Shareholders' Equity and Share Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Shareholders' Equity and Share Based Compensation

16. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

On January 30, 2023, the Company closed a public offering (the "Offering") of 18,350,000 Common Shares at a price of US$1.35 per share together with accompanying warrants to purchase up to 18,350,000 Common Shares, which have an exercise price of US$ 1.65 per share (the "Warrants"). The gross proceeds from the Offering were approximately US$25 million before deducting placement agent fees and other offering expenses payable by the Company. The proceeds from the Offering are being used for general working capital. The accompanying Warrants have an exercise price of US$1.65 and became exercisable beginning six months from issuance and will expire five years from the date of initial exercisability.

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.

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 4,078 shares remain available for issuance as of December 31, 2023.

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:


	2023	2022	2021
Expected volatility	85.7% - 87.8%	84.0% - 89.9%	68.3% - 75.7%
Dividend	$nil	$nil	$nil
Risk-free interest rate	2.76% - 4.15%	1.41% - 3.28%	1.07% - 1.54%
Expected life	6.5 years	6.5 years	4.5 years - 6.9 years
Fair value	$0.44 - $0.82	$0.93 - $4.33	$4.29 - $7.31

Stock option transactions under the Company’s plan for the years ended December 31, 2023, 2022 and 2021 are summarized as follows:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2021		3,067,322		$	5.42		6.82	$	15,735
Granted during 2021		792,236		$	8.47		9.78	$	57
Exercised during 2021		(177,000	)	$	1.07		1.14	$	1,813
Forfeited/expired 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
Granted during 2023		3,492,991		$	0.94		9.34	$	130
Exercised during 2023		(100,000	)	$	0.83			$	71
Forfeited during 2023		(535,833	)	$	4.04
Outstanding at December 31, 2023		6,946,576		$	3.50		7.54	$	83
Exercisable at December 31, 2023		3,081,262		$	6.07		5.44	$	1

The weighted-average grant-date fair value of options granted during the years 2023, 2022 and 2021 was $0.71, $3.31 and $6.00, respectively. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021, was $71, $772 and $2,273, respectively.

A summary of the status of the Company’s non-vested stock options, and the changes during the year ended December 31, 2023 is presented below:


	Number of Options			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at January 1, 2023		1,540,017		$	3.72
Granted		3,492,991		$	0.71
Vested		(739,361	)	$	3.89
Forfeited		(428,333	)	$	2.76
Non-vested at December 31, 2023		3,865,314		$	1.07	$	82

As of December 31, 2023, there was approximately $1,833 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, 2023, 2022 and 2021 is as follows:


	Number of Performance-based Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021		869,000		$	5.89
Granted		158,000		$	7.72
Issued		(487,000	)	$	5.70
Forfeited/expired		(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		—			—
Outstanding at December 31, 2022		30,000		$	8.31
Exercisable at December 31, 2022		30,000		$	8.31
Granted		—			—
Issued		(10,000	)	$	8.31
Forfeited/expired		(20,000	)	$	8.31
Outstanding at December 31, 2023		—		$	-
Exercisable at December 31, 2023		—		$	-

Total share-based compensation for the years ended December 31, 2023, 2022 and 2021 of $3,111, $3,987 and $7,533, respectively, was recorded in selling, general and administrative expenses and the corresponding amount credited to additional paid in capital.