Share capital and other equity instruments

6 Months Ended

Jun. 30, 2023

Disclosure of terms and conditions of share-based payment arrangement [abstract]

Share capital and other equity instruments

9. Share capital and other equity instruments

a) Share capital

On February 1, 2023, the Company performed a share consolidation of all its issued and outstanding common shares, stock options and warrants on the basis of a consolidation ratio of ten pre-consolidation shares to one post-consolidation share. The quantities and per unit prices of the Company's common shares, stock options and warrants presented in these interim financial statements have been retroactively adjusted to give effect to the share consolidation.

Authorized and without par value

Common shares: unlimited number authorized, participating, carrying one vote per share, entitled to dividends.

Preferred shares: unlimited number authorized, issuable in one or more series.

Series A preferred shares: unlimited number authorized, no par value, non-voting, ranking in priority to the common shares, entitled to the same dividends as the common shares, non-transferable, redeemable at the redemption amount offered for the common shares upon a change in control event.

No preferred shares have been issued. At June 30, 2023 and 2022, the number of common shares outstanding were as follows:


	June 30, 2023				June 30, 2022
	Number		Amount		Number		Amount
Balance - beginning of period		3,104,222	$	979,849		3,104,222	$	979,849
Shares issued for milestone achievement (note 4)		145,312		1,313		—		—
Balance - end of period		3,249,534	$	981,162		3,104,222	$	979,849

b) Contributed surplus (Share-based payments)

Stock options

For stock options having a CAD exercise price, the changes in the number of stock options outstanding during the six months ended June 30, 2023 and 2022 were as follows:


	June 30, 2023					June 30, 2022
				Weighted					Weighted
				average					average
				exercise price					exercise price
	Number			($)		Number			($)
Balance - beginning of period		101,629		$	214.46		102,805		$	215.29
Forfeited		(1,709	)		146.12		—			—
Expired		—			—		(8	)		21,225.00
Balance - end of period		99,920		$	215.63		102,797		$	213.65

For options having a USD exercise price, the changes in the number of stock options outstanding during the quarters ended June 2023, and 2022 were as follows:


	June 30, 2023					June 30, 2022
				Weighted					Weighted
				average					average
				exercise price					exercise price
	Number			(USD)		Number			(USD)
Balance - beginning of period		130,916		$	21.52		74,900		$	34.88
Granted		44,600			3.99		60,850			6.70
Forfeited		(5,166	)		16.34		(4,500	)		18.08
Balance - end of period		170,350		$	17.09		131,250		$	22.39

2023
In March 2023, there were two option grants issued of which 41,500 stock options having an exercise price of USD 3.99 and vesting over a period of up to four years were issued to executives and 3,100 stock options having an exercise price of USD 3.99 and vesting over a period of up to four years were issued to employees.

2022
In March 2022, there were two option grants issued of which 11,500 stock options, having an exercise price of USD 10.20 and vesting over a period of up to four years were issued to executives and 5,000 stock options, having an exercise price of USD 10.20 and vesting over a period of up to four years were issued to a member of the Board of Directors.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options at the date of grant. The weighted average inputs into the model and the resulting grant date fair values during the quarters ended June 30, 2023 and 2022 were as follows:


	June 30,			June 30,
		2023			2022
Expected dividend rate		—			—
Expected volatility of share price		117.2	%		115.8	%
Risk-free interest rate		3.54	%		2.85	%
Expected life in years		6.8			6.8
Weighted average grant date fair value	$	4.65		$	7.50

At June 30, 2023, stock options issued and outstanding denominated in CAD and USD by range of exercise price are as follows:


			Weighted average		Weighted				Weighted
Range of exercise			remaining		average				average
price for stock option	Number		contractual life		exercise price		Number		exercise price
issued in CAD	outstanding		(in years)		($)		exercisable		($)
$119.90-$146.35		15,399		6.8	$	136.57		13,079	$	136.15
$146.36-$211.05		78,973		5.9		152.10		68,197		152.10
$211.06 - $2,130.00		5,025		5.9		358.66		5,025		358.66
$2,130.01-$20,700.00		523		5.0		10,761.57		523		10,761.57
		99,920		6.1	$	215.63		86,824	$	225.56
			Weighted average		Weighted				Weighted
Range of exercise			remaining		average				average
price for stock option	Number		contractual life		exercise price		Number		exercise price
issued in USD	outstanding		(in years)		(USD)		exercisable		(USD)
$3.99-$4.75		54,600		9.7	$	4.01		—	$	—
$4.76-$7.80		37,850		8.9		5.40		14,370		5.40
$7.81 - $15.95		16,500		8.7		10.20		5,169		10.20
$15.96-$41.80		31,400		8.2		27.56		18,939		31.42
$41.81 - $108.00		30,000		7.4		48.48		27,164		48.28
		170,350		8.7	$	17.09		65,642	$	31.03

A share-based payment compensation expense of $243 and $530 was recorded for the stock options for the quarter and six months ended June 30, 2023, respectively ($537 and $1,156 for the quarter and six months ended June 30, 2022, respectively).

Share-based payments expense

The total share-based payments compensation expense has been included in the consolidated statements of operations for the quarters and six months ended June 30, 2023 and 2022 as indicated in the following table:


	Quarter ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Research and development expenses	$	98	$	256	$	231	$	523
Administration expenses		145		281		299		633
	$	243	$	537	$	530	$	1,156

c) Warrants

The following table presents the number of warrants outstanding with an exercise price in CAD during the six months ended June 30, 2023 and 2022:


	June 30, 2023					June 30, 2022
				Weighted					Weighted
				average					average
				exercise price					exercise price
	Number			($)		Number			($)
Balance of warrants - beginning of period		400		$	30,000.00		17,273		$	843.30
Cancelled (note 8)		—			—		(16,873	)		152.10
Expired		(400	)		30,000.00		—			—
Balance of warrants - end of period		—		$	—		400		$	30,000.00

There were no changes in the number of warrants having a USD exercise price during the quarter ended June 30, 2023 and 2022. These are the same warrants presented as a warrant liability (note 7) and they are listed here with the warrants classified as equity instruments, simply so the readers may see all the warrants outstanding together. At June 30, 2023, the number of warrants outstanding by exercise price were as follows:


	June 30, 2023
			Weighted
			average
			exercise price
	Number		(USD)
Balance of warrants - end of period		789,472	$	55.00

The 789,472 warrants shown in the table above, are those accounted for as a warrant liability (note 7) and are included in this note in order to present all the outstanding warrants in aggregate in the tables above.

The warrants outstanding at June 30, 2023, their exercise price in USD, expiry rate and the overall weighted average exercise price in both currencies are as follows:

Number

Expiry
date

Exercise
price
(USD)

Warrants outstanding with an exercise price in USD

789,472

November 2025

55.00

On February 15, 2022, the 16,873 warrants having an exercise price of $152.10 were cancelled (note 8).

Liminal BioSciences Inc. 6-K