Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS??? EQUITY AND STOCK-BASED COMPENSATION

v3.23.3
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
Amended and Restated 2018 Stock Award and Incentive Plan

The Company’s Amended and Restated 2018 Stock Award and Incentive Plan (the “Plan”) provides for the award of options to purchase the Company’s common stock (“stock options”), restricted stock units ("RSUs"), stock appreciation rights (“SARs”), restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards and other stock- or cash-based awards. Awards can be granted under the Plan to the Company’s employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries.

On June 8, 2023, the Company's Board of Directors approved an amendment to the Plan (the "2018 Plan") to modify the one-year minimum vesting requirements.

Stock Options

A summary of the Company's stock option activity during the nine months ended September 30, 2023 is below:
Shares Weighted average exercise price
Outstanding at January 1, 2023 36,504,673 $ 0.82 
Granted 1,100,000 $ 0.43 
Exercised (487,752) $ 0.23 
Forfeited (495,000) $ 1.92 
Expired (362,500) $ 1.98 
Outstanding at September 30, 2023 36,259,421 $ 0.79 

Stock options granted under the 2018 Plan generally expire five years from the date of grant. At September 30, 2023, the stock options outstanding had a weighted average remaining life of approximately three years.

The grant date fair values of stock options granted in the nine months ended September 30, 2023 were estimated using the Black-Scholes valuation model with the following assumptions:

Estimated life (in years)
3.00 to 3.26
Weighted average volatility 99.22  %
Weighted average risk-free interest rate 3.59  %
Dividend yield — 

The Company did not grant any stock options in the three months ended September 30, 2023.
Restricted Stock Units

The Company began to grant RSUs under the 2018 Plan in the fourth quarter of 2022. Holders of unvested RSUs do not have voting or dividend rights. The grant date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service periods. The fair value of RSUs is determined based on the market value of the shares of the Company's common stock on the date of grant.

The activity related to the Company's RSUs for the nine months ended September 30, 2023 was as follows:
RSUs Weighted average grant date fair value
Unvested at January 1, 2023 1,599,999 $ 0.53 
Granted 4,355,038 $ 0.41 
Vested (349,999) $ 0.53 
Forfeited (61,000) $ 0.43 
Outstanding at September 30, 2023 5,544,038 $ 0.44 

Warrants

In connection with the Credit Agreement, the Company issued to the Lenders an aggregate of 19,148,936 warrants to purchase shares of the Company's common stock at $0.47 per share, exercisable for a five-year period following issuance (see Note 10).

In addition to the 450,000 shares of restricted common stock issued to purchase the outstanding minority interest in Mari Holdings MD LLC ("Mari MD") noted below, the Company also issued 400,000 warrants to purchase the Company's common stock at an exercise price of $0.40 per share (the "Mari MD Warrants"). The Mari MD Warrants expire on April 13, 2026.

At September 30, 2023, warrants to purchase up to 42,199,476 shares of the Company's common stock were outstanding, with a weighted average exercise price of $0.68.

Other Common Stock Issuances

In addition to the activity related to stock options and RSUs, described previously, the Company also issued during the nine months ended September 30, 2023:

•70,000 shares of restricted common stock reported as subscribed at December 31, 2022 as discussed below;
•5,025 shares of restricted common stock subscribed;
•6,580,390 shares of restricted common stock with a fair value of $3.0 million issued as purchase consideration for the Ermont Acquisition (see Note 2);
•450,000 shares of restricted common stock to purchase a 0.33% minority interest in Mari Holdings MD LLC, one of the Company's majority-owned subsidiaries;
•25,304,710 shares of common stock issued to convert 5,060,942 shares of Series C Stock to common stock;
•an aggregate of 1,140,741 shares of restricted common stock with a total fair value of approximately $460,000 issued as payment for services to two service providers; and
•8,613 shares of restricted common stock with an aggregate fair value of approximately $3,000 issued under a royalty agreement.

Stock-Based Compensation

The Company recorded stock-based compensation of $0.3 million and $1.4 million in the three months ended September 30, 2023 and 2022, respectively, and $0.8 million and $6.4 million in the nine months ended September 30, 2023 and 2022, respectively.
Common Stock Issuance Obligations

At December 31, 2022, the Company was obligated to issue 70,000 shares of restricted common stock in the aggregate with a total grant date fair value of approximately $39,000, to two employees, which shares of common stock were issued in the first quarter of 2023.