6 Convertible preferred shares

In May 2019, the Company completed its initial public offering ("IPO"). Upon the closing of the IPO, all outstanding redeemable convertible preferred shares of Class A1, A2, B, C, D1 and D2 (collectively known as “Convertible Preferred Shares”) converted into 17,550,802 common shares.

Prior to converting to common shares in May 2019, the Company’s convertible preferred shares allowed the holders to redeem their shares upon a change in control in the Company. As a result, the Company classified its Convertible Preferred Shares as mezzanine equity. The Company charged specific incremental issuance costs incurred in the offering of Convertible Preferred Shares against the gross proceeds of the Convertible Preferred Shares.

Prior to May 2019, an authorized unlimited number of:

- Class A1 preferred shares, voting based on the number of common shares into which they could have been converted, annual non‑cumulative dividend of 8% in preference to the holders of common shares calculated on their issue price. In addition, the Class A1 preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any dividend paid on common shares. The Class A1 preferred shares are subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than C$5.3193

- Class A2 preferred shares, voting based on the number of common shares into which they could have been converted, preferential non‑cumulative dividend of 8% pari passu with the Class B preferred shares and in preference to the holders of Class A1 preferred shares calculated on their issue price. In addition, the Class A2 preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any dividend paid on common shares. The Class A2 preferred shares were subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than C$5.3193

- Class B preferred shares, voting based on the number of common shares into which they could have been converted, preferential non‑cumulative dividend of 8% pari passu with the Class A2 preferred shares and in preference to the holders of Class A1 preferred shares calculated on their issue price. In addition, the Class B preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any dividend paid on common shares. The Class B preferred shares were subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than $6.1172

- Class C preferred shares, voting based on the number of common shares into which they could have been converted, preferential non‑cumulative dividend of 8% to the Class B and A2 preferred shares and in preference to the holders of Class A1 preferred shares calculated on their issue price. In addition, the Class B preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any dividend paid on common shares. The Class C preferred shares were subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than $7.2619

- Class D1 preferred shares, voting based on the number of common shares into which they could have been converted, preferential non -cumulative dividend of 8% pari passu with the Class D2 preferred shares, and in preference to the holders of the Class C, Class B, Class A2 and Class A1 preferred shares calculated on their issue price. In addition, the Class D1 preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any non‑cumulative dividend paid on common shares. The Class D1 preferred shares were subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than $9.4295.

- Class D2 preferred shares, voting based on the number of common shares into which they could have been converted, preferential non‑cumulative dividend of 8% pari passu with the Class D1 preferred shares, and in preference to the holders of the Class C, Class B, Class A2 and Class A1 preferred shares calculated on their issue price. In addition, the Class D2 preferred shares were eligible to their pro rata shares, on an as‑converted basis, to any non‑cumulative dividend paid on common shares. The Class D2 preferred shares were subject to a weighted average antidilution adjustment in the event of a common share issuance at a price per share lower than $12.2583.

The Company early adopted the guidance on down round features from ASU 2017‑11 with respect to the antidilution adjustments for the Class A1, Class A2, Class B, Class C, Class D1 and D2 preferred shares.

The Class A1, A2, B, C, D1 and D2 preferred shares would have automatically converted into common shares at the applicable conversion price upon (i) closing of a qualified initial public offering at a price per share based on a pre‑money valuation of the Company of at least $250,000 and resulting in gross proceeds of at least $60,000, whereby the shares would be listed on one or more Recognized Stock Exchanges; and (ii) the election to convert by a majority of the Class A1, A2, B, C, D1 and D2 preferred shares. The conversion rate of Class A1, A2, B, C, D1 and D2 preferred shares into common shares at the time of conversion was 1:1.

The holders of the Company’s Convertible Preferred Shares were entitled to receive non‑cumulative dividends at the rate of 8% of the purchase price per annum in preference to any dividends to the holders of the common shares, payable as and if when declared by the Board of Directors. The holders of the Convertible Preferred Shares also were entitled to participate pro rata in any dividends paid to the holders of the common shares on an as‑converted basis. The Board of Directors had not declared any dividends as of May 2019 when the Preferred Shares were converted and therefore no dividends were paid.

Upon the liquidation of the Company, the holders of Convertible Preferred Stock were entitled to receive, in preference to the holders of the common stock and in order of priority, an amount equal to $12.4472 per share for Series D2 Convertible Preferred Stock, $9.5747 per share for Series D1 Convertible Preferred Stock, $7.9258 per share for Series C Convertible Preferred Stock, $7.3406 per share for Series B Convertible Preferred Stock, $7.713 per share for Series A2 Convertible Preferred Stock and $8.83 per share for Series A1 Convertible Preferred Stock (the “Liquidation Preference”). Following payment in full to the holders of preferred shares of all amounts distributable to them, the remaining assets of the Company available for distribution to holders of the Company’s share capital would have been distributed on a pro rata basis among (i) the holders of any preferred shares convertible into common shares of the Company on an as if converted basis; and (ii) the holders of the common shares.

The holders of 70% of Class A1, A2, B, C, D1 and D2 preferred shares, voting as a single class, could have required that the Company redeem the preferred shared at the earlier of a sale or an exclusive license of all or substantially all intellectual property of the Company or all of the assets and the fifth anniversary of the closing date of the Class D preferred shares. The redemption price would have been the higher of the liquidation preference or the fair market value of such preferred shares. Class A1 preferred shares could have been only redeemed once Class A2, B, C, D1 and D2 preferred shares were fully redeemed.

For the year ended December 31, 2018, the Company issued the following Convertible Preferred Shares:

a) On October 17, 2018, the Company issued 6,893,236 Class D1 preferred shares for gross proceeds of $65,000. The costs related with this share issuance were $281.

b) On October 17, 2018, the Company issued 1,223,656 Class D2 preferred shares for gross proceeds of $15,000. The costs related with this share issuance were $65.

No convertible preferred shares were issued for the year ended December 31, 2019. All preferred shares were converted to common share upon closing of the IPO in May 2019.