Note 9 - Share Capital and Additional Paid-in Capital | 3 Months Ended |
Mar. 31, 2015 |
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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2014 Private Placement |
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On December 12, 2014, the Company closed a private placement with Joinstar related entities consisting of 1,800,000 common shares at a price of $1.21 per share for total gross proceeds of $2,178,000. The net proceeds were $2,024,000 after deduction of $154,000 of financing costs. |
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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 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 to be equal to the fair market value of the commons shares on 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 1,974,907 stock options authorized for grant under the 2008 Plan as at March 31, 2015, options for 1,052,983 shares were outstanding and 921,924 stock options were available for future grant. |
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The following assumptions were used to estimate the fair value of options granted during the three month period ended March 31, 2015, and 2014 using a Black-Scholes option-pricing model: |
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Three months ended March 31, | | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 0.98 | % | | | 2.06 | % | | | | | | | | | | | | | | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0 | % | | | | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 6.1 | | | | 5.8 | | | | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 121 | % | | | 126 | % | | | | | | | | | | | | | | | | | | | | | | | |
Fair value per stock option | | $ | 0.8 | | | $ | 1.31 | | | | | | | | | | | | | | | | | | | | | | | | |
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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 month period ended March 31, 2015 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 March 31, 2015, the following stock options were outstanding: |
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| Range of | | | Number of | | | Weighted average | | | Weighted average | | | Number of options | | | Weighted | |
exercise price | shares under | remaining | exercise | currently | average exercise |
| option | contractual life | price | exercisable | price |
| $ | | | # | | | (years) | | | | $ | | | # | | | | $ | |
| 0.88 | - | 0.92 | | | | 198,483 | | | | 9.86 | | | | 0.91 | | | | - | | | | - | |
| 1.02 | - | 1.60 | | | | 288,302 | | | | 8.21 | | | | 4.46 | | | | 178,067 | | | | 1.41 | |
| | | 2.20 | | | | 388,131 | | | | 7.03 | | | | 2.2 | | | | 355,702 | | | | 2.2 | |
| 3.00 | - | 3.10 | | | | 176,243 | | | | 7.97 | | | | 3.09 | | | | 162,375 | | | | 3.1 | |
| 6.80 | - | 8.20 | | | | 1,824 | | | | 0.87 | | | | 7.7 | | | | 1,496 | | | | 7.89 | |
| 0.88 | - | 8.20 | | | | 1,052,983 | | | | 8.03 | | | | 1.91 | | | | 697,640 | | | | 2.22 | |
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The options expire at various dates from December 1, 2015 to March 20, 2025. |
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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, 2014 | | | 1,007,629 | | | | 1.99 | | | | | | | | | | | | | | | | | | | | | | | | |
Options granted | | | 128,793 | | | | 0.92 | | | | | | | | | | | | | | | | | | | | | | | | |
Options forfeited | | | (83,439 | ) | | | 1.33 | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2015 | | | 1,052,983 | | | | 1.91 | | | | | | | | | | | | | | | | | | | | | | | | |
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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, 2014 | | | 136,348 | | | | 1.39 | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs granted | | | 63,582 | | | | 0.92 | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs converted to common shares | | | (114,978 | ) | | | (1.27 | ) | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2015 | | | 84,952 | | | | 1.2 | | | | | | | | | | | | | | | | | | | | | | | | |
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The restricted share units that were granted during the three month period ended March 31, 2015 were to settle a director compensation liability that was recorded in accounts payable and accrued liabilities. The $59,000 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 246,863 RSUs authorized for grant under the RSU Plan as at March 31, 2015, 161,911 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 246,863 DSUs authorized for grant under the DSU Plan as at March 31, 2015, 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 March 31, | | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | | | | $ | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of sales | | | 8 | | | | 9 | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | 11 | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | 23 | | | | 119 | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing | | | 13 | | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 55 | | | | 151 | | | | | | | | | | | | | | | | | | | | | | | | |
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As of March 31, 2015, the total unrecognized compensation related to stock options granted amounts to $483,000, which is expected to be recognized over a weighted average service period of 2.60 years. |
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[g] Common share purchase warrants |
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At March 31, 2015, there were 86,865,691 warrants outstanding to purchase shares of common stock, with expiry dates ranging from November 7, 2015 to December 15, 2024. Of the total 86,865,691 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 $1.492 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, 52,796 warrants entitle the holder thereof to purchase one common share of the Company at a price of $1.831 per common share, and 54,905 warrants entitle the holder thereof to purchase one common share of the Company at a price of $1.00 per common share. |
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There have been no common share purchase warrant transactions during the three months ended March 31, 2015. |
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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 March 31, | | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 0.5 | % | | | 1.07 | % | | | | | | | | | | | | | | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0 | % | | | | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 1.75 | | | | 2.75 | | | | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 102 | % | | | 139 | % | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of warrant | | $ | 0.0139 | | | $ | 0.0629 | | | | | | | | | | | | | | | | | | | | | | | | |
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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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86,865,691 warrants, 1,052,983 stock options and 84,952 restricted share units have been excluded from the computation of diluted earnings per share for the three month period ended March 31, 2015 as the Company has incurred a net loss during the period and their inclusion would be anti-dilutive to the loss per share (2014 – 86,810,786 warrants, 1,487,304 stock options and 48,595 restricted share units were excluded). |