For the year ended May 31, 2021, the total stock-based compensation expense was $17,351 (2020 - $18,079 and 2019 - $21,951). The Company operates multiple stock-based award plans as follows:

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, 2021. For the year ended May 31, 2020 and 2019, 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 2020 – 2.10% and 2019 – 2.92% on the date of grant; expected life for 2020 – 8.97 years and 2019 – 5.79 years; volatility for 2020 – 61.33% and 2019 – 58.54% based on comparable companies; dividend yield for 2020 and 2019 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, 2021 is as follows:

EIP Time-based stock option activity
	Stock Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Balance May 1,		3,182,547		$	14.19		1.7	$	30,331,823
Granted		—			—		—		—
Exercised		(1,665	)		7.76		—		—
Forfeited		(188	)		7.76		—		—
Cancelled		(468	)		65.20		—		—
Balance May 31,		3,180,226		$	14.19		1.3	$	25,171,187

Original plan time-based stock option activity
	Stock Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Balance May 1,		946,948			3.99		2		13,777,571
Exercised		(29,403	)		4.71		—		—
Forfeited		—			—		—		—
Cancelled		—			—		—		—
Balance May 31,		917,545		$	3.97		1.7	$	11,885,699

Time-based RSU activity
	Time-based RSUs			Weighted-average grant-date fair value per share		Weighted-average remaining contractual term (years)		Aggregate intrinsic value
Balance May 1,		1,285,134		$	15.70		—		—
Granted		198,521			7.76		—		—
Vested		(112,508	)		12.99		—		—
Forfeited		(165,904	)		11.97		—		—
Cancelled		—			—		—		—
Balance May 31,		1,205,243		$	15.16		—	$	20,091,286

Prior to the reverse acquisition (Note 10), 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 of 0.39% (2020 – 1.20 – 1.56% and 2019 – 1.66 – 2.38%) on the date of grant; expected life of 5 years (2020 - 5 years and 2019 – 3 - 5 years); volatility of 70% (2020 and 2019 – 70%) based on comparable companies; forfeiture rate of 35% (2020 – 20% and 2019 – 0%); dividend yield of $nil (2020 and 2019 – $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:

	May 31, 2021
						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		4,484,051		$	12.04	$	6.24		2.9		(32,781	)
Exercised during the year		(1,073,986	)		8.70	$	4.38	N/A		N/A
Granted during the year		41,500			5.88	$	2.18	N/A		N/A
Forfeited during the year		(884,320	)		14.06	$	7.46	N/A		N/A
Expired during the year		(68,060	)		18.72	$	8.80	N/A		N/A
Outstanding, end of the year		2,499,185		$	12.48	$	6.51		2.4		10,472
Vested and exercisable, end of the year		1,846,090		$	13.53	$	7.16		2.2		5,797

During the year ended May 31, 2021, the Company issued 41,500 stock options at an exercise price of $5.88 per share, exercisable for 5 years to officers of the Company. The weighted-average grant date fair values of time-based stock options granted during the year ended May 31, 2021 was $2.18 per share (2020 - $3.54 and 2019 - $7.32). The total intrinsic values of these stock options exercised during the year ended May 31, 2021 was $4,679,758 (2020 - $4,869,447 and 2019 - $28,025,979). The total fair value of time-based stock options vested during the year ended May 31, 2021 was $3,054,257 (2020 - $9,592,767 and 2019 - $14,983,131).

As of May 31, 2021, the total remaining unrecognized compensation expenses related to non-vested time-based stock options amounted to $3,058,733 (2020 - $8,209,817 and 2019 - $17,110,533), which will be amortized over the weighted-average remaining requisite service period of approximately 1.06 years (2020 – 1.53 years and 2019 – 1.52 years).

	May 31, 2021
						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		398,400		$	8.11	$	3.80	0.6			(1,347	)
Exercised during the year		(166,000	)	$	5.15	$	2.38	N/A		N/A
Granted during the year		—			—		—	N/A		N/A
Forfeited during the year		(232,400	)	$	10.23	$	4.81	N/A		N/A
Expired during the year		—			—		—	N/A		N/A
Outstanding, end of the year		—			—		—		—		—
Vested and exercisable, end of the year		—			—		—		—		—

The weighted-average grant date fair values of performance-based stock options granted during the year ended May 31, 2021 was $N/A per share (2020 - $N/A and 2019 - $N/A). The total intrinsic values of these stock options exercised during the year ended May 31, 2021 was $746,743 (2020 - $326,033 and 2019 - $1,864,100). The total fair value of performance-based stock options vested during the year ended May 31, 2021 was $395,138 (2020 - $222,721 and 2019 - $461,188).

As of May 31, 2021, the total remaining unrecognized compensation expenses related to non-vested performance-based stock options amounted to $N/A (2020 - $1,074,701 and 2019 - $1,206,415), which will be amortized over the weighted-average remaining requisite service period of approximately N/A years (2020 – 0.58 years and 2019 – 0.76 years).

As of May 31, 2021, the total remaining unrecognized compensation expenses related to non-vested time-based RSUs amounted to $16,273,457 (2020 - $10,240,001 and 2019 - $1,392,478), which will be amortized over the weighted-average remaining requisite service period of approximately 1.03 years (2020 – 1.44 years and 2019 – 0.54 years). The total intrinsic values of the time-based RSUs exercised during the year ended May 31, 2021 was $10,905,991 (2020 - $5,123,883 and 2019 - $775,962). The total fair value of time-based RSUs vested during the year ended May 31, 2021 was $8,777,963 (2020 - $4,507,883 and 2019 - $2,044,952).

	May 31, 2021
				Weighted						Weighted
				average						average
				grant -						grant -
				date fair			Performance-			date fair
	Time- based			value per			based			value per
	RSUs			share			RSUs			share
Non-vested, beginning of the year		1,588,743		$	7.71			19,335		$	6.01
Granted during the year		2,370,862		$	6.24			—			—
Vested during the year		(1,006,222	)	$	(6.83	)		—			—
Forfeited during the year		(158,411	)	$	(6.68	)		(19,335	)	$	(6.01	)
Non-vested, end of the year		2,794,972		$	6.88			—			—