Annual report pursuant to Section 13 and 15(d)

Note 9 - Stock-based Compensation

v3.19.1
Note 9 - Stock-based Compensation
 12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
9.
Stock-based compensation:
 
(a)     
Stock options
 
Under the Company’s stock option plan, options, rights and other entitlements
may
be granted to directors, officers, employees and consultants of the Company to purchase up to a maximum of
17.5%
of the total number of outstanding common shares, estimated at
6.7
million options, rights and other entitlements as at
December 
31,
2018.
Options are granted at the fair market value of the common shares on the closing trading price of the Company’s stock on the day prior to the grant if the grant is made during the trading day or the closing trading price on the day of grant if the grant is issued after markets have closed. Options vest at various rates (immediate to
four
years) and have a term of
10
years.
 
Stock option transactions for the years ended
December 
31,
2017
and
2018
are summarized as follows:
 
Option numbers are in (000’s)                
        Year ended
December 31, 2018		   Weighted
average		   Aggregate
      Options     Weighted average
exercise price		   remaining
contractual
life (years)		   Intrinsic
Value
                 
Outstanding, January 1, 2017    
2,005
     $
4.31
      
 
      
 
  
Granted    
826
      
1.19
      
 
      
 
  
Expired    
(323
 )    
4.58
      
 
      
 
  
Forfeited    
(164
 )    
3.35
      
 
      
 
  
Outstanding, December 31, 2017    
2,344
     $
3.46
      
 
      
 
  
Granted    
2,320
      
2.98
      
 
      
 
  
Exercised    
(114
 )    
2.04
      
 
      
 
  
Expired    
(51
 )    
2.34
      
 
      
 
  
Forfeited    
(10
 )    
4.97
      
 
      
 
  
Outstanding, December 31, 2018    
4,489
     $
3.11
      
7.9
     $
562,438
  
Exercisable, December 31, 2018    
2,544
     $
3.41
      
7.1
      
273,907
  
Vested and expected to vest,
December 31, 2108		    
4,196
     $
3.06
      
7.8
      
519,159
  
 
Aggregate intrinsic value represents the excess of the value of the closing stock price on the previous trading day of the respective balance sheet dates over the exercise price of the stock options. Total intrinsic value of options exercised was
$255
thousand for the year ended
December 31, 2018,
and
nil
for
2017.
 
As of
December 31, 2018,
there was
$1.28
million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over an estimated weighted-average period of
1.83
years.
 
The following table presents the weighted average assumptions that were used in the Black-Scholes option pricing model to determine the fair value of stock options granted during the year, and the resultant weighted average fair values:
 
      Year ended
December 31, 2018		       Year ended
December 31, 2017
         
Risk-free interest rate    
2.43
 %    
1.32
 %
Expected dividend yield    
-
      
-
  
Expected volatility    
93.3
 %    
98
 %
Expected life of options (years)    
5
      
5
  
Grant date fair value   $
2.22
     $
0.87
  
 
The Company uses historical data to estimate the expected dividend yield and expected volatility of its common shares in determining the fair value of stock options. The expected life of the options represents the estimated length of time the options are expected to remain outstanding.
 
Stock options granted by the Company during the
twelve
months ended
December 31, 2018
vest
50%
after
one
year and
16.67%
on each of the next
three
anniversaries, except for
166,000
options which vest
50%
after
one
year and
25%
on each of the next
two
anniversaries and
850,000
options which vested immediately on the grant date.
 
Stock options granted by the Company during the year ended
December 31, 2017
consist of
641,500
options that vest
50%
after
one
year and
16.67%
on each of the next
three
anniversaries, and
185,000
options that vest
50%
after
one
year and
25%
on each of the next
two
anniversaries.
 
(b)    
Restricted share units
 
The Company has a stock incentive plan (SIP) pursuant to which the Board
may
grant stock-based awards comprised of restricted stock units or dividend equivalents to employees, officers, consultants, independent contractors, advisors and non-employee directors of the Company. Each restricted unit is automatically redeemed for
one
common share of the Company upon vesting. The following table presents the activity under the SIP plan for the years ended
December 31, 2018
the units outstanding.
 
    Year ended,
December 31, 2018		   Year ended,
December 31, 2017
    Number
(in thousands)		  
Weighted
average grant
date fair value
   Number
(in thousands)		  
Weighted
average
grant date
 fair value
Outstanding, beginning of period  
-
  
$-
  
-
  
$-
Granted    
150
 
    
3.35
 
    
150
 
    
1.14
 
Redeemed    
(150
)
    
3.35
 
    
(150
)
    
1.14
 
Outstanding, end of period    
-
 
   $
-
 
    
-
 
   $
-
 
 
On
March 28, 2017
the Company granted
150,000
restricted share units (RSUs) with a vesting term of
three
months. On
July 13, 2018,
the Company granted
150,000
restricted share units with a vesting term of
three
months. During the
three
-month and
twelve
-month period ending
December 31, 2018,
the Company recorded share-based payment expense of approximately
$66
thousand (
2017
-
nil
) and
$503
thousand (
2017
-
$171
thousand), respectively, related to the issued RSUs.
 
The grant date fair value of the
July 13, 2018
RSUS was determined as the closing value of the common shares of the Company on the Nasdaq Stock Exchange on the date prior to the date of grant; and for
March 28, 2017
RSUs, the grant date fair value was determined as the closing value of the common shares of the Company on the Toronto Stock Exchange on the date prior to the date of grant.
 
The Company recorded share-based payment expense related to stock options and RSUs as follows:
 
    Year ended
December 31, 2018		   Year ended
December 31, 2017
         
Research and development   $
1,026
     $
214
  
General and administrative    
3,250
      
603
  
Total   $
4,276
     $
817