Quarterly report pursuant to Section 13 or 15(d)

SHARE-BASED COMPENSATION AND OTHER BENEFITS

v3.22.2.2
SHARE-BASED COMPENSATION AND OTHER BENEFITS
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION AND OTHER BENEFITS
 14. SHARE-BASED COMPENSATION AND OTHER BENEFITS
The components of share-based compensation expense are as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Stock options $ 4,569  $ 1,093  $ 14,369  $ 2,791 
Restricted stock 347  1,015  1,625  5,258 
Warrants 550  126  1,120 932
Total share-based compensation expense $ 5,466  $ 2,234  $ 17,114  $ 8,981 
Equity Incentive Plan
Under the Company’s 2019 Equity Incentive Plan, as amended (the “Plan”), non-transferable options to purchase SVS and restricted SVS of the Company may be issued to directors, officers, employees, or consultants of the Company. The Plan authorizes the issuance of up to 15% (plus an additional 2% inducements for hiring employees and senior management) of the number of outstanding shares of common stock (of all classes) of the Company (the “Share Reserve”). Incentive stock options are limited to the Share Reserve as of June 6, 2019. As of September 30, 2022, the maximum number of incentive awards available for issuance under the Plan, including additional awards available for certain new hires, was 3.8 million.
(a)Stock Options
The stock options issued by the Company are options to purchase SVS of the Company. All stock options issued have been issued to employees of certain subsidiaries of the Company under the Plan. Such options generally expire in ten years from the date of grant and generally vest ratably over three years from the grant date. The options generally may be net share settled.
The following table summarizes the status of stock options and related transactions:
Number of Stock Options Weighted-Average Per Share Exercise Price
Issued and Outstanding as of January 1, 2022 20,429,120  $ 3.20 
Granted (1)
10,311,000  $ 2.01 
Exercised (2)
(274,998) $ 1.66 
Forfeited/expired/cancelled (2,037,002) $ 4.58 
Issued and Outstanding as of September 30, 2022 28,428,120  $ 2.68 
Exercisable as of September 30, 2022 11,863,260  $ 2.44 
(1)The weighted-average per share grant date fair value was $1.44.
(2)The weighted-average share price at the date of exercise was $3.84.
The following table summarizes the issued and outstanding stock options as of September 30, 2022:
Expiration Year Stock Options Outstanding Exercise Price Stock Options Exercisable
2022 50,000
$1.35 - $2.00
 50,000
2028 685,000
$1.00 - $1.35
 685,000
2029 6,849,668
$1.26 - $2.75
 6,689,665
2030 792,500
$0.91 - $3.98
 426,660
2031 9,809,952
$3.70 - $6.53
 2,837,941
2032 10,241,000 
$1.60 - $4.20
 1,173,994 
28,428,120 11,863,260
As of September 30, 2022, stock options outstanding have a weighted-average remaining contractual life of 8.61 years, and unrecognized share-based compensation expense of $20,399.
In determining the amount of share-based compensation expense related to stock options issued, the Company used the Black-Scholes option-pricing model to establish the measurement date fair value of stock options granted during the period. The following assumptions were applied at the time of grant:
Nine Months Ended September 30,
2022 2021
Risk-free annual interest rate
0.45% - 3.24%
0.45% - 1.25%
Expected annual dividend yield 0% 0%
Volatility
72.3% - 78.5%
74.0% - 78.5%
Expected life of stock options
5.0 - 7.5 years
5 - 7.48 years
Forfeiture rate 0% 0%
Volatility was estimated by using a weighting of the Company’s historical volatility and the average historical volatility of comparable companies from a representative peer group of publicly traded cannabis companies. The expected life in years represents the period of time that stock options issued are expected to be outstanding, using the simplified method. The simplified method represents the Company’s best estimate of the expected term of the options, given the Company’s limited history available. The risk-free rate is based on U.S. Treasury bills with a remaining term equal to the expected life of the options. The Company does not anticipate paying dividends in the foreseeable future, and as a result, the expected annual dividend yield is expected to be 0%.
(b)Restricted Stock Grants
The Company grants restricted SVS to independent directors, management, former owners of acquired businesses or assets, and to consultants and other employees. The restricted SVS are included in the issued and outstanding SVS. The following table summarizes the status of restricted stock and related transactions:
Number of Restricted Subordinate Voting Shares
Unvested restricted stock as of January 1, 2022 2,859,151
Granted (1)
86,952 
Cancelled (7,813)
Vested (1,701,221)
Unvested restricted stock as of September 30, 2022 1,237,069
(1)     The weighted-average per share grant date fair value was $2.05
Generally, restricted stock awards will vest either one-third on each anniversary of service from the vesting start date or will be fully vested on the completion of one year of full service from the vesting start date, depending on the award. As of September 30, 2022, unvested restricted stock awards have a weighted-average remaining vesting period of 0.56 years, and u