XML 44 R27.htm IDEA: XBRL DOCUMENT v3.22.4
Shareholders' Equity and Share Based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Shareholders' Equity and Share Based Compensation

21. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

On August 9, 2022, Village Farms entered into a Controlled Equity Offering Sales Agreement ("Sales Agreement") pursuant to which the Company may offer and sell Common Shares having an aggregate offering price up to $50 million from time to time to or through Cantor Fitzgerald & Co. and A.G.P./Alliance Global Partners. Under the Sales Agreement, the Company may offer and sell Common Shares through Cantor Fitzgerald & Co. and A.G.P./Alliance Global Partners by any method deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on The Nasdaq Capital Market. As of December 31, 2022, the Company had issued and sold 3,175,000 Common Shares under the Sales Agreement, resulting in net proceeds of $6,692 after deducting commissions and offering expenses.

On September 10, 2020, the Company sold 9,396,226 units through a registered direct offering. Each unit that was sold consisted of one common share of the Company and one-half (0.5) of a warrant to purchase a common share of the Company at a price of $5.80. On March 10, 2021, the warrants became exercisable and will expire on September 10, 2025. As of December 31, 2022, 3,188,680 of the warrants have been exercised. ASC 480, Distinguishing Liabilities from Equity, requires that these warrants are classified as equity. The fair value of these warrants was determined using the Black-Scholes-Merton valuation model.

The Company’s Share-Based Compensation Plan (the “Plan”) dated January 1, 2010, was most recently approved by Shareholders on June 10, 2021. The Plan provides that the number of Common Shares reserved for issuance upon the exercise or redemption of awards granted under the Plan is a rolling maximum of ten percent (10%) of the outstanding Common Shares at any point in time. Approximately 5,069 shares remain available for issuance of December 31, 2022.

Stock options have been granted with an exercise price equal to the fair market value of the common stock on the date of grants and have a ten-year contractual term. The stock options vest ratably over a 3- year period. Compensation expense is recognized on a straight-line basis.

The fair market value of stock options is estimated using the Black-Scholes-Merton valuation model and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatilities of the weekly closing price of the Company’s common stock; the expected term of options granted is based historical exercises and

forfeitures; the risk-free interest rate is based on Canadian Treasury bonds issued with similar life terms to the expected life of the grant; and the expected dividend yield is based on the current annual dividend amount divided by the stock price on the date of grant. Forfeitures are recorded when incurred.

The following key assumptions were used in the valuation model to value stock option grants for each respective period:

 

 

 

2022

 

2021

 

2020

 

Expected volatility

 

84.0% - 89.9%

 

68.3% - 75.7%

 

 

71.1

%

Dividend

 

$nil

 

$nil

 

$nil

 

Risk-free interest rate

 

1.41% - 3.28%

 

1.07% - 1.54%

 

 

0.52

%

Expected life

 

6.5 years

 

4.5 years - 6.9 years

 

7.1 years

 

Fair value

 

$0.93 - $4.33

 

$4.29 - $7.31

 

$

4.65

 

 

Stock option transactions under the Company’s plan for the years ended December 31, 2022, 2021 and 2020 are summarized as follows:

 

 

 

Number of
Options

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Term (years)

 

 

Aggregate
Intrinsic
Value

 

Outstanding at January 1, 2020

 

 

2,452,666

 

 

$

3.93

 

 

 

5.60

 

 

$

8,784

 

Granted during 2020

 

 

1,081,488

 

 

$

6.54

 

 

 

9.75

 

 

$

254

 

Exercised during 2020

 

 

(425,166

)

 

$

1.01

 

 

 

1.62

 

 

$

2,039

 

Forfeited/expired during 2020

 

 

(41,666

)

 

$

5.17

 

 

 

 

 

 

 

Outstanding at December 31, 2020

 

 

3,067,322

 

 

$

5.42

 

 

 

6.82

 

 

$

15,735

 

Exercisable at December 31, 2020

 

 

1,618,168

 

 

$

3.07

 

 

 

4.58

 

 

$

11,865

 

Granted during 2021

 

 

792,236

 

 

$

8.47

 

 

 

9.78

 

 

$

57

 

Exercised during 2021

 

 

(177,000

)

 

$

1.07

 

 

 

1.14

 

 

$

1,813

 

Forfeited during 2021

 

 

(60,000

)

 

$

10.70

 

 

 

 

 

 

 

Outstanding at December 31, 2021

 

 

3,622,558

 

 

$

6.20

 

 

 

7.89

 

 

$

6,530

 

Exercisable at December 31, 2021

 

 

2,042,663

 

 

$

4.80

 

 

 

5.14

 

 

$

6,001

 

Granted during 2022

 

 

725,360

 

 

$

2.74

 

 

 

9.70

 

 

$

16

 

Exercised during 2022

 

 

(180,000

)

 

$

1.30

 

 

 

0.51

 

 

$

772

 

Forfeited during 2022

 

 

(78,500

)

 

$

8.45

 

 

 

 

 

 

 

Outstanding at December 31, 2022

 

 

4,089,418

 

 

$

5.76

 

 

 

6.77

 

 

$

152

 

Exercisable at December 31, 2022

 

 

2,549,401

 

 

$

5.88

 

 

 

5.46

 

 

$

133

 

 

The weighted-average grant-date fair value of options granted during the years 2022, 2021 and 2020 was $3.31, $6.00 and $4.65, respectively. The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020, was $772, $2,273 and $2,732, respectively.

A summary of the status of the Company’s non-vested stock options, and the changes during the year ended December 31, 2022 is presented below:

 

 

 

Number of
Options

 

 

Weighted
Average Grant
Date Fair
Value

 

 

Aggregate
Intrinsic Value

 

Non-vested at January 1, 2022

 

 

1,579,895

 

 

$

5.28

 

 

 

 

Granted

 

 

725,360

 

 

$

2.06

 

 

 

 

Vested

 

 

(696,238

)

 

$

5.35

 

 

 

 

Forfeited

 

 

(69,000

)

 

$

5.75

 

 

 

 

Non-vested at December 31, 2022

 

 

1,540,017

 

 

$

3.72

 

 

$

19

 

 

As of December 31, 2022, there was approximately $5,692 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the stock option plan; that cost is expected to be recognized over a period of three years.

The Company has also issued performance-based restricted share units to Village Farms employees involved with future developments of the Company. Once a performance target is met and the share units are deemed earned and vested, compensation expense is recognized, based on the fair value of the share units on the grant date.

Performance-based restricted share unit activity for the years ended December 31, 2022, 2021 and 2020 is as follows:

 

 

 

Number of
Performance-based
Restricted Share Units

 

 

Weighted Average
Grant Date Fair Value

 

Outstanding at January 1, 2020

 

 

739,000

 

 

$

6.08

 

Granted

 

 

1,068,000

 

 

$

4.75

 

Issued

 

 

(840,000

)

 

$

4.83

 

Forfeited/expired

 

 

(98,000

)

 

$

7.16

 

Outstanding at December 31, 2020

 

 

869,000

 

 

$

5.89

 

Exercisable at December 31, 2020

 

 

75,000

 

 

$

4.79

 

Granted

 

 

158,000

 

 

$

7.72

 

Exercised

 

 

(487,000

)

 

$

5.70

 

Forfeited

 

 

(310,000

)

 

$

6.66

 

Outstanding at December 31, 2021

 

 

230,000

 

 

$

6.83

 

Exercisable at December 31, 2021

 

 

200,000

 

 

$

6.49

 

Granted

 

 

—

 

 

 

—

 

Exercised

 

 

(200,000

)

 

$

6.41

 

Forfeited/expired

 

 

—

 

 

 

—

 

Outstanding at December 31, 2022

 

 

30,000

 

 

$

8.31

 

Exercisable at December 31, 2022

 

 

30,000

 

 

$

8.31

 

 

A summary of the status of the Company’s non-vested performance-based restricted share units, and the changes during the year ended December 31, 2022, is presented below:

 

 

 

Number of
Performance-based
Restricted Share Units

 

 

Weighted Average
Grant Date Fair Value

 

Non-vested at January 1, 2022

 

 

30,000

 

 

$

8.24

 

Vested

 

 

(30,000

)

 

$

8.31

 

Non-vested at December 31, 2022

 

 

—

 

 

 

—

 

 

 

Total share-based compensation expense for the years ended December 31, 2022, 2021 and 2020 of $3,987, $7,533 and $6,142, respectively, was recorded in selling, general and administrative expenses and the corresponding amount credited to additional paid in capital.