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Share-Based Compensation Expense

9 Months Ended

Sep. 30, 2023

Share-Based Compensation Expense [Abstract]

Share-Based Compensation Expense

13.

Share-Based Compensation Expense

Share-based compensation expenses are summarized as follows:

		Three months ended September 30								Nine months ended September 30
		2023				2022				2023				2022

Restricted stock units		$	2,025,557			$	171,681			$	6,231,103			$	171,681
Stock options			1,237,565				16,986				2,693,771				50,958
Rights to contingent consideration			1,058,030				-				1,566,163				-
		$	4,321,152			$	188,667			$	10,491,037			$	222,639

Restricted Stock Units

The following table reflects the continuity of restricted stock units (“RSUs”) transactions:

		Nine months ended September 30, 2023
		Number				Weighted Average Grant Date Fair Value
Outstanding, beginning of year			1,548,098			$	11.62
Granted			634,341				8.59
Vested			(536,113	)			11.23
Forfeited			(8,033	)			9.03
Outstanding, end of period			1,638,293			$	10.59

The total unrecognized compensation cost for the RSUs issued is $14,843,463 which is expected to be recognized over a weighted-average period of 1.89 years.

Stock Options

During the nine months ended September 30, 2023, the Company issued stock options that were subject to certain performance or service conditions.

The grant date fair values of the options issued on various dates were in the range of $4.67 to $9.23 per option. The fair value of the options was determined using either a Black-Scholes option pricing model or a Monte Carlo simulation methodology that included simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. The following assumptions were made:

Share price		$7.16-$10.36
Exercise price		$7.16-$10.36
Risk-free interest rate		3.42%-4.24%
Volatility		95%-97%
Expected life		10 years
Dividend rate		0.00%

The Company estimated the volatility by reference to comparable companies that are publicly traded.

The following table reflects the continuity of stock option transactions:

		Nine months ended September 30, 2023
		Service Conditions								Performance Conditions
		Number				Weighted Average Exercise Price				Number				Weighted Average Exercise Price
Outstanding, beginning of year			58,607,457			$	0.22				-			$	-
Granted			1,452,937				9.41				358,249				9.42
Forfeited			(36,949	)			9.45				-				-
Outstanding, end of period			60,023,445			$	0.43				358,249			$	9.42

Vested and exercisable			57,874,192			$	0.10				-			$	-

Additionally, the option holders are eligible to receive up to an aggregate of 28,587,396 shares of Class A Common Stock in respect of the options they hold if the closing price of the Company’s Class A Common Stock is greater than or equal to $15.00 and $17.50, respectively (with 50% released at each target, or if the latter target is reached first, 100%) for a period of 20 trading days during any 30 trading-day period. The term will expire September 16, 2027. If there is a change in control prior to September 16, 2027 resulting in a per share price equal to or in excess of the $15.00 and $17.50 share price milestones not previously met, then the Company shall issue the earnout shares to the option holders.

The total unrecognized compensation cost for options with a service only condition and options with a performance condition as of September 30, 2023 was $12,921,320 and $3,000,000, respectively. For the options with a service only condition, the cost is expected to be recognized over a weighted average period of 2.22 years.

As of September 30, 2023, the Company has determined that it is not probable that the conditions related to the performance-based stock options will be met, and therefore, the Company has not recognized the related expense in the condensed consolidated interim statement of operations.

The weighted average fair value of the outstanding options with a service only condition and options with a performance condition as of September 30, 2023 was $0.97 and $8.37, respectively.

Rights to Contingent Consideration

In connection with the acquisition of Callin as described in Note 3, the Company was required to replace unvested options, unvested series FF preferred shares, and restricted common stock held by continuing employees of Callin with a right to receive contingent consideration. If the underlying contingencies are met, the obligation will be satisfied by the issuance of shares of Class A Common Stock. In addition, as described in Note 3, two of the contingent consideration tranches are dependent on one selling shareholder providing services to the Company.

Where rights to receive contingent consideration were issued to replace unvested awards of the acquired company, the Company has allocated an amount to consideration based on the fair value of the original award at the acquisition date. The amount allocated is based on the period of time vested as of the acquisition date in relation to the greater of the vesting period of the original award and the total service requirement as per the below. The difference between the fair value of the new award on the acquisition date and the amount allocated to consideration is post-combination expense, as laid out below:

		Fair value
Allocated to consideration		$	15,578
Allocated to post-combination services			5,941,563
Total fair value of rights		$	5,957,141

The portion of the fair value allocated to post-combination services will be recognized in the consolidated statement of operations over the remaining service period.

		Service Conditions				Performance Conditions
Outstanding, beginning of year			-				-
Granted			351,063				245,248
Forfeited			-				-
Outstanding, end of period			351,063				245,248

During the three and nine months ended September 30, 2023, share-based compensation expense of $1,058,030 and $1,566,163 was recognized in the condensed consolidated interim statement of operations related to the rights to contingent consideration (three and nine months ended September 30, 2022 - $nil and $nil). As of September 30, 2023, there was $2,702,342 and $1,673,059 of total unrecognized compensation cost related to rights with a service only condition, and rights with a performance condition, respectively. That cost is expected to be recognized over a weighted average period of 1.45 years and 1.34 years, respectively.