Shareholders' Equity | 13. SHAREHOLDERS’ EQUITY i. Authorized share capital Unlimited common shares, without par value. ii. Share capital The number of common shares issued and fully paid as at December 31, 2019 is 210,392,473. No dividends were declared and paid in the year ended December 31, 2019. In the year ended December 31, 2018, the Company declared and paid a dividend of $0.04 per common share totalling $8,400. iii. Stock options, RSUs, DSUs and share-based payments reserve On June 13, 2019, the Company, through its Board of Directors and shareholders, adopted a long-term equity incentive plan (the “Plan”) which, among other things, allows for the maximum number of shares that may be reserved for issuance under the Plan to be 10% of the Company’s issued and outstanding shares at the time of the grant. The Board of Directors has the authority and discretion to grant stock option, RSU and DSU awards within the limits identified in the Plan, which includes provisions limiting the issuance of options to qualified persons and employees of the Company to maximums identified in the Plan. As at December 31, 2019, the aggregate maximum number of shares pursuant to options granted under the Plan will not exceed 21,039,247 shares, and there were 16,455,912 shares available to be issued under the Plan. All stock options are settled by the issuance of common shares. The following table summarizes information about the stock options outstanding and exercisable: Year ended December 31, 2019 Year ended December 31, 2018 Number of options Weighted average exercise price Number of options Weighted average exercise price Balance at beginning of the year 3,130,000 $ 4.17 3,640,000 $ 4.40 Granted during the year 1,090,000 1.30 240,000 3.30 Expired/forfeited during the year (701,665) 4.24 (750,000 ) 5.00 Balance at end of the year 3,518,335 $ 3.26 3,130,000 $ 4.17 Options exercisable at the end of the year 1,972,223 $ 4.32 2,183,334 $ 4.45 The fair value of the stock options granted have been estimated on the date of grant using the Black-Scholes option pricing model. The assumptions are presented below for options granted during the December 31, 2018 and 2019 periods. Expected volatility is calculated by reference to the weekly closing share price for a period that reflects the expected life of the options. The 1,090,000 stock options issued on December 27, 2019 vest 1/3 on December 27, 2020, 1/3 on December 27, 2021 and 1/3 on December 27, 2022. The 200,000 stock options issued on June 30, 2018 vest 1/3 on July 1, 2019, 1/3 on July 1, 2020 and 1/3 on July 1, 2021. The 40,000 stock options issued on June 30, 2018 vest 1/2 on July 1, 2019 and 1/2 on July 1, 2020. December 31, 2019 December 31, 2018 Exercise price $ 1.30 $3.30 Expected volatility 43.33% 30.78% Expected option life 5 years 5 years Contractual option life 5 years 5 years Expected forfeiture none none Expected option cancellation none none Expected dividend yield 0% 0% Risk-free interest rate 1.64% 2.06% The following tables reflect the number of stock options outstanding, the weighted average of options outstanding, and the exercise price of stock options outstanding at December 31, 2019. The Black-Scholes values are measured at the grant date. At December 31, 2019 Expiry Date Black-Scholes Value Number of Options Number of Exercisable Options Exercise Price April 13, 2020 925 585,000 585,000 4.66 October 14, 2020 133 100,000 100,000 4.21 December 10, 2020 332 295,000 295,000 3.57 June 30, 2021 120 100,000 100,000 6.35 November 3, 2021 214 100,000 100,000 6.96 February 5, 2022 171 100,000 100,000 5.86 December 21, 2022 967 908,335 605,556 3.48 June 30, 2023 203 200,000 66,667 3.30 June 30, 2023 41 40,000 20,000 3.30 December 27, 2024 436 1,090,000 - 1.30 $ 3,542 3,518,335 1,972,223 $ 3.26 The weighted average remaining contractual life of the options outstanding at December 31, 2019 is 2.86 years (2018 - 2.63 years). The restricted and deferred share unit plans are full value phantom shares that mirror the value of the Company’s publicly traded common shares. Grants under the RSU and DSU plan are made on a discretionary basis to qualified persons and employees of the Company subject to the Board of Directors’ approval. Under the RSU and DSU plan, RSUs vest according to the terms set out in the award agreement which are determined on an individual basis at the discretion of the Board of Directors. Vesting under the RSU and DSU plan is subject to special rules for death, disability and change in control. The awards can be settled through issuance of common shares or paid in cash, at the discretion of the Board of Directors. These awards are accounted for as equity settled RSUs. The fair value of each RSU issued is determined at the closing share price on the grant date. The following table shows the RSU awards which have been granted and settled during the year: December 31, 2019 December 31, 2018 RSU Number of units Weighted average value Number of units Weighted average value Balance at beginning of year 368,997 $ 5.01 488,665 $ 4.88 Awards and payouts during the period (net): RSUs awarded 990,000 1.13 - - RSUs settled and common shares issued (289,997) 5.35 (111,668) 4.33 RSUs forfeited (4,000) 6.49 (8,000) 6.49 Balance at end of the year* 1,065,000 $ 1.31 368,997 $ 5.01 *As at December 31, 2019, 16,667 RSUs (2018, 106,668 RSUs) at a weighted average value of $3.90 have vested and have not yet been settled. No DSU awards have been granted to date, therefore as at December 31, 2019 there are no DSUs outstanding. The share-based payments recognized as an expense for the years ended December 31, 2019 and 2018 are as follows: Year ended Year ended December 31, 2019 December 31, 2018 Expense recognized in the period for share-based payments $ 789 $ 1,685 The share-based payment expense for the years ended December 31, 2019 and 2018 is included in selling, general and administrative expenses. iv. Loss per share The following table sets forth the computation of basic and diluted loss per share: Year ended December 31, 2019 Year ended December 31, 2018 Numerator Net loss for the year $ (128,758) $ (18,934) Denominator For basic - weighted average number of shares outstanding 210,134,192 195,968,588 Effect of dilutive securities - - For diluted - adjusted weighted average number of shares outstanding 210,134,192 195,968,588 Loss Per Share Basic $ (0.61) $ (0.10) Diluted $ (0.61) $ (0.10) For the years ended December 31, 2019, 3,518,335 stock options and 1,065,000 RSUs were not included in the calculation of diluted loss per share since to include them would be anti-dilutive (2018 - 3,130,000 stock options and 368,997 RSUs). |