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Stockholders' Equity
 12 Months Ended
May 31, 2022
Equity [Abstract]  
Stockholders' Equity

19.

Stockholders’ equity

Issued and outstanding

At May 31, 2022, the Company had 990,000,000 shares authorized to be issued with 532,674,887 shares issued and outstanding, at May 31, 2021 – 743,333,333 and 446,440,641 respectively.

During the year-ended May 31, 2022, the Company issued the following shares:

 

a)

In September 2021, the Company issued 9,817,061 shares to acquire a 68% interest in SH Acquisition (refer to Note 11 Convertible notes receivable). The fair value of the shares issued was $117,804.

 

b)

In December 2021, the Company issued 12,540,479 shares to acquire all the membership interests of Double Diamond Distillery LLC (refer to Note 9 Business Acquisitions)

 

c)

During the year, the Company issued 51,741,710 shares under its At-the-Market (“ATM”) program for gross proceeds of $267,762. The Company paid $5,253 in commissions and other fees associated with these issuances for net proceeds of $262,509. As a result of the sale of shares from the ATM, the exercise price on the outstanding warrants have been adjusted from $5.95 to $4.30.

 

d)

During the year, the Company issued 2,677,596 shares to settle amounts owed to the non-controlling shareholders of Aphria Diamond in the amount of $28,560. In addition, the Company also paid $7,484 to the non-controlling shareholders of Aphria Diamond for an aggregate settlement of $36,044.

 

e)

During the year, the Company issued 2,959,386 shares to settle various legal proceedings.

 

f)

In December 2021, the Company issued 1,289,628 shares to purchase capital and intangible assets.

 

g)

During the year ended May 31, 2022 the company issued 5,208,386 shares for the exercise of various stock-based compensation awards.

Stock-based compensation

For the year ended May 31, 2022, the total stock-based compensation expense was $35,994 (2021 - $17,351 and 2020- $18,079). The Company operates multiple stock-based award plans as follows:

Tilray 2018 Equity Incentive Plan and Original Plan

The 2018 Equity Incentive Plan (EIP) authorizes the award of stock options, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) to employees, including officers, non-employee directors and consultants and the employees and consultants of our affiliates. Shares subject to awards granted under the EIP that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the EIP. Additionally, shares become available for future grant under the EIP if they were issued under the EIP and if the Company repurchases them or they are forfeited. This includes shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award. The maximum number of shares of common stock subject to stock awards granted under the EIP or otherwise during any one calendar year to any non-employee director, taken together with any cash fees paid by the Company to such non-employee director during such calendar year for service on the Board of Directors, will not exceed five hundred thousand dollars in total value, calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes, or, with respect to the calendar year in which a nonemployee director is first appointed or elected to our Board of Directors, one million dollars.

Stock options represent the right to purchase shares of our common stock on the date of exercise at a stated exercise price. The exercise price of a stock option generally must be at least equal to the fair market value of our shares of common stock on the date of grant. The Company’s compensation committee may provide for stock 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. The maximum term of stock options granted under the EIP is ten years.

RSUs represent a right to receive common stock or their cash equivalent for each RSU that vests, which vesting may be based on time or achievement of performance conditions. Unless otherwise determined by our compensation committee at the time of grant, vesting will cease on the date the participant no longer provides services to the Company and unvested shares will be forfeited. If an RSU has not been forfeited, then on the date specified in the RSUs, the Company will deliver to the holder a number of whole shares of common stock, cash or a combination of shares of our common stock and cash. Additionally, dividend equivalents may be credited in respect of shares covered by the RSUs. Any additional shares covered by the RSU credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying RSU agreement to which they relate. The RSUs generally vest over a 3-or-4 year period. The fair value of RSUs are based on the share price as at date of grant.

SARs provide for a payment, or payments, in cash or shares of common stock to the holder based upon the difference between the fair market value of shares of our common stock on the date of exercise and the stated exercise price. The maximum term of SARs granted under the EIP is ten years. No SARs were issued to date.

The EIP permits the grant of performance-based stock and cash awards. The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates or business segments and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be conclusively determined by the Board of Directors.

As of April 30, 2021, 9,806,851 shares of common stock had been reserved for issuance under the EIP. The number of shares of common stock reserved for issuance under the 2018 EIP will automatically increase on January 1 of each calendar year, for a period of not more than ten years, starting on January 1, 2019 and ending on and including January 1, 2027, in an amount equal to 4% of the total number of shares of our common stock outstanding on December 31 of the prior calendar year, or a lesser number of shares determined by our Board of Directors. The shares reserved include only the outstanding shares related to stock options and RSUs and excludes stock options outstanding under the Original Plan.

Certain employees and other service providers of the Company participate in the equity-based compensation plan of Privateer Holdings, Inc (the “Original Plan”) under the terms and valuation method detailed below. The expected life of the stock options represented the period of time stock options were expected to be outstanding and was estimated considering vesting terms and employees’ historical exercise and post-vesting employment termination behavior. Expected volatility was based on historical volatilities of public companies operating in a similar industry to Privateer Holdings. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant. The expected dividend yield was determined based on the stock option’s exercise price and expected annual dividend rate at the time of grant.

No stock options were granted under the EIP during the year ended May 31, 2022 and 2021. For the year ended May 31, 2020, the fair value of each stock option granted is estimated on grant date using the Black-Scholes option pricing model using the following assumptions: risk-free rate for 2.10% on the date of grant; expected life of 8.97 years; volatility of 61.33% based on comparable companies; dividend yield of $nil; and, the exercise price of the respective option. The expected life of the award is estimated using the simplified method since the Company does not have adequate historical exercise data to estimate the expected term.

Stock-based activity under the EIP and Original Plan for the year ended May 31, 2022 is as follows:

 

EIP Time-based stock option activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

average

 

 

 

 

 

 

 

 

 

 

 

average

 

 

remaining

 

 

 

 

 

 

 

Stock

 

 

exercise

 

 

contractual

 

 

Aggregate

 

 

 

Options

 

 

price

 

 

term (years)

 

 

intrinsic value

 

Balance, May 31, 2021

 

 

3,180,226

 

 

$

14.19

 

 

1.3

 

 

$

25,171

 

Granted

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Exercised

 

 

(171,603

)

 

 

7.76

 

 

 

—

 

 

 

—

 

Forfeited

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(126,874

)

 

 

6.08

 

 

 

—

 

 

 

—

 

Balance, May 31, 2022

 

 

2,881,749

 

 

$

14.93

 

 

 

6.0

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Original plan time-based stock option activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

average

 

 

 

 

 

 

 

 

 

 

 

average

 

 

remaining

 

 

 

 

 

 

 

Stock

 

 

exercise

 

 

contractual

 

 

Aggregate

 

 

 

Options

 

 

price

 

 

term (years)

 

 

intrinsic value

 

Balance, May 31, 2021

 

 

917,545

 

 

$

3.97

 

 

1.7

 

 

$

11,886

 

Exercised

 

 

(735,564

)

 

 

3.36

 

 

 

—

 

 

 

—

 

Forfeited

 

 

(9,016

)

 

 

5.36

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(80,188

)

 

 

9.93

 

 

 

—

 

 

 

—

 

Balance, May 31, 2022

 

 

92,777

 

 

$

3.52

 

 

 

3.8

 

 

$

117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EIP Time-based RSU activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

average

 

 

Weighted-

average

 

 

 

 

 

 

 

 

 

 

 

grant-date

 

 

remaining

 

 

 

 

 

 

 

Time-based

 

 

fair value

 

 

contractual

 

 

Aggregate

 

 

 

RSUs

 

 

per share

 

 

term (years)

 

 

intrinsic value

 

Balance, May 31, 2021

 

 

1,205,243

 

 

$

15.16

 

 

 

—

 

 

$

20,091

 

Granted

 

 

6,447,993

 

 

 

12.02

 

 

 

—

 

 

 

—

 

Vested

 

 

(564,937

)

 

 

20.33

 

 

 

—

 

 

 

—

 

Forfeited

 

 

(377,519

)

 

 

14.16

 

 

 

—

 

 

 

—

 

Cancelled

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance, May 31, 2022

 

 

6,710,780

 

 

$

11.76

 

 

 

2.6

 

 

$

25,894

 

 

Predecessor Plan - Aphria

Aphria had established the Aphria Omnibus Incentive Plan (the “Predecessor Plan”). Following stockholder approval of the EIP, no new awards have been granted under the Predecessor Plan. In connection with the reverse acquisition Aphria stock options, Aphria RSUs and DSUs issued under the Predecessor Plan were exchanged for

options, RSUs under the EIP. As a result of the modification, all grantees were affected, and the Company recognized nil incremental compensation cost.

The fair value of each stock option granted under the Predecessor Plan is estimated on grant date using the Black-Scholes option pricing model using the following assumptions: risk-free rate for 2021 of 0.39% and 2020 of 1.20 – 1.56% on the date of grant; expected life for 2021 of 5 years and 2020 of 5 years; volatility for 2021 of 70% and 2020 of 70%) based on comparable companies; forfeiture rate for 2021 of 35% and 2020 of  20%; dividend yield for 2021 of $nil and 2020 of $nil); and, the exercise price of the respective option. The expected life of the award is estimated using the simplified method since the Company does not have adequate historical exercise data to estimate the expected term.

Stock option, RSU and DSU activity for the Company under the Predecessor Plan is as follows:

Time-based stock option activity

 

 

 

May 31, 2022

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

average

 

 

average

 

 

 

 

 

 

 

 

 

 

 

average

 

 

grant

 

 

remaining

 

 

Aggregate

 

 

 

Number of

 

 

exercise

 

 

date fair

 

 

contractual

 

 

Intrinsic

 

 

 

options

 

 

price

 

 

value

 

 

term (years)

 

 

Amount

 

Outstanding, beginning of the year

 

 

2,499,185

 

 

$

12.48

 

 

$

6.51

 

 

 

2.4

 

 

 

10,472

 

Exercised during the year

 

 

(203,071

)

 

 

8.14

 

 

 

31.88

 

 

N/A

 

 

N/A

 

Granted during the year

 

 

—

 

 

 

—

 

 

 

—

 

 

N/A

 

 

N/A

 

Forfeited during the year

 

 

(155,381

)

 

 

18.21

 

 

 

6.15

 

 

N/A

 

 

N/A

 

Expired during the year

 

 

(301,705

)

 

 

16.14

 

 

 

20.07

 

 

N/A

 

 

N/A

 

Outstanding, end of the year

 

 

1,839,028

 

 

$

11.29

 

 

$

64.44

 

 

 

1.8

 

 

 

—

 

Vested and exercisable, end of the year

 

 

1,764,777

 

 

$

11.39

 

 

$

65.39

 

 

 

1.8

 

 

 

—

 

 

Time-based and Performance-based RSU activity

 

 

 

May 31, 2022

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

grant -

 

 

 

 

 

 

 

 

date fair

 

 

 

 

Time- based

 

 

value per

 

 

 

 

RSUs

 

 

share

 

 

Non-vested, beginning of the year

 

 

2,794,972

 

 

$

6.88

 

 

Granted during the year

 

 

—

 

 

 

—

 

 

Vested during the year

 

 

(1,868,691

)

 

$

13.79

 

 

Forfeited during the year

 

 

(149,169

)

 

$

20.59

 

 

Non-vested, end of the year

 

 

777,112

 

 

$

11.09