ZeroStack Corp. Stock Compensation Disclosure

17. SHARE BASED COMPENSATION

The Company adopted the Flora Growth Corp. 2022 Incentive Compensation Plan (the “2022 Plan”) to attract, retain and motivate independent directors, executives, key employees and consultants. The 2022 Plan was approved by the Company’s shareholders on July 5, 2022, and reserves an aggregate of 7,693 of the Company’s common shares for issuance in connection with Awards (as defined in the 2022 Plan) granted under the 2022 Plan. The 2022 Plan was amended on June 6, 2023, with approval from the Company’s shareholders, to increase the shares available under the 2022 Plan from 7,693 to 24,359. The 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 24,359 to 64,103 shares on August 14, 2024, with approval from the Company’s shareholders. The 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 64,103 to 115,385 shares on June 30, 2025, with approval from the Company’s shareholders. And on December 19, 2025 the 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 115,385 to 1,506,892 shares. Previously, the Company’s shareholders had adopted a “rolling” stock option plan (the “Prior Plan”) which authorized the Company to grant stock options constituting up to 10% of the Company’s issued and outstanding common shares at the time of each option grant. Since the adoption of the 2022 Plan, no further grants have been made or will be made under the Prior Plan; however, any currently outstanding stock options granted prior to July 5, 2022 will remain in effect until they have been exercised or terminated or have expired in accordance with the terms of the Prior Plan. Under the 2022 Plan, the compensation committee of our board of directors (the “Committee”) may grant a variety of awards including stock options, stock appreciation rights (“SAR”s), restricted stock, restricted stock units, dividend equivalents and other stock-based awards.

OPTIONS

Stock options granted under the Prior Plan are non-transferable and non-assignable and may be granted for a term not exceeding five years. Under the 2022 Plan, stock options may be granted with a term of up to ten years and in the case of all stock options, the exercise price may not be less than 100% of the fair market value of a Common Share on the date the award is granted. Stock option vesting terms are subject to the discretion of the Committee. Common shares are newly issued from available authorized shares upon exercise of awards.

Information relating to share options outstanding for the years ended December 31, 2025 and 2024 is as follows:

		Options Outstanding						Options Exercisable
		Number of options			Weighted average exercise price			Number of options			Weighted average exercise price
Balance, December 31, 2023		1,272		$	1,055.74			1,143		$	1,145.93
Granted		-			-			129			273.00
Forfeited or expired		(726	)		729.07			(726	)		731.99
Balance, December 31, 2024		546			1,490.10			546			1,490.10
Granted		1,178,020			7.31			-			-
Forfeited or expired		(107	)		1,755.00			(107	)		1,755.00
Balance, December 31, 2025		1,178,459		$	7.84			439		$	1,425.53

 

Information relating to share options outstanding and exercisable as at December 31, 2025 is as follows:

Date of expiry		Options outstanding			Options exercisable			Exercise price			Grant date fair value vested			Remaining life in years
September 25, 2026		52			52		$	5,382.00		$	205			0.7
December 16, 2026		98			98			1,591.20			111			1.0
January 17, 2027		65			65			1,326.00			63			1.0
January 26, 2027		30			30			1,154.40			25			1.1
March 17, 2033		129			129			273.00			31			7.2
July 5, 2033		65			65			522.60			31			7.5
December 19, 2035		1,178,020			-			7.31			304			10.0
		1,178,459			439		$	7.84		$	770			10.0

The fair value of stock options issued in years prior to December 31, 2024 were determined at the time of issuance using the Black-Scholes option pricing model. The stock options issued in the year ended December 31, 2025 were determined at the time of issuance using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices for the Company throughout the term of the stock options, based on certain assumptions of stock price behavior. The significant inputs to the valuation include a 10-year term to expiration, the closing price of the Company’s common shares on the December 19, 2025 grant date ($7.31), a risk-free rate of return of 4.12% per annum, and a volatility of 102% based on the historical volatility of Solana calculated from its historical daily returns.

The total expense related to the options granted in the year ended December 31, 2025 was $0.3 million (2024 – less than $0.1 million). This expense is included in the share based compensation line on the consolidated statement of loss and comprehensive loss. The options granted in 2025 vest based on the Company's volume weighted average price ("VWAP") of the Company's Common Shares as follows:

During the year ended December 31, 2025, 107 (2024 - 726) unexercised stock options expired following the termination of certain employees and independent directors and were charged to deficit.

There were no options exercised in the years ended December 31, 2025 and 2024. The total fair value of options vested in the year ended December 31, 2025 was $nil (2024 - less than $0.1 million).

For the years ended December 31, 2025 and 2024, there has been no recognized income tax benefits associated with stock options, and no amounts capitalized as part of the cost of an asset.

At December 31, 2025 the total remaining stock option cost for nonvested awards is expected to be $7.5 million over a weighted average future period of 0.7 years until the awards vest. A total of 1,178,020 options issued in 2025 will vest based on the VWAP of the Company’s Common Shares, as described above,  provided if the award holder is still employed or engaged by the Company or the twelve-month anniversary of the date the award holder’s service ceased.

RESTRICTED STOCK AWARDS

Restricted stock is a grant of common shares which may not be sold or disposed of, and which is subject to such risks of forfeiture and other restrictions as the Committee, in its discretion, may impose. A participant granted restricted stock generally has all of the rights of a shareholder of the Company, unless otherwise determined by the Committee. Subject to certain exceptions, the vesting of restricted stock awards is subject to the holder's continued employment or engagement through the applicable vesting date. Unvested restricted stock awards will be forfeited if the holder's employment or engagement ceases during the vesting period and may, in certain circumstances, be accelerated. The Company values restricted stock awards based on the closing share price of the Company's common shares as of the date of grant. The fair value of the restricted stock award is recorded as expense over the vesting period.

Information relating to restricted stock awards outstanding for the years ended December 31, 2025 and 2024:

		Number of restricted stock awards			Weighted average grant date fair value
Balance, December 31, 2023		10,025		$	55.14
Granted		31,669			50.70
Cancelled		(91	)		(269.10	)
Vested		(41,268	)		(49.36	)
Balance, December 31, 2024		335			289.18
Vested		(69	)		(366.60	)
Balance, December 31, 2025		266		$	269.10

The total expense related to the restricted stock awards for the year ended December 31, 2025 was less than $0.1 million (2024 - $1.6 million). This expense is included in the share based compensation line on the consolidated statements of loss and comprehensive loss. For the years ended December 31, 2025 and 2024, there have been no recognized income tax benefits associated with restricted stock awards.

The Company issued 31,669 restricted stock awards that vested immediately on December 15, 2024 at a total fair value of $1.6 million. The remaining restricted stock awards issued are to vest in 2026 provided the award holder is still employed or engaged by the Company. As of December 31, 2025, the Company had less than $0.1 million of unrecognized compensation expense related to restricted stock awards which is to be recognized over the next year.

There were no restricted stock awards expired or were forfeited in the year ended December 31, 2025 (2024 - 91).

STOCK APPRECIATION RIGHTS ("SARs")

SARs grant a right to receive, upon exercise thereof, the excess of the fair market value of one common share on the date of exercise over the grant price of the SAR. The grant price of a SAR shall not be less than 100% of the fair market value of a common share on the date of the grant. SARs generally vest over a period of zero to three years and have a term of ten or eleven years. The SARS granted by the Company to date are only payable in the Company's common shares and have no cash payments options.

On August 14, 2024, the Company granted 41,139 and 13,712 SARs to its Chief Executive Officer and Chief Financial Officer, respectively, which was approved by a majority of the Company's shareholders at the Company's annual meeting held on August 14, 2024. The fair value of the SARs at August 14, 2024 was determined using a Monte Carlo simulation incorporating Brownian motion. The significant inputs to the valuation include an 11-year term to maturity, the Company's closing share price at August 14, 2024 ($35.49), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 3.8% per annum to discount the ending result to present value. The valuation also includes a derived service period, which is the median time to vest, as calculated by the model. This derived service period inherently contains some degree of estimation uncertainty.

On December 15, 2024, the Company granted 11,286 SARS to officers, directors, employees and consultants of the Company pursuant to the 2022 Plan. The fair value of the SARS at December 15, 2024 was determined using a Black Scholes pricing model with the following assumptions: the $50.70 price of the Company's common shares; expected dividend yield of 0%; expected volatility of 110% based on the Company's common share and comparable companies' historical volatilities; risk-free interest rate of 4.35% and an expected life of 10.0 years.

On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $22.62, the closing share price of the Company's stock as of June 30, 2025.

The vesting terms of the SARs granted on December 15, 2023 and August 14, 2024 to the Company's Chief Executive Officer were amended such that the first of nine tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. The vesting terms of the SARs granted on December 15, 2023 and August 14, 2024 to the Company's Chief Financial Officer were amended such that the first of eight tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. In accordance with ASC 718, the Company treated this modification of terms as an exchange of the original award for a new award. The fair value of the new SARs award was determined using a Monte Carlo simulation incorporating Brownian motion. The significant inputs to the valuation include a 10.1-year term to maturity, the Company's closing share price at June 30, 2025 ($22.62), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 4.2% to discount the ending result to present value. The valuation also includes a new derived service period, which is the median time to vest, as calculated by the model. The new valuation resulted in an incremental value of less than $0.1 million, which, along with the unrecognized compensation cost, will be recognized as compensation cost over the new requisite service period.

The SARS granted on December 15, 2024, and amended on June 30, 2025, were vested at the grant date and the expense was accelerated at that time. There is no incremental fair value for these awards.

Mr. Clifford Starke resigned as director and Chief Executive Officer of the Company on October 1, 2025. Under terms of Mr. Starke's SARs agreement, this triggered the full vesting of his remaining outstanding SARS. Under terms of Mr. Starke's separation agreement, all his 41,139 SARs were cancelled on December 19, 2025.

Information relating to SARs outstanding for the years ended December 31, 2025 and 2024:

		SARs Outstanding
		Number of SARS			Grant date average exercise price			Weighted average remaining life (years)			Aggregate intrinsic value
Outstanding balance, December 31, 2023		-		$	-
Granted		66,137		$	22.62
Outstanding balance, December 31, 2024		66,137		$	22.62
Cancelled		(41,139	)	$	22.62
Outstanding balance, December 31, 2025		24,998		$	22.62			9.32		$	114
Exercisable balance, December 31, 2025		18,142		$	22.62			9.21		$	114

The total expense related to the SARs in the year ended December 31, 2025 was $0.9 million (2024 - $1.1 million). This expense is included in the share based compensation line on the consolidated statements of loss and comprehensive loss. For the years ended December 31, 2025 and 2024, there have been no recognized income tax benefits associated with SARs.

There were no SARs exercised for the years ended December 31, 2025 and 2024.

The SARs granted in 2024 will vest in tranches based on the derived service period, ranging from zero to one year, provided that the recipient is still employed or engaged by the Company.