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Share-based Payments | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Share-based Payments | Share-based Payments (a)Warrants The following is a summary of the changes in warrants during the year ended December 31, 2020 and December 31, 2019:
| Weighted average exercise price (C$) |  | Number of warrants
Balance as of January 1, 2020 | $ | 0.26 |  |  | 18,066,662 |
Exercise of warrants | 0.27 |  |  | (10,079,313) |
Balance as of December 31, 2020 | $ | 0.25 |  |  | 7,987,349 |
| Weighted average exercise price (C$) |  | Number of warrants
Balance as of January 1, 2019 | $ | 0.26 |  |  | 25,457,623 |
Exercise of warrants | 0.26 |  |  | (7,390,961) |
Balance as of December 31, 2019 | $ | 0.26 |  |  | 18,066,662 |
For a description of the Altria Warrant, see Note 14. As of December 31, 2020, the Company had outstanding warrants as follows:
Grant date |  | Expiry date |  | Weighted average exercise price (C$) |  | Number of warrants
May 13 – 27, 2016 |  | May 13 – 27, 2021 |  | $ | 0.25 |  |  | 7,987,349 |
As of December 31, 2020 |  | $ | 0.25 |  |  | 7,987,349 |
(b)Stock options (i)Stock option plans The Company adopted an amended and restated stock option plan dated May 26, 2015 (the “2015 Stock Option Plan”), which was approved by shareholders of the Company at the annual general meeting of shareholders held on June 28, 2017. The 2015 Stock Option Plan allowed the Company’s Board of Directors (the “Board”) to award options to purchase shares to directors, officers, key employees and service providers of the Company. As of June 28, 2018, no further awards will be granted under the 2015 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2015 Stock Option Plan. On June 28, 2018, the shareholders of the Company approved a stock option plan (the “2018 Stock Option Plan”), which replaced the 2015 Stock Option Plan. The 2018 Stock Option Plan terminated the Company’s ability to grant equity under the 2015 Stock Option Plan. As of June 25, 2020, the date on which the 2020 Omnibus Plan (as defined below) was approved by the shareholders of the Company, no further awards will be granted under the 2018 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2018 Stock Option Plan. On March 29, 2020, the Board adopted a new omnibus equity incentive plan (the “2020 Omnibus Plan”), which was approved by the shareholders of the Company at the annual and special meeting of shareholders held on June 25, 2020. The 2020 Omnibus Plan provides for grants of stock options, share appreciation rights, restricted shares, restricted share units (“RSUs”) and other share-based or cash-based awards, which are subject to terms as determined by the Compensation Committee of the Board, and awards may be granted to eligible employees, non-employee directors and consultants. The 2020 Omnibus Plan terminated the Company’s ability to grant equity awards under the 2018 Stock Option Plan and restricted stock units under the Employment Inducement Plan. Options represent the right to purchase Company common shares on the date of exercise at a stated exercise price. The exercise price of an option generally must be at least equal to the fair market value of the Company common shares on the date of grant. The Compensation Committee of the Board (“Compensation Committee”) may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to the Company’s right of repurchase that lapses as the shares vest. Vesting conditions for grants of options are determined by the Compensation Committee. The typical vesting for stock option grants is quarterly vesting over three to five years. The maximum term of options granted under the 2020 Omnibus Plan is seven years. Participants under the 2020 Omnibus Plan are eligible to be granted options to purchase shares at an exercise price established upon approval of the grant by the Compensation Committee. When options are granted, the exercise price is, with respect to a particular date, the closing price as reported by the TSX or the Nasdaq and, if the shares are not traded on the TSX or the Nasdaq, any other stock exchange on which the Company’s common shares are traded (as selected by the Compensation Committee in good faith taking into account applicable legal and tax requirements) on the immediately preceding trading day (the “Fair Market Value”). The 2020 Omnibus Plan does not authorize grants of options with an exercise price below the Fair Market Value. The equity plans described above have the following stock options outstanding:
| Shares outstanding as of December 31,
| 2020 |  | 2019 |  | 2018
2020 Omnibus Plan | 2,000,000 |  |  | — |  |  | — |
2018 Stock Option Plan | 1,627,715 |  | 1,817,287 |  | 285,000 |
2015 Stock Option Plan | 10,127,433 |  |  | 12,332,215 |  |  | 12,617,995 |
Total stock options outstanding | 13,755,148 |  | 14,149,502 |  | 12,902,995 |
For the year ended December 31, 2020, the total stock-based compensation expense associated with the equity plans was $7,185 (December 31, 2019 – $10,278; December 31, 2018 - $8,151). (ii) Summary of changes The following is a summary of the changes in options during the year ended December 31, 2020 and December 31, 2019:
| Weighted average exercise price (C$) |  | Number of options |  | Weighted average remaining contractual term (years)
Balance as of January 1, 2020 | $ | 4.84 |  |  | 14,149,502 |  |  | 2.56
Issuance of options(i) | 6.96 |  |  | 2,000,000 |  |  |
Exercise of options | 2.03 |  |  | (2,131,939) |  |  |
Cancellation, forfeiture and expiry of options | 14.34 |  |  | (262,415) |  |  |
Balance as of December 31, 2020 | $ | 5.40 |  |  | 13,755,148 |  |  | 2.30
Exercisable at December 31, 2020 | $ | 3.75 |  |  | 9,643,682 |  |  | 1.34
(i)The weighted average exercise price reflects the conversion of foreign currency-denominated options at the exchange rates as of December 31, 2020. For foreign currency-denominated options, the weighted average exercise prices are translated using exchange rates as of the settlement date.
| Weighted average exercise price (C$) |  | Number of options |  | Weighted average remaining contractual term (years)
Balance as of January 1, 2019 | $ | 2.99 |  |  | 12,902,995 |  |  | 3.35
Issuance of options | 20.08 |  |  | 1,534,162 |  |  |
Exercise of options | 3.48 |  |  | (282,572) |  |  |
Cancellation, forfeiture and expiry of options | 2.27 |  |  | (5,083) |  |  |
Balance as of December 31, 2019 | $ | 4.84 |  |  | 14,149,502 |  |  | 2.56
Exercisable at December 31, 2019 | $ | 2.93 |  |  | 9,034,714 |  |  | 2.27
(iii)Fair value of options issued The fair value of the options issued during the year was determined using the Black-Scholes option pricing model, using the following inputs:
| 2020 |  | 2019
Share price at grant date (per share) | C$6.96 |  | C$15.34 – $24.75
Exercise price (per option)(i) | C$6.96 |  | C$15.34 – $24.75
Risk-free interest rate | 0.43% |  | 1.39% – 1.62%
Expected life of options (in years)(ii) | 5 |  | 5
Expected annualized volatility | 91% |  | 82%
Expected dividend yield | — |  | —
Weighted average Black-Scholes value at grant date (per option) | C$4.84 |  | C$13.03
Forfeiture rate | — |  | —
(i)The weighted average exercise price reflects the conversion of foreign currency-denominated options at the exchange rates as of December 31, 2020. For foreign currency-denominated options, the weighted average exercise prices are translated using exchange rates as of the settlement date. (ii)The expected life of the awards represents the period of time options are expected to be outstanding and is estimated considering vesting terms and employees’ and non-employees’ historical exercise and, where relevant, post-vesting employment termination behavior. Volatility was estimated by using the historical volatility of the Company’s share price, adjusted for the Company’s expectation of volatility going forward. The risk-free interest rate was based on the Bank of Canada government bonds with a remaining term equal to the expected life of the options at the grant date. The weighted average fair value per share at grant date of the options during the year ended December 31, 2020 was C$4.84 per share (December 31, 2019 – C$13.03 per share). (c)Restricted share units RSUs are granted under the 2020 Omnibus Plan. RSUs represent an equivalent amount of Company common shares on the date of issuance at fair value. Fair value is determined using the closing price of the trading day immediately preceding the date of grant. RSUs issued under the 2020 Omnibus Plan typically vest over a three-year period following the grant date, have no performance requirements and no forfeiture rate. On July 20, 2020, the Company entered into separation agreements with Robert Rosenheck and another Redwood employee pursuant to which they resigned from their employment with Redwood. In connection with such separation agreements, 732,972 outstanding and unvested RSUs were accelerated and vested during the year ended December 31, 2020. For the year ended December 31, 2020, the Company recorded $8,176 (December 31, 2019 – $889) in share-based compensation expense related to these RSUs. No RSUs were granted in 2018. The following is a summary of the changes in RSUs:
| Number of RSUs |  | Weighted average grant date fair value (C$)
Balance at January 1, 2020 | 732,972 |  |  | $ | 15.34 |
Granted | 957,854 |  |  | 7.66 |
Exercised | (732,972) |  |  | 15.34 |
Cancellation and forfeitures | (9,497) |  |  | 7.52 |
Balance at December 31, 2020 | 948,357 |  |  | $ | 7.66 |
| Number of RSUs |  | Weighted average grant date fair value (C$)
Balance at January 1, 2019 | — |  |  | $ | — |
Granted | 732,972 |  |  | 15.34 |
Balance at December 31, 2019 | 732,972 |  |  | $ | 15.34 |
(d)Deferred share units On August 10, 2019, the Company established a cash-settled deferred share unit plan (“DSU Plan”) pursuant to which its non-executive directors receive deferred share units (“DSUs”). The DSU Plan is designed to promote a greater alignment of long-term interests between non-executive directors and shareholders. The number of DSUs granted under the DSU Plan (including fractional DSUs) is determined by dividing the amount of remuneration payable by the closing price as reported by the TSX on the trading day immediately preceding the date of grant. DSUs are payable at the time a non-executive director ceases to hold the office of director for any reason and are settled by a lump-sum cash payment, in accordance with the terms of the DSU Plan, based on the fair value of the DSUs at such time. The fair value of the cash payout is determined by multiplying the number of DSUs vested at the payout date by the closing price as reported by the TSX on the trading day immediately preceding the payout date. The fair value of the cash payout is determined at each reporting date based on the fair value of the Company’s common shares at the reporting date and is recorded within other liabilities. No DSUs were granted during 2018. The following is a summary of the changes in DSUs:
| Number of DSUs |  | Financial liability
Balance at January 1, 2020 | 33,397 |  |  | $ | 255 |
Granting and vesting of DSUs | 58,380 |  |  | 338 |
Liabilities settled | (8,484) |  |  | (46) |
Loss (gain) on revaluation | — |  |  | 30 |
Balance at December 31, 2020 | 83,293 |  |  | $ | 577 |
| Number of DSUs |  | Financial liability
Balance at January 1, 2019 | — |  |  | $ | — |
Granting and vesting of DSUs | 33,397 |  |  | 452 |
Loss (gain) on revaluation | — |  |  | (197) |
Balance at December 31, 2019 | 33,397 |  |  | $ | 255 |

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