Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Equity and Capital Stock

v2.4.0.8
Shareholders' Equity and Capital Stock
 6 Months Ended
Jun. 30, 2014
Stockholders' Equity Note [Abstract]  
Shareholders' Equity and Capital Stock
18.
Shareholders’ Equity and Capital Stock
 
Stock options
 
In 2005, the Company’s Board of Directors approved the adoption of the Company's stock option plan (the “Option Plan”). Eligible participants under the Option Plan include directors, officers, employees and consultants of the Company. Under the terms of the Option Plan, stock options generally vest with Option Plan participants as follows: 10% at the date of grant; 22% four and one-half months after grant; 22% nine months after grant; 22% thirteen and one-half months after grant; and the balance of 24% eighteen months after the date of grant.
 
Activity with respect to stock options is summarized as follows:
 
 
 
 
 
Weighted-
 
 
 
 
 
average
 
 
 
Options
 
exercise price
 
 
 
#
 
$
 
 
 
 
 
 
 
Outstanding, December 31, 2013
 
9,273,659
 
1.19
 
Granted
 
100,000
 
1.53
 
Exercised
 
(1,045,786)
 
0.84
 
Forfeited
 
(174,779)
 
1.33
 
 
 
 
 
 
 
Outstanding, June 30, 2014
 
8,153,094
 
1.23
 
 
The exercise price of a new grant is set at the closing price for the shares on the Toronto Stock Exchange (TSX) on the trading day immediately preceding the grant date so there is no intrinsic value as of the date of grant. The fair value of options vested during the six months ended June 30, 2014 was $0.5 million.
 
As of June 30, 2014, outstanding stock options are as follows:
 
 
 
Options outstanding
 
Options exercisable
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
 
 
average
 
Aggregate
 
 
 
average
 
Aggregate
 
 
 
Exercise
 
Number
 
remaining
 
Intrinsic
 
Number
 
remaining
 
Intrinsic
 
 
 
price
 
of
 
contractual
 
Value
 
of
 
contractual
 
Value
 
 
 
$
 
options
 
life (years)
 
$
 
options
 
life (years)
 
$
 
Expiry
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.84
 
508,376
 
0.2
 
138
 
508,376
 
0.2
 
138
 
September 2, 2014
 
0.76
 
462,064
 
0.7
 
160
 
462,064
 
0.7
 
160
 
March 5, 2015
 
2.69
 
1,277,741
 
1.6
 
-
 
1,277,741
 
1.6
 
-
 
January 28, 2016
 
1.47
 
545,000
 
2.0
 
-
 
545,000
 
2.0
 
-
 
July 7, 2016
 
1.10
 
677,223
 
2.2
 
19
 
677,223
 
2.2
 
19
 
September 9, 2016
 
1.09
 
200,000
 
2.3
 
7
 
200,000
 
2.3
 
7
 
October 24, 2016
 
0.85
 
983,167
 
2.5
 
258
 
983,167
 
2.5
 
258
 
January 12, 2017
 
1.30
 
200,000
 
2.6
 
-
 
200,000
 
2.6
 
-
 
February 1, 2017
 
1.11
 
100,000
 
2.7
 
2
 
100,000
 
2.7
 
2
 
March 1, 2017
 
0.71
 
1,371,994
 
3.4
 
540
 
1,371,994
 
3.4
 
540
 
December 7, 2017
 
0.72
 
620,971
 
3.8
 
239
 
471,527
 
3.8
 
181
 
April 25, 2018
 
1.16
 
100,000
 
4.1
 
-
 
54,000
 
4.1
 
-
 
August 1, 2018
 
1.12
 
1,006,558
 
4.5
 
9
 
326,608
 
4.5
 
3
 
December 27, 2018
 
1.57
 
100,000
 
4.8
 
-
 
10,000
 
4.8
 
-
 
March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.19
 
8,153,094
 
2.6
 
1,372
 
7,187,700
 
2.4
 
1,308
 
 
 
 
The aggregate intrinsic value of the options in the preceding table represents the total pre-tax intrinsic value for stock options with an exercise price less than the Company’s TSX closing stock price of Cdn$1.21 as of the last trading day in the period ended June 30, 2014, that would have been received by the option holders had they exercised their options as of that date. The total number of in-the-money stock options outstanding as of June 30, 2014 was 5,930,353. The total number of in-the-money stock options exercisable as of June 30, 2014 was 5,100,959.
 
Restricted share units
 
On June 24, 2010, the Company’s shareholders approved the adoption of the Company’s restricted share unit plan (the “RSU Plan”). Eligible participants under the RSU Plan include directors, officers and employees of the Company. Under the terms of the RSU Plan, RSUs vest with participants as follows: 50% on the first anniversary of the date of the grant and 50% on the second anniversary of the date of the grant.
 
Activity with respect to RSUs is summarized as follows:
 
 
 
Number
 
Weighted
 
 
 
of
 
average grant
 
 
 
RSUs
 
date fair value
 
 
 
 
 
 
$
 
Unvested, December 31, 2013
 
 
691,610
 
 
0.90
 
Vested
 
 
(230,531)
 
 
0.93
 
Forfeited
 
 
(28,383)
 
 
0.93
 
 
 
 
 
 
 
 
 
Unvested, June 30, 2014
 
 
432,696
 
 
0.95
 
 
As of June 30, 2014, outstanding RSUs are as follows:
 
 
 
 
 
 
 
 
Aggregate
 
 
Number of
Remaining
intrinsic
 
 
unvested
life
value
 
Grant date
units
(years)
$
 
December 7, 2012
 
 
182,716
 
 
0.44
 
 
206
 
December 27, 2013
 
 
249,980
 
 
1.49
 
 
282
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
432,696
 
 
1.05
 
 
488
 
 
Upon RSU vesting, the holder of an RSU will receive one common share, for no additional consideration, for each RSU held.
 
Warrants
 
There was no warrant activity during the period ended June 30, 2014.
 
As of June 30, 2014, outstanding warrants are as follows:
 
 
 
 
 
 
 
Aggregate
 
 
 
Exercise
 
 
 
Remaining
 
intrinsic
 
 
 
price
 
Number
 
contractual
 
value
 
 
 
$
 
of warrants
 
life (years)
 
$
 
Expiry
 
 
 
 
 
 
 
 
 
 
 
0.92
 
50,000
 
1.2
 
10
 
September 4, 2015
 
1.12
 
100,000
 
1.3
 
1
 
November 1, 2015
 
0.93
 
25,000
 
1.7
 
5
 
March 5, 2016
 
1.35
 
2,354,545
 
2.5
 
-
 
December 19, 2016
 
1.12
 
4,294,167
 
4.0
 
40
 
June 24, 2018
 
1.17
 
1,550,400
 
4.2
 
-
 
August 27, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
8,374,112
 
3.5
 
56
 
 
 
 
Share-based compensation expense
 
Share-based compensation expense was $0.5 million and $0.4 million for the six months ended June 30, 2014 and 2013, respectively.
 
As of June 30, 2014, there was approximately $0.5 million of total unrecognized compensation expense (net of estimated pre-vesting forfeitures) related to unvested share-based compensation arrangements granted under the Option Plan and $0.3 million under the RSU Plan. The expenses are expected to be recognized over a weighted-average period of 0.9 years and 1.3 years, respectively.
 
Cash received from stock options exercised during the six months ended June 30, 2014 was $0.9 million. There were no options exercised during the six months ended June 30, 2013.
 
Fair Value Calculations
 
The initial fair value of options granted during the six months ended June 30, 2014 was determined using the Black-Scholes option pricing model with the following assumptions:
 
 
 
2014
 
 
2013
 
 
 
 
 
 
 
 
 
 
Expected option life (years)
 
 
3.49
 
 
 
3.41
 
Expected volatility
 
 
66
%
 
 
63
%
Risk-free interest rate
 
 
1.4
%
 
 
1.1
%
Forfeiture rate (options)
 
 
4.5
%
 
 
4.4
%
Expected dividend rate
 
 
0
%
 
 
0
%
 
The Company estimates expected volatility using daily historical trading data of the Company’s common shares, because this is recognized as a valid method used to predict future volatility. The risk-free interest rates are determined by reference to Canadian Treasury Note constant maturities that approximate the expected option term. The Company has never paid dividends and currently has no plans to do so.
 
Share-based compensation expense is recognized net of estimated pre-vesting forfeitures, which results in recognition of expense on options that are ultimately expected to vest over the expected option term. Forfeitures were estimated using actual historical forfeiture experience.
 
There were no RSUs granted in the six months ended June 30, 2014 or 2013.