The Company’s 2021 Omnibus Incentive Plan (the “2021 Plan”) was adopted in June 2021 at the 2021 annual meeting of shareholders. The 2021 Plan reserves 4,000,000 Subordinate Voting Shares for issuance thereunder and replaced the Schyan Exploration Inc. Stock Option Plan (the “Prior Plan”). Awards previously granted under the Prior Plan, including equity awards granted in the first quarter of 2021 for performance in 2020, remain subject to the terms of the Prior Plan. No further grants of awards shall be made under the Prior Plan. The Prior Plan is administered by the Board of Directors of the Company and the 2021 Plan is administered by the Compensation Committee of the Board of Directors. The 2021 Plan provides for the grant of Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Share Units, and Other Awards.

On January 4, 2022 and February 24, 2022, under the 2021 Plan, the Board awarded options to purchase shares to board members, directors, officers, and key employees of the Company. The options granted vest immediately for board members and all other options granted vest over a two-to three-year period.

On October 26, 2021, under the 2021 Plan, the Board awarded options to purchase shares to officers and other select employees of the Company. The options generally vest over a two-to three-year period.

On October 1, 2021, the Company acquired Harvest which included consideration in the form of 1,266,641 stock options (as converted) that had been issued before the acquisition date to employees and non-employees of Harvest. The post-combination options vest over a one-to three-year period.

On September 29, 2021, under the 2021 Plan, the Board awarded options to purchase shares to officers and other select employees of the Company. The September 29, 2021, options vest over a three-year period.

On January 4, 2021, under the Prior Plan, the Board awarded options to purchase shares to directors, officers, and key employees of the Company. The January 4, 2021, options generally vest over a two-to three-year period.

The expected volatility was estimated by using the historical volatility of the Company. In cases where there is insufficient trading history, the expected volatility is estimated using the historical volatility of other companies that the Company considers comparable that have trading and volatility history prior to the Company becoming public. The expected life in years represents the period of time that options granted are expected to be outstanding and is computed using the simplified method. The risk-free rate was based on the United States bond yield rate at the time of grant of the award. Expected annual rate of dividends is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

For the three months ended June 30, 2022 and 2021, the Company recorded share-based compensation for all stock options in the amount of $2.6 million and $0.8 million, respectively. This is recognized as a nominal amount of cost of goods sold, $2.2 million and $0.6 million in general and administrative, and $0.4 million and $0.2 million in sales and marketing in the condensed consolidated statements of operations and comprehensive (loss) income, respectively.

For the six months ended June 30, 2022 and 2021, the Company recorded share-based compensation for all stock options in the amount of $4.7 million and $1.5 million, respectively. This is recognized as $0.1 million and $0.1 million of cost of goods sold, $3.9 million and $1.1 million in general and administrative, and $0.7 million and $0.3 million in sales and marketing in the condensed consolidated statements of operations and comprehensive (loss) income, respectively.

The following is a summary of stock option activity:


	Number of options			Weighted average exercise price		Weighted average remaining contractual life (Years)		Aggregate intrinsic value
Outstanding, January 1, 2022		2,973,895		$	27.61		6.26	$	—
Granted		864,051			21.56
Exercised		(92,811	)		11.25
Forfeited		(279,496	)		35.12
Outstanding, June 30, 2022		3,465,639		$	25.93		6.04	$	—
Exercisable, June 30, 2022		1,769,965		$	25.39		4.59	$	—


	Number of options		Weighted average exercise price		Weighted average remaining contractual life (yrs)		Aggregate intrinsic value
Outstanding, January 1, 2021		1,129,779	$	11.72		4.01	$	19.90
Granted		326,867		33.42
Exercised		—		—
Forfeited		—		—
Outstanding, June 30, 2021		1,456,646	$	16.59		3.80	$	20.91
Exercisable, June 30, 2021		554,459	$	11.70		3.59	$	25.80

As of June 30, 2022, there was approximately $9.7 million of unrecognized compensation cost related to nonvested stock option arrangements which is expected to be recognized over a weighted average period of 0.84 years.

Restricted stock units ("RSUs") represent a right to receive a single Subordinate Voting Share that is both non-transferable and forfeitable unless and until certain conditions are satisfied. RSUs vest ratably over a two-to-three-year period subject to continued employment through each anniversary. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a straight-line basis.

On January 4, February 24, and March 31, 2022, the Board awarded RSUs to board members, directors, officers, and key employees of the Company. The RSUs vest immediately for board members and all other RSUs granted vest over a two-year period.

On September 15, 2021, the Board awarded RSUs to two officers of the Company as replacement awards for cancelled warrants, which vest immediately. The previously held 3,572,514 warrants were cancelled on September 15, 2021 with the new RSUs granted on September 15, 2021 as a replacement of the previously held warrants. The two officers were awarded a total premium of $3.1 million, allocated between the two officers, to incentivize the cancellation and replacement, which was recorded to general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.

On September 29, 2021, under the 2021 Plan, the Board awarded RSUs to officers and other select employees of the Company, which vest over a two-to three-year period.

The following is a summary of RSU activity:


	Number of restricted stock units			Weighted average grant price
Unvested balance as of January 1, 2022		332,428		$	26.86
Granted		821,800			21.51
Vested		(30,549	)		27.92
Forfeited		(87,917	)		24.54
Unvested balance as of June 30, 2022		1,035,762		$	22.94

During the three and six months ended June 30, 2022, the Company recorded share-based compensation in the amount of $3.1 million and $5.5 million related to RSUs, respectively. This is recognized as $0.3 million and $0.5 million of cost of goods sold, $2.6 million and $4.5 million in general and administrative, and $0.3 million and $0.6 million in sales and marketing in the statements of operations and comprehensive (loss) income, respectively. There was no share-based compensation expense related to RSUs during the three or six months ended June 30, 2021.

As of June 30, 2022, there was approximately $17.7 million of total unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted-average service period of 1.27 years.

During the year ended December 31, 2018, the Company issued 8,784,872 warrants to certain employees and directors of the Company for past services provided. The warrants had no vesting conditions and are exercisable at any time for three years after the issuance, subject to certain lock-up provisions: (i) the warrants may not be exercised for 18 months following the Issue Date; (ii) 50% of the warrants may be exercised between months 19-24 following the Issue Date; and (iii) the remaining 50% of the warrants may be exercised at any time thereafter until expiration. The warrants are exchangeable into Subordinate Voting Shares.

The following table summarizes the activity related to warrants issued and outstanding to certain employees and directors of the Company for the six-month period ending June 30, 2021. There were no outstanding warrants as of June 30, 2022 and December 31, 2021.


	Number of warrants			Weighted average exercise price ($CAD)		Weighted average remaining contractual life (Years)
Outstanding, December 31, 2020		6,061,561			6.00		0.72
Granted		—			—		—
Exercised		(795,022	)		6.00		—
Forfeited		(116,333	)		—		—
Outstanding, June 30, 2021		5,150,206			6.00		0.24