | | (259) | | | | | | (261) | | | | | | (613) | | |
Interest expense, net
|
| | | | (2,781) | | | | | | (2,455) | | | | | | (10,367) | | | | | | (9,390) | | |
Gain on foreign currency exchange
|
| | | | — | | | | | | — | | | | | | 14 | | | | | | — | | |
Other income (expense)
|
| | | | (5,484) | | | | | | (16,755) | | | | | | (9,236) | | | | | | (21,938) | | |
Loss from continuing operations before income
tax and non-controlling interest |
| | | | (12,966) | | | | | | (17,079) | | | | | | (49,029) | | | | | | (58,232) | | |
Income taxes | | | | | | | | | | | | | | | | | | | | | | | | | |
Income tax benefit (expense)
|
| | | | 1,332 | | | | | | 22 | | | | | | 13,903 | | | | | | (1,696) | | |
Net loss from continuing operations, net of tax
and before non-controlling interest |
| | | | (11,634) | | | | | | (17,057) | | | | | | (35,126) | | | | | | (59,928) | | |
Loss from discontinued operations before income taxes
|
| | | | — | | | | | | — | | | | | | — | | | | | | (58,257) | | |
Income tax benefit from discontinued operations
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,767 | | |
Net loss from discontinued operations, net of tax and before non-controlling interest
|
| | | | — | | | | | | — | | | | | | — | | | | | | (56,490) | | |
Net loss before non-controlling
interest |
| | | | (11,634) | | | | | | (17,057) | | | | | | (35,126) | | | | | | (116,418) | | |
Less: Net loss attributable to non-controlling interest
|
| | | | 5 | | | | | | — | | | | | | — | | | | | | — | | |
| | |
March 31,
2022 |
| |
March 31,
2021 |
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||||||||
Net loss attributable to TILT Holdings, Inc.
|
| | | $ | (11,629) | | | | | $ | (17,057) | | | | | $ | (35,126) | | | | | $ | (116,418) | | |
Other comprehensive (loss) income | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | $ | (11,634) | | | | | $ | (17,057) | | | | | $ | (35,126) | | | | | $ | (116,418) | | |
Foreign currency translation differences
|
| | | | 1 | | | | | | (2) | | | | | | (15) | | | | | | 496 | | |
Comprehensive loss before non-controlling interest
|
| | | $ | (11,633) | | | | | $ | (17,059) | | | | | $ | (35,141) | | | | | $ | (115,922) | | |
Less: Net loss attributable to non-controlling interest
|
| | | | 5 | | | | | | — | | | | | | — | | | | | | — | | |
Comprehensive loss attributable to TILT Holdings, Inc.
|
| | | $ | (11,628) | | | | | $ | (17,059) | | | | | $ | (35,141) | | | | | $ | (115,922) | | |
Weighted average number of shares outstanding:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | |
|
371,738,863
|
| | | |
|
365,809,870
|
| | | |
|
370,002,378
|
| | | |
|
364,562,929
|
| |
Net Loss per common share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | $ | (0.03) | | | | | $ | (0.05) | | | | | $ | (0.09) | | | | | $ | (0.32) | | |
Basic and diluted, from continuing operations
|
| | | $ | (0.03) | | | | | $ | (0.05) | | | | | $ | (0.09) | | | | | $ | (0.16) | | |
Basic and diluted, from discontinued operations
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | (0.15) | | |
| | |
Three Months Ended
|
| |
Years Ended
|
| ||||||||||||||||||
($ in thousands)
|
| |
Mar 31,
2022 |
| |
Mar 31,
2021 |
| |
Dec 31,
2021 |
| |
Dec 31,
2020 |
| ||||||||||||
Net cash provided by (used in) operating activities
|
| | | $ | 4,203 | | | | | $ | 2,742 | | | | | $ | (8,599) | | | | | $ | 10,660 | | |
Net cash provided by (used in) investing activities
|
| | | | (775) | | | | | | (329) | | | | | | 186 | | | | | | (2,520) | | |
Net cash provided by (used in) financing activities
|
| | | | (1,149) | | | | | | (882) | | | | | | 6,514 | | | | | | (3,909) | | |
Effect of foreign exchange on cash and cash equivalents
|
| | | | 1 | | | | | | (3) | | | | | |
(8)
|
| | | | |
616
|
| |
Net changes in cash and cash equivalents
|
| | |
$
|
2,280
|
| | | |
$
|
1,528
|
| | | |
$
|
(1,907)
|
| | | |
$
|
4,847
|
| |
($ in thousands)
|
| |
Mar 31,
2022 |
| |
Dec 31,
2021 |
| |
$
Change |
| |
%
Change |
| ||||||||||||
Working capital
|
| | | $ | (4,951) | | | | | $ | 1,389 | | | | | $ | (6,340) | | | | | | -456% | | |
For the three months ended March 31, 2022
|
| ||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
Technology/
Distribution |
| |
Cannabis
|
| |
Accessories
|
| |
Corporate
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 11,259 | | | | | $ | 31,624 | | | | | $ | — | | | | | $ | — | | | | | $ | 42,883 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (531) | | | | | | — | | | | | | — | | | | | | (531) | | |
Net revenue
|
| | | $ | — | | | | | $ | 11,259 | | | | | $ | 31,093 | | | | | $ | — | | | | | $ | — | | | | | $ | 42,352 | | |
For the three months ended March 31, 2021
|
| ||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
Technology/
Distribution |
| |
Cannabis
|
| |
Accessories
|
| |
Corporate
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 11,734 | | | | | $ | 35,301 | | | | | $ | — | | | | | $ | — | | | | | $ | 47,035 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (218) | | | | | | — | | | | | | — | | | | | | (218) | | |
Net revenue
|
| | | $ | — | | | | | $ | 11,734 | | | | | $ | 35,083 | | | | | $ | — | | | | | $ | — | | | | | $ | 46,817 | | |
For the year ended December 31, 2021
|
| ||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
Technology/
Distribution |
| |
Cannabis
|
| |
Accessories
|
| |
Corporate
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 41,923 | | | | | $ | 161,662 | | | | | $ | — | | | | | $ | — | | | | | $ | 203,585 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (880) | | | | | | — | | | | | | — | | | | | | (880) | | |
Net revenue
|
| | | $ | — | | | | | $ | 41,923 | | | | | $ | 160,782 | | | | | $ | — | | | | | $ | — | | | | | $ | 202,705 | | |
For the year ended December 31, 2020
|
| ||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
Technology/
Distribution |
| |
Cannabis
|
| |
Accessories
|
| |
Corporate
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | 54 | | | | | $ | 37,901 | | | | | $ | 122,042 | | | | | $ | — | | | | | $ | — | | | | | $ | 159,997 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (1,588) | | | | | | — | | | | | | — | | | | | | (1,588) | | |
Net revenue
|
| | | $ | 54 | | | | | $ | 37,901 | | | | | $ | 120,454 | | | | | $ | — | | | | | $ | — | | | | | $ | 158,409 | | |
| | | | | | | | |
Contractual cash flows
|
| |||||||||||||||||||||
March 31, 2022
|
| |
Carrying
amount |
| |
Total
|
| |
< 6 months
|
| |
6 – 12 months
|
| |
1 – 5 years
|
| |||||||||||||||
Accounts payable and accrued liabilities
|
| | | $ | 45,980 | | | | | $ | (45,980) | | | | | $ | (36,711) | | | | | $ | (184) | | | | | $ | (9,085) | | |
Notes payable
|
| | | | 87,970 | | | | | | (86,373) | | | | | | (11,604) | | | | | | (37,927) | | | | | | (36,842) | | |
Total | | | | $ | 133,950 | | | | | $ | (132,353) | | | | | $ | (48,315) | | | | | $ | (38,111) | | | | | $ | (45,927) | | |
| | | | | | | | |
Contractual cash flows
|
| |||||||||||||||||||||
December 31, 2021
|
| |
Carrying
amount |
| |
Total
|
| |
< 6 months
|
| |
6 – 12 months
|
| |
1 – 5 years
|
| |||||||||||||||
Accounts payable and accrued liabilities
|
| | | $ | 49,482 | | | | | $ | (49,482) | | | | | $ | (40,208) | | | | | $ | (189) | | | | | $ | (9,085) | | |
Notes payable
|
| | | | 86,613 | | | | | | (87,105) | | | | | | (10,704) | | | | | | (38,629) | | | | | | (37,772) | | |
Total | | | | $ | 136,095 | | | | | $ | (136,587) | | | | | $ | (50,912) | | | | | $ | (38,818) | | | | | $ | (46,857) | | |
| | |
As of March 31, 2022
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 9,232 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 28,854 | | | | | | — | | | | | | — | | |
Other loans receivable
|
| | | | 3,899 | | | | | | — | | | | | | — | | |
Investments
|
| | | | 57 | | | | | | — | | | | | | 6,596 | | |
Accounts payable and accrued liabilities
|
| | | | 45,980 | | | | | | — | | | | | | — | | |
Warrant liability
|
| | | | — | | | | | | — | | | | | | 4,557 | | |
Notes payable
|
| | | | 87,970 | | | | | | — | | | | | | — | | |
Total | | | | $ | 175,992 | | | | | $ | — | | | | | $ | 11,153 | | |
| | |
As of December 31, 2021
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 6,952 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 32,393 | | | | | | — | | | | | | — | | |
Other loans receivable
|
| | | | 4,125 | | | | | | — | | | | | | — | | |
Investments
|
| | | | 102 | | | | | | — | | | | | | 6,596 | | |
Accounts payable and accrued liabilities
|
| | | | 49,482 | | | | | | — | | | | | | — | | |
Warrant liability
|
| | | | — | | | | | | — | | | | | | 2,394 | | |
Notes payable
|
| | | | 86,613 | | | | | | — | | | | | | — | | |
Total | | | | $ | 179,667 | | | | | $ | — | | | | | $ | 8,990 | | |
|
Location
|
| |
Square Feet
|
| |
Purpose
|
| |
Segment(s)
|
| |
Leased/Owned
|
|
| Phoenix, AZ | | |
13,115
|
| |
Administrative
|
| |
Corporate,
Accessories |
| |
Leased
|
|
| Cambridge, MA | | |
9,882
|
| |
Distribution
|
| |
Cannabis
|
| |
Leased
|
|
| Taunton, MA | | |
539,273
|
| |
Cultivation and Distribution
|
| |
Cannabis
|
| |
Leased
|
|
| Taunton, MA | | |
N/M
|
| |
Administrative
|
| |
Cannabis
|
| |
Leased
|
|
| Taunton, MA | | |
20,000
|
| |
Distribution
|
| |
Cannabis
|
| |
Leased
|
|
| Brockton, MA | | |
6,000
|
| |
Distribution
|
| |
Cannabis
|
| |
Leased
|
|
| Cleveland, OH | | |
20,725
|
| |
Distribution and manufacturing
|
| |
Cannabis
|
| |
Leased
|
|
| Elyria, OH | | |
6,180
|
| |
Distribution
|
| |
Cannabis
|
| |
Owned
|
|
| White Haven Borough, PA | | |
478,724
|
| |
Cultivation and manufacturing
|
| |
Cannabis
|
| |
Owned
|
|
| Total Square Footage | | |
1,093,899
|
| | | | | | | | | |
| | |
Common Shares
|
| |||||||||
Name and Position of Beneficial Owner
|
| |
Amount and
Nature of Beneficial Ownership |
| |
Percent of
Class |
| ||||||
Mark Scatterday, Director and Former Chief Executive Officer
|
| | | | 33,062,957(1) | | | | | | 9.1% | | |
Tim Conder, Director
|
| | | | 1,393,900(2) | | | | | | * | | |
Jane Batzofin, Director
|
| | | | 1,452,829(3) | | | | | | * | | |
Mark J. Coleman, Director
|
| | | | 702,829(4) | | | | | | * | | |
John Barravecchia, Director
|
| | | | 587,767(5) | | | | | | * | | |
D’Angela Simms, Director
|
| | | | 541,494(6) | | | | | | * | | |
Gary F. Santo, Jr., Chief Executive Officer
|
| | | | 807,982(7) | | | | | | * | | |
Brad Hoch, Chief Financial Officer
|
| | | | 441,509(8) | | | | | | * | | |
Dana Arvidson, Chief Operating Officer
|
| | | | 50,000(9) | | | | | | * | | |
Marshall Horowitz, Former General Counsel
|
| | | | 1,000,000(10) | | | | | | * | | |
All current directors and executive officers as a group (9 persons)
|
| | | | 39,041,267 | | | | | | 10.7% | | |
Name
|
| |
Age
|
| |
Position
|
|
Mark Scatterday | | |
53
|
| | Chairman of the Board | |
Tim Conder | | |
39
|
| | Director | |
Jane Batzofin | | |
47
|
| | Director | |
Mark J. Coleman | | |
63
|
| | Director | |
John Barravecchia | | |
67
|
| | Director | |
D’Angela Simms | | |
46
|
| | Director | |
Gary F. Santo, Jr. | | |
55
|
| | Chief Executive Officer | |
Dana Arvidson | | |
47
|
| | Chief Operating Officer | |
Brad Hoch | | |
52
|
| | Chief Financial Officer | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) |
| |
Stock
awards ($)(1) |
| |
Option
awards ($)(2) |
| |
Non-equity
incentive plan compensation ($)(3) |
| |
All other
Compensation ($)(4) |
| |
Total
Compensation ($) |
| ||||||||||||||||||||||||
Gary F. Santo, Jr.
Chief Executive Officer and Former President (5) |
| | | | 2021 | | | | | | 381,884 | | | | | | — | | | | | | 2,786,127 | | | | | | — | | | | | | 385,200 | | | | | | — | | | | | | 3,553,211 | | |
| | | 2020 | | | | | | 131,707 | | | | | | — | | | | | | — | | | | | | 182,460 | | | | | | 129,082 | | | | | | — | | | | | | 443,249 | | | ||
Dana Arvidson
Chief Operating Officer(6) |
| | | | 2021 | | | | | | 158,750 | | | | | | — | | | | | | 243,090 | | | | | | — | | | | | | 155,500 | | | | | | — | | | | | | 557,340 | | |
Brad Hoch
Chief Financial Officer(7) |
| | | | 2021 | | | | | | 305,769 | | | | | | — | | | | | | — | | | | | | — | | | | | | 300,000 | | | | | | — | | | | | | 605,769 | | |
| | | 2020 | | | | | | 135,192 | | | | | | — | | | | | | 24,780 | | | | | | 121,640 | | | | | | 145,068 | | | | | | — | | | | | | 426,680 | | | ||
Mark Scatterday,
Former Chief Executive Officer(8) |
| | | | 2021 | | | | | | 164,615 | | | | | | — | | | | | | 303,000(10) | | | | | | — | | | | | | — | | | | | | 707,000(11) | | | | | | 1,174,615 | | |
| | | 2020 | | | | | | 415,962 | | | | | | — | | | | | | — | | | | | | — | | | | | | 400,000 | | | | | | — | | | | | | 815,962 | | | ||
Marshall Horowitz
Former General Counsel (9) |
| | | | 2021 | | | | | | 307,692 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 542,474 | | | | | | 850,166 | | |
| | | 2020 | | | | | | 412,000 | | | | | | — | | | | | | — | | | | | | 233,440 | | | | | | 200,000 | | | | | | — | | | | | | 845,440 | | |
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Name
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Option (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
Shares or Units of Stock That Have Not Vested(1) |
| |
Market
Value of Shares of Units of Stock That Have Not Vested ($)(2) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| |||||||||||||||||||||||||||
Gary F. Santo Jr., Chief Executive Officer
|
| | | | 450,000 | | | | | | 150,000 | | | | | | — | | | | | | 0.48 | | | | | | 6/25/2030 | | | | | | 623,946 | | | | | | 315,093 | | | | | | 7,487,351 | | | | | | 1,684,654 | | |
Dana Arvidson, Chief
Operating Officer |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 150,000 | | | | | | 58,718 | | | | | | 800,000 | | | | | | 180,000 | | |
Brad Hoch, Chief Financial Officer
|
| | | | 300,002 | | | | | | 99,998 | | | | | | — | | | | | | 0.48 | | | | | | 6/25/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Scatterday, Former Chief Executive Officer
|
| | | | 1,666,667 | | | | | | — | | | | | | — | | | | | | 0.4135 | | | | | | 11/21/2029 | | | | | | 250,000(5) | | | | | | 126,250 | | | | | | 1,400,000 | | | | | | 315,000 | | |
Marshall Horowitz, Former General Counsel
|
| | | | 600,000 | | | | | | — | | | | | | — | | | | | | 0.3732(4) | | | | | | 12/31/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 400,000 | | | | | | — | | | | | | — | | | | | | 0.4135(4) | | | | | | 12/31/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Vesting Date
|
| |
Number of
PSUs |
| |||
December 31, 2021
|
| | | | 1,871,837 | | |
December 31, 2022
|
| | | | 3,743,674 | | |
December 31, 2023
|
| | | | 5,615,511 | | |
December 31, 2024
|
| | | | 7,487,351 | | |
Name
|
| |
Fees earned
or paid in cash ($) |
| |
Stock
Awards ($)(1) |
| |
Option
Awards ($) |
| |
Non-equity
Incentive Plan Compensation ($) |
| |
All Other
Compensation ($) |
| |
Total ($)
|
| ||||||||||||||||||
Mark Scatterday
|
| |
See Footnote 2
|
| |
See Footnote 2
|
| |
See Footnote 2
|
| |
See Footnote 2
|
| |
See Footnote 2
|
| |
See Footnote 2
|
| ||||||||||||||||||
Tim Conder
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jane Batzofin
|
| | | | 45,000 | | | | | | 63,943(3) | | | | | | — | | | | | | — | | | | | | — | | | | | | 108,943 | | |
Mark J. Coleman
|
| | | | 45,000 | | | | | | 63,943(4) | | | | | | — | | | | | | — | | | | | | — | | | | | | 108,943 | | |
John Barravecchia
|
| | | | 60,000 | | | | | | 63,943(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | 123,943 | | |
D’Angela Simms
|
| | | | 50,000 | | | | | | 63,943(6) | | | | | | — | | | | | | — | | | | | | — | | | | | | 113,943 | | |
Period Ended
|
| |
Low Trading
Price (CAD$) |
| |
High Trading
Price (CAD$) |
| ||||||
First Quarter Ended March 31, 2022
|
| | | | 0.160 | | | | | | 0.420 | | |
Fourth Quarter Ended December 31, 2021
|
| | | | 0.250 | | | | | | 0.600 | | |
Third Quarter Ended September 30, 2021
|
| | | | 0.465 | | | | | | 0.680 | | |
Second Quarter Ended June 30, 2021
|
| | | | 0.500 | | | | | | 0.720 | | |
First Quarter Ended March 31, 2021
|
| | | | 0.370 | | | | | | 0.920 | | |
Fourth Quarter Ended December 31, 2020
|
| | | | 0.290 | | | | | | 0.550 | | |
Third Quarter Ended September 30, 2020
|
| | | | 0.335 | | | | | | 0.690 | | |
Second Quarter Ended June 30, 2020
|
| | | | 0.215 | | | | | | 0.800 | | |
First Quarter Ended March 31, 2020
|
| | | | 0.155 | | | | | | 0.395 | | |
Period Ended
|
| |
Low Trading
Price (US$) |
| |
High Trading
Price (US$) |
| ||||||
First Quarter Ended March 31, 2022
|
| | | | 0.17 | | | | | | 0.35 | | |
Fourth Quarter Ended December 31, 2021
|
| | | | 0.19 | | | | | | 0.47 | | |
Third Quarter Ended September 30, 2021
|
| | | | 0.37 | | | | | | 0.54 | | |
Second Quarter Ended June 30, 2021
|
| | | | 0.40 | | | | | | 0.59 | | |
First Quarter Ended March 31, 2021
|
| | | | 0.27 | | | | | | 0.75 | | |
Fourth Quarter Ended December 31, 2020
|
| | | | 0.22 | | | | | | 0.44 | | |
Third Quarter Ended September 30, 2020
|
| | | | 0.25 | | | | | | 0.53 | | |
Second Quarter Ended June 30, 2020
|
| | | | 0.14 | | | | | | 0.61 | | |
First Quarter Ended March 31, 2020
|
| | | | 0.09 | | | | | | 0.32 | | |
Plan Category
|
| |
Number of securities
to be issued upon the vesting of RSUs, PSUs and the exercise of outstanding options |
| |
Weighted-average
exercise price of outstanding options |
| |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected herein)(1) |
| |||||||||
Equity compensation plans approved by securityholders
|
| | | | 32,004,959 | | | | | US$ | 0.6341 | | | | | | 18,445,536 | | |
Equity compensation plans not approved by
securityholders |
| | | | N/A | | | | | | N/A | | | | | | N/A | | |
Total:
|
| | | | 32,004,959 | | | | | US$ | 0.6341 | | | | | | 18,445,536 | | |
|
Exhibit
No. |
| |
Description of Exhibit
|
|
| 2.1†# | | | | |
| 2.2*†# | | | | |
| 2.3†# | | | | |
| 2.4†# | | | | |
| 2.5†# | | | | |
| 3.1# | | | | |
| 3.2# | | | | |
| 4.1†# | | | | |
| 4.2 | | | | |
| 4.3 | | | | |
| 10.1†# | | | | |
| 10.2†# | | | | |
| 10.3*# | | | | |
| 10.4*†# | | | | |
| 10.5†# | | | | |
| 10.6*†# | | | |
|
Exhibit
No. |
| |
Description of Exhibit
|
|
| 10.7†# | | | | |
| 10.8†# | | | | |
| 10.9†# | | | | |
| 10.10†# | | | | |
| 10.11†# | | | | |
| 10.12†# | | | | |
| 10.13†# | | | | |
| 10.14†# | | | | |
| 10.15+# | | | | |
| 10.16+# | | | | |
| 10.17+# | | | | |
| 10.18+# | | | Employment Agreement, dated October 28, 2020 between TILT Holdings Inc. and Brad Hoch. | |
|
Exhibit
No. |
| |
Description of Exhibit
|
|
| 10.19+# | | | | |
| 10.20+# | | | | |
| 10.21†+# | | | | |
| 10.22+# | | | | |
| 10.23†+# | | | | |
| 10.24+ | | | | |
| 10.25+# | | | | |
| 10.26+# | | | | |
| 10.27+# | | | | |
| 10.28 | | | | |
| 21.1# | | | |
| | |
Page
|
| |||
AUDITED CONSOLIDATED FINANCIAL STATEMENTS: | | | | | | | |
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-8 | | | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | |
| | | | F-59 | | | |
| | | | F-60 | | | |
| | | | F-61 | | | |
| | | | F-62 | | | |
| | | | F-63 | | |
| | |
2021
|
| |
2020
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 6,952 | | | | | $ | 8,859 | | |
Trade receivables and others, net
|
| | | | 32,393 | | | | | | 14,568 | | |
Inventories
|
| | | | 55,583 | | | | | | 32,507 | | |
Loans receivable, current portion
|
| | | | 2,453 | | | | | | 2,660 | | |
Prepaid expenses and other current assets
|
| | | | 3,005 | | | | | | 4,556 | | |
Assets held for sale
|
| | | | 500 | | | | | | — | | |
Advances for acquisition target
|
| | | | — | | | | | | 7,411 | | |
Total current assets
|
| | | | 100,886 | | | | | | 70,561 | | |
Non-current assets | | | | | | | | | | | | | |
Property, plant and equipment, net
|
| | | | 62,360 | | | | | | 66,795 | | |
Right-of-use assets – finance, net
|
| | | | 5,379 | | | | | | 5,144 | | |
Right-of-use assets – operating, net
|
| | | | 5,038 | | | | | | 6,572 | | |
Investments
|
| | | | 6,698 | | | | | | 1,189 | | |
Intangible assets, net
|
| | | | 128,770 | | | | | | 138,637 | | |
Loans receivable
|
| | | | 1,672 | | | | | | 14,483 | | |
Goodwill
|
| | | | 70,545 | | | | | | 98,693 | | |
TOTAL ASSETS
|
| | | $ | 381,348 | | | | | $ | 402,074 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 49,482 | | | | | $ | 31,086 | | |
Warrant liability
|
| | | | 2,394 | | | | | | — | | |
Income tax payable
|
| | | | — | | | | | | 903 | | |
Deferred revenue
|
| | | | 5,177 | | | | | | 6,311 | | |
Finance lease liability, current portion
|
| | | | 955 | | | | | | 831 | | |
Operating lease liability, current portion
|
| | | | 731 | | | | | | 879 | | |
Notes payable, current portion. net of discount
|
| | | | 40,758 | | | | | | 4,668 | | |
Total current liabilities
|
| | | | 99,497 | | | | | | 44,678 | | |
Non-current liabilities | | | | | | | | | | | | | |
Finance lease liability
|
| | | | 5,319 | | | | | | 5,305 | | |
Operating lease liability
|
| | | | 4,927 | | | | | | 6,375 | | |
Notes payable, net of discount
|
| | | | 45,855 | | | | | | 67,082 | | |
Deferred tax liability
|
| | | | 85 | | | | | | 13,949 | | |
TOTAL LIABILITIES
|
| | | | 155,683 | | | | | | 137,389 | | |
Shareholders’ equity | | | | | | | | | | | | | |
Common stock, no par value, unlimited shares authorized as of December 31, 2021 and 2020, 374,083 and 367,183 issued and outstanding as of December 31, 2021 and 2020, respectively
|
| | | | 854,952 | | | | | | 851,851 | | |
Additional paid-in capital
|
| | | | 224,835 | | | | | | 223,499 | | |
Warrants
|
| | | | 952 | | | | | | 6,757 | | |
Accumulated other comprehensive income
|
| | | | 999 | | | | | | 1,014 | | |
Accumulated deficit
|
| | | | (856,248) | | | | | | (818,436) | | |
Non-controlling interest
|
| | | | 175 | | | | | | — | | |
TOTAL SHAREHOLDERS’ EQUITY
|
| | | | 225,665 | | | | | | 264,685 | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | $ | 381,348 | | | | | $ | 402,074 | | |
| | |
2021
|
| |
2020
|
| ||||||
Revenues, net
|
| | | $ | 202,705 | | | | | $ | 158,409 | | |
Cost of goods sold
|
| | | | (152,502) | | | | | | (112,270) | | |
Gross profit
|
| | | | 50,203 | | | | | | 46,139 | | |
Operating expenses: | | | | | | | | | | | | | |
Wages and benefits
|
| | | | 17,407 | | | | | | 12,927 | | |
General and administrative
|
| | | | 19,073 | | | | | | 22,170 | | |
Sales and marketing
|
| | | | 1,457 | | | | | | 839 | | |
Share-based compensation
|
| | | | 3,804 | | | | | | 4,200 | | |
Depreciation and amortization
|
| | | | 17,857 | | | | | | 18,356 | | |
Impairment loss
|
| | | | 30,398 | | | | | | 23,941 | | |
Total operating expenses
|
| | | | 89,996 | | | | | | 82,433 | | |
Loss from operations
|
| | | | (39,793) | | | | | | (36,294) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income
|
| | | | 593 | | | | | | 3,835 | | |
Other income
|
| | | | 74 | | | | | | 1,053 | | |
Change in fair value of warrant liability
|
| | | | 6,001 | | | | | | — | | |
Gain on foreign currency exchange
|
| | | | 14 | | | | | | — | | |
Gain (loss) on sale of assets
|
| | | | 163 | | | | | | (70) | | |
Unrealized loss on investments
|
| | | | (891) | | | | | | (337) | | |
Loan receivable losses
|
| | | | (4,562) | | | | | | (16,416) | | |
Loss on termination of lease
|
| | | | (261) | | | | | | (613) | | |
Interest expense, net
|
| | | | (10,367) | | | | | | (9,390) | | |
Other expense
|
| | | | (9,236) | | | | | | (21,938) | | |
Loss from continuing operations before income taxes
|
| | | | (49,029) | | | | | | (58,232) | | |
Income taxes | | | | | | | | | | | | | |
Income tax benefit (expense)
|
| | | | 13,903 | | | | | | (1,696) | | |
Net loss from continuing operations, net of tax
|
| | | | (35,126) | | | | | | (59,928) | | |
Loss from discontinued operations before income taxes
|
| | | | — | | | | | | (58,257) | | |
Income tax benefit from discontinued operations
|
| | | | — | | | | | | 1,767 | | |
Net loss from discontinued operations, net of tax
|
| | | | — | | | | | | (56,490) | | |
Net loss
|
| | | | (35,126) | | | | | | (116,418) | | |
Other comprehensive (loss) income | | | | | | | | | | | | | |
Foreign currency translation adjustments
|
| | | | (15) | | | | | | 496 | | |
Comprehensive loss
|
| | | $ | (35,141) | | | | | $ | (115,922) | | |
Weighted average number of shares outstanding: | | | | | | | | | | | | | |
Basic
|
| | |
|
370,002,378
|
| | | |
|
364,562,929
|
| |
Net loss per common share | | | | | | | | | | | | | |
Basic and diluted
|
| | | $ | (0.09) | | | | | $ | (0.32) | | |
Basic and diluted, from continuing operations
|
| | | $ | (0.09) | | | | | $ | (0.16) | | |
Basic and diluted, from discontinued operations
|
| | | $ | — | | | | | $ | (0.15) | | |
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Warrants
|
| |
Accumulated Other
Comprehensive Income (Loss) |
| |
Accumulated
Deficit |
| |
Non-Controlling
Interest |
| |
Shareholders’
Equity Total |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2020
|
| | | | 362,279,572 | | | | | $ | 849,696 | | | | | $ | 210,160 | | | | | $ | 17,809 | | | | | $ | 518 | | | | | $ | (702,018) | | | | | $ | — | | | | | $ | 376,165 | | |
Options exercised
|
| | | | 62,100 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | |
Share-based compensation
|
| | | | 481,999 | | | | | | 175 | | | | | | 2,221 | | | | | | 66 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,462 | | |
Warrants exercised
|
| | | | 100,857 | | | | | | — | | | | | | 27 | | | | | | (27) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Warrants expired
|
| | | | — | | | | | | — | | | | | | 11,091 | | | | | | (11,091) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Shares returned from escrow
|
| | | | (660,044) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance and vesting of restricted share units
|
| | | | 4,918,189 | | | | | | 1,979 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,979 | | |
Comprehensive (loss) for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 496 | | | | | | (116,418) | | | | | | — | | | | | | (115,922) | | |
Balance – December 31, 2020
|
| | | | 367,182,673 | | | | | $ | 851,851 | | | | | $ | 223,499 | | | | | $ | 6,757 | | | | | $ | 1,014 | | | | | $ | (818,436) | | | | | $ | — | | | | | $ | 264,685 | | |
Options exercised
|
| | | | 221,400 | | | | | | 13 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 13 | | |
Options forfeited
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | 1,240 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,240 | | |
Warrants exercised
|
| | | | 657,000 | | | | | | 173 | | | | | | 96 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 269 | | |
Warrants expired
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Warrants reclassified to liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | (5,805) | | | | | | | | | | | | (2,686) | | | | | | — | | | | | | (8,491) | | |
Shares returned from escrow
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance and vesting of restricted share units
|
| | | | 5,272,310 | | | | | | 2,192 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,192 | | |
Shares reserved for contingent consideration
|
| | | | — | | | | | | 372 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 372 | | |
Formation of SFNY:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued from formation of SFNY
|
| | | | 749,376 | | | | | | 351 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 351 | | |
Non-controlling interest
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 175 | | | | | | 175 | | |
Comprehensive (loss) for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15) | | | | | | (35,126) | | | | | | — | | | | | | (35,141) | | |
Balance – December 31, 2021
|
| | | | 374,082,759 | | | | | $ | 854,952 | | | | | $ | 224,835 | | | | | $ | 952 | | | | | $ | 999 | | | | | $ | (856,248) | | | | | $ | 175 | | | | | $ | 225,665 | | |
| | |
2021
|
| |
2020
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (35,126) | | | | | $ | (116,418) | | |
Adjustments to reconcile net loss to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Loss on sale of discontinued operation, net of tax
|
| | | | — | | | | | | 56,787 | | |
Unrealized loss on investments
|
| | | | 891 | | | | | | 337 | | |
Gain (Loss) on disposal of property
|
| | | | — | | | | | | 70 | | |
Loss on termination of lease
|
| | | | 210 | | | | | | 418 | | |
Depreciation and amortization
|
| | | | 22,438 | | | | | | 20,393 | | |
Amortization of operating lease right of use assets
|
| | | | 1,231 | | | | | | 1,602 | | |
Change in allowance for doubtful accounts
|
| | | | (188) | | | | | | 757 | | |
Non-cash interest income
|
| | | | (500) | | | | | | (3,740) | | |
Deferred tax benefit
|
| | | | (13,864) | | | | | | (975) | | |
Share-based compensation
|
| | | | 3,804 | | | | | | 4,200 | | |
Accretion of debt discount
|
| | | | 2,667 | | | | | | 2,227 | | |
Accounts receivable write off
|
| | | | — | | | | | | 2,169 | | |
Loan receivable losses
|
| | | | 4,562 | | | | | | 16,416 | | |
Impairment loss
|
| | | | 30,398 | | | | | | 23,941 | | |
Warrants and severance
|
| | | | — | | | | | | 66 | | |
Change in fair value of derivatives
|
| | | | (6,001) | | | | | | — | | |
Non-cash interest expense
|
| | | | 4,050 | | | | | | 3,669 | | |
Net change in working capital items:
|
| | | | | | | | | | | | |
Trade receivables and others, net
|
| | | | (17,627) | | | | | | (405) | | |
Inventories
|
| | | | (22,574) | | | | | | 5,204 | | |
Prepaid expenses and other current assets
|
| | | | 1,340 | | | | | | 797 | | |
Accounts payable and accrued liabilities
|
| | | | 18,239 | | | | | | (2,695) | | |
Income tax payable
|
| | | | (903) | | | | | | 903 | | |
Operating lease liability
|
| | | | (512) | | | | | | 859 | | |
Deferred revenue
|
| | | | (1,134) | | | | | | 1,218 | | |
Cash (used in) provided by operating activities – continuing operations
|
| | | | (8,599) | | | | | | 17,800 | | |
Cash used in operating activities – discontinuing operations
|
| | | | — | | | | | | (7,140) | | |
Net cash (used in) provided by operating activities
|
| | | | (8,599) | | | | | | 10,660 | | |
Cash flows from investing activities: | | | | | | | | | |||||
Purchases of property, plant and equipment
|
| | | | (3,064) | | | | | | (1,908) | | |
Proceeds from sale of property
|
| | | | 1,233 | | | | | | 138 | | |
Net repayment (advances) on loan receivables
|
| | | | 2,417 | | | | | | (808) | | |
Cash paid for acquisitions
|
| | | | (400) | | | | | | — | | |
Cash provided by (used in) investing activities – continuing operations
|
| | | | 186 | | | | | | (2,578) | | |
Cash provided by investing activities – discontinuing operations
|
| | | | — | | | | | | 58 | | |
| | |
2021
|
| |
2020
|
| ||||||
Net cash provided by (used in) investing activities
|
| | | | 186 | | | | | | (2,520) | | |
Cash flows from financing activities:
|
| | | | | | | | | | | | |
Payments on lease liability
|
| | | | (2,311) | | | | | | (2,392) | | |
Principal payments on notes payable
|
| | | | (47,973) | | | | | | (516) | | |
Debt issuance costs
|
| | | | (469) | | | | | | — | | |
Proceeds from notes payable
|
| | | | 57,081 | | | | | | — | | |
Proceeds from options and warrants exercised
|
| | | | 186 | | | | | | 1 | | |
Cash provided by (used in) financing activities – continuing operations
|
| | | | 6,514 | | | | | | (2,907) | | |
Cash used in financing activities – discontinuing operations
|
| | | | — | | | | | | (1,002) | | |
Net cash provided by (used in) financing activities
|
| | | | 6,514 | | | | | | (3,909) | | |
Effect of foreign exchange on cash and cash equivalents
|
| | | | (8) | | | | | | 616 | | |
Net change in cash and cash equivalents
|
| | | | (1,907) | | | | | | 4,847 | | |
Cash and cash equivalents, beginning of year
|
| | | | 8,859 | | | | | | 4,012 | | |
Cash and cash equivalents, end of year
|
| | | $ | 6,952 | | | | | $ | 8,859 | | |
Other non-cash investing and financing activities | | | | | | | | | | | | | |
Conversion of loans receivable to investment
|
| | | $ | 6,400 | | | | | $ | (526) | | |
Shares issued for Standard Farms New York Acquisition
|
| | | $ | 351 | | | | | $ | — | | |
Extinguishment of debt for Standard Farms Ohio, LLC acquisition
|
| | | $ | 7,550 | | | | | $ | — | | |
Extinguishment of existing liabilities from Sante Veritas Therapeutics sale
|
| | | $ | 825 | | | | | $ | — | | |
Property and equipment acquired via finance lease
|
| | | $ | 832 | | | | | $ | — | | |
Property and equipment acquired via operating lease
|
| | | $ | 139 | | | | | $ | 88 | | |
|
Major subsidiaries
|
| |
Place of Incorporation
|
| |
Ownership
Percentage |
| |||
Jimmy Jang Holdings Inc.
|
| |
British Columbia
|
| | | | 100% | | |
Jimmy Jang, L.P.(i)
|
| | Delaware | | | | | 100% | | |
Jupiter Research, LLC
|
| | Arizona | | | | | 100% | | |
Baker Technologies Inc.
|
| | Delaware | | | | | 100% | | |
Standard Farms, LLC
|
| | Pennsylvania | | | | | 100% | | |
Standard Farms Ohio, LLC
|
| | Ohio | | | | | 100% | | |
Sea Hunter, Therapeutics, LLC
|
| | Delaware | | | | | 100% | | |
Commonwealth Alternative Care, Inc.
|
| | Massachusetts | | | | | 100% | | |
SFNY Holdings, Inc.
|
| | Delaware | | | | | 100% | | |
CGSF Group, LLC
|
| | Delaware | | | | | 75% | | |
|
Machinery and equipment
|
| | 3 – 10 years | |
|
Furniture and fixtures
|
| | 3 – 7 years | |
|
Autos and trucks
|
| | 5 years | |
|
Buildings, leasehold and land improvements
|
| | 5 – 40 years | |
|
Greenhouse-agricultural structure
|
| | 7 – 15 years | |
|
Construction in progress
|
| |
Not depreciated
|
|
|
Property not in service
|
| |
Not depreciated
|
|
|
Customer relationships
|
| | 10 – 13 years | |
|
Trademarks
|
| | 7 – 10 years | |
|
License rights(1)
|
| | 9 – 15 years | |
|
Management agreements
|
| |
Over the term of agreement
|
|
|
Patents and technologies
|
| | 10 years | |
|
Software
|
| | 7 – 10 years | |
|
Backlog and non-competition agreements
|
| | 4 years | |
| Consideration: | | | | | | | |
|
Settlement of pre-existing advance for acquisition target
|
| | | $ | 7,550 | | |
|
Fair value of consideration exchanged
|
| | | $ | 7,550 | | |
| Recognized amounts of identifiable assets acquired and liabilities assumed: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 21 | | |
|
Trade receivables
|
| | | | 10 | | |
|
Inventory
|
| | | | 502 | | |
|
Prepaid expenses and other current assets
|
| | | | 29 | | |
|
Property, plant and equipment
|
| | | | 1,935 | | |
|
Intangible assets:
|
| | | | | | |
|
License
|
| | | | 3,890 | | |
|
Right-of-use assets
|
| | | | 120 | | |
|
Goodwill
|
| | | | 1,380 | | |
|
Accounts payable and accrued liabilities
|
| | | | (204) | | |
|
Lease liabilities
|
| | | | (133) | | |
|
Total net assets acquired
|
| | | $ | 7,550 | | |
| Consideration: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 400 | | |
|
Shares issued upon issuance
|
| | | | 351 | | |
|
Fair value of consideration exchanged
|
| | | $ | 751 | | |
|
Non-controlling interest
|
| | | $ | 175 | | |
| Recognized amounts of identifiable assets acquired and liabilities assumed: | | | | | | | |
|
Intangible assets:
|
| | | | | | |
|
Management agreement
|
| | | $ | 926 | | |
|
Total net assets acquired
|
| | | $ | 926 | | |
| Carrying value of net assets sold: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 31 | | |
|
Trade receivables and others, net
|
| | | | 768 | | |
|
Prepaid expenses and other current assets
|
| | | | 90 | | |
|
Property, plant and equipment, net
|
| | | | 298 | | |
|
Right-of-use assets
|
| | | | 1,721 | | |
|
Intangible assets, net
|
| | | | 27,410 | | |
|
Loans receivable, long-term
|
| | | | 58 | | |
|
Goodwill
|
| | | | 30,505 | | |
|
Accounts payable and accrued liabilities
|
| | | | (4,879) | | |
|
Lease liability
|
| | | | (1,796) | | |
|
Deferred tax liability
|
| | | | (179) | | |
| | | | | | 54,027 | | |
| Sale consideration on disposition of net assets: | | | | | | | |
|
Fair value of convertible senior promissory note (Note 10)
|
| | | | 6,518 | | |
|
Cost to sell
|
| | | | (485) | | |
| | | | | | 6,033 | | |
|
Loss on sale of discontinued operations
|
| | | | 47,994 | | |
|
Loss from discontinued operations
|
| | | | 10,263 | | |
|
Tax recovery on loss on sale of discontinued operations
|
| | | | (1,767) | | |
|
Loss from sale of discontinued operations, net of tax
|
| | | | 56,490 | | |
|
|
Revenues, net
|
| | | $ | 6,246 | | |
|
Cost of goods sold
|
| | | | (6,593) | | |
|
Gross profit
|
| | | | (347) | | |
| Operating expenses: | | | | | | | |
|
Depreciation and amortization
|
| | | | 1,327 | | |
|
Wages and benefits
|
| | | | 5,755 | | |
|
Professional fees
|
| | | | 57 | | |
|
Rent
|
| | | | 218 | | |
|
Insurance
|
| | | | 29 | | |
|
Advertising and marketing
|
| | | | 54 | | |
|
Travel
|
| | | | 21 | | |
|
General and administrative
|
| | | | 1,369 | | |
|
Loss on sale of assets
|
| | | | 44 | | |
|
Finance expense
|
| | | | 129 | | |
|
Total operating expenses
|
| | | | 9,003 | | |
|
(Loss) from operations
|
| | | | (9,350) | | |
| Other income (expense): | | | | | | | |
|
Other expense
|
| | | | (913) | | |
|
Total other income (expense)
|
| | | | (913) | | |
|
(Loss) from discontinued operations
|
| | | | (10,263) | | |
| Income taxes | | | | | | | |
|
Recovery of (provision for) income taxes
|
| | | | 1,767 | | |
|
Net (loss) from discontinued operations
|
| | | | (8,496) | | |
|
(Loss) on sale of discontinued operations
|
| | | | (47,994) | | |
|
Net (loss) from operating activities, net of tax
|
| | | $ | (56,490) | | |
| | |
Years ended
|
| |||||||||
Inventory
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Raw material – cannabis plants
|
| | | $ | 3,206 | | | | | $ | 2,143 | | |
Raw material – other materials
|
| | | | 1,116 | | | | | | 580 | | |
Work in progress
|
| | | | 6,327 | | | | | | 3,488 | | |
Finished goods
|
| | | | 43,776 | | | | | | 25,680 | | |
Supplies and accessories
|
| | | | 1,158 | | | | | | 616 | | |
Total inventory
|
| | | $ | 55,583 | | | | | $ | 32,507 | | |
| | |
Years ended December 31,
|
| |||||||||
Property, plant and equipment
|
| |
2021
|
| |
2020
|
| ||||||
Land
|
| | | $ | 169 | | | | | $ | 169 | | |
Land improvements
|
| | | | 460 | | | | | | 460 | | |
Machinery & equipment
|
| | | | 12,450 | | | | | | 11,368 | | |
Furniture & fixtures
|
| | | | 788 | | | | | | 949 | | |
Buildings
|
| | | | 6,845 | | | | | | 6,591 | | |
Greenhouse-agricultural structure
|
| | | | 8,195 | | | | | | 8,192 | | |
Leasehold improvements
|
| | | | 46,587 | | | | | | 39,662 | | |
Construction in progress
|
| | | | 3,391 | | | | | | 6,936 | | |
Autos & trucks
|
| | | | 214 | | | | | | 192 | | |
Property held for sale
|
| | | | — | | | | | | 1,713 | | |
Total cost
|
| | | | 79,099 | | | | | | 76,232 | | |
Less: accumulated depreciation
|
| | | | (16,739) | | | | | | (9,437) | | |
Total property, plant and equipment
|
| | | $ | 62,360 | | | | | $ | 66,795 | | |
| | |
Years ended
|
| |||||||||
Investments
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Investment in HERBL, Inc.
|
| | | $ | 6,400 | | | | | $ | — | | |
Investment in Big Toe Ventures LLC
|
| | | | 196 | | | | | | 1,000 | | |
Investment in Akerna
|
| | | | 102 | | | | | | 189 | | |
Total Investments
|
| | | $ | 6,698 | | | | | $ | 1,189 | | |
Intangible assets
|
| |
Net Balance
12/31/2020 |
| |
Business
acquisitions |
| |
Amortization
Expense |
| |
Impairment
|
| |
Net Balance
12/31/2021 |
| |||||||||||||||
Customer relationships
|
| | | $ | 71,905 | | | | | $ | — | | | | | $ | (6,698) | | | | | $ | — | | | | | $ | 65,207 | | |
Trademarks
|
| | | | 23,106 | | | | | | — | | | | | | (2,947) | | | | | | — | | | | | | 20,159 | | |
License rights
|
| | | | 14,000 | | | | | | 3,890 | | | | | | (19) | | | | | | (35) | | | | | | 17,836 | | |
Management agreements
|
| | | | — | | | | | | 926 | | | | | | (43) | | | | | | — | | | | | | 883 | | |
Patents & technologies
|
| | | | 26,320 | | | | | | — | | | | | | (3,290) | | | | | | — | | | | | | 23,030 | | |
Backlog and non-competition agreements
|
| | | | 3,306 | | | | | | — | | | | | | (1,651) | | | | | | — | | | | | | 1,655 | | |
Total intangible assets
|
| | | $ | 138,637 | | | | | $ | 4,816 | | | | | $ | (14,648) | | | | | $ | (35) | | | | | $ | 128,770 | | |
Intangible assets
|
| |
Net Balance
12/31/2019 |
| |
Amortization
Expense |
| |
Impairment
|
| |
Discontinued
operations |
| |
Net Balance
12/31/2020 |
| |||||||||||||||
Customer relationships
|
| | | $ | 85,469 | | | | | $ | (7,660) | | | | | $ | (1,458) | | | | | $ | (4,446) | | | | | $ | 71,905 | | |
Trademarks
|
| | | | 27,196 | | | | | | (3,082) | | | | | | (281) | | | | | | (727) | | | | | | 23,106 | | |
License rights
|
| | | | 34,970 | | | | | | (26) | | | | | | — | | | | | | (20,944) | | | | | | 14,000 | | |
Management agreements
|
| | | | 2,460 | | | | | | — | | | | | | (2,460) | | | | | | — | | | | | | — | | |
Patents & technologies
|
| | | | 29,610 | | | | | | (3,290) | | | | | | — | | | | | | — | | | | | | 26,320 | | |
Software
|
| | | | 2,028 | | | | | | (243) | | | | | | (492) | | | | | | (1,293) | | | | | | — | | |
Backlog and non-competition agreements
|
| | | | 4,957 | | | | | | (1,651) | | | | | | — | | | | | | — | | | | | | 3,306 | | |
Total intangible assets
|
| | | $ | 186,690 | | | | | $ | (15,952) | | | | | $ | (4,691) | | | | | $ | (27,410) | | | | | $ | 138,637 | | |
Year ended December 31,
|
| |
Estimated
amortization |
| |||
2022
|
| | | $ | 14,706 | | |
2023
|
| | | | 13,056 | | |
2024
|
| | | | 13,056 | | |
2025
|
| | | | 13,056 | | |
2026
|
| | | | 12,899 | | |
Thereafter
|
| | | | 44,268 | | |
Total | | | | $ | 111,041 | | |
Goodwill
|
| |
Baker
|
| |
Blackbird
|
| |
Jupiter
|
| |
Standard
Farms |
| |
Standard
Farms OH |
| |
Total
|
| ||||||||||||||||||
Balance, December 31, 2019
|
| | | $ | 3,752 | | | | | $ | 30,505 | | | | | $ | 93,786 | | | | | $ | 10,306 | | | | | $ | — | | | | | $ | 138,349 | | |
Impairment
|
| | | | (3,752) | | | | | | — | | | | | | (5,399) | | | | | | — | | | | | | — | | | | | | (9,151) | | |
Discontinued operations
|
| | | | — | | | | | | (30,505) | | | | | | — | | | | | | — | | | | | | — | | | | | | (30,505) | | |
Balance, December 31, 2020
|
| | | $ | — | | | | | $ | — | | | | | $ | 88,387 | | | | | $ | 10,306 | | | | | $ | — | | | | | $ | 98,693 | | |
Business acquisitions
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,380 | | | | | | 1,380 | | |
Impairment
|
| | | | — | | | | | | — | | | | | | (25,040) | | | | | | (4,488) | | | | | | — | | | | | | (29,528) | | |
Balance, December 31, 2021
|
| | | $ | — | | | | | $ | — | | | | | $ | 63,347 | | | | | $ | 5,818 | | | | | $ | 1,380 | | | | | $ | 70,545 | | |
| | |
Jupiter
reporting unit |
| |
Standard Farms
reporting unit |
| ||||||
Balance, December 31, 2021 | | | | | | | | | | | | | |
Terminal value growth rate
|
| | | | 3.0% | | | | | | 3.0% | | |
Discount rate
|
| | | | 24.7% | | | | | | 31.5% | | |
Projected revenue growth rate*
|
| | | | 20.2% | | | | | | 33.6% | | |
Fair value less cost to dispose
|
| | | $ | 177,733 | | | | | $ | 38,917 | | |
| | |
Jupiter
reporting unit |
| |
Standard Farms
reporting unit |
| ||||||
Balance, December 31, 2020 | | | | | | | | | | | | | |
Terminal value growth rate
|
| | | | 3.0% | | | | | | 3.0% | | |
Discount rate
|
| | | | 22.5% | | | | | | 21.2% | | |
Projected revenue growth rate*
|
| | | | 24.6% | | | | | | 30.8% | | |
Fair value less cost to dispose
|
| | | $ | 194,361 | | | | | $ | 56,412 | | |
Accumulated impairment
|
| |
Total
|
| |||
Beginning balance, January 1, 2020
|
| | | $ | 498 | | |
Impairment recognized during the year
|
| | | | 9,151 | | |
Closing balance, December 31, 2020
|
| | | $ | 9,649 | | |
Impairment recognized during the year
|
| | | | 29,528 | | |
Closing balance, December 31, 2021
|
| | | $ | 39,177 | | |
Loans receivable
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Teneo Fund SPVi LLC note
|
| | | $ | 5,911 | | | | | $ | 20,541 | | |
Blackbird note (FVTPL)
|
| | | | — | | | | | | 7,128 | | |
Verdant note
|
| | | | — | | | | | | 2,182 | | |
Medical 420 note
|
| | | | 1,410 | | | | | | 1,410 | | |
A&R note
|
| | | | 714 | | | | | | 1,250 | | |
SSZ and Elev8 note
|
| | | | 1,002 | | | | | | 968 | | |
Pure Hana Synergy note
|
| | | | 224 | | | | | | 224 | | |
IESO note
|
| | | | — | | | | | | 161 | | |
Little beach note
|
| | | | 423 | | | | | | — | | |
Total loans receivable
|
| | | | 9,684 | | | | | | 33,864 | | |
Less allowance for expected credit losses
|
| | | | (5,559) | | | | | | (16,721) | | |
Loans receivable, net of expected credit losses
|
| | | | 4,125 | | | | | | 17,143 | | |
Less current portion of loan receivable
|
| | | | (2,453) | | | | | | (2,660) | | |
Loans receivable, long-term
|
| | | $ | 1,672 | | | | | $ | 14,483 | | |
| | |
Years ended
|
| |||||||||
Accounts payable and accrued liabilities
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Accounts Payable
|
| | | $ | 31,979 | | | | | $ | 18,416 | | |
Other Accrued Expenses
|
| | | | 5,746 | | | | | | 5,749 | | |
Accrued Accounts Payable
|
| | | | 5,798 | | | | | | 2,742 | | |
Accrued Interest Expense
|
| | | | 2,752 | | | | | | 2,150 | | |
Accrued Payroll
|
| | | | 2,951 | | | | | | 1,982 | | |
Other Current Payables/Liabilities
|
| | | | 254 | | | | | | 34 | | |
Credit Card Payable
|
| | | | 2 | | | | | | 13 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 49,482 | | | | | $ | 31,086 | | |
| | |
Years ended
|
| |||||||||
Notes payable
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Balance, beginning of year
|
| | | $ | 71,750 | | | | | $ | 65,710 | | |
Proceeds from borrowing
|
| | | | 57,081 | | | | | | — | | |
Accretion of debt discount
|
| | | | 2,667 | | | | | | 2,227 | | |
Repayment of borrowings
|
| | | | (47,973) | | | | | | (516) | | |
Transaction costs related to notes issued
|
| | | | (469) | | | | | | — | | |
Proceeds allocated to warrants
|
| | | | — | | | | | | — | | |
Interest expense
|
| | | | 6,461 | | | | | | 6,994 | | |
Interest paid
|
| | | | (2,904) | | | | | | (2,665) | | |
Notes payable, end of year
|
| | | | 86,613 | | | | | | 71,750 | | |
Less current portion
|
| | | | (40,758) | | | | | | (4,668) | | |
Notes payable, long-term
|
| | | $ | 45,855 | | | | | $ | 67,082 | | |
Year ended December 31,
|
| |
Amount
|
| |||
2022
|
| | | $ | 40,758 | | |
2023
|
| | | | 45,855 | | |
Total | | | | $ | 86,613 | | |
Years ended December 31,
|
| |
2021
|
| |
2020
|
| ||||||
Operating lease cost
|
| | | $ | 1,231 | | | | | $ | 1,062 | | |
Finance lease cost: | | | | | | | | | | | | | |
Amortization of lease assets
|
| | | | 971 | | | | | | 1,472 | | |
Interest on lease liabilities
|
| | | | 493 | | | | | | 611 | | |
Finance lease costs
|
| | | | 1,464 | | | | | | 2,083 | | |
Total lease cost
|
| | | $ | 2,695 | | | | | $ | 3,145 | | |
Year ended December 31,
|
| |
Finance
|
| |
Operating
|
| ||||||
2022
|
| | | $ | 1,414 | | | | | $ | 1,149 | | |
2023
|
| | | | 1,452 | | | | | | 1,180 | | |
2024
|
| | | | 1,489 | | | | | | 1,197 | | |
2025
|
| | | | 1,212 | | | | | | 1,213 | | |
2026
|
| | | | 926 | | | | | | 1,111 | | |
Thereafter
|
| | | | 1,295 | | | | | | 1,294 | | |
Total undiscounted lease liabilites
|
| | | | 7,788 | | | | | | 7,144 | | |
Interest on lease liabilities
|
| | | | (1,514) | | | | | | (1,486) | | |
Total present value of minimum lease payments
|
| | | | 6,274 | | | | | | 5,658 | | |
Lease liability – current portion
|
| | | | (955) | | | | | | (731) | | |
Lease liability
|
| | | $ | 5,319 | | | | | $ | 4,927 | | |
Warrants
|
| | | | | | | |
Weighted Average
Exercise Price ($C) |
| |||
Balance as of December 31, 2019
|
| | | | 76,042,967 | | | | | $ | 2.29 | | |
Exercised
|
| | | | (182,500) | | | | | | 0.33 | | |
Issued
|
| | | | 500,000 | | | | | | 0.33 | | |
Warrants
|
| | | | | | | |
Weighted Average
Exercise Price ($C) |
| |||
Expiration of warrants
|
| | | | (1,798,256) | | | | | | 5.25 | | |
Balance as of December 31, 2020
|
| | | | 74,562,211 | | | | | $ | 0.43 | | |
Exercised
|
| | | | (657,000) | | | | | | 0.33 | | |
Balance as of December 31, 2021
|
| | | | 73,905,211 | | | | | $ | 0.44 | | |
|
Security issued
|
| |
Exercise
price (C$) |
| |
Number of
warrants |
| |
Expiration date
|
| ||||||
Warrants issued as part of debt offering
|
| | | | 0.33 | | | | | | 45,249,520 | | | |
November 1, 2022
|
|
Warrants issued as part of debt offering
|
| | | | 0.39 | | | | | | 18,360,000 | | | |
November 20, 2022
|
|
Consultant warrants
|
| | | | 0.53 | | | | | | 750,000 | | | |
November 22, 2022
|
|
Consultant warrants
|
| | | | 0.33 | | | | | | 500,000 | | | |
January 28, 2023
|
|
Founders separation warrants
|
| | | | 1.05 | | | | | | 9,045,691 | | | |
September 30, 2024
|
|
| | | | | | | | | | | 73,905,211 | | | | | |
|
Exercise price
|
| |
$0.25 – 0.79
|
|
|
Expected dividend yield
|
| |
0%
|
|
|
Risk free interest rate
|
| |
1.55% – 1.62%
|
|
|
Expected life in years
|
| |
2.50 – 3.00
|
|
|
Expected volatility
|
| |
80% – 90%
|
|
| | |
Number of
Restricted Stock Units |
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Unvested as of January 1, 2020
|
| | | | 6,374,246 | | | | | $ | 0.40 | | |
Issued
|
| | | | 1,024,104 | | | | | | 0.29 | | |
Forfeited
|
| | | | — | | | | | | — | | |
Vested
|
| | | | (3,899,246) | | | | | | 0.39 | | |
Unvested as of December 31, 2020
|
| | | | 3,499,104 | | | | | $ | 0.38 | | |
Issued
|
| | | | 5,978,269 | | | | | | 0.38 | | |
Forfeited
|
| | | | (577,942) | | | | | | 0.39 | | |
Vested
|
| | | | (5,272,350) | | | | | | 0.38 | | |
Unvested as of December 31, 2021
|
| | | | 3,627,081 | | | | | $ | 0.37 | | |
Share options
|
| |
Stock options
common shares |
| |
Weighted-
average exercise price |
| |
Weighted-average
remaining contractual life (yrs) |
| ||||||
Balance as of December 31, 2019
|
| | | | 12,525,614 | | | |
US$1.35
|
| | | | 4.66 | | |
Granted
|
| | | | 17,837,463 | | | |
US$0.62
|
| | | | 5.49 | | |
Exercised
|
| | | | (62,100) | | | |
US$0.09
|
| | | | — | | |
Forfeited
|
| | | | (11,159,789) | | | |
US$1.14
|
| | | | 0.55 | | |
Balance as of December 31, 2020
|
| | | | 19,141,188 | | | |
US$0.63
|
| | | | 6.61 | | |
Share options
|
| |
Stock options
common shares |
| |
Weighted-
average exercise price |
| |
Weighted-average
remaining contractual life (yrs) |
| ||||||
Granted
|
| | | | 250,000 | | | |
US$0.49
|
| | | | 0.46 | | |
Exercised
|
| | | | (221,400) | | | |
US$0.06
|
| | | | 0.03 | | |
Forfeited
|
| | | | (2,596,408) | | | |
US$0.53
|
| | | | — | | |
Balance as of December 31, 2021
|
| | | | 16,573,380 | | | |
US$0.63
|
| | | | 5.42 | | |
|
Security issuable
|
| |
Number of
options |
| |
Exercise
price |
| |
Expiration date
|
| |
Options
exercisable |
| ||||||
| | | | | | | | | | | |
February 22, 2022 –
|
| | | | | | |
Legacy employees
|
| | | | 1,754,600 | | | |
US$0.32 – 1.58
|
| |
June 28, 2028
|
| | | | 1,754,600 | | |
2020 employee grant
|
| | | | 9,123,350 | | | |
US$0.30 – 0.48
|
| |
February 28, 2022 –
|
| | | | 3,599,573 | | |
| | | | | | | | | | | |
December 1, 2030
|
| | | | | | |
| | | | | | | | | | | |
February 22, 2022 –
|
| | | | | | |
Other employee grants
|
| | | | 5,695,430 | | | |
US$0.41 – 3.96
|
| |
November 21, 2029
|
| | | | 5,695,430 | | |
Total | | | | | 16,573,380 | | | | | | | | | | | | 11,049,603 | | |
|
Risk free interest rate
|
| |
0.06% – 2.66%
|
|
|
Expected dividend yield
|
| |
0%
|
|
|
Expected volatility
|
| |
63.06% – 166.66%
|
|
|
Expected life in years
|
| |
1.00 – 10.00
|
|
|
Forfeiture rate
|
| |
0%
|
|
| | |
Number of
Performance Stock Units |
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Unvested as of January 1, 2021
|
| | | | — | | | | | $ | — | | |
Issued
|
| | | | 11,843,156 | | | | | | 0.31 | | |
Forfeited
|
| | | | (38,658) | | | | | | 0.21 | | |
Vested
|
| | | | — | | | | | | — | | |
Unvested as of December 31, 2021
|
| | | | 11,804,498 | | | | | $ | 0.31 | | |
PSU Grant Dates
|
| |
Close Price on
Grant Date |
| |
Expiration Date
|
| |
Outstanding (#)
|
| ||||||
June 18th, 2021
|
| | | $ | 0.4941 | | | |
December 31, 2024
|
| | | | 7,487,351 | | |
September 30th, 2021
|
| | | $ | 0.3875 | | | |
December 31, 2024
|
| | | | 2,367,772 | | |
December 19th, 2021
|
| | | $ | 0.2263 | | | |
December 31, 2024
|
| | | | 549,375 | | |
Total | | | | | | | | | | | | | | 10,404,498 | | |
Weighted Average 2021 PSU Valuation Inputs
|
| ||||||
Risk-Free Interest Rate
|
| | | | 0.59% | | |
Dividend Yield
|
| | | | 0.00% | | |
Expected Stock Price Volatility
|
| | | | 104.67% | | |
Expected Life of Awards (Years)
|
| | | | 3.45 | | |
Weighted Average Fair Value
|
| | | $ | 0.28 | | |
| | |
Years ended
|
| |||||||||
Loss per share
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Net loss
|
| | | $ | (35,126) | | | | | $ | (116,418) | | |
Weighted-average number of shares and units outstanding – basic
|
| | | | 370,002,378 | | | | | | 364,562,929 | | |
Loss per share – basic and diluted
|
| | | $ | (0.09) | | | | | $ | (0.32) | | |
Loss per share – basic and diluted, from continuing operations
|
| | | $ | (0.09) | | | | | $ | (0.16) | | |
Loss per share, from discontinued operations
|
| | | $ | — | | | | | $ | (0.15) | | |
Income tax provision
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Current: | | | | | | | | | | | | | |
US Federal
|
| | | $ | (39) | | | | | $ | — | | |
US State
|
| | | | — | | | | | | — | | |
Foreign
|
| | | | — | | | | | | 903 | | |
Deferred | | | | | | | | | | | | | |
US Federal
|
| | | | (9,236) | | | | | | (2,202) | | |
US State
|
| | | | (4,628) | | | | | | 2,995 | | |
Foreign
|
| | | | — | | | | | | — | | |
(Recovery of) provision for income taxes
|
| | | $ | (13,903) | | | | | $ | 1,696 | | |
Income tax provision
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
(Loss) from continuing operations before income taxes
|
| | | $ | (49,029) | | | | | $ | (58,232) | | |
| | | | | 21% | | | | | | 22% | | |
Pre-tax (loss) at statutory rate from continuing operations
|
| | | | (10,356) | | | | | | (12,562) | | |
U.S. State and local taxes
|
| | | | (1,024) | | | | | | (2,501) | | |
IRC Section 280E
|
| | | | 4,133 | | | | | | 4,646 | | |
Goodwill impairment
|
| | | | 2,198 | | | | | | 4,472 | | |
Other impairment
|
| | | | (2,866) | | | | | | — | | |
Change in fair value of warrants
|
| | | | (1,506) | | | | | | — | | |
Stock based compensation
|
| | | | 888 | | | | | | 1,113 | | |
Change in valuation allowance
|
| | | | 1,022 | | | | | | 68 | | |
Return to provision and other
|
| | | | 1,080 | | | | | | 2,702 | | |
Tax rate changes
|
| | | | (7,492) | | | | | | 3,748 | | |
Other
|
| | | | 21 | | | | | | 10 | | |
(Recovery of) provision for income taxes
|
| | | $ | (13,903) | | | | | $ | 1,696 | | |
Deferred tax asset (liability)
|
| |
December 31,
2021 |
| |
December 31,
2020 |
| ||||||
Allowance for doubtful accounts
|
| | | $ | 1,287 | | | | | $ | 4,293 | | |
Lease liabilities
|
| | | | 960 | | | | | | 483 | | |
Acquisition costs
|
| | | | 697 | | | | | | 587 | | |
Fixed assets
|
| | | | (4,264) | | | | | | 2,914 | | |
Accrued payroll
|
| | | | 361 | | | | | | 486 | | |
Other
|
| | | | 290 | | | | | | 277 | | |
Interest expense carryforward
|
| | | | 5,023 | | | | | | 1,944 | | |
Net operating loss carryforwards
|
| | | | 24,436 | | | | | | 16,334 | | |
Capital loss carryforwards
|
| | | | 9,177 | | | | | | 7,603 | | |
Valuation allowance
|
| | | | (29,368) | | | | | | (22,591) | | |
Deferred tax asset recognized
|
| | | | 8,599 | | | | | | 12,330 | | |
Intangible assets
|
| | | | (5,893) | | | | | | (22,571) | | |
Goodwill
|
| | | | (228) | | | | | | (588) | | |
Investment in subsidiary
|
| | | | (2,708) | | | | | | (2,676) | | |
Right of use asset
|
| | | | 274 | | | | | | (335) | | |
Other
|
| | | | (128) | | | | | | (109) | | |
Net deferred tax liability
|
| | | $ | (85) | | | | | $ | (13,949) | | |
Year ended December 31,
|
| |
Amount
|
| |||
2022
|
| | | $ | 434 | | |
2023
|
| | | | 450 | | |
2024
|
| | | | 463 | | |
2025
|
| | | | 477 | | |
2026 and thereafter
|
| | | | 1,520 | | |
Total | | | | $ | 3,344 | | |
| | | | | | | | |
Contractual cash flows
|
| |||||||||||||||||||||
December 31, 2021
|
| |
Carrying amount
|
| |
Total
|
| |
< 6 months
|
| |
6 – 12 months
|
| |
1 – 5 years
|
| |||||||||||||||
Accounts payable and accrued
liabilities |
| | | $ | 49,482 | | | | | $ | (49,482) | | | | | | (40,208) | | | | | | (189) | | | | | | (9,085) | | |
Notes payable
|
| | | | 86,613 | | | | | | (87,105) | | | | | | (10,704) | | | | | | (38,629) | | | | | | (37,772) | | |
Total | | | | $ | 136,095 | | | | | $ | (136,587) | | | | | $ | (50,912) | | | | | $ | (38,818) | | | | | $ | (46,857) | | |
| | |
Year ended December 31, 2021
|
| |||||||||||||||
Nature of collateral
|
| |
Gross amounts
|
| |
Loan losses
|
| |
Net
|
| |||||||||
Security interest in assets of counterparty
|
| | | $ | 8,050 | | | | | $ | (4,556) | | | | |
$
|
3,494
|
| |
Third party guarantee
|
| | | | 1,410 | | | | | | (882) | | | | |
|
528
|
| |
No collateral
|
| | | | 224 | | | | | | (121) | | | | |
|
103
|
| |
Net loans receivable
|
| | | $ | 9,684 | | | | | $ | (5,559) | | | | | $ | 4,125 | | |
| | |
Year ended December 31, 2020
|
| |||||||||||||||
Nature of collateral
|
| |
Gross amounts
|
| |
Loan losses
|
| |
Net
|
| |||||||||
Security interest in assets of counterparty
|
| | | $ | 32,069 | | | | | $ | (15,563) | | | | |
$
|
16,506
|
| |
Third party guarantee
|
| | | | 1,410 | | | | | | (882) | | | | |
|
528
|
| |
No collateral
|
| | | | 385 | | | | | | (276) | | | | |
|
109
|
| |
Net loans receivable
|
| | | $ | 33,864 | | | | | $ | (16,721) | | | | | $ | 17,143 | | |
| | |
Year Ended December 31, 2021
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets and liabilities
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 6,952 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 32,393 | | | | | | — | | | | | | — | | |
Other loans receivable
|
| | | | 4,125 | | | | | | — | | | | | | — | | |
Investments
|
| | | | 102 | | | | | | — | | | | | | 6,596 | | |
Accounts payable and accrued liabilities
|
| | | | 49,482 | | | | | | — | | | | | | — | | |
Warrant liability(1)
|
| | | | — | | | | | | — | | | | | | 2,394 | | |
Notes payable
|
| | | | 86,613 | | | | | | — | | | | | | — | | |
Total | | | | $ | 179,667 | | | | | $ | — | | | | | $ | 8,990 | | |
| | |
Year Ended December 31, 2020
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets and liabilities
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 8,859 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 14,568 | | | | | | — | | | | | | — | | |
Blackbird loan receivable
|
| | | | — | | | | | | — | | | | | | 7,128 | | |
Other loans receivable
|
| | | | 10,015 | | | | | | — | | | | | | — | | |
Investments
|
| | | | — | | | | | | 189 | | | | | | 1,000 | | |
Accounts payable and accrued liabilities
|
| | | | 31,086 | | | | | | — | | | | | | — | | |
Notes payable
|
| | | | 71,750 | | | | | | — | | | | | | — | | |
Total | | | | $ | 136,278 | | | | | $ | 189 | | | | | $ | 8,128 | | |
|
Exercise Price
|
| |
$0.26 – 0.30
|
|
|
Risk-Free Annual Interest Rate
|
| |
0.13% – 0.39%
|
|
|
Expected Share Price Volatility
|
| |
60% – 80%
|
|
|
Expected Life of Warrants
|
| |
0.38 – 0.83 years
|
|
| | |
As of and for the year ended December 31, 2021
|
| |||||||||||||||||||||||||||||||||
| | |
Technology/Distribution
|
| |
Cannabis
|
| |
Accessories
|
| |
Corporate & Elim
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 41,923 | | | | | $ | 161,662 | | | | | $ | — | | | | | $ | — | | | | | $ | 203,585 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (880) | | | | | | — | | | | | | — | | | | | | (880) | | |
Net revenue
|
| | | $ | — | | | | | $ | 41,923 | | | | | $ | 160,782 | | | | | $ | — | | | | | $ | — | | | | | $ | 202,705 | | |
Share-based
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3,804 | | | | | | — | | | | | | 3,804 | | |
Depreciation and amortization
|
| | | | — | | | | | | 2,313 | | | | | | 14,750 | | | | | | 141 | | | | | | 653 | | | | | | 17,857 | | |
Wages and benefits
|
| | | | — | | | | | | 3,775 | | | | | | 4,881 | | | | | | 8,751 | | | | | | — | | | | | | 17,407 | | |
Impairment loss
|
| | | | | | | | | | 4,987 | | | | | | 25,040 | | | | | | 371 | | | | | | — | | | | | | 30,398 | | |
Interest expense
|
| | | | — | | | | | | 660 | | | | | | 424 | | | | | | 9,283 | | | | | | — | | | | | | 10,367 | | |
Loan losses
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4,562 | | | | | | — | | | | | | 4,562 | | |
Net income (loss)
|
| | | | — | | | | | | (3,277) | | | | | | (25,074) | | | | | | (6,207) | | | | | | (568) | | | | | | (35,126) | | |
Total assets
|
| | | | — | | | | | | 125,103 | | | | | | 237,445 | | | | | | 11,530 | | | | | | 7,270 | | | | | | 381,348 | | |
Total liabilities
|
| | | | — | | | | | | 12,856 | | | | | | 61,804 | | | | | | 81,023 | | | | | | — | | | | | | 155,683 | | |
| | |
As of and for the year ended December 31, 2020
|
| |||||||||||||||||||||||||||||||||
| | |
Technology/
Distribution |
| |
Cannabis
|
| |
Accessories
|
| |
Corporate & Elim
|
| |
Other
|
| |
Total
|
| ||||||||||||||||||
Revenue
|
| | | $ | 54 | | | | | $ | 37,901 | | | | | $ | 122,042 | | | | | $ | — | | | | | $ | — | | | | | $ | 159,997 | | |
Inter-segment revenue
|
| | | | — | | | | | | — | | | | | | (1,588) | | | | | | — | | | | | | — | | | | | | (1,588) | | |
Net revenue
|
| | | $ | 54 | | | | | $ | 37,901 | | | | | $ | 120,454 | | | | | $ | — | | | | | $ | — | | | | | $ | 158,409 | | |
Share-based
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
compensation
|
| | | | — | | | | | | — | | | | | | 384 | | | | | | 3,816 | | | | | | — | | | | | | 4,200 | | |
Depreciation and amortization
|
| | | | 898 | | | | | | 2,413 | | | | | | 14,431 | | | | | | — | | | | | | 614 | | | | | | 18,356 | | |
Wages and benefits
|
| | | | 95 | | | | | | 2,478 | | | | | | 3,685 | | | | | | 6,669 | | | | | | — | | | | | | 12,927 | | |
Impairment loss
|
| | | | 6,478 | | | | | | 9,604 | | | | | | 5,399 | | | | | | 2,460 | | | | | | — | | | | | | 23,941 | | |
Interest expense
|
| | | | 184 | | | | | | 744 | | | | | | 180 | | | | | | 8,282 | | | | | | — | | | | | | 9,390 | | |
Loan losses
|
| | | | — | | | | | | 1,158 | | | | | | — | | | | | | 15,258 | | | | | | — | | | | | | 16,416 | | |
Net income (loss) from continued operations
|
| | | | (8,203) | | | | | | (6,981) | | | | | | (19,214) | | | | | | (24,829) | | | | | | (701) | | | | | | (59,928) | | |
Loss on discontinued operations, net of tax
|
| | | | (56,490) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (56,490) | | |
Net income (loss)
|
| | | | (64,693) | | | | | | (6,981) | | | | | | (19,214) | | | | | | (24,829) | | | | | | (701) | | | | | | (116,418) | | |
Total assets
|
| | | | 8,118 | | | | | | 118,980 | | | | | | 249,909 | | | | | | 17,410 | | | | | | 7,657 | | | | | | 402,074 | | |
Total liabilities
|
| | | | (2,376) | | | | | | 17,177 | | | | | | 46,673 | | | | | | 75,904 | | | | | | 11 | | | | | | 137,389 | | |
| | |
Year ended December 31, 2021
|
| | ||||||||||||||||||||
| | |
USA
|
| |
Canada
|
| |
Other
|
| |
Total
|
| ||||||||||||
Revenue
|
| | | $ | 189,194 | | | | | $ | 13,222 | | | | | $ | 289 | | | | | $ | 202,705 | | |
Gross profit
|
| | | | 46,535 | | | | | | 3,555 | | | | | | 113 | | | | | | 50,203 | | |
Total current assets
|
| | | | 100,804 | | | | | | 82 | | | | | | — | | | | | | 100,886 | | |
Total non-current assets
|
| | | | 280,462 | | | | | | — | | | | | | — | | | | | | 280,462 | | |
Total liabilities
|
| | | | 155,674 | | | | | | 9 | | | | | | — | | | | | | 155,683 | | |
| | |
Year ended December 31, 2020
|
| | ||||||||||||||||||||
| | |
USA
|
| |
Canada
|
| |
Other
|
| |
Total
|
| ||||||||||||
Revenue
|
| | | $ | 148,793 | | | | | $ | 9,121 | | | | | $ | 495 | | | | | $ | 158,409 | | |
Gross profit
|
| | | | 43,310 | | | | | | 2,644 | | | | | | 185 | | | | | | 46,139 | | |
Total current assets
|
| | | | 70,488 | | | | | | 73 | | | | | | — | | | | | | 70,561 | | |
Total non-current assets
|
| | | | 330,964 | | | | | | 549 | | | | | | — | | | | | | 331,513 | | |
Total liabilities
|
| | | | 136,695 | | | | | | 694 | | | | | | — | | | | | | 137,389 | | |
| | |
Year ended December 31, 2021
|
| |||||||||||||||||||||
| | |
Technology/Distribution
|
| |
Cannabis
|
| |
Accessories
|
| |
Total
|
| ||||||||||||
Cannabis (ii)
|
| | | $ | — | | | | | $ | 41,923 | | | | | $ | — | | | | | $ | 41,923 | | |
Vaporization and inhalation devices (ii)
|
| | | | — | | | | | | — | | | | | | 160,782 | | | | | | 160,782 | | |
Other (ii)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | $ | 41,923 | | | | | $ | 160,782 | | | | | $ | 202,705 | | |
| | |
Year ended December 31, 2020
|
| |||||||||||||||||||||
| | |
Technology/Distribution
|
| |
Cannabis
|
| |
Accessories
|
| |
Total
|
| ||||||||||||
Cannabis (ii)
|
| | | $ | — | | | | | $ | 37,901 | | | | | $ | — | | | | | $ | 37,901 | | |
Vaporization and inhalation devices (ii)
|
| | | | — | | | | | | — | | | | | | 120,454 | | | | | | 120,454 | | |
Other (ii)
|
| | | | 54 | | | | | | — | | | | | | — | | | | | | 54 | | |
| | | | $ | 54 | | | | | $ | 37,901 | | | | | $ | 120,454 | | | | | $ | 158,409 | | |
| | |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 9,232 | | | | | $ | 6,952 | | |
Trade receivables and others
|
| | | | 28,854 | | | | | | 32,393 | | |
Inventories
|
| | | | 49,614 | | | | | | 55,583 | | |
Loans receivable, current portion
|
| | | | 2,453 | | | | | | 2,453 | | |
Prepaid expenses and other current assets
|
| | | | 2,969 | | | | | | 3,005 | | |
Assets held for sale
|
| | | | 500 | | | | | | 500 | | |
Total current assets
|
| | | | 93,622 | | | | | | 100,886 | | |
Non-current assets | | | | | | | | | | | | | |
Property, plant and equipment, net
|
| | | | 60,200 | | | | | | 62,360 | | |
Right-of-use assets – finance, net
|
| | | | 5,121 | | | | | | 5,379 | | |
Right-of-use assets – operating, net
|
| | | | 4,868 | | | | | | 5,038 | | |
Investments
|
| | | | 6,653 | | | | | | 6,698 | | |
Intangible assets, net
|
| | | | 125,094 | | | | | | 128,770 | | |
Loans receivable
|
| | | | 1,446 | | | | | | 1,672 | | |
Deferred tax asset
|
| | | | 1,746 | | | | | | — | | |
Goodwill
|
| | | | 70,545 | | | | | | 70,545 | | |
TOTAL ASSETS
|
| | | $ | 369,295 | | | | | $ | 381,348 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 45,980 | | | | | $ | 49,482 | | |
Warrant liability
|
| | | | 4,557 | | | | | | 2,394 | | |
Income taxes payable
|
| | | | 407 | | | | | | — | | |
Deferred revenue
|
| | | | 3,591 | | | | | | 5,177 | | |
Finance lease liability, current portion
|
| | | | 988 | | | | | | 955 | | |
Operating lease liability, current portion
|
| | | | 753 | | | | | | 731 | | |
Notes payable, current portion, net of discount
|
| | | | 42,297 | | | | | | 40,758 | | |
Total current liabilities
|
| | | | 98,573 | | | | | | 99,497 | | |
Non-current liabilities | | | | | | | | | | | | | |
Finance lease liability
|
| | | | 5,063 | | | | | | 5,319 | | |
Operating lease liability
|
| | | | 4,728 | | | | | | 4,927 | | |
Notes payable, net of discount
|
| | | | 45,673 | | | | | | 45,855 | | |
Deferred tax liability
|
| | | | — | | | | | | 85 | | |
TOTAL LIABILITIES
|
| | | | 154,037 | | | | | | 155,683 | | |
Shareholders’ equity | | | | | | | | | | | | | |
Common stock, no par value, unlimited shares authorized as of March 31, 2022 and December 31, 2021, 375,303,227 and 374,082,759 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
|
| | | | 856,097 | | | | | | 854,952 | | |
Additional paid-in capital
|
| | | | 224,916 | | | | | | 224,835 | | |
Warrants
|
| | | | 952 | | | | | | 952 | | |
Accumulated other comprehensive income
|
| | | | 1,000 | | | | | | 999 | | |
Accumulated deficit
|
| | | | (867,877) | | | | | | (856,248) | | |
Non-controlling interest
|
| | | | 170 | | | | | | 175 | | |
TOTAL SHAREHOLDERS’ EQUITY
|
| | | | 215,258 | | | | | | 225,665 | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | $ | 369,295 | | | | | $ | 381,348 | | |
| | |
March 31,
2022 |
| |
March 31,
2021 |
| ||||||
Revenues, net
|
| | | $ | 42,352 | | | | | $ | 46,817 | | |
Cost of goods sold
|
| | | | (32,999) | | | | | | (33,272) | | |
Gross profit
|
| | | | 9,353 | | | | | | 13,545 | | |
Operating expenses: | | | | | | | | | | | | | |
Wages and benefits
|
| | | | 5,168 | | | | | | 4,083 | | |
General and administrative
|
| | | | 4,779 | | | | | | 4,317 | | |
Sales and marketing
|
| | | | 407 | | | | | | 155 | | |
Share-based compensation
|
| | | | 1,226 | | | | | | 882 | | |
Depreciation and amortization
|
| | | | 4,558 | | | | | | 4,432 | | |
Impairment loss
|
| | | | 697 | | | | | | — | | |
Total operating expenses
|
| | | | 16,835 | | | | | | 13,869 | | |
Loss from operations
|
| | | | (7,482) | | | | | | (324) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income
|
| | | | 18 | | | | | | 603 | | |
Other income
|
| | | | 3 | | | | | | 44 | | |
Change in fair value of warrant liability
|
| | | | (2,163) | | | | | | (13,916) | | |
Gain (loss) on sale of assets
|
| | | | 1 | | | | | | (67) | | |
Unrealized loss on investment
|
| | | | (45) | | | | | | (705) | | |
Loan receivable losses
|
| | | | (517) | | | | | | — | | |
Loss on termination of lease
|
| | | | — | | | | | | (259) | | |
Interest expense, net
|
| | | | (2,781) | | | | | | (2,455) | | |
Total other income (expense)
|
| | | | (5,484) | | | | | | (16,755) | | |
Loss from operations before income tax and non-controlling interest
|
| | | | (12,966) | | | | | | (17,079) | | |
Income taxes | | | | | | | | | | | | | |
Income tax benefit
|
| | | | 1,332 | | | | | | 22 | | |
Net loss before non-controlling interest
|
| | | | (11,634) | | | | | | (17,057) | | |
Less: Net loss attributable to non-controlling interest
|
| | | | 5 | | | | | | — | | |
Net loss attributable to TILT Holdings Inc.
|
| | | $ | (11,629) | | | | | $ | (17,057) | | |
Other comprehensive (loss) income | | | | | | | | | | | | | |
Net loss
|
| | | $ | (11,634) | | | | | $ | (17,057) | | |
Foreign currency translation differences
|
| | | | 1 | | | | | | (2) | | |
Comprehensive loss before non-controlling interest
|
| | | $ | (11,633) | | | | | $ | (17,059) | | |
Less: Net loss attributable to non-controlling interest
|
| | | | 5 | | | | | | — | | |
Comprehensive loss attributable to TILT Holdings Inc.
|
| | | $ | (11,628) | | | | | $ | (17,059) | | |
Weighted average number of shares outstanding: | | | | | | | | | | | | | |
Basic
|
| | |
|
371,738,863
|
| | | |
|
365,809,870
|
| |
Net loss per common share attributable to TILT Holdings Inc. | | | | | | | | | | | | | |
Basic and diluted
|
| | | $ | (0.03) | | | | | $ | (0.05) | | |
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Warrants
|
| |
Accumulated Other
Comprehensive Income (Loss) |
| |
Accumulated
Deficit |
| |
Non-Controlling
Interest |
| |
Shareholders’
Equity Total |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2021
|
| | | | 367,182,673 | | | | | $ | 851,851 | | | | | $ | 223,499 | | | | | $ | 6,757 | | | | | $ | 1,014 | | | | | $ | (818,436) | | | | | $ | — | | | | | $ | 264,685 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | 625 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 625 | | |
Warrants exercised
|
| | | | 567,000 | | | | | | 149 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 149 | | |
Warrants reclassified to liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | (5,805) | | | | | | — | | | | | | (2,686) | | | | | | — | | | | | | (8,491) | | |
Issuance and vesting of restricted share units
|
| | | | 825,000 | | | | | | 257 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 257 | | |
Comprehensive loss for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2) | | | | | | (17,057) | | | | | | — | | | | | | (17,059) | | |
Balance – March 31, 2021
|
| | | | 368,574,673 | | | | | $ | 852,257 | | | | | $ | 224,124 | | | | | $ | 952 | | | | | $ | 1,012 | | | | | $ | (838,179) | | | | | $ | — | | | | | $ | 240,166 | | |
| | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2022
|
| | | | 374,082,759 | | | | | $ | 854,952 | | | | | $ | 224,835 | | | | | $ | 952 | | | | | $ | 999 | | | | | $ | (856,248) | | | | | $ | 175 | | | | | $ | 225,665 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | 81 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 81 | | |
Issuance and vesting of restricted share units
|
| | | | 1,220,468 | | | | | | 888 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 888 | | |
Shares reserved for contingent consideration
|
| | | | — | | | | | | 257 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 257 | | |
Comprehensive loss for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | | | | (11,629) | | | | | | (5) | | | | | | (11,633) | | |
Balance – March 31, 2022
|
| | | | 375,303,227 | | | | | $ | 856,097 | | | | | $ | 224,916 | | | | | $ | 952 | | | | | $ | 1,000 | | | | | $ | (867,877) | | | | | $ | 170 | | | | | $ | 215,258 | | |
| | |
March 31,
2022 |
| |
March 31,
2021 |
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (11,634) | | | | | $ | (17,057) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Unrealized loss on investments
|
| | | | 45 | | | | | | 705 | | |
(Gain) Loss on disposal of property and other
|
| | | | (1) | | | | | | 47 | | |
Loss on terimination of lease
|
| | | | — | | | | | | 258 | | |
Depreciation and amortization
|
| | | | 5,888 | | | | | | 5,289 | | |
Amortization of operating lease right of use assets
|
| | | | 280 | | | | | | 336 | | |
Change in allowance for doubtful accounts
|
| | | | (115) | | | | | | (2) | | |
Non-cash interest income
|
| | | | (18) | | | | | | (420) | | |
Deferred tax
|
| | | | (1,831) | | | | | | 751 | | |
Share-based compensation
|
| | | | 1,226 | | | | | | 882 | | |
Accretion of debt discount
|
| | | | 771 | | | | | | 583 | | |
Loan receivable losses
|
| | | | 517 | | | | | | — | | |
Impairment loss
|
| | | | 697 | | | | | | — | | |
Change in fair value of derivatives
|
| | | | 2,163 | | | | | | 13,916 | | |
Non-cash interest expense
|
| | | | 1,225 | | | | | | 753 | | |
Net change in working capital items:
|
| | | | | | | | | | | | |
Trade receivables and others, net
|
| | | | 3,654 | | | | | | 871 | | |
Inventories
|
| | | | 5,969 | | | | | | (1,878) | | |
Prepaid expenses and other current assets
|
| | | | 46 | | | | | | 368 | | |
Accounts payable and accrued liabilities
|
| | | | (3,500) | | | | | | (4,038) | | |
Income tax payable
|
| | | | 407 | | | | | | 30 | | |
Operating lease liability
|
| | | | — | | | | | | (204) | | |
Deferred revenue
|
| | | | (1,586) | | | | | | 1,551 | | |
Net cash provided by operating activities
|
| | | | 4,203 | | | | | | 2,741 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of property, plant, and equipment
|
| | | | (491) | | | | | | (1,302) | | |
Proceeds from sale of property
|
| | | | 3 | | | | | | — | | |
Net repayment (advances) on loan receivables
|
| | | | (287) | | | | | | 952 | | |
Cash acquired in acquisition
|
| | | | — | | | | | | 21 | | |
Net cash (used in) investing activities
|
| | | | (775) | | | | | | (329) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Payments on lease liability
|
| | | | (632) | | | | | | (731) | | |
Principal payments on notes payable
|
| | | | (32,529) | | | | | | (300) | | |
Proceeds from notes payable
|
| | | | 32,012 | | | | | | — | | |
Proceeds from options and warrants exercised
|
| | | | — | | | | | | 149 | | |
Net cash (used in) financing activities
|
| | | | (1,149) | | | | | | (882) | | |
Effect of foreign exchange on cash and cash equivalents
|
| | | | 1 | | | | | | (2) | | |
Net change in cash and cash equivalents
|
| | | | 2,280 | | | | | | 1,528 | | |
Cash and cash equivalents, beginning of year
|
| | | | 6,952 | | | | | | 8,859 | | |
Cash and cash equivalents, end of year
|
| | | $ | 9,232 | | | | | $ | 10,387 | | |
Supplemental disclosure of cash flow information | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 1,044 | | | | | $ | 855 | | |
Other non-cash investing and financing activities | | | | | | | | | | | | | |
Additions to rights of use assets
|
| | | $ | — | | | | | $ | 199 | | |
| Consideration | | | | | | | |
|
Settlement of pre-existing indebtedness
|
| | | $ | 7,550 | | |
|
Fair value of consideration exchanged
|
| | | | | | |
| Recognized amounts of identifiable assets acquired and liabiliteis assumed: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 21 | | |
|
Trade receivables
|
| | | | 10 | | |
|
Inventory
|
| | | | 502 | | |
|
Prepaid expenses and other current assets
|
| | | | 29 | | |
|
Property, plant and equipment
|
| | | | 1,935 | | |
|
Intangible assets:
|
| | | | | | |
|
License
|
| | | | 3,890 | | |
|
Right of use assets
|
| | | | 120 | | |
|
Goodwill
|
| | | | 1,380 | | |
|
Accounts payable and other current liabilities
|
| | | | (204) | | |
|
Lease liabilities
|
| | | | (133) | | |
|
Identifiable net assets
|
| | | $ | 7,550 | | |
| Consideration: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 400 | | |
|
Shares issued upon issuance
|
| | | | 351 | | |
|
Fair value of consideration exchanged
|
| | | $ | 751 | | |
|
Non-controlling interest
|
| | | $ | 175 | | |
| Recognized amounts of identifiable assets acquired and liabilities assumed: | | | | | | | |
|
Management agreement
|
| | | $ | 926 | | |
|
Total net assets acquired
|
| | | $ | 926 | | |
| | |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Raw Material – cannabis plants
|
| | | $ | 3,465 | | | | | $ | 3,206 | | |
Raw Material – other materials
|
| | | | 1,302 | | | | | | 1,116 | | |
Work in progress
|
| | | | 5,684 | | | | | | 6,327 | | |
Finished goods
|
| | | | 37,656 | | | | | | 43,776 | | |
Supplies and accessories
|
| | | | 1,507 | | | | | | 1,158 | | |
Total Inventory
|
| | | $ | 49,614 | | | | | $ | 55,583 | | |
| | |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Land
|
| | | $ | 169 | | | | | $ | 169 | | |
Land improvements
|
| | | | 460 | | | | | | 460 | | |
Machinery & equipment
|
| | | | 12,170 | | | | | | 12,450 | | |
Furniture & fixtures
|
| | | | 788 | | | | | | 788 | | |
Buildings
|
| | | | 6,891 | | | | | | 6,845 | | |
Greenhouse-agricultural structure
|
| | | | 8,195 | | | | | | 8,195 | | |
Leasehold improvements
|
| | | | 46,689 | | | | | | 46,587 | | |
Construction in progress
|
| | | | 3,083 | | | | | | 3,391 | | |
Autos & trucks
|
| | | | 256 | | | | | | 214 | | |
Total cost
|
| | | | 78,701 | | | | | | 79,099 | | |
Less: accumulated depreciation
|
| | | | (18,501) | | | | | | (16,739) | | |
Total property, plant and equipment
|
| | | $ | 60,200 | | | | | $ | 62,360 | | |
Investment
|
| |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Investment in HERBL, Inc.
|
| | | $ | 6,400 | | | | | $ | 6,400 | | |
Investment in Big Toe Ventures LLC
|
| | | | 196 | | | | | | 196 | | |
Investment in Akerna
|
| | | | 57 | | | | | | 102 | | |
Total Investments
|
| | | | 6,653 | | | | | | 6,698 | | |
Intangible assets
|
| |
Net Balance
12/31/2021 |
| |
Business
acquisitions |
| |
Amortization
Expense |
| |
Impairment
|
| |
Net Balance
3/31/2022 |
| |||||||||||||||
Customer relationships
|
| | | $ | 65,207 | | | | | $ | — | | | | | $ | (1,674) | | | | | $ | — | | | | | $ | 63,533 | | |
Trademarks
|
| | | | 20,159 | | | | | | — | | | | | | (737) | | | | | | — | | | | | | 19,422 | | |
License rights(1)
|
| | | | 17,836 | | | | | | — | | | | | | (4) | | | | | | — | | | | | | 17,832 | | |
Management agreements
|
| | | | 883 | | | | | | — | | | | | | (25) | | | | | | — | | | | | | 858 | | |
Patents & technologies
|
| | | | 23,030 | | | | | | — | | | | | | (823) | | | | | | — | | | | | | 22,207 | | |
Backlog and non-competition agreements
|
| | | | 1,655 | | | | | | — | | | | | | (413) | | | | | | — | | | | | | 1,242 | | |
Total intangible assets
|
| | | $ | 128,770 | | | | | $ | — | | | | | $ | (3,676) | | | | | $ | — | | | | | $ | 125,094 | | |
Intangible assets
|
| |
Net Balance
12/31/2020 |
| |
Business
acquisitions |
| |
Amortization
Expense |
| |
Impairment
|
| |
Net Balance
12/31/2021 |
| |||||||||||||||
Customer relationships
|
| | | $ | 71,905 | | | | | $ | — | | | | | $ | (6,698) | | | | | $ | — | | | | | $ | 65,207 | | |
Trademarks
|
| | | | 23,106 | | | | | | — | | | | | | (2,947) | | | | | | — | | | | | | 20,159 | | |
License rights(1)
|
| | | | 14,000 | | | | | | 3,890 | | | | | | (19) | | | | | | (35) | | | | | | 17,836 | | |
Management agreements
|
| | | | — | | | | | | 926 | | | | | | (43) | | | | | | — | | | | | | 883 | | |
Patents & technologies
|
| | | | 26,320 | | | | | | — | | | | | | (3,290) | | | | | | — | | | | | | 23,030 | | |
Backlog and non-competition agreements
|
| | | | 3,306 | | | | | | — | | | | | | (1,651) | | | | | | — | | | | | | 1,655 | | |
Total intangible assets
|
| | | $ | 138,637 | | | | | $ | 4,816 | | | | | $ | (14,648) | | | | | $ | (35) | | | | | $ | 128,770 | | |
Years ended December 31,
|
| |
Estimated
amortization |
| |||
Remainder of 2022
|
| | | $ | 11,030 | | |
2023
|
| | | | 13,056 | | |
2024
|
| | | | 13,056 | | |
2025
|
| | | | 13,056 | | |
2026
|
| | | | 12,899 | | |
Thereafter
|
| | | | 44,268 | | |
| | | | $ | 107,365 | | |
Reporting Unit
|
| |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Jupiter
|
| | | $ | 63,347 | | | | | $ | 63,347 | | |
Standard Farms
|
| | | | 5,818 | | | | | | 5,818 | | |
Standard Farms OH
|
| | | | 1,380 | | | | | | 1,380 | | |
Goodwill | | | | $ | 70,545 | | | | | $ | 70,545 | | |
Loans receivable
|
| |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Teneo Fund SPVi LLC note
|
| | | $ | 5,911 | | | | | $ | 5,911 | | |
Pharma EU, LLC note
|
| | | | 1,410 | | | | | | 1,410 | | |
A&R note
|
| | | | 714 | | | | | | 714 | | |
SSZ and Elev8 note
|
| | | | 1,002 | | | | | | 1,002 | | |
Pure Hana Synergy note
|
| | | | 224 | | | | | | 224 | | |
Little Beach Harvest note
|
| | | | 714 | | | | | | 423 | | |
Total loans receivable
|
| | | $ | 9,975 | | | | | $ | 9,684 | | |
Less allowance for expected credit losses
|
| | | | (6,076) | | | | | | (5,559) | | |
Loans receivable, net of expected credit losses
|
| | | | 3,899 | | | | | | 4,125 | | |
Less current portion of loan receivable
|
| | | | (2,453) | | | | | | (2,453) | | |
Loans receivable, long-term
|
| | | $ | 1,446 | | | | | $ | 1,672 | | |
Accounts payable and accrued liabilities
|
| |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Accounts payable
|
| | | $ | 30,258 | | | | | $ | 31,979 | | |
Other accrued expenses
|
| | | | 6,495 | | | | | | 5,746 | | |
Accrued accounts payable
|
| | | | 2,655 | | | | | | 5,798 | | |
Accrued interest expense
|
| | | | 2,820 | | | | | | 2,752 | | |
Accrued payroll
|
| | | | 3,531 | | | | | | 2,951 | | |
Other current payables/liabilities
|
| | | | 221 | | | | | | 254 | | |
Credit card payable
|
| | | | — | | | | | | 2 | | |
Total accounts payable and accrued liabilities
|
| | | $ | 45,980 | | | | | $ | 49,482 | | |
Notes payable
|
| |
March 31,
2022 |
| |
December 31,
2021 |
| ||||||
Balance, beginning of year
|
| | | $ | 86,613 | | | | | $ | 71,750 | | |
Proceeds from borrowing
|
| | | | 32,012 | | | | | | 57,081 | | |
Accretion of debt discount
|
| | | | 771 | | | | | | 2,667 | | |
Repayment of borrowings
|
| | | | (32,339) | | | | | | (47,973) | | |
Transaction costs related to notes issued
|
| | | | — | | | | | | (469) | | |
Interest expense
|
| | | | 1,835 | | | | | | 6,461 | | |
Interest paid
|
| | | | (922) | | | | | | (2,904) | | |
Notes payable, end of period
|
| | | | 87,970 | | | | | | 86,613 | | |
Less current portion
|
| | | | (42,297) | | | | | | (40,758) | | |
Notes payable, long-term
|
| | | $ | 45,673 | | | | | $ | 45,855 | | |
Year ended December 31,
|
| |
Amount
|
| |||
Remainder of 2022
|
| | | $ | 42,297 | | |
2023
|
| | | | 45,673 | | |
Total
|
| | | $ | 87,970 | | |
| | |
March 31,
2022 |
| |
March 31,
2021 |
| ||||||
Operating lease cost
|
| | | $ | 280 | | | | | $ | 336 | | |
Finance lease cost: | | | | | | | | | | | | | |
Amortization of lease assets
|
| | | | 258 | | | | | | 233 | | |
Interest on lease liabilities
|
| | | | 122 | | | | | | 123 | | |
Finance lease costs
|
| | | | 380 | | | | | | 356 | | |
Total lease cost
|
| | | $ | 660 | | | | | $ | 692 | | |
Year ended December 31,
|
| |
Finance
|
| |
Operating
|
| ||||||
Remainder of 2022
|
| | | $ | 1,069 | | | | | $ | 864 | | |
2023
|
| | | | 1,452 | | | | | | 1,180 | | |
2024
|
| | | | 1,489 | | | | | | 1,197 | | |
2025
|
| | | | 1,212 | | | | | | 1,213 | | |
2026
|
| | | | 926 | | | | | | 1,111 | | |
Thereafter
|
| | | | 1,294 | | | | | | 1,292 | | |
Total undiscounted lease liabilites
|
| | | | 7,442 | | | | | | 6,857 | | |
Interest on lease liabilities
|
| | | | (1,391) | | | | | | (1,376) | | |
Total present value of minimum lease payments
|
| | | | 6,051 | | | | | | 5,481 | | |
Lease liability – current portion
|
| | | | (988) | | | | | | (753) | | |
Lease liability
|
| | | $ | 5,063 | | | | | $ | 4,728 | | |
Warrants
|
| |
Number of
warrants |
| |
Weighted-average
exercise price |
| |||
Balance as of January 1, 2022
|
| | | | 73,905,211 | | | |
CAD$0.44
|
|
Exercised
|
| | | | — | | | |
—
|
|
Balance as of March 31, 2022
|
| | | | 73,905,211 | | | |
CAD$0.44
|
|
Security issued
|
| |
Exercise
price (C$) |
| |
Number of
warrants |
| |
Expiration date
|
| ||||||
Warrants issued as part of debt offering
|
| | | | 0.33 | | | | | | 45,249,520 | | | |
November 1, 2022
|
|
Warrants issued as part of debt offering
|
| | | | 0.39 | | | | | | 18,360,000 | | | |
November 20, 2022
|
|
Consultant warrants
|
| | | | 0.53 | | | | | | 750,000 | | | |
November 22, 2022
|
|
Consultant warrants
|
| | | | 0.33 | | | | | | 500,000 | | | |
January 28, 2023
|
|
Founders separation warrants
|
| | | | 1.05 | | | | | | 9,045,691 | | | |
September 30, 2024
|
|
| | | | | | | | | | | 73,905,211 | | | | | |
Restricted stock units
|
| |
Number of
Restricted Stock Units |
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Unvested as of January 1, 2022
|
| | | | 3,627,081 | | | | | | 0.37 | | |
Forfeited
|
| | | | (48,582) | | | | | | 0.33 | | |
Vested
|
| | | | (520,468) | | | | | | 0.33 | | |
Unvested as of March 31, 2022
|
| | | | 3,058,031 | | | | | $ | 0.38 | | |
Share options
|
| |
Stock options
common shares |
| |
Weighted-
average exercise price |
| |
Weighted-average
remaining contractual life (yrs) |
| |||||||||
Balance as of January 1, 2022
|
| | | | 16,573,380 | | | | | US | $0.63 | | | | | | 5.42 | | |
Forfeited
|
| | | | (3,484,588) | | | | | US | $0.90 | | | | | | — | | |
Balance as of March 31, 2022
|
| | | | 13,088,792 | | | | | US | $0.56 | | | | | | 6.28 | | |
Security issuable
|
| |
Number of
options |
| |
Exercise
price |
| |
Expiration date
|
| |
Options
exercisable |
| ||||||
Legacy employees
|
| | | | 190,000 | | | |
US$1.58
|
| |
June 28, 2028
|
| | | | 190,000 | | |
2020 employee grant
|
| | | | 8,566,194 | | | |
US$0.30-0.48
|
| |
February 28, 2022 –
|
| | | | 3,542,842 | | |
| | | | | | | | | | | |
December 1, 2030
|
| | | | | | |
Other employee grants
|
| | | | 4,332,598 | | | |
US$0.41-3.96
|
| |
June 17, 2022 –
November 21, 2029 |
| | | | 4,332,598 | | |
Total
|
| | | | 13,088,792 | | | | | | | | | | | | 8,065,440 | | |
Performance Stock Units
|
| |
Number of
Performance Stock Units |
| |
Weighted Average
Grant Date Fair Value |
| ||||||
Unvested as of January 1, 2022
|
| | | | 11,804,498 | | | | | $ | 0.31 | | |
Issued
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (7,198) | | | | | | 0.16 | | |
Vested
|
| | | | (700,000) | | | | | | 0.51 | | |
Unvested as of March 31, 2022
|
| | | | 11,097,300 | | | | | | 0.29 | | |
PSU Grant Dates
|
| |
Close Price on
Grant Date |
| |
Expiration Date
|
| |
Outstanding (#)
|
| ||||||
June 18th, 2021
|
| | | $ | 0.49 | | | |
December 31, 2024
|
| | | | 7,487,351 | | |
September 30th, 2021
|
| | | $ | 0.39 | | | |
December 31, 2024
|
| | | | 2,367,772 | | |
December 19th, 2021
|
| | | $ | 0.23 | | | |
December 31, 2024
|
| | | | 549,375 | | |
Total | | | | | | | | | | | | | | 10,404,498 | | |
Loss per share
|
| |
March 31, 2022
|
| |
March 31, 2021
|
| ||||||
Net loss attributable to TILT
|
| | | $ | (11,629) | | | | | $ | (17,057) | | |
Weighted-average number of shares and units outstanding – basic and diluted
|
| | | | 371,738,863 | | | | | | 365,809,870 | | |
Loss per share – basic and diluted
|
| | | $ | (0.03) | | | | | $ | (0.05) | | |
| | |
March 31, 2022
|
| |
March 31, 2021
|
| ||||||
Loss before Income Taxes
|
| | | $ | (12,966) | | | | | $ | (17,079) | | |
Income tax benefit
|
| | | | 1,332 | | | | | | 22 | | |
Effective Tax rate
|
| | | | -10.27% | | | | | | -0.13% | | |
Year ended December 31,
|
| |
Amount
|
| |||
Remainder of 2022
|
| | | $ | 325 | | |
2023
|
| | | | 450 | | |
2024
|
| | | | 463 | | |
2025
|
| | | | 477 | | |
2026 and thereafter
|
| | | | 1,520 | | |
Total | | | | $ | 3,235 | | |
| | |
Carrying
amount |
| |
Contractual cash flows
|
| ||||||||||||||||||||||||
March 31, 2022
|
| |
Total
|
| |
< 6 months
|
| |
6 – 12 months
|
| |
1 – 5 years
|
| ||||||||||||||||||
Accounts payable and accrued liabilities
|
| | | $ | 45,980 | | | | | $ | (45,980) | | | | | $ | (36,711) | | | | | $ | (184) | | | | | $ | (9,085) | | |
Notes payable
|
| | | | 87,970 | | | | | | (86,373) | | | | | | (11,604) | | | | | | (37,927) | | | | | | (36,842) | | |
Total | | | | $ | 133,950 | | | | | $ | (132,353) | | | | | $ | (48,315) | | | | | $ | (38,111) | | | | | $ | (45,927) | | |
| | |
As of March 31, 2022
|
| |||||||||||||||
Nature of collateral
|
| |
Gross amounts
|
| |
Loan losses
|
| |
Net
|
| |||||||||
Security interest in assets of counterparty
|
| | | $ | 8,341 | | | | | $ | (5,008) | | | | |
$
|
3,333
|
| |
Third party guarantee
|
| | | | 1,410 | | | | | | (882) | | | | |
|
528
|
| |
No collateral
|
| | | | 224 | | | | | | (186) | | | | |
|
38
|
| |
Net loans receivable
|
| | | $ | 9,975 | | | | | $ | (6,076) | | | | | $ | 3,899 | | |
| | |
As of December 31, 2021
|
| |||||||||||||||
Nature of collateral
|
| |
Gross amounts
|
| |
Loan losses
|
| |
Net
|
| |||||||||
Security interest in assets of counterparty
|
| | | $ | 8,050 | | | | | $ | (4,556) | | | | |
$
|
3,494
|
| |
Third party guarantee
|
| | | | 1,410 | | | | | | (882) | | | | |
|
528
|
| |
No collateral
|
| | | | 224 | | | | | | (121) | | | | |
|
103
|
| |
Net loans receivable
|
| | | $ | 9,684 | | | | | $ | (5,559) | | | | | $ | 4,125 | | |
| | |
As of March 31, 2022
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 9,232 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 28,854 | | | | | | — | | | | | | — | | |
Other loans receivable
|
| | | | 3,899 | | | | | | — | | | | | | — | | |
Investments
|
| | | | 57 | | | | | | — | | | | | | 6,596 | | |
Accounts payable and accrued liabilities
|
| | | | 45,980 | | | | | | — | | | | | | — | | |
Warrant liability(1)
|
| | | | — | | | | | | — | | | | | | 4,557 | | |
Notes payable
|
| | | | 87,970 | | | | | | — | | | | | | — | | |
Total | | | | $ | 175,992 | | | | | $ | — | | | | | $ | 11,153 | | |
| | |
As of December 31, 2021
|
| |||||||||||||||
| | |
Fair value hierarchy
|
| |||||||||||||||
Fair value of assets
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 6,952 | | | | | $ | — | | | | | $ | — | | |
Trade receivables and others
|
| | | | 32,393 | | | | | | — | | | | | | — | | |
Other loans receivable
|
| | | | 4,125 | | | | | | — | | | | | | — | | |
Investments
|
| | | | 102 | | | | | | — | | | | | | 6,596 | | |
Accounts payable and accrued liabilities
|
| | | | 49,482 | | | | | | — | | | | | | — | | |
Warrant liability(1)
|
| | | | — | | | | | | — | | | | | | 2,394 | | |
Notes payable
|
| | | | 86,613 | | | | | | — | | | | | | — | | |
Total | | | | $ | 179,667 | | | | | $ | — | | | | | $ | 8,990 | | |
|
Exercise price
|
| |
$0.26 – 0.30
|
|
|
Risk free interest rate
|
| |
1.06%
|
|
|
Expected Share Price Volatility
|
| |
67% – 69%
|
|
|
Expected Life of Warrant (years)
|
| |
0.58 – 0.83
|
|
| | |
For the three months ended March 31, 2022
|
| |||||||||||||||||||||||||||
| | |
Cannabis
|
| |
Accessories
|
| |
Corporate & Elim
|
| |
Other
|
| |
Total
|
| |||||||||||||||
Revenue
|
| | | $ | 11,259 | | | | | $ | 31,624 | | | | | $ | — | | | | | $ | — | | | | | $ | 42,883 | | |
Inter-segment revenue
|
| | | | — | | | | | | (531) | | | | | | — | | | | | | — | | | | | | (531) | | |
Net revenue
|
| | | $ | 11,259 | | | | | $ | 31,093 | | | | | $ | — | | | | | $ | — | | | | | $ | 42,352 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | 969 | | | | | | 257 | | | | | | 1,226 | | |
Depreciation and amortization
|
| | | | 648 | | | | | | 3,700 | | | | | | 14 | | | | | | 196 | | | | | | 4,558 | | |
Wages and benefits
|
| | | | 1,532 | | | | | | 1,168 | | | | | | 2,468 | | | | | | — | | | | | | 5,168 | | |
Impairment loss
|
| | | | 697 | | | | | | — | | | | | | — | | | | | | — | | | | | | 697 | | |
Interest expense
|
| | | | 87 | | | | | | 238 | | | | | | 2,456 | | | | | | — | | | | | | 2,781 | | |
Loan losses
|
| | | | — | | | | | | — | | | | | | 517 | | | | | | — | | | | | | 517 | | |
Net (loss)
|
| | | | (1,221) | | | | | | (4,701) | | | | | | (5,380) | | | | | | (332) | | | | | | (11,634) | | |
| | |
For the three months ended March 31, 2021
|
| |||||||||||||||||||||||||||
| | |
Cannabis
|
| |
Accessories
|
| |
Corporate & Elim
|
| |
Other
|
| |
Total
|
| |||||||||||||||
Revenue
|
| | | $ | 11,734 | | | | | $ | 35,301 | | | | | $ | — | | | | | $ | — | | | | | $ | 47,035 | | |
Inter-segment revenue
|
| | | | — | | | | | | (218) | | | | | | — | | | | | | — | | | | | | (218) | | |
Net revenue
|
| | | $ | 11,734 | | | | | $ | 35,083 | | | | | $ | — | | | | | $ | — | | | | | $ | 46,817 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | 882 | | | | | | — | | | | | | 882 | | |
Depreciation and amortization
|
| | | | 560 | | | | | | 3,667 | | | | | | 50 | | | | | | 155 | | | | | | 4,432 | | |
Wages and benefits
|
| | | | 814 | | | | | | 1,180 | | | | | | 2,089 | | | | | | — | | | | | | 4,083 | | |
Interest Expense
|
| | | | 394 | | | | | | 43 | | | | | | 2,018 | | | | | | — | | | | | | 2,455 | | |
Net income (loss)
|
| | | | 1,983 | | | | | | (1,563) | | | | | | (17,447) | | | | | | (30) | | | | | | (17,057) | | |
| | |
Three months ended March 31, 2022
|
| |||||||||||||||||||||
| | |
USA
|
| |
Canada
|
| |
Other
|
| |
Total
|
| ||||||||||||
Revenue
|
| | | $ | 39,907 | | | | | $ | 2,295 | | | | | $ | 150 | | | | | $ | 42,352 | | |
Gross profit
|
| | | | 8,627 | | | | | | 669 | | | | | | 57 | | | | | | 9,353 | | |
| | |
Three months ended March 31, 2021
|
| |||||||||||||||||||||
| | |
USA
|
| |
Canada
|
| |
Other
|
| |
Total
|
| ||||||||||||
Revenue
|
| | | $ | 44,496 | | | | | $ | 2,239 | | | | | $ | 82 | | | | | $ | 46,817 | | |
Gross profit
|
| | | | 13,220 | | | | | | 260 | | | | | | 65 | | | | | | 13,545 | | |
| | |
Three months ended March 31, 2022
|
| |||||||||||||||||||||||||||
| | |
Cannabis
|
| |
Accessories
|
| |
Corporate/Elim
|
| |
Other
|
| |
Total
|
| |||||||||||||||
Cannabis (ii)
|
| | | $ | 11,259 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 11,259 | | |
Vaporization and inhalation devices (ii)
|
| | | | — | | | | | | 31,093 | | | | | | — | | | | | | — | | | | | | 31,093 | | |
| | | | $ | 11,259 | | | | | $ | 31,093 | | | | | $ | — | | | | | $ | — | | | | | $ | 42,352 | | |
| | |
Three months ended March 31, 2021
|
| |||||||||||||||||||||||||||
| | |
Cannabis
|
| |
Accessories
|
| |
Corporate/Elim
|
| |
Other
|
| |
Total
|
| |||||||||||||||
Cannabis (ii)
|
| | | $ | 11,734 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 11,734 | | |
Vaporization and inhalation devices (ii)
|
| | | | — | | | | | | 35,083 | | | | | | — | | | | | | — | | | | | | 35,083 | | |
| | | | $ | 11,734 | | | | | $ | 35,083 | | | | | $ | — | | | | | $ | — | | | | | $ | 46,817 | | |
Exhibit 4.2
WARRANT CERTIFICATE
the warrants evidenced hereby are EXERCISABLE ON OR BEFORE 5:00 PM, VANCOUVER TIME, On November 22, 2022, AFTER WHICH TIME THESE WARRANTS SHALL BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN THEM UNDER REGULATION S PROMULGATED PURSUANT TO THE U.S. SECURITIES ACT.
SERIES 1 2019 WARRANTS TO PURCHASE COMMON SHARES
OF
Tilt holdings inc.
Certificate Number 42 | Number of Warrants represented by this certificate – 750,000 |
THIS CERTIFIES THAT, for value received, Jane Batzofin, is entitled, at any time prior to the Expiry Time, to purchase, at the Exercise Price, one Share of the Company, for each Warrant evidenced hereby, by surrendering to the Company at its principal office at 745 Thurlow Street, #2400 Vancouver, British Columbia, V6C 0C5, this Warrant Certificate, together with a Subscription Form, duly completed and executed, and either (i) cash, certified cheque, money order or bank draft in lawful money of Canada payable to or to the order of the Company for the amount equal to the Exercise Price per Share multiplied by the number of Shares subscribed for or (ii) notice of a cashless exercise, on and subject to the terms and conditions set forth below.
Nothing contained herein shall confer any right upon the Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant Certificate and the Warrants represented hereby, and all rights hereunder shall be void and of no value.
1. | Definitions |
In this Warrant Certificate, including the preamble, unless there is something in the subject matter or context inconsistent therewith, the following expressions shall have the following meanings:
(a) | “Business Day” means a day which is not a Saturday, Sunday, or a civic or statutory holiday in the City of Vancouver, British Columbia, Canada; |
(b) | “Company” means TILT Holdings, Inc., a corporation existing under the laws of British Columbia, and its successors and assigns; |
(c) | “Current Market Price” at any date, means the price per Share equal to the weighted average of the sale prices per Share at which the Shares have traded (i) on the Exchange, or (ii) if the Shares are not listed on the Exchange, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any 5 consecutive trading days selected by the Company commencing not earlier than 20 trading days and ending no later than 3 trading days before such date; provided, however, if the Shares are not listed on any exchange or on the over-the-counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Share during such period by the total number of Shares sold during such period; |
(d) | “Exchange” means the Canadian Securities Exchange; |
(e) | “Exercise Price” means $0.53 in Canadian funds per Share, unless such price shall have been adjusted in accordance with the provisions of Section 13, in which case it shall mean the adjusted price in effect at such time; |
(f) | “Expiry Time” means 5:00 p.m., Vancouver time, on November 22, 2022; |
(g) | “Form of Transfer” means the form of transfer annexed hereto as Schedule “B”; |
(h) | “Holder” means the registered holder of this Warrant Certificate; |
(i) | “Issuance Date” means the date of issue of the Warrants; |
(j) | “person” means an individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof; |
(k) | “Series 1 2019 Warrants” means the warrants issued by the Company in connection with the closing of a private placement financing of $25,600,000 USD on November 4, 2019. |
(l) | “Share” means a fully paid and non-assessable common share of the Company (such common shares of the Company, collectively, the “Shares”); |
(m) | “Subscription Form” means the form of subscription annexed hereto as Schedule ”A”; |
(n) | “this Warrant Certificate”, “herein”, “hereby”, “hereof”, “hereto”, “hereunder” and similar expressions mean or refer to this Warrant Certificate and any deed or instrument supplemental or ancillary thereto and any schedules hereto or thereto and not to any particular article, section, subsection, clause, subclause or other portion hereof; and |
(o) | “Warrant” or “Warrants” means the right to acquire Shares evidenced hereby. |
2. | Expiry Time |
After the Expiry Time, all rights under any Warrants evidenced hereby, in respect of which the right of subscription and purchase herein provided for shall not theretofore have been exercised, shall wholly cease and terminate and such Warrants and this Warrant Certificate shall be void and of no value or effect.
3. | [Intentionally Omitted] |
4. | Exercise Procedure |
(a) | The Holder may exercise the right of purchase herein provided for by surrendering or delivering to the Company prior to the Expiry Time at its principal office: |
(i) | this Warrant Certificate, with the Subscription Form duly completed and executed by the Holder or its legal representative or attorney, duly appointed by an instrument in writing in form and manner satisfactory to the Company; and |
(ii) | either (A) cash, certified cheque, money order or bank draft payable to or to the order of the Company in lawful money of Canada at par in the City of British Columbia in an amount equal to the Exercise Price multiplied by the number of Shares for which subscription is being made or (B) notice that the Holder elects to effect a cashless exercise as contemplated by Section 4(b). |
(b) | This Warrant Certificate may be exercised, in whole or in part, by surrender of this Warrant Certificate without payment to the Company of any other consideration, commission or remuneration, by election of the cashless exercise option on the Subscription Form. In the event of such exercise, the number of Shares issuable upon the exercise of this Warrant Certificate shall be reduced and the Company shall issue to the Holder a number of Shares computed using the following formula: |
Y (A - B)
X = A
Where: |
X -- | The number of Shares to be issued to the Holder upon full exercise. |
Y -- | The number of Shares issuable upon exercise of this Warrant Certificate in accordance with its terms by means of a cash exercise rather than a cashless exercise. |
A -- | The Fair Market Value of one Share (at the date of such calculation). |
B-- | The Exercise Price (as adjusted to the date of such calculation). |
For purposes of this Section 4(b), the “Fair Market Value” of one Share on any date in question shall be the closing sale price of a Share on the Exchange (or the other principal stock exchange or stock market on which the Shares are traded at such time, if applicable) or, if the Shares are not traded on any such principal stock exchange or stock market at such time, the average of the high and low closing bid and ask prices of a Share on any over-the-counter market on which the Shares are traded on the Business Day immediately preceding such date (or if there is not trading on such date, on the next preceding Business Day on which there was trading in the Shares), as quoted in The Globe and Mail. If the Shares are not listed or qualified for trading on any stock exchange, stock market or over-the-counter market at such time, then the Fair Market Value shall be determined in good faith by the members of the board of directors of the Company. In connection with any cashless exercise, no cash or other consideration will be paid by the Holder in connection with such exercise other than the surrender of this Warrant Certificate itself, and no commission or other remuneration will be paid or given by the Holder or the Company in connection with such exercise. On any partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant Certificate of like tenor, in the name of the Holder hereof or as the Holder (upon payment by the Holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face thereof for the number of Shares for which such Warrant Certificate may still be exercised (and such Shares, for the avoidance of doubt, may be subsequently exercised in accordance with this Section 4(b)).
(c) | Any Warrant Certificate referred to in Section 4(a)(i) or Section 4(b) and any cash, certified cheque, money order, bank draft or notice referred to in Section 4(a)(ii) shall be deemed to be surrendered or delivered, as applicable, only upon delivery thereof to the Company at its principal office in the manner provided in Section 28. |
(d) | This Warrant Certificate is exchangeable, upon the surrender hereof by the Holder, for new warrant certificates of like tenor, and bearing, as applicable, the same legend, representing, in the aggregate, the right to subscribe for the number of Shares which may be subscribed for hereunder. |
5. | Entitlement to Certificate |
Upon delivery and payment or notice as set out in Section 4, the Company shall cause to be issued to the Holder hereof the Shares subscribed for not exceeding those which such Holder is entitled to purchase pursuant to this Warrant Certificate and the Holder hereof shall become a shareholder of the Company in respect of such Shares with effect from the date of such delivery and payment or notice and shall be entitled to delivery of a certificate or certificates evidencing such Shares and the Company shall cause such certificate or certificates to be mailed to the Holder hereof at the address or addresses specified in such subscription within five (5) Business Days of such delivery and payment or notice.
6. | Register of Warrantholders and Transfer of Warrants |
The Company shall cause a register to be kept in which shall be entered the names and addresses of all holders of the Warrants and the number of Warrants held by them. No transfer of Warrants shall be valid unless made by the Holder or its executors, administrators or other legal representatives or its attorney or solicitor (Canadian) duly appointed by an instrument in writing in form and manner satisfactory to the Company in compliance with all applicable securities legislation and recorded on the register of holders of Warrants maintained by the Company, nor until stamp or governmental or other charges arising by reason of such transfer have been paid. The transferee of a Warrant shall, after a Form of Transfer is duly completed and the Warrant is lodged with the Company and upon compliance with all other reasonable requirements of the Company or law, be entitled to have his, her or its name entered on the register as the owner of such Warrant, free from all equities or rights of set-off or counterclaim between the Company and the transferor or any previous holder of such Warrant, save in respect of equities of which the Company is required to take notice by statute or by order of a court of competent jurisdiction. The Company may treat the registered holder of any Warrant certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary except where the Company is required to take notice by statute or by order of a court of competent jurisdiction.
7. | Partial Exercise |
The Holder may subscribe for and purchase or provide notice of a cashless exercise for a number of Shares less than the number the Holder is entitled to purchase or provide notice of a cashless exercise for pursuant to this Warrant Certificate. In the event of any such subscription and purchase or notice of a cashless exercise prior to the Expiry Time, the Holder shall in addition be entitled to receive, without charge, a new Warrant certificate in respect of the balance of the Shares of which he, she or it was entitled to purchase or provide notice of a cashless exercise for pursuant to this Warrant Certificate and which were then not purchased or elected to be subject to a cashless exercise in accordance with Section 4(b).
8. | No Fractional Shares |
Notwithstanding any adjustments provided for in Section 13 or otherwise, the Company shall not be required upon the exercise of any Warrants, to issue fractional Shares in satisfaction of its obligations hereunder. Where a fractional Share would, but for this Section 8, have been issued upon exercise of a Warrant, in lieu thereof, there shall be paid to the Holder an amount equal (rounded down to the nearest $0.01) to the product obtained by multiplying such fractional share interest by the Current Market Price at the date of due exercise of the Warrants and delivery by the Holder of a Subscription Form and the Exercise Price in the manner provided in Section 4, which payment shall be made within five (5) Business Days of such delivery and payment.
9. | Not a Shareholder |
Nothing in this Warrant Certificate or in the holding of the Warrants evidenced hereby shall be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Company.
10. | No Obligation to Purchase or Provide Notice |
Nothing herein contained or done pursuant hereto shall obligate the Holder to purchase, pay for, or provide notice of a cashless exercise for, or the Company to issue, any Shares except those Shares in respect of which the Holder shall have exercised its right to purchase or provide notice of a cashless exercise for hereunder in the manner provided herein.
11. | Ranking of Warrants |
All Series 1 2019 Warrants shall rank pari passu, notwithstanding the actual date of the issue thereof.
12. | Covenants |
(a) | The Company covenants and agrees that: |
(i) | so long as any Warrants evidenced by this Warrant Certificate remain outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Shares to satisfy the right of purchase herein provided for should the Holder determine to exercise its rights in respect of all the Shares for the time being represented by such outstanding Warrants; |
(ii) | it will use reasonable commercial efforts to ensure that all Shares outstanding or issuable from time to time (including without limitation the Shares issuable on the exercise of the Warrants) continue to be or are listed and posted for trading on the Exchange, provided that this clause shall not be construed as limiting or restricting the Company from completing a consolidation, amalgamation, arrangement, takeover bid or merger that would result in the Shares ceasing to be listed and posted for trading on another recognized Canadian exchange, so long as the holders of Shares receive cash or the holders of the Shares have approved the transaction in accordance with the requirements of applicable corporate and securities laws and the policies of the Exchange; |
(iii) | it will use commercially reasonable best efforts to maintain its status as a “reporting issuer” (or the equivalent thereof) not in default of the requirements of the securities laws in each of the provinces of Canada in which it is a reporting issuer; and |
(iv) | all Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon notice or payment therefor of the amount at which such Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable Shares and the holders thereof shall not be liable to the Company or to its creditors in respect thereof. |
(b) | The Company shall use all commercially reasonable efforts to preserve and maintain its corporate existence, except as may otherwise be contemplated by this Warrant Certificate, including, but not limited to, subsection 13(d). |
13. | Adjustment to Exercise Price |
The Exercise Price in effect at any time is subject to adjustment from time to time in the events and in the manner provided as follows:
(a) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company: |
(i) | issues Shares or securities exchangeable for or convertible into Shares to all or substantially all the holders of the Shares by way of a stock dividend or other distribution; |
(ii) | subdivides or changes its outstanding Shares into a greater number of shares; or |
(iii) | reduces or consolidates its outstanding Shares into a smaller number of shares; |
(any of such events being called a “Share Reorganization”), then the Exercise Price will be adjusted effective immediately after the record date for any such event in (i) above or the effective date of any such event in (ii) or (iii) above, as the case may be, by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction, the numerator of which is the number of Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Share Reorganization and the denominator of which is the number of Shares outstanding immediately after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Shares are distributed, the number of Shares that would have been outstanding had all such securities been exchanged for or converted into Shares on such effective date or record date). To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(a) as a result of the fixing by the Company of a record date for the distribution of exchangeable or convertible securities referred to in subsection 13(a)(i), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Shares actually issued and remaining issuable as a result of the event described in subsection 13(a)(i) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
(b) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Shares under which such holders are entitled to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares, where: |
(i) | the right to subscribe for or purchase Shares or other securities expires not more than 45 days after the record date for such issue (the period from the record date to the date of expiry being herein in this Section 13 called the “Rights Period”), and |
(ii) | the cost per Share during the Rights Period (inclusive of any cost of acquisition of securities exchangeable for or convertible into Shares in addition to any direct cost of Shares) (herein in this Section 13 called the “Per Share Cost”) is less than 95% of the Current Market Price of the Shares on the record date, |
(any of such events being called a “Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:
(A) | the numerator of which is the aggregate of: |
(1) | the number of Shares outstanding as of the record date for the Rights Offering; and |
(2) | a number determined by dividing the product of the Per Share Cost and: |
(I) | where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase additional Shares, the number of Shares so subscribed for or purchased during the Rights Period, or |
(II) | where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase securities exchangeable for or convertible into Shares, the number of Shares for which those securities so subscribed for or purchased during the Rights Period could have been exchanged or into which they could have been converted during the Rights Period, |
by the Current Market Price of the Shares as of the record date for the Rights Offering; and
(B) | the denominator of which is: |
(1) | in the case described in subparagraph 13(b)(ii)(A)(2)(I), the number of Shares outstanding, or |
(2) | in the case described in subparagraph 13(b)(ii)(A)(2)(II), the number of Shares that would be outstanding if all the Shares described in subparagraph 13(b)(ii)(A)(2)(II) had been issued, |
as at the end of the Rights Period.
Any Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (Ontario)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
If by the terms of the rights, options or warrants referred to in this subsection 13(b), there is more than one purchase, conversion or exchange price per Share, the aggregate price of the total number of additional Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:
(I) | the lowest purchase, conversion or exchange price per Share, as the case may be, if such price is applicable to all Shares which are subject to the rights, options or warrants, and |
(II) | the average purchase, conversion or exchange price per Share, as the case may be, if the applicable price is determined by reference to the number of Shares acquired. |
To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this subsection 13(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Shares actually issued and remaining issuable as a result of the event described in this subsection 13(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
If the Holder has exercised the Warrants in accordance herewith during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Rights Offering pursuant to this subsection is multiplied by the number of Shares received upon the exercise of the Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Rights Offering pursuant to this subsection, and (b) the number of Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 8 will be applicable to any fractional interest in a Share to which such Holder might otherwise be entitled. Such additional Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period and a certificate for such additional Shares will be delivered to such Holder within ten (10) Business Days following the end of the Rights Period.
(c) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding: |
(i) | shares of the Company of any class other than Shares; |
(ii) | rights, options or warrants to acquire Shares or securities exchangeable for or convertible into Shares (other than rights, options or warrants issued to the holders of all or substantially all of the outstanding Shares pursuant to which such holders are entitled to subscribe for or purchase Shares at a price per share (or in the case of securities exchangeable for or convertible into Shares at an exchange or conversion price per share at the date of issue of such securities) of at least 95% of the Current Market Price of the Shares on such record date); |
(iii) | evidence of indebtedness of the Company; or |
(iv) | any property or other assets of the Company, |
and if such issue or distribution does not constitute (A) a Share Reorganization or (B) a Rights Offering (any of such non-excluded events being called a “Special Distribution”), the Exercise Price will be adjusted effective immediately after such record date to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:
(A) | the numerator of which is the difference between: |
(1) | the product of the number of Shares outstanding on such record date and the Current Market Price of the Shares on such record date; and |
(2) | the aggregate fair market value (as determined in good faith by action of the board of directors of the Company, subject, however, to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required) to the holders of the Shares of such securities, evidence of indebtedness or property or other assets to be issued or distributed in the Special Distribution; and |
(B) | the denominator of which is the product obtained by multiplying the number of Shares outstanding on such record date by the Current Market Price of the Shares on such record date. |
Any Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (Ontario)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Shares or securities exchangeable for or convertible into Shares referred to in this subsection 13(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Shares actually issued and the number of Shares remaining issuable, as a result of the issue or distribution referred to in this subsection 13(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.
(d) | If and whenever at any time after the Issuance Date and prior to the Expiry Time there is a reclassification or redesignation of the Shares outstanding at any time or change of the Shares into other shares or into other securities (other than a Share Reorganization), or a consolidation, amalgamation, merger, arrangement, business combination or other similar transaction of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation, merger, arrangement, business combination or other similar transaction which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other shares), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a “Capital Reorganization”), the Holder, upon exercising the Warrants after the effective date of such Capital Reorganization, will be entitled to receive and will accept, in lieu of the number of Shares to which such Holder was theretofore entitled upon such exercise, the kind and aggregate number of shares, other securities or other property which such Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which such Holder was theretofore entitled upon exercise of the Warrants. If determined appropriate by action of the board of directors of the Company, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 13 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 13 will thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise hereof. Any such adjustment must be made by and set forth in an amendment to this Warrant Certificate approved by action by the board of directors of the Company and will, absent manifest error, for all purposes be conclusively deemed to be an appropriate adjustment. |
(e) | If at any time after the Issuance Date and prior to the Expiry Time, any adjustment in the Exercise Price shall occur as a result of any of the events set out in subsections 13(a), (b) or (c), then the number of Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price; provided that the provisions of Section 8 will be applicable to any fractional interest in a Share to which such Holder might otherwise be entitled. To the extent any adjustment occurs pursuant to this subsection 13(e) as a result of the fixing by the Company of a record date for the distribution of exchangeable or convertible securities referred to in subsection 13(a)(i) or as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in subsection 13(b), the number of Shares purchasable upon exercise of the Warrants shall be readjusted immediately after the expiration of any relevant exchange or conversion right to the number of Shares which would be purchasable based upon the number of Shares actually issued and remaining issuable as a result of the event described in subsection 13(a)(i) or 13(b), as the case may be, immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right. To the extent that any adjustment occurs pursuant to this subsection 13(e) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants referred to in subsection 13(c)(ii), the number of Shares purchasable upon exercise of the Warrants shall be readjusted immediately after the expiration of any relevant exchange or conversion right to the number of Shares which would be purchasable pursuant to this subsection 13(e) if the fair market value of such rights, options or warrants had been determined for purposes of the adjustment pursuant to this subsection 13(e) on the basis of the number of Shares issued and the number of Shares remaining issuable, as a result of the issue or distribution referred to in subsection 13(c) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right. |
14. | Rules Regarding Calculation of Adjustment of Exercise Price |
(a) | The adjustments provided for in Section 13 are cumulative and will, in the case of any adjustment to the Exercise Price, be computed to the nearest one-tenth of one cent and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 14. |
(b) | No adjustment in the Exercise Price is required to be made unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price; provided, however, that any adjustments which, except for the provisions of this subsection, would otherwise have been required to be made, will be carried forward and taken into account in any subsequent adjustments. |
(c) | No adjustment in the Exercise Price will be made in respect of any event described in Section 13, other than the events referred to in subsections 13(a)(ii) and (iii), if the Holder is entitled to participate in such event, or is entitled to participate within 45 days from the record date or effective date, as the case may be, of the event described in Section 13 in a comparable event, on the same terms, mutatis mutandis, as if the Holder had exercised the Warrants prior to or on the effective date or record date of such event, such participation being subject to the prior consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required. |
(d) | No adjustment in the Exercise Price will be made under Section 13 in respect of the issue from time to time of Shares as dividends paid in the ordinary course to holders of Shares who exercise an option or election to receive substantially equivalent dividends in Shares in lieu of receiving a cash dividend and any such event will be deemed not to be a Share Reorganization or any other event described in Section 13. |
(e) | If at any time a question or dispute arises with respect to adjustments provided for in Section 13, such question or dispute will be conclusively determined by the auditors of the Company or, if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the board of directors of the Company and any such determination, where required, will be binding upon the Company, the Holder and the shareholders of the Company, but subject in all cases to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required, and any other necessary regulatory approval. The Company will provide such auditors or accountants with access to all necessary records of the Company. |
(f) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company takes any action affecting or relating to the Shares, other than any action described in Section 13, which in the opinion of the board of directors of the Company would have a material adverse effect on the rights of the Holder, the Exercise Price will be adjusted by action of the board of directors of the Company in such manner, if any, and at such time as the board of directors may in their sole discretion determine to be equitable in the circumstances, but subject in all cases to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required, and any other necessary regulatory approval. Failure of the taking of action by the board of directors of the Company so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the Shares will be conclusive evidence that the board of directors of the Company has determined that it is equitable to make no adjustment in the circumstances. |
(g) | If the Company sets a record date to determine the holders of the Shares for the purpose of entitling them to receive any dividend or distribution or sets a record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, abandons its plan to pay or deliver such dividend or distribution or take such other action, then no adjustment in the Exercise Price will be required by reason of the setting of such record date. |
(h) | In the absence of a resolution of the board of directors of the Company fixing a record date for a Share Reorganization, Special Distribution or Rights Offering, the Company will be deemed to have fixed as the record date therefor the date on which the Share Reorganization, Special Distribution or Rights Offering is effected. |
(i) | As a condition precedent to the taking of any action which would require any adjustment to the Warrants, including the Exercise Price, the Company will take any corporate action which may, in the opinion of counsel to the Company, be necessary in order that the Company, or any successor to the Company or successor to the undertaking or assets of the Company, will be obligated to and may validly and legally issue as fully paid and non-assessable all of the Shares or other securities which the Holder is entitled to receive on the exercise hereof in accordance with the provisions hereof. |
(j) | The Company will from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 13, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Exercise Price. |
(k) | In any case in which Section 13 shall require that an adjustment shall become effective immediately after a record date for or an effective date of an event referred to therein, the Company may defer, until the occurrence and consummation of such event, issuing to the Holder, to the extent that any Warrants are exercised after such record date or effective date and before the occurrence and consummation of such event, the additional Shares or other shares, securities or property issuable upon such exercise by reason of the adjustment required by such event; provided, however, that the Company will deliver to the Holder an appropriate instrument evidencing the Holder’s right to receive such additional Shares or other shares, securities or the property upon the occurrence and consummation of such event and the right to receive any dividend or other distribution in respect of such additional Shares or other shares, securities or property declared in favour of the holders of record of Shares or of such other shares, securities or property on or after the date such Warrants are exercised or such later date as the Holder would, but for the provisions of this subsection, have become the Holder of record of such additional Shares or of such other shares, securities or property pursuant hereto. |
15. | Consolidation and Amalgamation |
(a) | The Company shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “successor corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, arrangement, business combination, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Company and the successor corporation shall have executed such instruments and done such things as, in the opinion of counsel to the Company, are necessary or advisable to establish that upon the consummation of such transaction: |
(i) | the successor corporation will have assumed all the covenants and obligations of the Company under this Warrant Certificate; and |
(ii) | the Warrants evidenced by this Warrant Certificate will be a valid and binding obligation of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder hereunder. |
(b) | Whenever the conditions of subsection 15(a) shall have been duly observed and performed, the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Company under this Warrant Certificate in the name of the Company or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Company may be done and performed with like force and effect by the like directors or officers of the successor corporation. |
16. | Representation and Warranty |
The Company hereby represents and warrants with and to the Holder that the Company is duly authorized and has the corporate and lawful power and authority to create and issue the Warrants and the Shares issuable upon the exercise hereof and perform its obligations hereunder and that this Warrant Certificate represents a valid, legal and binding obligation of the Company enforceable in accordance with its terms.
17. | If Share Transfer Books Closed |
The Company shall not be required to deliver certificates for Shares while the share transfer books of the Company are properly closed, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment or notice for the Shares called for thereby during any such period, delivery of the certificates for Shares may be postponed for a period not exceeding five (5) Business Days after the date of the re-opening of said share transfer books; provided, however, that any such postponement of delivery of such certificates shall be without prejudice to the right of the Holder, if the Holder has surrendered this Warrant Certificate and all required deliveries in accordance with the provisions hereof and made payment or notice during such period, to receive such certificates for the Shares called for after the share transfer books have been re-opened.
18. | Protection of Shareholders, Officers and Directors |
Subject as herein provided, all or any of the rights conferred upon the Holder may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement herein contained or in any of the Warrants represented hereby shall be taken against any shareholder, officer or director of the Company, either directly or through the Company, it being expressly agreed and declared that the obligations under the Warrants evidenced hereby, are solely corporate obligations of the Company and that no personal liability whatever shall attach to or be incurred by the shareholders, officers, or directors of the Company or any of them in respect thereof, and any and all rights and claims against every such shareholder, officer or director are being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants evidenced hereby.
19. | Lost Certificate |
If the Warrant Certificate evidencing the Warrants issued hereby becomes stolen, lost, mutilated or destroyed, the Company may, on such terms, as it may in its discretion impose, acting reasonably, respectively issue and countersign a new warrant of like denomination, tenor and date, and bearing the same legend, as the certificate so stolen, lost, mutilated or destroyed.
20. | Governing Law |
This Warrant Certificate shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein but the reference to such laws shall not, by conflict of laws rules or otherwise, require the application of the law of any jurisdiction other than the Province of Ontario. The parties hereto hereby irrevocably attorn to the exclusive jurisdiction of the Courts of the Province of Ontario.
21. | Severability |
If any one or more of the provisions or parts thereof contained in this Warrant Certificate should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and:
(i) | the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and |
(ii) | the invalidity, illegality or unenforceability of any provision or part thereof contained in this Warrant Certificate in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Warrant Certificate in any other jurisdiction. |
22. | Headings |
The headings of the articles, Sections, subsections and clauses of this Warrant Certificate have been inserted for convenience and reference only and do not define, limit, alter or enlarge the meaning of any provision of this Warrant Certificate.
23. | Numbering of Articles, etc. |
Unless otherwise stated, a reference herein to a numbered or lettered article, Section, subsection, clause, subclause or schedule refers to the article, Section, subsection, clause, subclause or schedule bearing that number or letter in this Warrant Certificate.
24. | Gender |
Whenever used in this Warrant Certificate, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender.
25. | Day not a Business Day |
In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a Business Day. If the payment of any amount is deferred for any period, then such period shall be included for purposes of the computation of any interest payable hereunder.
26. | Computation of Time Period |
Except to the extent otherwise provided herein, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
27. | Binding Effect |
This Warrant Certificate and all of its provisions shall enure to the benefit of the Holder and his, her or its heirs, executors, administrators, legal personal representatives, permitted assigns and successors and shall be binding upon the Company and its successors and permitted assigns.
28. | Notice |
Any notice, document or communication required or permitted by this Warrant Certificate to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid registered mail, or if transmitted by any form of recorded telecommunication or by email, to such party addressed as follows:
(i) | to the Holder(s), at the address indicated in the register to be maintained pursuant to Section 6 or via public dissemination; and |
(ii) | to the Company at: |
745 Thurlow Street, #2400
Vancouver, British Columbia
V6C 0C5
Attention: General Counsel
email: investors@tiltholdings.com
Notice so mailed shall be deemed to have been given on the tenth (10th) Business Day after deposit in a post office or public letter box. Neither party shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by email or other form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be. Any party may from time to time notify the other in the manner provided herein of any change of address which thereafter, until change by like notice, shall be the address of such party for all purposes hereof.
29. | Further Assurances |
The Company hereby covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other act, deed and assurance as the Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant Certificate.
30. | Language |
The parties hereto acknowledge and confirm that they have requested that this Warrant Certificate as well as all notices and other documents contemplated hereby be drawn up in the English language. Les parties aux présentes reconnaissent et confirment qu’elles ont exigé que la présente convention ainsi que tous les avis et documents qui s’y rattachent soient rédigés en langue anglaise.
31. | Time of Essence |
Time shall be of the essence hereof.
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IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be signed by its duly authorized officer as of this 22nd day of November, 2019.
TILT HOLDINGS, INC. | ||
Per: | /s/ | |
Authorized Signing Officer |
SCHEDULE “A”
SUBSCRIPTION FORM
TO: | TILT Holdings, Inc. 745 Thurlow Street, #2400 Vancouver, British Columbia, V6C 0C5 |
The undersigned holder of the within Warrant Certificate hereby irrevocably subscribes for ____________________ Shares of TILT Holdings, Inc. (the “Company”) pursuant to the within Warrant Certificate at the Exercise Price per share specified in the said Warrant Certificate. Capitalized terms used but not defined herein have the meanings set forth in the within Warrant Certificate.
The undersigned hereby acknowledges that the following legends will be placed on the certificates representing the Shares being acquired if the Warrants are exercised prior to March 2, 2020.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 2, 2020.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE CANADIAN SECURITIES EXCHANGE (“CSE”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF THE CSE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE CSE.
1. | The undersigned represents, warrants and certifies as follows (one and only one of the following must be checked): |
¨ | A. | The holder of the Warrants being exercised (i) at the time of exercise of such Warrants is not in the United States; (ii) is not a “U.S. Person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and is not exercising such Warrants on behalf of or for the account or benefit of a “U.S. Person” or a person in the United States; and (iii) did not execute or deliver this exercise form in the United States. |
¨ | B. | The Warrants are being exercised by or on behalf of an “accredited investor” as defined in Rule 501(a) of Regulation D under the U.S. Securities Act, (an “Accredited Investor”) that purchased units consisting of Shares and Warrants directly from the Company in the Company’s offering of units pursuant to a subscription agreement between the Company and the holder, it is exercising such Warrants for its own account, and was an Accredited Investor, both on the date such Warrants were purchased from the Company and on the date such Warrants are being exercised. |
¨ | C. | An opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance reasonably satisfactory to the Company) has been delivered to the Company to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issue of the Shares issuable upon exercise of the Warrants. |
2. | The undersigned, the record holder of the within Warrant Certificate, hereby irrevocably elects to exercise the right, represented by the within Warrant Certificate, to purchase the Shares and herewith pays the Exercise Price in accordance with the terms of the within Warrant Certificate by (one and only one of the following must be checked): |
¨ | A. | tendering cash or a certified cheque, money order or bank draft payable to the order of the Company in payment for such Shares of the subscription price therefor. |
¨ | B. | subscribing to only that number of Shares as are issuable in accordance with the “cashless exercise” formula set forth in Section 4(b) of the within Warrant Certificate. |
DATED this_____day of________, 20 .
NAME: | ||
Signature: | ||
Address: |
¨ | Please check box if these Share certificates are to be delivered at the office where this Warrant Certificate is surrendered, failing which the Share certificates will be mailed to the subscriber at the address set out above. |
If any Warrants represented by this Warrant Certificate are not being exercised, a new warrant certificate bearing the same legend as the within Warrant Certificate will be issued and delivered with the Share certificates.
If Box 1C is to be checked, the holder is encouraged to consult with the Company in advance to determine that the legal opinion tendered in connection with exercise will be satisfactory in form and substance to the Company.
Certificates representing Shares will not be registered or delivered to an address in the United States unless Box 1B or 1C above is checked and the applicable requirements are complied with.
If Box 1B or 1C is checked, the certificate representing the Shares will bear a legend restricting transfer without registration under the U.S. Securities Act or applicable state securities laws unless an exemption from registration is available.
SCHEDULE
“B”
Form of Transfer
THE WARRANTS REPRESENTED BY THE WITHIN WARRANT CERTIFICATE MAY NOT BE TRANSFERRED TO A U.S. PERSON OR TO ANY PERSON IN THE UNITED STATES OR TO ANY PERSON FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (name) _____________ (the “Transferee”), of _______________________________________________(residential address) Warrants of TILT Holdings, Inc. (the “Company”) registered in the name of the undersigned on the records of the Company represented by the within Warrant Certificate, and irrevocably appoints the Corporate Secretary of the Company as the attorney of the undersigned to transfer the said securities on the books or register of transfer, with full power of substitution. Capitalized terms used but not otherwise defined herein have the meanings set forth in the within Warrant Certificate.
DATED the____day of_____________, 20 .
Signature Guaranteed | (Signature of Holder, to be the same as appears on the face of this Warrant Certificate) |
TRANSFEREE ACKNOWLEDGMENT
In connection with this transfer (check one):
¨ | The undersigned transferee hereby certifies that (i) it was not offered the Warrants while in the United States and did not execute this certificate while within the United States; (ii) it is not acquiring any of the Warrants represented by this Warrant Certificate by or on behalf of person within the United States; and (iii) it has in all other respects complied with the terms of Regulation S of United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any successor rule or regulation of the United States Securities and Exchange Commission as presently in effect. |
¨ | The undersigned transferee is delivering a written opinion of U.S. Counsel acceptable to the Company to the effect that this transfer of Warrants has been registered under the U.S. Securities Act or is exempt from registration thereunder. |
(Signature of Transferee) |
Date | Name of Transferee (please print) |
The Warrants and the Shares issuable upon exercise of the Warrants shall only be transferable in accordance with applicable laws. The Warrants may only be exercised in the manner required by the certificate representing the Warrants and the Warrant Exercise Form attached thereto. Any Shares acquired pursuant to this Warrant shall be subject to applicable hold periods and any certificate representing such Shares may bear restrictive legends, as applicable.
Exhibit 4.3
WARRANT CERTIFICATE
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 2, 2020.
the warrants evidenced hereby are EXERCISABLE ON OR BEFORE 5:00 PM, VANCOUVER TIME, On November 1, 2022, AFTER WHICH TIME THESE WARRANTS SHALL BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. THE TERMS “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN THEM UNDER REGULATION S PROMULGATED PURSUANT TO THE U.S. SECURITIES ACT.
SERIES 1 2019 WARRANTS TO PURCHASE COMMON SHARES
OF
Tilt holdings, inc.
Certificate Number 32 | Number
of Warrants represented by this certificate – 2,913,750 |
THIS CERTIFIES THAT, for value received, Mark Scatterday, is entitled, at any time prior to the Expiry Time, to purchase, at the Exercise Price, one Share of the Company, for each Warrant evidenced hereby, by surrendering to the Company at its principal office at 745 Thurlow Street, #2400 Vancouver, British Columbia, V6C 0C5, this Warrant Certificate, together with a Subscription Form, duly completed and executed, and either (i) cash, certified cheque, money order or bank draft in lawful money of Canada payable to or to the order of the Company for the amount equal to the Exercise Price per Share multiplied by the number of Shares subscribed for or (ii) notice of a cashless exercise, on and subject to the terms and conditions set forth below.
Nothing contained herein shall confer any right upon the Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant Certificate and the Warrants represented hereby, and all rights hereunder shall be void and of no value.
1. | Definitions |
In this Warrant Certificate, including the preamble, unless there is something in the subject matter or context inconsistent therewith, the following expressions shall have the following meanings:
(a) | “Business Day” means a day which is not a Saturday, Sunday, or a civic or statutory holiday in the City of Vancouver, British Columbia, Canada; |
(b) | “Company” means TILT Holdings, Inc., a corporation existing under the laws of British Columbia, and its successors and assigns; |
(c) | “Current Market Price” at any date, means the price per Share equal to the weighted average of the sale prices per Share at which the Shares have traded (i) on the Exchange, or (ii) if the Shares are not listed on the Exchange, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any 5 consecutive trading days selected by the Company commencing not earlier than 20 trading days and ending no later than 3 trading days before such date; provided, however, if the Shares are not listed on any exchange or on the over-the-counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Share during such period by the total number of Shares sold during such period; |
(d) | “Exchange” means the Canadian Securities Exchange; |
(e) | “Exercise Price” means $0.33 in Canadian funds per Share, unless such price shall have been adjusted in accordance with the provisions of Section 13, in which case it shall mean the adjusted price in effect at such time; |
(f) | “Expiry Time” means 5:00 p.m., Vancouver time, on November 1, 2022; |
(g) | “Form of Transfer” means the form of transfer annexed hereto as Schedule “B”; |
(h) | “Holder” means the registered holder of this Warrant Certificate; |
(i) | “Issuance Date” means the date of issue of the Warrants; |
(j) | “person” means an individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof; |
(k) | “Share” means a fully paid and non-assessable common share of the Company (such common shares of the Company, collectively, the “Shares”); |
(l) | “Subscription Form” means the form of subscription annexed hereto as Schedule ”A”; |
(m) | “this Warrant Certificate”, “herein”, “hereby”, “hereof”, “hereto”, “hereunder” and similar expressions mean or refer to this Warrant Certificate and any deed or instrument supplemental or ancillary thereto and any schedules hereto or thereto and not to any particular article, section, subsection, clause, subclause or other portion hereof; and |
(n) | “Warrant” or “Warrants” means the right to acquire Shares evidenced hereby. |
2. | Expiry Time |
After the Expiry Time, all rights under any Warrants evidenced hereby, in respect of which the right of subscription and purchase herein provided for shall not theretofore have been exercised, shall wholly cease and terminate and such Warrants and this Warrant Certificate shall be void and of no value or effect.
3. | [Intentionally Omitted] |
4. | Exercise Procedure |
(a) | The Holder may exercise the right of purchase herein provided for by surrendering or delivering to the Company prior to the Expiry Time at its principal office: |
(i) | this Warrant Certificate, with the Subscription Form duly completed and executed by the Holder or its legal representative or attorney, duly appointed by an instrument in writing in form and manner satisfactory to the Company; and |
(ii) | either (A) cash, certified cheque, money order or bank draft payable to or to the order of the Company in lawful money of Canada at par in the City of British Columbia in an amount equal to the Exercise Price multiplied by the number of Shares for which subscription is being made or (B) notice that the Holder elects to effect a cashless exercise as contemplated by Section 4(b). |
(b) | This Warrant Certificate may be exercised, in whole or in part, by surrender of this Warrant Certificate without payment to the Company of any other consideration, commission or remuneration, by election of the cashless exercise option on the Subscription Form. In the event of such exercise, the number of Shares issuable upon the exercise of this Warrant Certificate shall be reduced and the Company shall issue to the Holder a number of Shares computed using the following formula: |
Y (A - B)
X = A
Where: |
X — | The number of Shares to be issued to the Holder upon full exercise. |
Y — | The number of Shares issuable upon exercise of this Warrant Certificate in accordance with its terms by means of a cash exercise rather than a cashless exercise. |
A — | The Fair Market Value of one Share (at the date of such calculation). |
B — | The Exercise Price (as adjusted to the date of such calculation). |
For purposes of this Section 4(b), the “Fair Market Value” of one Share on any date in question shall be the closing sale price of a Share on the Exchange (or the other principal stock exchange or stock market on which the Shares are traded at such time, if applicable) or, if the Shares are not traded on any such principal stock exchange or stock market at such time, the average of the high and low closing bid and ask prices of a Share on any over-the-counter market on which the Shares are traded on the Business Day immediately preceding such date (or if there is not trading on such date, on the next preceding Business Day on which there was trading in the Shares), as quoted in The Globe and Mail. If the Shares are not listed or qualified for trading on any stock exchange, stock market or over-the-counter market at such time, then the Fair Market Value shall be determined in good faith by the members of the board of directors of the Company. In connection with any cashless exercise, no cash or other consideration will be paid by the Holder in connection with such exercise other than the surrender of this Warrant Certificate itself, and no commission or other remuneration will be paid or given by the Holder or the Company in connection with such exercise. On any partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant Certificate of like tenor, in the name of the Holder hereof or as the Holder (upon payment by the Holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face thereof for the number of Shares for which such Warrant Certificate may still be exercised (and such Shares, for the avoidance of doubt, may be subsequently exercised in accordance with this Section 4(b)).
(c) | Any Warrant Certificate referred to in Section 4(a)(i) or Section 4(b) and any cash, certified cheque, money order, bank draft or notice referred to in Section 4(a)(ii) shall be deemed to be surrendered or delivered, as applicable, only upon delivery thereof to the Company at its principal office in the manner provided in Section 28. |
(d) | This Warrant Certificate is exchangeable, upon the surrender hereof by the Holder, for new warrant certificates of like tenor, and bearing, as applicable, the same legend, representing, in the aggregate, the right to subscribe for the number of Shares which may be subscribed for hereunder. |
5. | Entitlement to Certificate |
Upon delivery and payment or notice as set out in Section 4, the Company shall cause to be issued to the Holder hereof the Shares subscribed for not exceeding those which such Holder is entitled to purchase pursuant to this Warrant Certificate and the Holder hereof shall become a shareholder of the Company in respect of such Shares with effect from the date of such delivery and payment or notice and shall be entitled to delivery of a certificate or certificates evidencing such Shares and the Company shall cause such certificate or certificates to be mailed to the Holder hereof at the address or addresses specified in such subscription within five (5) Business Days of such delivery and payment or notice.
6. | Register of Warrantholders and Transfer of Warrants |
The Company shall cause a register to be kept in which shall be entered the names and addresses of all holders of the Warrants and the number of Warrants held by them. No transfer of Warrants shall be valid unless made by the Holder or its executors, administrators or other legal representatives or its attorney or solicitor (Canadian) duly appointed by an instrument in writing in form and manner satisfactory to the Company in compliance with all applicable securities legislation and recorded on the register of holders of Warrants maintained by the Company, nor until stamp or governmental or other charges arising by reason of such transfer have been paid. The transferee of a Warrant shall, after a Form of Transfer is duly completed and the Warrant is lodged with the Company and upon compliance with all other reasonable requirements of the Company or law, be entitled to have his, her or its name entered on the register as the owner of such Warrant, free from all equities or rights of set-off or counterclaim between the Company and the transferor or any previous holder of such Warrant, save in respect of equities of which the Company is required to take notice by statute or by order of a court of competent jurisdiction. The Company may treat the registered holder of any Warrant certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary except where the Company is required to take notice by statute or by order of a court of competent jurisdiction.
7. | Partial Exercise |
The Holder may subscribe for and purchase or provide notice of a cashless exercise for a number of Shares less than the number the Holder is entitled to purchase or provide notice of a cashless exercise for pursuant to this Warrant Certificate. In the event of any such subscription and purchase or notice of a cashless exercise prior to the Expiry Time, the Holder shall in addition be entitled to receive, without charge, a new Warrant certificate in respect of the balance of the Shares of which he, she or it was entitled to purchase or provide notice of a cashless exercise for pursuant to this Warrant Certificate and which were then not purchased or elected to be subject to a cashless exercise in accordance with Section 4(b).
8. | No Fractional Shares |
Notwithstanding any adjustments provided for in Section 13 or otherwise, the Company shall not be required upon the exercise of any Warrants, to issue fractional Shares in satisfaction of its obligations hereunder. Where a fractional Share would, but for this Section 8, have been issued upon exercise of a Warrant, in lieu thereof, there shall be paid to the Holder an amount equal (rounded down to the nearest $0.01) to the product obtained by multiplying such fractional share interest by the Current Market Price at the date of due exercise of the Warrants and delivery by the Holder of a Subscription Form and the Exercise Price in the manner provided in Section 4, which payment shall be made within five (5) Business Days of such delivery and payment.
9. | Not a Shareholder |
Nothing in this Warrant Certificate or in the holding of the Warrants evidenced hereby shall be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Company.
10. | No Obligation to Purchase or Provide Notice |
Nothing herein contained or done pursuant hereto shall obligate the Holder to purchase, pay for, or provide notice of a cashless exercise for, or the Company to issue, any Shares except those Shares in respect of which the Holder shall have exercised its right to purchase or provide notice of a cashless exercise for hereunder in the manner provided herein.
11. | Ranking of Warrants |
All Series 1 2019 warrants shall rank pari passu, notwithstanding the actual date of the issue thereof.
12. | Covenants |
(a) | The Company covenants and agrees that: |
(i) | so long as any Warrants evidenced by this Warrant Certificate remain outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Shares to satisfy the right of purchase herein provided for should the Holder determine to exercise its rights in respect of all the Shares for the time being represented by such outstanding Warrants; |
(ii) | it will use reasonable commercial efforts to ensure that all Shares outstanding or issuable from time to time (including without limitation the Shares issuable on the exercise of the Warrants) continue to be or are listed and posted for trading on the Exchange, provided that this clause shall not be construed as limiting or restricting the Company from completing a consolidation, amalgamation, arrangement, takeover bid or merger that would result in the Shares ceasing to be listed and posted for trading on another recognized Canadian exchange, so long as the holders of Shares receive cash or the holders of the Shares have approved the transaction in accordance with the requirements of applicable corporate and securities laws and the policies of the Exchange; |
(iii) | it will use commercially reasonable best efforts to maintain its status as a “reporting issuer” (or the equivalent thereof) not in default of the requirements of the securities laws in each of the provinces of Canada in which it is a reporting issuer; and |
(iv) | all Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon notice or payment therefor of the amount at which such Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable Shares and the holders thereof shall not be liable to the Company or to its creditors in respect thereof. |
(b) | The Company shall use all commercially reasonable efforts to preserve and maintain its corporate existence, except as may otherwise be contemplated by this Warrant Certificate, including, but not limited to, subsection 13(d). |
13. | Adjustment to Exercise Price |
The Exercise Price in effect at any time is subject to adjustment from time to time in the events and in the manner provided as follows:
(a) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company: |
(i) | issues Shares or securities exchangeable for or convertible into Shares to all or substantially all the holders of the Shares by way of a stock dividend or other distribution; |
(ii) | subdivides or changes its outstanding Shares into a greater number of shares; or |
(iii) | reduces or consolidates its outstanding Shares into a smaller number of shares; |
(any of such events being called a “Share Reorganization”), then the Exercise Price will be adjusted effective immediately after the record date for any such event in (i) above or the effective date of any such event in (ii) or (iii) above, as the case may be, by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction, the numerator of which is the number of Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Share Reorganization and the denominator of which is the number of Shares outstanding immediately after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Shares are distributed, the number of Shares that would have been outstanding had all such securities been exchanged for or converted into Shares on such effective date or record date). To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(a) as a result of the fixing by the Company of a record date for the distribution of exchangeable or convertible securities referred to in subsection 13(a)(i), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Shares actually issued and remaining issuable as a result of the event described in subsection 13(a)(i) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
(b) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Shares under which such holders are entitled to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares, where: |
(i) | the right to subscribe for or purchase Shares or other securities expires not more than 45 days after the record date for such issue (the period from the record date to the date of expiry being herein in this Section 13 called the “Rights Period”), and |
(ii) | the cost per Share during the Rights Period (inclusive of any cost of acquisition of securities exchangeable for or convertible into Shares in addition to any direct cost of Shares) (herein in this Section 13 called the “Per Share Cost”) is less than 95% of the Current Market Price of the Shares on the record date, |
(any of such events being called a “Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:
(A) | the numerator of which is the aggregate of: |
(1) | the number of Shares outstanding as of the record date for the Rights Offering; and |
(2) | a number determined by dividing the product of the Per Share Cost and: |
(I) | where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase additional Shares, the number of Shares so subscribed for or purchased during the Rights Period, or |
(II) | where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase securities exchangeable for or convertible into Shares, the number of Shares for which those securities so subscribed for or purchased during the Rights Period could have been exchanged or into which they could have been converted during the Rights Period, |
by the Current Market Price of the Shares as of the record date for the Rights Offering; and
(B) | the denominator of which is: |
(1) | in the case described in subparagraph 13(b)(ii)(A)(2)(I), the number of Shares outstanding, or |
(2) | in the case described in subparagraph 13(b)(ii)(A)(2)(II), the number of Shares that would be outstanding if all the Shares described in subparagraph 13(b)(ii)(A)(2)(II) had been issued, |
as at the end of the Rights Period.
Any Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (Ontario)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
If by the terms of the rights, options or warrants referred to in this subsection 13(b), there is more than one purchase, conversion or exchange price per Share, the aggregate price of the total number of additional Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:
(I) | the lowest purchase, conversion or exchange price per Share, as the case may be, if such price is applicable to all Shares which are subject to the rights, options or warrants, and |
(II) | the average purchase, conversion or exchange price per Share, as the case may be, if the applicable price is determined by reference to the number of Shares acquired. |
To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this subsection 13(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Shares actually issued and remaining issuable as a result of the event described in this subsection 13(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
If the Holder has exercised the Warrants in accordance herewith during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Rights Offering pursuant to this subsection is multiplied by the number of Shares received upon the exercise of the Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Rights Offering pursuant to this subsection, and (b) the number of Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 8 will be applicable to any fractional interest in a Share to which such Holder might otherwise be entitled. Such additional Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period and a certificate for such additional Shares will be delivered to such Holder within ten (10) Business Days following the end of the Rights Period.
(c) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding: |
(i) | shares of the Company of any class other than Shares; |
(ii) | rights, options or warrants to acquire Shares or securities exchangeable for or convertible into Shares (other than rights, options or warrants issued to the holders of all or substantially all of the outstanding Shares pursuant to which such holders are entitled to subscribe for or purchase Shares at a price per share (or in the case of securities exchangeable for or convertible into Shares at an exchange or conversion price per share at the date of issue of such securities) of at least 95% of the Current Market Price of the Shares on such record date); |
(iii) | evidence of indebtedness of the Company; or |
(iv) | any property or other assets of the Company, |
and if such issue or distribution does not constitute (A) a Share Reorganization or (B) a Rights Offering (any of such non-excluded events being called a “Special Distribution”), the Exercise Price will be adjusted effective immediately after such record date to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:
(A) | the numerator of which is the difference between: |
(1) | the product of the number of Shares outstanding on such record date and the Current Market Price of the Shares on such record date; and |
(2) | the aggregate fair market value (as determined in good faith by action of the board of directors of the Company, subject, however, to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required) to the holders of the Shares of such securities, evidence of indebtedness or property or other assets to be issued or distributed in the Special Distribution; and |
(B) | the denominator of which is the product obtained by multiplying the number of Shares outstanding on such record date by the Current Market Price of the Shares on such record date. |
Any Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (Ontario)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection 13(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Shares or securities exchangeable for or convertible into Shares referred to in this subsection 13(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Shares actually issued and the number of Shares remaining issuable, as a result of the issue or distribution referred to in this subsection 13(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.
(d) | If and whenever at any time after the Issuance Date and prior to the Expiry Time there is a reclassification or redesignation of the Shares outstanding at any time or change of the Shares into other shares or into other securities (other than a Share Reorganization), or a consolidation, amalgamation, merger, arrangement, business combination or other similar transaction of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation, merger, arrangement, business combination or other similar transaction which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other shares), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a “Capital Reorganization”), the Holder, upon exercising the Warrants after the effective date of such Capital Reorganization, will be entitled to receive and will accept, in lieu of the number of Shares to which such Holder was theretofore entitled upon such exercise, the kind and aggregate number of shares, other securities or other property which such Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which such Holder was theretofore entitled upon exercise of the Warrants. If determined appropriate by action of the board of directors of the Company, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 13 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 13 will thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise hereof. Any such adjustment must be made by and set forth in an amendment to this Warrant Certificate approved by action by the board of directors of the Company and will, absent manifest error, for all purposes be conclusively deemed to be an appropriate adjustment. |
(e) | If at any time after the Issuance Date and prior to the Expiry Time, any adjustment in the Exercise Price shall occur as a result of any of the events set out in subsections 13(a), (b) or (c), then the number of Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price; provided that the provisions of Section 8 will be applicable to any fractional interest in a Share to which such Holder might otherwise be entitled. To the extent any adjustment occurs pursuant to this subsection 13(e) as a result of the fixing by the Company of a record date for the distribution of exchangeable or convertible securities referred to in subsection 13(a)(i) or as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in subsection 13(b), the number of Shares purchasable upon exercise of the Warrants shall be readjusted immediately after the expiration of any relevant exchange or conversion right to the number of Shares which would be purchasable based upon the number of Shares actually issued and remaining issuable as a result of the event described in subsection 13(a)(i) or 13(b), as the case may be, immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right. To the extent that any adjustment occurs pursuant to this subsection 13(e) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants referred to in subsection 13(c)(ii), the number of Shares purchasable upon exercise of the Warrants shall be readjusted immediately after the expiration of any relevant exchange or conversion right to the number of Shares which would be purchasable pursuant to this subsection 13(e) if the fair market value of such rights, options or warrants had been determined for purposes of the adjustment pursuant to this subsection 13(e) on the basis of the number of Shares issued and the number of Shares remaining issuable, as a result of the issue or distribution referred to in subsection 13(c) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right. |
14. | Rules Regarding Calculation of Adjustment of Exercise Price |
(a) | The adjustments provided for in Section 13 are cumulative and will, in the case of any adjustment to the Exercise Price, be computed to the nearest one-tenth of one cent and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 14. |
(b) | No adjustment in the Exercise Price is required to be made unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price; provided, however, that any adjustments which, except for the provisions of this subsection, would otherwise have been required to be made, will be carried forward and taken into account in any subsequent adjustments. |
(c) | No adjustment in the Exercise Price will be made in respect of any event described in Section 13, other than the events referred to in subsections 13(a)(ii) and (iii), if the Holder is entitled to participate in such event, or is entitled to participate within 45 days from the record date or effective date, as the case may be, of the event described in Section 13 in a comparable event, on the same terms, mutatis mutandis, as if the Holder had exercised the Warrants prior to or on the effective date or record date of such event, such participation being subject to the prior consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required. |
(d) | No adjustment in the Exercise Price will be made under Section 13 in respect of the issue from time to time of Shares as dividends paid in the ordinary course to holders of Shares who exercise an option or election to receive substantially equivalent dividends in Shares in lieu of receiving a cash dividend and any such event will be deemed not to be a Share Reorganization or any other event described in Section 13. |
(e) | If at any time a question or dispute arises with respect to adjustments provided for in Section 13, such question or dispute will be conclusively determined by the auditors of the Company or, if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the board of directors of the Company and any such determination, where required, will be binding upon the Company, the Holder and the shareholders of the Company, but subject in all cases to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required, and any other necessary regulatory approval. The Company will provide such auditors or accountants with access to all necessary records of the Company. |
(f) | If and whenever at any time after the Issuance Date and prior to the Expiry Time, the Company takes any action affecting or relating to the Shares, other than any action described in Section 13, which in the opinion of the board of directors of the Company would have a material adverse effect on the rights of the Holder, the Exercise Price will be adjusted by action of the board of directors of the Company in such manner, if any, and at such time as the board of directors may in their sole discretion determine to be equitable in the circumstances, but subject in all cases to the prior written consent of the Exchange or any other stock exchange or market on which the Shares are traded, where required, and any other necessary regulatory approval. Failure of the taking of action by the board of directors of the Company so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the Shares will be conclusive evidence that the board of directors of the Company has determined that it is equitable to make no adjustment in the circumstances. |
(g) | If the Company sets a record date to determine the holders of the Shares for the purpose of entitling them to receive any dividend or distribution or sets a record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, abandons its plan to pay or deliver such dividend or distribution or take such other action, then no adjustment in the Exercise Price will be required by reason of the setting of such record date. |
(h) | In the absence of a resolution of the board of directors of the Company fixing a record date for a Share Reorganization, Special Distribution or Rights Offering, the Company will be deemed to have fixed as the record date therefor the date on which the Share Reorganization, Special Distribution or Rights Offering is effected. |
(i) | As a condition precedent to the taking of any action which would require any adjustment to the Warrants, including the Exercise Price, the Company will take any corporate action which may, in the opinion of counsel to the Company, be necessary in order that the Company, or any successor to the Company or successor to the undertaking or assets of the Company, will be obligated to and may validly and legally issue as fully paid and non-assessable all of the Shares or other securities which the Holder is entitled to receive on the exercise hereof in accordance with the provisions hereof. |
(j) | The Company will from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 13, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Exercise Price. |
(k) | In any case in which Section 13 shall require that an adjustment shall become effective immediately after a record date for or an effective date of an event referred to therein, the Company may defer, until the occurrence and consummation of such event, issuing to the Holder, to the extent that any Warrants are exercised after such record date or effective date and before the occurrence and consummation of such event, the additional Shares or other shares, securities or property issuable upon such exercise by reason of the adjustment required by such event; provided, however, that the Company will deliver to the Holder an appropriate instrument evidencing the Holder’s right to receive such additional Shares or other shares, securities or the property upon the occurrence and consummation of such event and the right to receive any dividend or other distribution in respect of such additional Shares or other shares, securities or property declared in favour of the holders of record of Shares or of such other shares, securities or property on or after the date such Warrants are exercised or such later date as the Holder would, but for the provisions of this subsection, have become the Holder of record of such additional Shares or of such other shares, securities or property pursuant hereto. |
15. | Consolidation and Amalgamation |
(a) | The Company shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “successor corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, arrangement, business combination, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Company and the successor corporation shall have executed such instruments and done such things as, in the opinion of counsel to the Company, are necessary or advisable to establish that upon the consummation of such transaction: |
(i) | the successor corporation will have assumed all the covenants and obligations of the Company under this Warrant Certificate; and |
(ii) | the Warrants evidenced by this Warrant Certificate will be a valid and binding obligation of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder hereunder. |
(b) | Whenever the conditions of subsection 15(a) shall have been duly observed and performed, the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Company under this Warrant Certificate in the name of the Company or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Company may be done and performed with like force and effect by the like directors or officers of the successor corporation. |
16. | Representation and Warranty |
The Company hereby represents and warrants with and to the Holder that the Company is duly authorized and has the corporate and lawful power and authority to create and issue the Warrants and the Shares issuable upon the exercise hereof and perform its obligations hereunder and that this Warrant Certificate represents a valid, legal and binding obligation of the Company enforceable in accordance with its terms.
17. | If Share Transfer Books Closed |
The Company shall not be required to deliver certificates for Shares while the share transfer books of the Company are properly closed, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment or notice for the Shares called for thereby during any such period, delivery of the certificates for Shares may be postponed for a period not exceeding five (5) Business Days after the date of the re-opening of said share transfer books; provided, however, that any such postponement of delivery of such certificates shall be without prejudice to the right of the Holder, if the Holder has surrendered this Warrant Certificate and all required deliveries in accordance with the provisions hereof and made payment or notice during such period, to receive such certificates for the Shares called for after the share transfer books have been re-opened.
18. | Protection of Shareholders, Officers and Directors |
Subject as herein provided, all or any of the rights conferred upon the Holder may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement herein contained or in any of the Warrants represented hereby shall be taken against any shareholder, officer or director of the Company, either directly or through the Company, it being expressly agreed and declared that the obligations under the Warrants evidenced hereby, are solely corporate obligations of the Company and that no personal liability whatever shall attach to or be incurred by the shareholders, officers, or directors of the Company or any of them in respect thereof, and any and all rights and claims against every such shareholder, officer or director are being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants evidenced hereby.
19. | Lost Certificate |
If the Warrant Certificate evidencing the Warrants issued hereby becomes stolen, lost, mutilated or destroyed, the Company may, on such terms, as it may in its discretion impose, acting reasonably, respectively issue and countersign a new warrant of like denomination, tenor and date, and bearing the same legend, as the certificate so stolen, lost, mutilated or destroyed.
20. | Governing Law |
This Warrant Certificate shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein but the reference to such laws shall not, by conflict of laws rules or otherwise, require the application of the law of any jurisdiction other than the Province of Ontario. The parties hereto hereby irrevocably attorn to the exclusive jurisdiction of the Courts of the Province of Ontario.
21. | Severability |
If any one or more of the provisions or parts thereof contained in this Warrant Certificate should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and:
(i) | the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and |
(ii) | the invalidity, illegality or unenforceability of any provision or part thereof contained in this Warrant Certificate in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Warrant Certificate in any other jurisdiction. |
22. | Headings |
The headings of the articles, Sections, subsections and clauses of this Warrant Certificate have been inserted for convenience and reference only and do not define, limit, alter or enlarge the meaning of any provision of this Warrant Certificate.
23. | Numbering of Articles, etc. |
Unless otherwise stated, a reference herein to a numbered or lettered article, Section, subsection, clause, subclause or schedule refers to the article, Section, subsection, clause, subclause or schedule bearing that number or letter in this Warrant Certificate.
24. | Gender |
Whenever used in this Warrant Certificate, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender.
25. | Day not a Business Day |
In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a Business Day. If the payment of any amount is deferred for any period, then such period shall be included for purposes of the computation of any interest payable hereunder.
26. | Computation of Time Period |
Except to the extent otherwise provided herein, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
27. | Binding Effect |
This Warrant Certificate and all of its provisions shall enure to the benefit of the Holder and his, her or its heirs, executors, administrators, legal personal representatives, permitted assigns and successors and shall be binding upon the Company and its successors and permitted assigns.
28. | Notice |
Any notice, document or communication required or permitted by this Warrant Certificate to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid registered mail, or if transmitted by any form of recorded telecommunication or by email, to such party addressed as follows:
(i) | to the Holder(s), at the address indicated in the register to be maintained pursuant to Section 6 or via public dissemination; and |
(ii) | to the Company at: |
745
Thurlow Street, #2400
Vancouver, British Columbia
V6C 0C5
Attention: General
Counsel
email: investors@tiltholdings.com
Notice so mailed shall be deemed to have been given on the tenth (10th) Business Day after deposit in a post office or public letter box. Neither party shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by email or other form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be. Any party may from time to time notify the other in the manner provided herein of any change of address which thereafter, until change by like notice, shall be the address of such party for all purposes hereof.
29. | Further Assurances |
The Company hereby covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other act, deed and assurance as the Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant Certificate.
30. | Language |
The parties hereto acknowledge and confirm that they have requested that this Warrant Certificate as well as all notices and other documents contemplated hereby be drawn up in the English language. Les parties aux présentes reconnaissent et confirment qu’elles ont exigé que la présente convention ainsi que tous les avis et documents qui s’y rattachent soient rédigés en langue anglaise.
31. | Time of Essence |
Time shall be of the essence hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be signed by its duly authorized officer as of this 1st day of November, 2019.
TILT HOLDINGS, INC. | ||
Per: | /s/ | |
Authorized Signing Officer |
SCHEDULE “A”
SUBSCRIPTION FORM
TO: | TILT Holdings, Inc. 745 Thurlow Street, #2400 Vancouver, British Columbia, V6C 0C5 |
The undersigned holder of the within Warrant Certificate hereby irrevocably subscribes for ______________________ Shares of TILT Holdings, Inc. (the “Company”) pursuant to the within Warrant Certificate at the Exercise Price per share specified in the said Warrant Certificate. Capitalized terms used but not defined herein have the meanings set forth in the within Warrant Certificate.
The undersigned hereby acknowledges that the following legends will be placed on the certificates representing the Shares being acquired if the Warrants are exercised prior to March 2, 2020.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 2, 2020.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE CANADIAN SECURITIES EXCHANGE (“CSE”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF THE CSE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE CSE.
1. | The undersigned represents, warrants and certifies as follows (one and only one of the following must be checked): |
¨ | A. | The holder of the Warrants being exercised (i) at the time of exercise of such Warrants is not in the United States; (ii) is not a “U.S. Person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and is not exercising such Warrants on behalf of or for the account or benefit of a “U.S. Person” or a person in the United States; and (iii) did not execute or deliver this exercise form in the United States. |
¨ | B. | The Warrants are being exercised by or on behalf of an “accredited investor” as defined in Rule 501(a) of Regulation D under the U.S. Securities Act, (an “Accredited Investor”) that purchased units consisting of Shares and Warrants directly from the Company in the Company’s offering of units pursuant to a subscription agreement between the Company and the holder, it is exercising such Warrants for its own account, and was an Accredited Investor, both on the date such Warrants were purchased from the Company and on the date such Warrants are being exercised. |
¨ | C. | An opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance reasonably satisfactory to the Company) has been delivered to the Company to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issue of the Shares issuable upon exercise of the Warrants. |
2. | The undersigned, the record holder of the within Warrant Certificate, hereby irrevocably elects to exercise the right, represented by the within Warrant Certificate, to purchase the Shares and herewith pays the Exercise Price in accordance with the terms of the within Warrant Certificate by (one and only one of the following must be checked): |
¨ | A. | tendering cash or a certified cheque, money order or bank draft payable to the order of the Company in payment for such Shares of the subscription price therefor. |
¨ | B. | subscribing to only that number of Shares as are issuable in accordance with the “cashless exercise” formula set forth in Section 4(b) of the within Warrant Certificate. |
DATED this day of , 20 .
NAME: | ||
Signature: | ||
Address: |
¨ | Please check box if these Share certificates are to be delivered at the office where this Warrant Certificate is surrendered, failing which the Share certificates will be mailed to the subscriber at the address set out above. |
If any Warrants represented by this Warrant Certificate are not being exercised, a new warrant certificate bearing the same legend as the within Warrant Certificate will be issued and delivered with the Share certificates.
If Box 1C is to be checked, the holder is encouraged to consult with the Company in advance to determine that the legal opinion tendered in connection with exercise will be satisfactory in form and substance to the Company.
Certificates representing Shares will not be registered or delivered to an address in the United States unless Box 1B or 1C above is checked and the applicable requirements are complied with.
If Box 1B or 1C is checked, the certificate representing the Shares will bear a legend restricting transfer without registration under the U.S. Securities Act or applicable state securities laws unless an exemption from registration is available.
SCHEDULE
“B”
Form of Transfer
THE WARRANTS REPRESENTED BY THE WITHIN WARRANT CERTIFICATE MAY NOT BE TRANSFERRED TO A U.S. PERSON OR TO ANY PERSON IN THE UNITED STATES OR TO ANY PERSON FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (name) (the “Transferee”), of (residential address) Warrants of TILT Holdings, Inc. (the “Company”) registered in the name of the undersigned on the records of the Company represented by the within Warrant Certificate, and irrevocably appoints the Corporate Secretary of the Company as the attorney of the undersigned to transfer the said securities on the books or register of transfer, with full power of substitution. Capitalized terms used but not otherwise defined herein have the meanings set forth in the within Warrant Certificate.
DATED the day of , 20 .
Signature Guaranteed | (Signature of Holder, to be the same as appears on the face of this Warrant Certificate) |
TRANSFEREE ACKNOWLEDGMENT
In connection with this transfer (check one):
¨ | The undersigned transferee hereby certifies that (i) it was not offered the Warrants while in the United States and did not execute this certificate while within the United States; (ii) it is not acquiring any of the Warrants represented by this Warrant Certificate by or on behalf of person within the United States; and (iii) it has in all other respects complied with the terms of Regulation S of United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any successor rule or regulation of the United States Securities and Exchange Commission as presently in effect. |
¨ | The undersigned transferee is delivering a written opinion of U.S. Counsel acceptable to the Company to the effect that this transfer of Warrants has been registered under the U.S. Securities Act or is exempt from registration thereunder. |
(Signature of Transferee) | ||
Date | Name of Transferee (please print) |
The Warrants and the Shares issuable upon exercise of the Warrants shall only be transferable in accordance with applicable laws. The Warrants may only be exercised in the manner required by the certificate representing the Warrants and the Warrant Exercise Form attached thereto. Any Shares acquired pursuant to this Warrant shall be subject to applicable hold periods and any certificate representing such Shares may bear restrictive legends, as applicable.
Exhibit 10.24
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
TILT HOLDINGS INC.
AMENDED AND RESTATED 2018 STOCK AND INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and Non-Employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock and cash-based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) | “Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company within the meaning of the British Columbia Business Corporations Act. |
(b) | “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the Plan. |
(c) | “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 10(b). |
(d) | “Board” shall mean the Board of Directors of the Company. |
(e) | “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. |
(f) | “Committee” shall mean the Compensation Committee of the Board or such other committee designated by the Board to administer the Plan. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “non-employee director” within the meaning of Rule 16b-3. |
(g) | “Company” shall mean TILT Holdings Inc., a British Columbia corporation, and any successor corporation. |
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(h) | “Consultant” means, in relation to the Company, an individual or a Consultant Company, other than an Employee, Director or Officer of the Company, that: |
(i) | is engaged to provide on a continuous bona tide basis, consulting, technical, management or other services to the Company or to an Affiliate of the Company, other than services provided in relation to a distribution; |
(ii) | provides the services under a written contract between the Company or the Affiliate and the individual or the Consultant Company; |
(iii) | in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an Affiliate of the Company; and |
(iv) | has a relationship with the Company or an Affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the Company. |
(i) | “Consultant Company” means for an individual Consultant, a company or partnership of which the individual is an employee, shareholder or partner. |
(j) | “Director” shall mean a member of the Board. |
(k) | “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan. |
(l) | “Effective Date” shall mean the date the Plan is adopted by the Board, as set forth in Section 12. |
(m) | “Eligible Person” shall mean any employee, officer, Non-Employee Director, or Consultant providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended. |
(n) | “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended. |
(o) | “Fair Market Value” with respect to one Share as of any date shall mean (a) if the Shares are listed on the NEO or any established stock exchange, the price of one Share at the close of the regular trading session of such market or exchange on the last trading day prior to such date, if no sale of Shares shall have occurred on such date, on the next preceding date on which there was a sale of Shares. Notwithstanding the foregoing, in the event that the Shares are listed on the NEO, for the purposes of establishing the exercise price of any Options, the Fair Market Value shall not be lower than the greater of the closing of the market price of the Shares on the NEO on (a) the prior trading day, and (b) the date of grant of the Options; (b) if the Shares are not so listed on the NEO or any established stock exchange, the average of the closing “bid” and “ask” prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “ask” prices on such date, on the next preceding date for which there are such quotes for a Share; or (c) if the Shares are not publicly traded as of such date, the per share value of one Share, as determined by the Board, or any duly authorized Committee of the Board, in its sole discretion, by applying principles of valuation with respect thereto. |
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For any Participant that is subject to the tax laws of the United States of America, “Fair Market Value” shall be determined in a manner consistent with Section 409A.
(p) | “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision. |
(q) | “NEO” means the NEO Exchange. |
(r) | “Non-Employee Director” shall mean a Director who is not also an employee of the Company or any Affiliate. |
(s) | “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. |
(t) | “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase Shares. |
(u) | “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Plan. |
(v) | “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan. |
(w) | “Performance Award” shall mean any right granted under Section 6(d) of the Plan. |
(x) | “Person” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust. |
(y) | “Plan” shall mean the Company’s 2018 Stock and Incentive Plan, as amended on June 24, 2020 and June 9, 2022, and amended from time to time. |
(z) | “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan. |
(aa) | “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date, provided that in the case of Participants who are liable to taxation under the Tax Act in respect of amounts payable under this Plan, that such date shall not be later than December 31 of the third calendar year following the year services were performed in respect of the corresponding Restricted Stock Unit awarded. |
(bb) | “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder. |
(cc) | “Securities Act” shall mean the U.S. Securities Act of 1933, as amended. |
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(dd) | “Share” or “Shares” shall mean shares of common stock in the capital of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan). |
(ee) | “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A. |
(ff) | “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. |
(gg) | “Tax Act” means the Income Tax Act (Canada). |
(hh) | “U.S. Award Holder” shall mean any holder of an Award who is a “U.S. person” (as defined in Rule 902(k) of Regulation S under the Securities Act) or who is holding or exercising Awards in the United States. |
Section 3. | Administration |
(a) | Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations’ in Section 7, (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property (excluding promissory notes), or canceled, forfeited or suspended, subject to the limitations in Section 7; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of the jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate. |
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(b) | Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority in such a manner as would cause the Plan not to comply with applicable exchange rules or applicable corporate law. |
(c) | Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of all applicable securities rules and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where the Shares are then listed) may grant Awards to Directors who are not also employees of the Company or an Affiliate. |
(d) | Indemnification. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board., the Committee or any other person may have by virtue of such person’s position with the Company. |
Section 4. | Shares Available for Awards |
(a) | Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall be 60,000,000. The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards issued under the Plan in accordance with the Share counting rules described in Section 4(b) below. |
(b) | Counting Shares. For purposes of this Section 4, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. |
(i) | Shares Added Back to Reserve. If any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation on Awards or Shares covered by an Award that are settled in cash), or if an Award otherwise terminates or is cancelled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan. |
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(ii) | Cash-Only Awards. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan. |
(iii) | Substitute Awards Relating to Acquired Entities. Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the Plan. |
(c) | Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d) below; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive. |
(d) | Additional Award Limitations. The total number of Shares which may be issued or issuable to any one Person under the Plan and all other security based compensation arrangements within any one-year period shall not exceed 5% of the Shares then outstanding. For the purposes of this Section, the number of Shares then outstanding shall mean the number of Shares outstanding on a non-diluted basis immediately prior to the proposed grant of the applicable Award. Under this Plan “security based compensation arrangements” shall mean any compensation or incentive mechanism (such as option plans, restricted share plans, stock purchase plans) involving the issuance or potential issuances of securities of the Company from treasury. |
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Section 5. | Eligibility |
Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company and/or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term, as used herein, includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision.
Section 6. | Awards |
(a) | Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan, as the Committee shall determine: |
(i) | Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate. |
(ii) | Option Term. The term of each Option shall be fixed by the Committee at the date of grant but shall not be longer than 10 years from the date of grant. Notwithstanding the foregoing, in the event that the expiry date of an Option falls within a trading blackout period imposed by the Company (a “Blackout Period”), and neither the Company nor the individual in possession of the Options is subject to a cease trade order in respect of the Company’s securities, then the expiry date of such Option shall be automatically extended to the 10th business day following the end of the Blackout Period. |
(iii) | Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which payment of the exercise price with respect thereto may be made or deemed to have been made. |
(A) | Promissory Notes. Notwithstanding the foregoing, the Committee may not permit payment of the exercise price, either in whole or in part, with a promissory note. |
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(B) | Net Exercises. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised on the date of exercise, over the exercise price of the Option for such Shares. |
(iv) | Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: |
(A) | The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, such excess shall be considered Non-Qualified Stock Options. |
(B) | All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Committee or the date this Plan was approved by the stockholders of the Company. |
(C) | Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant. |
(D) | The purchase price per Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option. |
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(E) | Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. |
(F) | Subject to adjustment as provided in Section 4(c), the maximum number of Shares that may be awarded under the Plan as Incentive Stock Options is 50,000,000 Shares. |
(b) | Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, that, subject to applicable law and stock exchange rules, the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the same limitations in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. |
(c) | Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: |
(i) | Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e). |
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(ii) | Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units. |
(iii) | Forfeiture. Except as otherwise determined by the Committee or as provided in an Award Agreement, upon a Participant’s termination of employment or service or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by such Participant at such time shall be forfeited and reacquired by the Company for cancellation at no cost to the Company; provided, however, that the Committee may waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units. |
(d) | Performance Awards. The Committee is hereby authorized to grant Performance Awards to Eligible Persons. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. |
(e) | Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other Awards the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts may be accrued but shall not be paid unless and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived or lapsed. |
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(f) | Other Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No Award issued under this Section 6(f) shall contain a purchase right or an option-like exercise feature. |
(i) | General Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law. |
(ii) | Limits on Transfer of Awards. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Where the Committee does permit the transfer of an Award other than a fully vested and unrestricted Share, such permitted transfer shall be for no value and in accordance with all applicable securities rules. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. |
(iii) | Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. |
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(iv) | Prohibition on Option and Stock Appreciation Right Repricing. Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company’s stockholders and applicable stock exchange approval, seek to effect any repricing of any previously granted, “underwater” Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units, Performance Award or Other Stock-Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash. or other securities. An Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of the Award. |
(v) | Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control event, disability or separation from service meet the definition of a change in control event, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. |
If an Award is subject to Section 409A, the Company intends (but cannot and does not guarantee) that the Award Agreement and this Plan comply with and meet all of the requirements of Section 409A or an exception thereto and the Award Agreement shall include such provisions, in addition to the provisions of this Plan, as may be necessary to assure compliance with Section 409A or an exception thereto. Under no circumstances may the time or schedule of any payment for any Award that is subject to the requirements of Section 409A be accelerated or subject to further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A. If the Company fails to make any payment pursuant to the payment provisions applicable to an Award that is subject to Section 409A, either intentionally or unintentionally, within the time period specified in such provisions, but the payment is made within the same calendar year, such payment will be treated as made within the specified time period. In addition, in the event of a dispute with respect to any payment, such payment may be delayed in accordance with the regulations and other guidance issued pursuant to Section 409A. Notwithstanding any of the foregoing, the Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A but do not satisfy the provisions thereof.
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(vi) | Acceleration of Vesting or Exercisability. No Award Agreement shall accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change-in-control event, unless such acceleration occurs upon the consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such change-in-control event. |
Section 7. | Amendment and Termination; Corrections |
(a) | Amendments to the Plan and Awards. The Committee may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. For greater certainty and without limiting the foregoing, the Committee may amend, suspend, terminate or discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of stockholders of the Company in order to: |
(i) | amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan; |
(ii) | amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively; |
(iii) | make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under Section 409A), and no action taken to comply shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof; or |
(iv) | amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules related to the Plan. |
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Notwithstanding the foregoing and for greater certainty, prior approval of the stockholders of the Company shall be required for any amendment to the Plan or an Award that would:
(i) | require stockholder approval under the rules or regulations of securities exchange that is applicable to the Company; |
(ii) | permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(g)(iv) of the Plan; |
(iii) | permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; |
(iv) | permit Options to be transferable other than for normal estate settlement purposes; |
(v) | amend this Section 7(a); or |
(vi) | increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a) and Section 6(b) or extend the terms of any Options beyond their original expiry date. |
(b) | Corporate Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any holder of an Award or beneficiary thereof: |
(i) | either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the Participant’s vested rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i )(A), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated by the Company without any payment) or (B) the replacement of the Award with other rights or property selected by the Committee or the Board, in its sole discretion; |
(ii) | that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; |
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(iii) | that, subject to Section 6(g)(vi), the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or |
(iv) | that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event. |
(c) | Correction of Defects, Omissions and Inconsistencies. The Committee may, without prior approval of the stockholders of the Company, correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan. |
Section 8. | Income Tax Withholding |
In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, in order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any applicable limitations under ASC Topic 718 to avoid adverse accounting treatment) or (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.
Section 9. | U.S. Securities Laws |
Neither the Awards nor the securities which may be acquired pursuant to the exercise of the Awards have been registered under the Securities Act or under any securities law of any state of the United States of America and are considered “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act and any Shares shall be affixed with an applicable restrictive legend as set forth in the Award Agreement. The Awards may not be offered or sold, directly or indirectly, in the United States except pursuant to registration under the U.S. Securities Act and the securities laws of all applicable states or available exemptions therefrom, and the Company has no obligation or present intention of filing a registration statement under the U.S. Securities Act in respect of any of the Awards or the securities underlying the Awards, which could result in such U.S. Award Holder not being able to dispose of any Shares issued on exercise of Awards for a considerable length of time. Each U.S. Award Holder or anyone who becomes a U.S. Award Holder, who is granted an Award in the United States, who is a resident of the United States or who is otherwise subject to the Securities Act or the securities laws of any state of the United States will be required to complete an Award Agreement which sets out the applicable United States restrictions.
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Section 10. | General Provisions |
(a) | No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. |
(b) | Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. |
(c) | Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. |
(d) | No Rights of Stockholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards pursuant to Section 6(c)(i) or Section 6(e)), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued. |
(e) | No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases. |
(f) | No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. |
(g) | Governing Law. The internal law, and not the law of conflicts, of British Columbia shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award. |
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(h) | Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. |
(i) | No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. |
(j) | Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan. |
(k) | No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated. |
(l) | Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. |
Section 11. | Clawback or Recoupment |
All Awards under this Plan shall be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time, or (ii) any applicable law, rule or regulation or applicable stock exchange rule.
- 18 - |
Section 12. | Effective Date of the Plan |
The Plan was adopted by the Committee effective as of November 21, 2018. The Plan shall be subject to approval by the stockholders of the Company which approval will be within 12 months after the date the Plan is adopted by the Committee.
Section 13. | Term of the Plan |
No Award shall be granted under the Plan, and the Plan shall terminate, on the earlier of (i) November 21, 2028 or (ii) the tenth anniversary of the date the Plan is approved by the stockholders of the Company, or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Committee to amend the Plan, shall extend beyond the termination of the Plan.
Exhibit 10.28
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Amendment") is entered into effective as of the 17th day of June 2022, by and between WHITE HAVEN RE, LLC, a Pennsylvania limited liability company ("Seller"), and IIP-PA 9 LLC, a Delaware limited liability company ("Buyer").
RECITALS
A. WHEREAS, Seller and Buyer are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of April 19, 2022, as amended by the First Amendment to Purchase and Sale Agreement and Joint Escrow Instructions dated as of May 24, 2022 (as so amended, the "Existing PSA"), where Seller has agreed to sell to Buyer, and Buyer has agreed to purchase from Seller, Seller's right, title and interest in certain real property located at 411 Susquehanna Street, White Haven, Pennsylvania 18661, as more particularly described therein; and
B. WHEREAS, various of Buyer’s third party reports for the Property were all timely ordered following the Effective Date, but due to unforeseen delays have not yet been received by the Parties; and
C. WHEREAS, the Parties have agreed to extend the Investigation Period to provide additional time for the third party reports to be completed and delivered to Buyer; and
D. WHEREAS, in accordance with Section 15.4 of the Existing PSA, Seller and Buyer desire to modify and amend the Existing PSA only in respects and on the conditions hereinafter stated.
AGREEMENT
NOW, THEREFORE, Seller and Buyer, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, agree as follows:
1. Definitions. For purposes of this Amendment, capitalized terms shall have the meanings ascribed to them in the Existing PSA unless otherwise defined herein. The Existing PSA, as amended by this Amendment, is referred to collectively herein as the "Agreement." From and after the date hereof, the term "Agreement," as used in the Existing PSA, shall mean the Existing PSA, as amended by this Amendment.
2. Investigation Period. The first sentence of Section 4.1 of the Existing PSA is hereby amended and restated in its entirety to read as follows:
"During the time period commencing upon the Effective Date of this Agreement and terminating at 11:00 p.m. Eastern Time on September 30, 2022 (the "Investigation Period"), subject to the terms and conditions of this Agreement, Buyer shall have the right to conduct and complete an investigation of all matters pertaining to the Property and Buyer's purchase thereof including, without limitation, the matters described in this Section 4.1."
3. Effect of Amendment. Except as modified by this Amendment, the Existing PSA and all the covenants, agreements, terms, provisions and conditions thereof shall remain in full force and effect and are hereby ratified and affirmed. In the event of any conflict between the terms contained in this Amendment and the Existing PSA, the terms herein contained shall supersede and control the obligations and liabilities of the parties.
4. Miscellaneous. This Amendment becomes effective only upon execution and delivery hereof by Seller and Buyer. The captions of the paragraphs and subparagraphs in this Amendment are inserted and included solely for convenience and shall not be considered or given any effect in construing the provisions hereof.
5. Authority. Each of Seller and Buyer guarantees, warrants and represents that the individual or individuals signing this Amendment have the power, authority and legal capacity to sign this Amendment on behalf of and to bind all entities, corporations, partnerships, limited liability companies or other organizations on whose behalf such individual or individuals have signed.
6. Counterparts; Facsimile and PDF Signatures. This Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute one and the same document. A facsimile, electronic or portable document format (PDF) signature on this Amendment shall be equivalent to, and have the same force and effect as, an original signature.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2 |
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of the date and year first above written.
SELLER: | |||
WHITE HAVEN RE, LLC, a Pennsylvania limited liability company | |||
By: Baker Technologies, Inc., a Delaware corporation, its sole member | |||
By: | /s/ Gary F. Santo, Jr. | ||
Name: | Gary F. Santo, Jr. | ||
Title: | President | ||
BUYER: | |||
IIP-PA 9 LLC, | |||
a Delaware limited liability company | |||
By: | Brian Wolfe | ||
Name: | Brian Wolfe | ||
Title: | Vice President, General Counsel and Secretary |
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