Annual report pursuant to Section 13 and 15(d)

Shareholders' Equity and Capital Stock

v2.4.0.8
Shareholders' Equity and Capital Stock
 12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Shareholders' equity and capital stock
18.
Shareholders’ Equity and Capital Stock
 
Common share issuances
 
During the year ended December 31, 2013, the Company exchanged 338,451 common shares for vested Restricted Share Units (“RSUs”). In addition, 377,927 stock options were exercised for proceeds of $0.3 million.
   
On December 18, 2013, the Company completed a private placement of 4,709,089 units consisting of one share of common stock and one half warrant at $1.10 per unit raising gross proceeds of $5.1 million. Total direct share issue costs, including the placement agents’ commission, were $0.2 million.
 
During the year ended December 31, 2012, 88,473 common shares were issued pursuant to the exercise of stock options for proceeds of $0.1 million. In addition, the Company exchanged 120,359 common shares for vested RSUs.
   
On February 23, 2012, the Company completed a private placement of 17,250,000 common shares at $1.00 per share raising gross proceeds of $17.3 million. Total direct share issue costs, including the placement agents’ commission, were $1.0 million.
 
During the year ended December 31, 2011, 1,677,432 common shares were issued pursuant to the exercise of stock options for proceeds of $5.2 million.
 
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, 2010
 
 
5,665,568
 
1.79
Granted
 
 
3,162,098
 
2.07
Exercised
 
 
(1,677,432)
 
2.02
Forfeited
 
 
(241,332)
 
2.14
Expired
 
 
(495,000)
 
2.59
Outstanding, December 31, 2011
 
 
6,413,902
 
1.75
Granted
 
 
3,114,207
 
0.87
Exercised
 
 
(88,473)
 
0.85
Forfeited
 
 
(145,414)
 
1.99
Expired
 
 
(782,500)
 
3.25
Outstanding, December 31, 2012
 
 
8,511,722
 
1.32
Granted
 
 
1,876,670
 
1.07
Exercised
 
 
(377,927)
 
0.79
Forfeited
 
 
(31,806)
 
0.78
Expired
 
 
(705,000)
 
1.69
Outstanding, December 31, 2013
 
 
9,273,659
 
1.19
 
The exercise price of a new grant is set at the closing price for the stock 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 year ended December 31, 2013 was $1.0 million.
 
As of December 31, 2013, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.66
 
145,909
 
0.1
 
101
 
145,909
 
0.1
 
101
 
February 9, 2014
0.84
 
776,257
 
0.7
 
396
 
776,257
 
0.7
 
396
 
September 2, 2014
0.76
 
554,074
 
1.2
 
327
 
554,074
 
1.2
 
327
 
March 5, 2015
2.68
 
1,318,293
 
2.1
 
-
 
1,318,293
 
2.1
 
-
 
January 28, 2016
1.47
 
645,000
 
2.5
 
-
 
645,000
 
2.5
 
-
 
July 7, 2016
1.09
 
759,809
 
2.7
 
198
 
759,809
 
2.7
 
198
 
September 9, 2016
1.08
 
200,000
 
2.8
 
54
 
200,000
 
2.8
 
54
 
October 24, 2016
0.85
 
1,110,871
 
3.0
 
555
 
1,110,871
 
3.0
 
555
 
January 12, 2017
1.30
 
200,000
 
3.1
 
10
 
200,000
 
3.1
 
10
 
February 1, 2017
1.10
 
100,000
 
3.2
 
25
 
100,000
 
3.2
 
25
 
March 1, 2017
0.71
 
1,594,312
 
3.9
 
1,020
 
860,928
 
3.9
 
551
 
December 7, 2017
0.72
 
673,791
 
4.3
 
424
 
215,613
 
4.3
 
136
 
April 25, 2018
1.16
 
100,000
 
4.6
 
19
 
32,000
 
4.6
 
6
 
August 1, 2018
1.12
 
1,095,343
 
5.0
 
252
 
109,537
 
5.0
 
25
 
December 27, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.19
 
9,273,659
 
3.0
 
3,381
 
7,028,291
 
2.5
 
2,384
 
 
 
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$1.44 as of the last trading day in the year ended December 31, 2013, 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 December 31, 2013 was 7,310,366. The total number of in-the-money stock options exercisable as of December 31, 2013 was 5,064,998.
 
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:
 
 
 
 
 
Weighted
 
 
 
 
 
average grant
 
 
 
RSUs
 
date fair
value
 
 
 
#
 
$
 
Unvested, December 31, 2010
 
-
 
-
 
Granted
 
355,662
 
2.90
 
Forfeited
 
(79,297)
 
2.90
 
Unvested, December 31, 2011
 
276,365
 
2.87
 
Granted
 
703,572
 
0.91
 
Vested
 
(136,789)
 
2.87
 
Forfeited
 
(16,723)
 
1.66
 
Unvested, December 31, 2012
 
826,425
 
1.15
 
Granted
 
273,834
 
1.23
 
Vested
 
(402,581)
 
1.89
 
Forfeited
 
(6,068)
 
0.78
 
Unvested, December 31, 2013
 
691,610
 
0.96
 
 
As of December 31, 2013, outstanding RSUs are as follows: 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
average
 
Aggregate
 
 
 
Number of
 
remaining
 
Intrinsic
 
 
 
unvested
 
amortization
 
Value
 
Grant date
 
options
 
life (years)
 
$
 
January 12, 2012
 
144,309
 
0.12
 
195
 
December 7, 2012
 
273,467
 
1.02
 
369
 
December 27, 2013
 
273,834
 
2.07
 
370
 
 
 
 
 
 
 
 
 
 
 
691,610
 
1.25
 
934
 
 
Upon RSU vesting, the holder of an RSU will receive one common share, for no additional consideration, for each RSU held.
 
Warrants
 
On December 19, 2013, the Company issued 2,354,545 warrants to purchase stock at $1.35 per share in connection with the sale of private placement units (see note 17). The First and Second Loan Facility account for the remainder of the warrants issued during 2013 (see note 13). 
 
Activity with respect to warrants is summarized as follows: 
 
 
 
 
 
Weighted-
 
 
 
 
 
average
 
 
 
Warrants
 
exercise price
 
 
 
#
 
$
Outstanding, December 31, 2010
 
 
100,000
 
1.12
 
 
 
 
 
 
Outstanding, December 31, 2011
 
 
100,000
 
1.12
Granted
 
 
50,000
 
0.93
 
 
 
 
 
 
Outstanding, December 31, 2012
 
 
150,000
 
1.06
Granted
 
 
9,774,512
 
1.19
Cancelled
 
 
(1,550,400)
 
1.17
 
 
 
 
 
 
Outstanding, December 31, 2013
 
 
8,374,112
 
1.19
 
As of December 31, 2013, outstanding warrants are as follows:
 
 
 
 
 
 
 
Aggregate
 
 
 
Exercise
 
 
 
Remaining
 
Intrinsic
 
 
 
price
 
Number
 
contractual
 
Value
 
 
 
$
 
of warrants
 
life (years)
 
$
 
Expiry
 
 
 
 
 
 
 
 
 
 
 
0.92
 
50,000
 
1.7
 
21,500
 
September 4, 2015
 
1.12
 
100,000
 
1.8
 
23,000
 
November 1, 2015
 
0.93
 
25,000
 
2.2
 
10,500
 
March 5, 2016
 
1.35
 
2,354,545
 
3.0
 
-
 
December 19, 2016
 
1.12
 
4,294,167
 
4.5
 
987,658
 
June 24, 2018
 
1.17
 
1,550,400
 
4.7
 
279,072
 
August 27, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
8,374,112
 
4.7
 
1,321,730
 
 
 
 
Share-based compensation expense
 
Stock-based compensation expense was $1.2 million, $2.4 million and $2.5 million for the years ended December 31, 2013, 2012 and 2011, respectively.
 
As of December 31, 2013, there was approximately $0.8 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 $0.4 million under the RSU Plan. The expenses are expected to be recognized over a weighted-average period of 1.2 years and 1.7 years, respectively.
 
Cash received from stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $0.3 million, less than $0.1 million and $3.4 million, respectively.
 
Fair Value Calculations
 
The initial fair value of RSUs, options and warrants granted during the years ended December 31, 2013, 2012 and 2011 was determined using the Black-Scholes option pricing model with the following assumptions:
 
 
 
2013
 
2012
 
2011
 
 
 
 
 
 
 
 
 
Expected warrant life (years)
 
0.16 - 3
 
1.5
 
-
 
Expected option life (years)
 
3.41-3.51
 
3.29-3.37
 
3.24-3.28
 
Expected volatility
 
61-66%
 
63-78%
 
79-82%
 
Risk-free interest rate
 
0.9-1.4%
 
1.0-1.3%
 
1.3-1.9%
 
Forfeiture rate (warrants)
 
0.0%
 
0.0%
 
0.0%
 
Forfeiture rate (options)
 
4.2-4.4%
 
4.6-4.8%
 
4.4-5.1%
 
Forfeiture rate (RSUs)
 
7.7%
 
12.5-22.3%
 
5.0%
 
Expected dividend rate
 
0%
 
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.
 
The fair value used for the RSUs issued in December 2013, December 2012 and January 2012 was $1.20, $0.76 and $0.91 per unit, respectively which was the closing price of the stock on the TSX as of the trading days immediately preceding the grant dates.