v3.25.2
Note 19 - Stockholders' Equity
12 Months Ended
May 31, 2025
Notes to Financial Statements  
Equity [Text Block]

19.

Stockholders equity

 

Issued and outstanding

 

Pursuant to its Fifth Amended and Restated Certificate of Incorporation, the total number of shares that the Company is authorized to issue is 1,426,000,000 shares, of which 1,416,000,000 shares are Common Stock (the “Common Stock”), and 10,000,000 shares of which are Preferred Stock (the “Preferred Stock”). As of  May 31, 2025, the Company had issued and outstanding 1,060,678,745 shares of Common Stock, 2,004,218 shares of Treasury Stock (the “Treasury Stock”) and no Preferred Stock. Historically, the Company has issued shares of its Common Stock in consideration for acquisitions and other strategic transactions, settlement of convertible notes, settlement of litigation claims, in connection with public offerings and as payment of dividends to non-controlling interests for profit distributions.

 

During the fiscal year ended May 31, 2025, the Company issued the following shares:

 

 

a)

135,938,741 shares and 4,688,280 Treasury Stock under its At-the-Market (“ATM”) program for gross proceeds of $163,413. The Company paid $2,225 in commissions and other fees associated with these issuances for net proceeds of $161,188.

 

 

b)

71,755,054 shares and 7,253,625 Treasury Stock were issued to exchange the aggregate principal of $67,500 of its TLRY 27 Notes for cancellation. Upon exchanging the TLRY 27 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $19,028 reduction of additional paid-in capital. Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by approximately 15,065,217 shares which were then returned as Treasury Stock, see Note 13 (Convertible debentures payable). The net effect on the Treasury Stock in relation to this transaction was 7,811,592.

 

 

c)

13,217,588 shares of Common Stock to settle dividends payable to the non-controlling shareholders of Aphria Diamond in the amount of $23,824.

 

 

d)

7,841,989 shares in connection with the exercise of previously awarded stock-based compensation awards.

 

In aggregate, during the year ended May 31, 2025, 15,065,217 shares were returned in connection with the share lending agreement related to the TLRY 27 Notes which were recorded as Treasury stock, of which 13,060,999 were re-issued in connection with our ATM and in the exchange for TLRY 27 Notes.

 

Stock-based compensation

 

The Company maintains stock-based compensation plans as disclosed in our Annual Financial Statements. For the fiscal year ended May 31, 2025, the total stock-based compensation was $ 24,289. For the fiscal years ended May 31, 2024 and May 31, 2023, the total stock-based compensation was $31,769 and $39,595, respectively.

 

During the fiscal year-ended May 31, 2025, the Company granted 13,505,127 time-based RSUs, and nil performance-based RSUs. For the fiscal year ended May 31, 2024, the Company granted 13,680,556 time-based RSUs and 7,566,146 performance-based RSUs. The 7,566,146 performance-based RSUs, issued during the fiscal year ended May 31, 2024, contain certain performance conditions that will only be set at a future date, and, therefore, for accounting purposes, the grant date has not been met. 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.

 

In conjunction with the reverse acquisition with Aphria Inc on 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 fiscal years ended May 31, 2025 and 2024

 

Stock-based activity under the EIP and Original Plan for the fiscal year ended May 31, 2025 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, 2024

  2,797,787  $14.53   4.0  $ 

Granted

            

Exercised

            

Forfeited

            

Cancelled

  (11,758)  7.76       

Balance, May 31, 2025

  2,786,029  $14.55   3.0  $ 

 

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, 2024

  49,166  $3.46   3.0  $1.43 

Exercised

            

Forfeited

            

Cancelled

  (36,206)  3.00       

Balance, May 31, 2025

  12,960  $4.77   2.6  $ 

 

Time-based and Performance-based RSU activity

                
      

Weighted-

  

Weighted-

     
      

average

  

average

     
      

grant-date

  

remaining

     
  

Time-based

  

fair value

  

contractual

  

Aggregate

 
  

RSUs

  

per share

  

term (years)

  

intrinsic value

 

Balance, May 31, 2024

  26,134,852  $3.16   2.9  $47,043 

Granted

  13,774,358   1.96      5,779 

Vested

  (10,027,649)  2.94      (4,374)

Forfeited

  (2,082,103)  3.60      (1,009)

Cancelled

  (93,750)  2.68      (40)

Balance, May 31, 2025

  27,705,708  $2.60   2.90  $11,794 

 

Predecessor Plan - Aphria

 

Aphria had established the Aphria Omnibus Incentive Plan (the “Aphria Predecessor Plan”). Following stockholder approval of the EIP, no new awards have been granted under the Aphria 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.

 

No stock options were granted under the Aphria Predecessor Plan during the fiscal years ended May 31, 2025 and 2024. As of May 31, 2025, there were 45,223 awards outstanding and which are vested and exercisable.

 

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

 

Time-based stock option activity

 

          

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

  434,212  $7.56  $   0.7    

Exercised during the year

              N/A 

Granted during the year

              N/A 

Forfeited during the year

              N/A 

Expired during the year

  (388,989)  7.38         N/A 

Outstanding, end of the year

  45,223  $9.12  $   2.53    

Vested and exercisable, end of the year

  45,223  $9.12  $   2.53    

 

Time-based and Performance-based RSU activity

 

  

May 31, 2025

 
      

Weighted

 
      

average

 
      

grant -

 
      

date fair

 
  

Time- based

  

value per

 
  

RSUs

  

share

 

Non-vested, beginning of the year

  244,193  $13.91 

Granted during the year

      

Vested during the year

  (33,276)  0.46 

Forfeited during the year

      

Non-vested, end of the year

  210,917  $16.03 

 

Predecessor Plan - HEXO

 

Prior to the acquisition of HEXO Corp, HEXO had established the Formal Plan and Omnibus Incentive Plan (the “HEXO Predecessor Plan”). In connection with the acquisition, HEXO stock options issued under these plans were exchanged at a rate of 0.4352 for 1,267,793 options under the Tilray 2018 EIP. As a result of the modification, all grantees were affected, and the Company recognized nil incremental compensation cost. Following stockholder approval of the EIP, no new awards have been granted under the Predecessor Plan. As of May 31, 2025, 187,173 awards are outstanding and 177,426 are vested and exercisable.

 

  

May 31, 2025

 
          

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

  1,144,218  $53.40  $   1.2    

Exercised during the year

               

Converted upon acquisition

               

Forfeited during the year

               

Expired during the year

  (957,045)  17.97          

Outstanding, end of the year

  187,173  $234.53  $  $5.84  $ 

Vested and exercisable, end of the year

  177,426  $247.00  $   5.75