On September 10, 2020 the Company closed a registered direct offering with certain institutional investors for the purchase and sale of an aggregate of 9,396,226 units at a purchase price of $5.30 per unit for gross proceeds of approximately $49.8 million before placement agent fees and other offering expenses.

Each unit that was sold consists of one common share of the Company and a one-half (0.5) of a warrant to purchase a common share of the Company at an exercise price of $5.80. The warrants will be exercisable beginning on March 10, 2021 and will expire on September 10, 2025. ASC 480, Distinguishing Liabilities from Equity, requires that these warrants are classified as equity. The fair value of these warrants was determined using the Black-Sholes Merton valuation model.

The Company’s Share-Based Compensation Plan (the “Plan”), dated January 1, 2010 was most recently approved by Shareholders on June 14, 2018. 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 2,175,000 shares remain available for issuance at December 31, 2020.

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:

	2020			2019			2018
Expected volatility		71.1	%		60.7	%		55.5	%
Dividend	$nil			$nil			$nil
Risk-free interest rate		0.52	%		1.86	%		2.30	%
Expected life	7.1 years			5.7 years			5.9 years
Fair value	C$5.8314			C$9.7259			C$3.2541

Stock option transactions under the Company’s plan for the years ended December 31, 2020, 2019 and 2018 are summarized as follows:

	Number of Options			Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2018		2,337,732		C$1.59		5.89	$	14,125
Granted during 2018		203,000		C$5.79		9.44
Exercised during 2018		(365,733	)	C$0.98		2.68
Forfeited/expired during 2018		(10,000	)	C$1.48
Outstanding at December 31, 2018		2,164,999		C$2.10		5.69	$	5,553
Exercisable at December 31, 2018		1,648,670		C$1.43		4.74	$	5,012
Granted during 2019		510,000		C$16.32		9.19
Exercised during 2019		(212,332	)	C$1.29		4.85
Forfeited during 2019		(10,001	)	C$2.20
Outstanding at December 31, 2019		2,452,666		C$5.12		5.60	$	11,435
Exercisable at December 31, 2019		1,707,337		C$1.78		4.18	$	10,736
Granted		1,081,488		C$8.77		9.75
Exercised		(425,166	)	C$1.36		1.62
Forfeited		(41,666	)	C$6.93		—
Outstanding at December 31, 2020		3,067,322		C$6.91		6.82	$	20,051
Exercisable at December 31, 2020		1,618,168		C$3.91		4.58	$	15,119

The weighted-average grant-date fair value of options granted during the years 2020, 2019 and 2018 was $5.83, $9.58 and $3.22, respectively. The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018, was $2,732, $1,999 and $2,162, respectively.

A summary of the status of the Company’s non-vested stock options, and the changes during the year ended December 31, 2020, is presented below:

	Number of Options			Weighted Average Grant Date Fair Value	Aggregate Intrinsic Value
Non-vested at January 1, 2020		745,329		C$7.43
Granted		1,081,488		C$5.83
Vested		(362,664	)	C$6.36
Forfeited		(14,999	)	C$6.05
Non-vested at December 31, 2020		1,449,154		C$6.52	C$4,931

As of December 31, 2020, there was $9,449 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, 2020, 2019 and 2018 is as follows:

	Number of Performance-based Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018		128,000		C$2.82
Granted		979,000		C$5.79
Received		(50,334	)	C$3.06
Forfeited/expired		—			—
Outstanding at December 31, 2018		1,056,666		C$5.56
Exercisable at December 31, 2018		175,333		C$5.08
Granted		355,000		C$14.94
Issued		(442,666	)	C$7.82
Forfeited		(230,000	)	C$12.90
Outstanding at December 31, 2019		739,000		C$7.92
Exercisable at December 31, 2019		30,000		C$12.87
Granted		1,068,000		C$6.36
Exercised		(840,000	)	C$6.47
Forfeited/expired		(98,000	)	C$9.59
Outstanding at December 31, 2020		869,000		C$7.51
Exercisable at December 31, 2020		75,000		C$6.10

A summary of the status of the Company’s non-vested performance-based restricted share units, and the changes during the year ended December 31, 2020, is presented below:

Total share-based compensation expense for the years ended December 31, 2020, 2019 and 2018 of $6,142, $4,714 and $1,454, respectively, was recorded in selling, general and administrative expenses and the corresponding amount credited to additional paid in capital.