Share based compensation

12 Months Ended

Dec. 31, 2022

Share based compensation

Share Based Compensation

17. Share based compensation

The Company has an equity compensation program in place for its executives, employees and directors. Executives and employees are given equity compensation grants that vest based on a recipient's continued employment. The Company’s stock-based compensation awards outstanding as at December 31, 2022, include stock options, restricted stock units (“RSUs”), deferred share units (“DSUs”) and the employee share purchase plan (“ESP Plan”). The following tables provide information about stock option, RSU, DSU, and ESP Plan activity.

For the years ended December 31,
	2022		2021		2020
Stock Option Expense	$	22,552	$	26,250	$	34,223
Deferred Share Units		-		-		15,000
Restricted Stock Units		153,343		154,715		111,060
Employee Share Purchase Plan		39,389		106,935		8,133
Total stock based compensation expense		215,284		287,900		168,416

Stock Options:

The following is a summary of stock options which are outstanding as at December 31, 2022.

Exercise price per share	# of options outstanding		# of options exercisable		Average remaining life (in years)
$0.17		69,200		69,200		4.9
$0.44		21,360		21,360		3.5
$0.51		16,000		16,000		2.7
$0.52		100,000		100,000		1.5
$0.55		30,000		30,000		2.1
$0.59		150,000		150,000		0.8
$0.62		18,050		18,050		4.0
$0.68		14,750		14,750		3.7
$0.68		17,500		17,500		4.5
$0.72		24,460		24,460		4.4
		461,320		461,320		2.4

A continuity of the number of stock options which are outstanding at the end of the current year and as at the prior fiscal years ended December 31, 2021 and 2020 are as follows:

For the years ended December 31,
	2022						2021
				weighted						Weighted
	# of stock			average			# of stock			Average
	Options			exercise price			Options			exercise price
Options outstanding, start of the year		358,660		$	0.56			421,000		$	0.83
Granted		134,060		$	0.40			62,660		$	0.56
Expired		-			-			(125,000	)	$	(1.48	)
Cancelled		(31,400	)	$	(0.51	)
Options outstanding, end of the year		461,320		$	0.51			358,660		$	0.56
Options exercisable, end of the year		461,320		$	0.51			358,660		$	0.56

For the year ended December 31,
	2020
				Weighted
	# of stock			Average
	Options			exercise price
Options outstanding, start of the year		1,169,500		$	1.48
Granted		46,000		$	0.54
Expired		(794,500	)	$	(1.77	)
Options outstanding, end of the year		421,000		$	0.83
Options exercisable, end of the year		421,000		$	0.83

Stock options granted generally expire, if unexercised, five years from the date granted and entitlement to exercise them generally vests at a rate as determined by the Board of Directors.

Stock based compensation expense (“SBCE”) is calculated based on the fair value attributed to grants of stock options using the Black-Scholes valuation model and utilizing the following weighted average assumptions:

For the year ended	2022		2021		2020
Expected dividends paid per common share	Nil		Nil		Nil
Expected life in years		5.0		5.0		5.0
Weighted average expected volatility in the price of common shares	75%		108%		138%
Weighted average risk free interest rate	3.05%		0.38%		1.12%
Weighted average fair market value per share at grant date	$	0.40	$	0.56	$	0.54

On January 6, 2023 the Company announced the grant of 2,050,000 incentive stock options at a price of $0.216 to employees, officers and directors. These incentive stock options will vest upon receipt of cash for SFD® services performed: 1/3 upon collection of US$6.5 million, 1/3 upon the collection of the next US$7.0 million and the final 1/3 upon collection of an additional US$7.5 million.

Deferred Stock Units:

A continuity of the number of DSUs which are outstanding at the end of the current year and as at the prior fiscal years ended December 31, 2021 and 2020 are as follows:

	For the years ended December 31,
Opening balance	2022		2021		2020
Opening balance		37,354		37,354		-
Granted		-		-		37,354
Closing balance		37,354		37,354		37,354

The DSUs plan is a long-term incentive plan that permits the grant of DSUs to qualified directors. DSUs granted under the DSUs plan are to be settled at the retirement, resignation or death of the Board member holding the DSUs

Restricted Stock Units:

RSUs entitle the holder to receive, at the option of the Company, either the underlying number of shares of the Company's Common Stock upon vesting of such units or a cash payment equal to the value of the underlying shares. The RSUs vest at a rate of one-third at the end of each of the first three years following the date of grant. In the third quarter of 2022, the Company settled the RSUs that vested with shares and cash, and intends to continue to settle the RSUs in shares and cash.

A continuity of the number of RSUs, including fair value (“FV”) which are outstanding at the end of the current year and as the end of the prior fiscal years ended December 31, 2021 and 2020 are as follows:

For the years ended December 31,
	2022						2021
	# of RSUs			FV/Unit			# of RSUs			FV/Unit
RSUs outstanding, start of the year		696,666		$	0.61			1,200,000		$	0.79
Granted		-			-			-			-
Common shares issued		(212,304	)	$	(0.58	)		(208,370	)	$	(0.55	)
Payroll withholdings settled in cash		(136,028	)	$	(0.58	)		(139,964	)	$	(0.55	)
Forfeited		-			-			(155,000	)	$	(0.79	)
RSUs outstanding, end of the year		348,334		$	0.21			696,666		$	0.61

	For the year ended December 31,
	2020
	# of RSUs		FV/Unit
RSUs outstanding, start of the year		-		-
Granted		1,200,000	$	0.45
RSUs outstanding, end of the year		1,200,000	$	0.79

Employee Share Purchase Plan:

The ESP Plan allows employees and other individuals determined by the Board to be eligible to contribute a minimum of 1% and a maximum of 10% of their earnings to the plan for the purchase of common shares in the capital of the Company, of which the Company will make an equal contribution. Common shares contributed by the Company may be issued from treasury or acquired through the facilities of the TSX. During 2022, 2021, and 2020 the Company has elected to issue common shares from treasury.

A continuity of the number of commons shares under the ESP Plan which are outstanding at the end of the current period and as at the prior fiscal years ended December 31, 2021 and 2020 are as follows:

	For the years ended December 31,
	2022				2021
	# of shares		$ amount		# of shares		$ amount
Purchased by employees		105,221	$	49,738		127,790	$	69,260
Matched by the Company		83,412		39,389		102,641		55,733
Bonus match by the Company		-		-		74,119		48,030
Total Common Shares issued		188,633		89,127		304,550		173,023

For the year ended December 31,
	2020
	# of shares		$ amount
Purchased by employees		16,686	$	7,592
Matched by the Company		14,213		6,467
Total Common Shares issued		30,899		14,059

If the employee does not withdraw common shares from the ESP Plan in the first year of their participation, the Company will match an additional 100% of the employee contributions, up to $15,000 per employee (the “Bonus Match”). The Company matched employee contributions for a total of $52,867, less any payroll withholdings in 2021. As at December 31, 2022 the Company has accrued $nil for the Bonus Match ($nil as at December 31, 2021).