Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Equity and Capital Stock

v2.4.0.8
Shareholders' Equity and Capital Stock
 9 Months Ended
Sep. 30, 2014
Stockholders' Equity Note [Abstract]  
Shareholders' Equity and Capital Stock

17.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-

 

 

 

Options

 

average

 

 

 

#

 

exercise price

 

 

 

 

 

$

Outstanding, December 31, 2013

 

 
9,273,659 

 
1.19 

Granted

 

 
100,000 

 
1.53 

Exercised

 

 
(1,558,576)

 
0.83 

Forfeited

 

 
(245,225)

 
1.41 

Expired

 

 
(15,070)

 
0.82 

 

 

 

 

 

 

Outstanding, September 30, 2014

 

 
7,554,788 

 
1.26 

 

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 nine months ended September 30, 2014 was $0.6 million.

 

As of September 30, 2014, outstanding stock options are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding

 

Options exercisable

 

 

 

 

 

 

Weighted-

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

average

 

Aggregate

 

 

 

average

 

Aggregate

 

 

Exercise

 

 

 

remaining

 

Intrinsic

 

 

 

remaining

 

Intrinsic

 

 

price

 

Number

 

contractual

 

Value

 

Number

 

contractual

 

Value

 

 

$

 

of options

 

life (years)

 

$

 

of options

 

life (years)

 

$

 

Expiry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.73

 
457,986 

 

0.4

 
115 

 
457,986 

 

0.4

 
115 

 

March 5, 2015

2.57

 
1,251,212 

 

1.3

 

 -

 
1,251,212 

 

1.3

 

 -

 

January 28, 2016

1.41

 
545,000 

 

1.8

 

 -

 
545,000 

 

1.8

 

 -

 

July 7, 2016

1.05

 
674,976 

 

1.9

 

 -

 
674,976 

 

1.9

 

 -

 

September 9, 2016

1.04

 
200,000 

 

2.1

 

 -

 
200,000 

 

2.1

 

 -

 

October 24, 2016

0.82

 
980,071 

 

2.3

 
167 

 
980,071 

 

2.3

 
167 

 

January 12, 2017

1.25

 
200,000 

 

2.3

 

 -

 
200,000 

 

2.3

 

 -

 

February 1, 2017

1.06

 
100,000 

 

2.4

 

 -

 
100,000 

 

2.4

 

 -

 

March 1, 2017

0.68

 
1,359,418 

 

3.2

 
402 

 
1,359,418 

 

3.2

 
402 

 

December 7, 2017

0.69

 
607,044 

 

3.6

 
174 

 
461,671 

 

3.6

 
132 

 

April 25, 2018

1.11

 
100,000 

 

3.8

 

 -

 
76,000 

 

3.8

 

 -

 

August 1, 2018

1.08

 
979,081 

 

4.2

 

 -

 
531,404 

 

4.2

 

 -

 

December 27, 2018

1.51

 
100,000 

 

4.5

 

 -

 
32,000 

 

4.5

 

 -

 

March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.19

 
7,554,788 

 

2.6

 
858 

 
6,869,738 

 

2.4

 
816 

 

 

 

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$1.13 as of the last trading day in the period ended September 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 September 30, 2014 was 3,404,519. The total number of in-the-money stock options exercisable as of September 30, 2014 was 3,259,146.

 

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 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

 

 
(38,671)

 
0.93 

 

 

 

 

 

 

Unvested, September 30, 2014

 

 
422,408 

 
0.91 

 

As of September 30, 2014, outstanding RSUs are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate

 

 

Number of

 

Remaining

 

Intrinsic

 

 

unvested

 

life

 

Value

Grant date

 

options

 

(years)

 

$

December 7, 2012

 
179,106 

 

0.19

 
181 

December 27, 2013

 
243,302 

 

1.24

 
246 

 

 

 

 

 

 

 

 

 
422,408 

 

0.79

 
427 

 

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 September 30, 2014.

 

As of September 30, 2014, outstanding warrants are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate

 

 

Exercise

 

 

 

Remaining

 

Intrinsic

 

 

price

 

Number

 

contractual

 

Value

 

 

$

 

of warrants

 

life (years)

 

$

 

Expiry

 

 

 

 

 

 

 

 

 

0.92

 
50,000 

 

0.9

 
6 

 

September 4, 2015

1.12

 
100,000 

 

1.1

 

 -

 

November 1, 2015

0.93

 
25,000 

 

1.4

 
3 

 

March 5, 2016

1.35

 
2,354,545 

 

2.2

 

 -

 

December 19, 2016

1.12

 
4,294,167 

 

3.7

 

 -

 

June 24, 2018

1.17

 
1,550,400 

 

3.9

 

 -

 

August 27, 2018

 

 

 

 

 

 

 

 

 

 

 
8,374,112 

 

3.3

 
9 

 

 

 

Share-based compensation expense

 

Share-based compensation expense was $0.7 million and $0.9 million for the nine months ended September 30, 2014 and 2013, respectively.

 

As of September 30, 2014, there was approximately $0.3 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 $0.2 million under the RSU Plan. The expenses are expected to be recognized over a weighted-average period of 0.7 years and 1.1 years, respectively.

 

Cash received from stock options exercised during the nine months ended September 30, 2014 and 2013 was $1.3 million and $0.1 million, respectively.  

 

Fair value calculations

 

The initial fair value of options granted during the nine months ended September 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 nine months ended September 30, 2014 or 2013.