16.	Stock-based payments

 

(a)	Option plan details

The Company has an incentive stock option plan, under which non-transferrable options to purchase common shares of the Company may be granted to directors, officers, employees, or consultants of the Company. The terms of the plan provide that the Board of Directors may grant options to acquire common shares of the Company at not less than the discounted market price (as set out in the plan) with the market price deemed to be the closing price on the day preceding the grant at varying rates. The maximum number of common shares reserved for issuance for options that may be granted under the plan is 10% of the common shares outstanding. No amounts are paid or payable by the recipient on receipt of the option, and the Board of Directors has the authority to determine the terms, limitations, restrictions, and conditions (including any criteria) in respect of any grants.

 

(b)	Summary of changes

The following is a summary of the changes in options for the period from January 1, 2016 to December 31, 2016:

 

		Grant date				Exercise price				Number of options				Amount
Balance at January 1, 2016											1,610,003			$	599
Issuance of options
May			May 17 and 27, 2016			$	0.285				157,850				6
August			August 5, 2016				0.50				1,225,000				30
October			October 6, 2016				1.23				3,618,500				114
November			Multiple				Multiple				482,000				28
Exercise of options															—
August			October 1, 2013				0.24				(213,390	)			(31	)
August			May 17 and 27, 2016				0.285				(157,390	)			(6	)
October			October 1, 2013				0.24				(32,008	)			(5	)
Expiry of options							0.96				(512,971	)			—
Balance at December 31, 2016											6,177,594			$	735

 

The following is a summary of the changes in options for the period from January 1, 2017 to December 31, 2017:

 

		Grant date				Exercise price				Number of options				Amount
Balance at January 1, 2017											6,177,594			$	735
Issuance of options
April			April 12, 2017				3.14				3,299,000				—
August			August 23, 2017				2.42				2,903,000				—
November			November 9, 2017				3.32				200,000				—
Exercise of options
January			January 30, 2014				0.71				(32,009	)			(14	)
February			August 5, 2014				1.15				(32,000	)			(23	)
March			September 19, December 17, 2014				1.15				(171,695	)			(104	)
April			August 5, 2014				1.15				(93,000	)			(66	)
April			October 6, 2016				1.23				(30,416	)			(15	)
May			August 5, 2014				1.15				(35,043	)			(25	)
July			August 5, 2016				0.50				(83,333	)			(19	)
September			October 6, 2016				1.23				(1,250	)			(1	)
December			December 17, 2014				1.15				(92,500	)			(41	)
Expiry of options											(404,598	)			—
Vesting of issued options							1.15				—				1,862
Balance at December 31, 2017											11,603,750			$	2,289

The weighted average share price at the dates of exercise of options during the year ended December 31, 2017 was $3.66 (2016 - $0.52).

As at December 31, 2017, the Company had outstanding and exercisable options as follows:

 

										Weighted average
Grant date		Vesting terms				Number of options				Exercise price				Remaining contractual life (years)
August 5, 2016			Evenly over 48 months				1,141,666			$	0.50				3.60
October 6, 2016			Evenly over 48 months				3,578,084				1.23				3.77
November 16, 2016			On May 15, 2017				300,000				1.50				0.37
November 21, 2016			Evenly over 48 months				182,000				1.84				3.88
April 12, 2017			Evenly over 48 months				3,299,000				3.14				4.28
August 23, 2017			Evenly over 48 months				2,903,000				2.42				4.65
November 9, 2017			Evenly over 48 months				200,000				3.32				4.86
Outstanding at December 31, 2017							11,603,750			$	2.05				4.05
Exercisable at December 31, 2017							2,744,387			$	1.71				3.57

These options shall expire at the earlier of 180 days of the death, disability or incapacity of the holder or five years after the date of issue, and can only be settled in equity.

As at December 31, 2017, the weighted average exercise price of options outstanding is $2.05 (2016 - $1.10). The weighted average exercise price of options exercisable is $1.71 (2016 - $1.09).

(c)	Fair Value of Options Issued During the Year

The fair value of the options was determined using the Black-Scholes option pricing model. The following inputs were used:

 

		2017		2016
Share price at grant date		$2.42 - $3.27		$0.19 - $1.77
Exercise price		$2.42 - $3.32		$0.285 - $1.84
Risk free interest rate		0.96% - 1.59%		0.54% - 0.67%
Expected life of options (years)		5		0.25 - 5
Expected annualized volatility		55%		55% - 150%
Expected dividend yield		0%		0%
Weighted average Black Scholes value at grant date		$1.39		$0.43

Volatility was estimated using the historical volatility of the Company and other companies that the Company considers comparable that have trading and volatility history prior to the Company becoming public.

 

(d)	Expenses Arising from Stock-based Payments

Total expenses arising from stock-based payments recognized during the year ended December 31, 2017 were $1,862 (2016 $307).