Note 9 - Share Capital and Additional Paid-in Capital | 9 Months Ended |
Sep. 30, 2014 |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
9. SHARE CAPITAL AND ADDITIONAL PAID-IN CAPITAL |
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[a] Authorized - Unlimited common shares without par value. |
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[b] Issued |
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2013 Private Placement |
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On November 7, 2013, the Company’s shareholders approved a brokered and non-brokered private placement of 1,273,117 subscription receipts (the “Subscription Receipts”) at a price of $2.45 for aggregate gross proceeds of $3.1 million. Each Subscription Receipt automatically entitled the holder to receive one unit. Each unit consisted of one common share and one-half of one warrant to purchase one common share. Each whole warrant has a term of 36 months and an exercise price of $3.58. |
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The net proceeds were $2.8 million after deduction of $388,000 of financing costs. Of these net proceeds, $2.1 million was allocated to common shares and $677,000 was allocated to warrants. |
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[c] Stock option plan |
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At the Annual General Meeting held September 3, 2008, the Company’s shareholders approved a new stock option plan (“2008 Plan”). Under the plan, the Company may grant options to purchase common shares in the Company to employees, directors, officers and consultants of the Company. The exercise price of the options is determined by the Board but is equal to the fair market value of the common shares at the grant date. The Company estimates the fair value of options on the date of the grant. The options vest over the requisite service period in accordance with terms as determined by the Board, typically over four years. Stock options expire no later than ten years from the date of grant. |
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At the Annual General and Special Meeting held on June 18, 2013, the Company’s shareholders’ approved a change to the Company’s 2008 stock option plan permitting the maximum shares authorized to be issued under the plan to be up to 20% of the issued and outstanding common shares outstanding at any point in time. |
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Of the 1,589,857 stock options authorized for grant under the 2008 Plan as at September 30, 2014, 412,014 options are available for grant. |
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The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on the assumptions noted in the following table: |
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Nine Month Ended September 30, | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 2.04 | % | | | 1.66 | % | | | | | | | | | | | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0 | % | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 5.88 | | | | 5.74 | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 126 | % | | | 123 | % | | | | | | | | | | | | | | | | | | | | |
Fair value per stock option | | $ | 1.33 | | | $ | 2.68 | | | | | | | | | | | | | | | | | | | | | |
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The expected volatility reflects the assumption that the historical volatility of common stock of the Company over a period similar to the expected life of the options is indicative of future trends. The Company estimates the risk-free interest rate using the Bank of Canada bond yield with a remaining term equal to the expected life of the option. The Company uses the simplified method for estimating the stock option term for stock option grants during the three and nine month period ended September 30, 2014 as the Company has determined that the stock options are “plain vanilla” and historical share option exercises do not apply as the vesting term and contractual lives have significantly changed from those stock options exercised previously. |
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At September 30, 2014, the following stock options were outstanding: |
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Range of | | | Number of | | | Weighted average | | | Weighted average | | | Number of | | | Weighted average | |
exercise price | shares under | remaining | exercise price | options currently | exercise price |
| option | contractual life | | exercisable | |
| | | | | | | $ | | | # | | | (years) | | | | $ | | | # | | | | $ | |
1.02 | | | - | | | | 1.8 | | | | 598,940 | | | | 8.55 | | | | 1.51 | | | | 277,792 | | | | 1.52 | |
| | | | | | | 2.2 | | | | 389,794 | | | | 7.51 | | | | 2.2 | | | | 341,415 | | | | 2.2 | |
3 | | | - | | | | 3.1 | | | | 186,700 | | | | 8.47 | | | | 3.1 | | | | 156,958 | | | | 3.1 | |
6.8 | | | - | | | | 8.2 | | | | 1,824 | | | | 1.37 | | | | 7.7 | | | | 911 | | | | 7.7 | |
| | | | | | | 23 | | | | 585 | | | | 0.19 | | | | 23 | | | | 585 | | | | 23 | |
1.02 | | | - | | | | 23 | | | | 1,177,843 | | | | 8.18 | | | | 2.01 | | | | 777,661 | | | | 2.18 | |
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The options expire at various dates from December 10, 2014 to August 14, 2024. |
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Stock option transactions and the number of stock options outstanding are summarized below: |
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| | Number of optioned | | | Weighted average | | | | | | | | | | | | | | | | | | | | | |
| | common shares | | | exercise price | | | | | | | | | | | | | | | | | | | | | |
| | # | | | | $ | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2013 | | | 1,130,628 | | | | 2.08 | | | | | | | | | | | | | | | | | | | | | |
Options granted | | | 390,990 | | | | 1.51 | | | | | | | | | | | | | | | | | | | | | |
Options forfeited | | | (343,775 | ) | | | 1.67 | | | | | | | | | | | | | | | | | | | | | |
Balance, September 30, 2014 | | | 1,177,843 | | | | 2.01 | | | | | | | | | | | | | | | | | | | | | |
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[d] Restricted share unit plan |
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At the Annual General and Special Meeting held on June 18, 2013, the Company’s shareholders approved a new restricted share unit plan (“RSU Plan”). Under the plan, the Company may grant Restricted Share Units (“RSUs”) to employees, directors, and eligible consultants which entitle each participant to either one common share of the Company on a time vested basis or a cash payout equal to the number of vested RSUs multiplied by the then current market value of the RSUs. The fair market value of the RSUs is determined based upon the number of RSUs granted and the quoted closing price of the Company’s stock on the trading day immediately preceding the date of determination. The duration of the vesting period and other vesting terms applicable to the grant of the RSUs shall be determined by the Board. |
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| | Number | | | Weighted average | | | | | | | | | | | | | | | | | | | | | |
| | of RSUs | | | exercise price | | | | | | | | | | | | | | | | | | | | | |
| | # | | | | $ | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2013 | | | 98,325 | | | | 1.88 | | | | | | | | | | | | | | | | | | | | | |
RSUs granted | | | 72,347 | | | | 1.56 | | | | | | | | | | | | | | | | | | | | | |
RSUs converted to common shares | | | (78,390 | ) | | | (1.86 | ) | | | | | | | | | | | | | | | | | | | | |
Balance, September 30, 2014 | | | 92,282 | | | | 1.64 | | | | | | | | | | | | | | | | | | | | | |
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The RSUs that were granted during the three and nine month period ended September 30, 2014 were to settle a director compensation liability that was recorded in accounts payable and accrued liabilities. The $113,000 liability has been excluded from the change in accounts payable and accrued liabilities on the consolidated statement of cash flows. |
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Of the 198,732 RSUs authorized for grant under the RSU Plan as at September 30, 2014, 106,450 RSUs are available for grant. |
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[e] Deferred share unit plan |
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At the Annual General and Special Meeting held on June 18, 2013, the Company’s shareholders approved a new non-employee director deferred share unit plan (“DSU Plan”). A Deferred Share Unit (“DSU”) is a right granted to non-employee directors which entitle each participant to either one common share of the Company on a time vested basis or a cash payout equal to the number of DSUs multiplied by the then current market value of the DSUs. The fair market value of the DSU’s is determined based upon the number of DSUs granted and the quoted price of the Company’s stock on the trading day immediately preceding the determination date. The duration of the vesting period and other vesting terms applicable to the grant of the DSU’s shall be determined by the Board. |
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Of the 198,732 DSUs authorized for grant under the DSU Plan as at September 30, 2014, all are available for grant. |
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[f] Stock-based compensation |
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The following table shows stock-based compensation allocated by type of cost (in thousands): |
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| | Three Months Ended | | | Nine Months Ended | | | | | | | | | | | | | |
September 30, | 30-Sep | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | | | | | | | | | | | |
| | | $ | | | | $ | | | | $ | | | | $ | | | | | | | | | | | | | |
Cost of sales | | | 9 | | | | 8 | | | | 27 | | | | 24 | | | | | | | | | | | | | |
Research and development | | | 11 | | | | 12 | | | | 34 | | | | 34 | | | | | | | | | | | | | |
General and administrative | | | 68 | | | | 160 | | | | 236 | | | | 422 | | | | | | | | | | | | | |
Sales and marketing | | | 7 | | | | 10 | | | | 30 | | | | 26 | | | | | | | | | | | | | |
| | | 95 | | | | 190 | | | | 327 | | | | 506 | | | | | | | | | | | | | |
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As of September 30, 2014, the total unrecognized compensation related to stock options granted, net of estimated forfeitures, is $360,000, which is expected to be recognized over a weighted average service period of 1.10 years. |
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[g] Common share purchase warrants |
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At September 30, 2014, there were 86,810,786 warrants outstanding to purchase shares of common stock, with expiry dates ranging from November 7, 2015 to February 11, 2024. Of the total 86,810,786 warrants outstanding, 86,103,744 warrants (the warrants related to the 2011 financing) entitle the holder thereof to purchase 1/20th of a common share of the Company at a price of $1.49 per whole common share; 636,557 warrants (the private placement warrants) entitle the holder thereof to purchase one common share of the Company at a price of $3.58 per common share; 17,689 warrants (the agent warrants) entitle the holder thereof to purchase one common share of the Company at a price of $2.45 per common share; and 52,796 warrants (the Silicon Valley Bank warrants) entitle the holder thereof to purchase one common share of the Company at a price of $1.83 per common share. |
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Common share purchase warrant transactions and the number of warrants outstanding are summarized below: |
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| | Number of | | | Weighted average | | | | | | | | | | | | | | | | | | | | | |
| | warrants | | | exercise price | | | | | | | | | | | | | | | | | | | | | |
| | # | | | | $ | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2013 | | | 86,757,990 | | | | 0.1088 | | | | | | | | | | | | | | | | | | | | | |
Warrants issued | | | 52,796 | | | | 1.831 | | | | | | | | | | | | | | | | | | | | | |
Balance, September 30, 2014 | | | 86,810,786 | | | | 0.1019 | | | | | | | | | | | | | | | | | | | | | |
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The estimated fair value of the warrants related to the 2011 financing is reassessed at each balance sheet date using the Black-Scholes option pricing model. The following assumptions were used to value the warrants on the following balance sheet dates: |
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As at September 30, | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 1.12 | % | | | 1.69 | % | | | | | | | | | | | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0 | % | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 2.25 | | | | 3.25 | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 106 | % | | | 132 | % | | | | | | | | | | | | | | | | | | | | |
Fair value of warrant | | $ | 0.0337 | | | $ | 0.1067 | | | | | | | | | | | | | | | | | | | | | |
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[h] Earnings per common share |
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Basic net income per share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common shares for all potential dilutive common shares outstanding using the treasury stock method. Dilutive potential common shares outstanding include outstanding warrants, stock options, and restricted share units. |
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86,810,786 warrants, 1,177,843 stock options and 92,282 restricted share units have been excluded from the computation of diluted earnings per share for the three and nine month periods ended September 30, 2014 as the Company has incurred a net loss during both periods and their inclusion would be anti-dilutive to the loss per share (2013 - 86,103,744 warrants and 1,142,769 stock options were excluded). |