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SHARE CAPITAL
9 Months Ended
Sep. 30, 2022
SHARE CAPITAL  
SHARE CAPITAL

6.    SHARE CAPITAL

Authorized

The Company’s authorized share capital consists of an unlimited number of common shares without par value. At December 31, 2021 and September 30, 2022, there were 194,908,184 and 195,313,184 shares issued and outstanding, respectively.

Share issuances

During the nine months ended September 30, 2022, the Company issued 405,000 common shares pursuant to the exercise of stock options for total proceeds of $290,290 and transferred related contributed surplus of $162,479 to share capital.

There were no share issuances during the nine months ended September 30, 2021.

Stock options

The Company adopted an incentive stock option plan in 2006, as amended September 19, 2012, and reapproved by the Company’s shareholders on May 28, 2015, May 30, 2018, and May 25, 2021 (the “Stock Option Plan”). The essential elements of the Stock Option Plan provide that the aggregate number of common shares of the Company that may be issued pursuant to options granted under the Stock Option Plan and any other share-based compensation arrangements may not exceed 10% of the number of issued shares of the Company at the time of the granting of options. Options granted under the Stock Option Plan will have a maximum term of ten years. The exercise price of options granted under the Stock Option Plan shall be fixed in compliance with the applicable provisions of the Toronto Stock Exchange (“TSX”) Company Manual in force at the time of grant and, in any event, shall not be less than the closing price of the Company’s common shares on the TSX on the trading day immediately preceding the day on which the option is granted, or such other price as may be agreed to by the Company and accepted by the TSX. Options granted under the Stock Option Plan vest immediately, unless otherwise determined by the Board at the date of grant.

A summary of the options granted under the Stock Option Plan as of September 30, 2022 and December 31, 2021 is presented below:

Nine Months Ended

Year Ended

September 30, 2022

December 31, 2021

    

    

Weighted

    

  

  

    

Weighted

    

Average

Aggregate

Average

Aggregate

Number of

Exercise Price

Intrinsic Value

Number of

Exercise Price

Intrinsic Value

Options

(C$)

(C$)

Options

(C$)

(C$)

Balance, beginning of the period

 

2,947,049

$

0.97

 

2,707,049

 

$

0.94

 

  

Granted

 

240,000

0.92

 

240,000

 

1.31

 

  

Exercised

 

(405,000)

 

0.90

 

 

 

  

Cancelled

 

(495,000)

 

1.08

 

 

 

  

Balance, end of the period

 

2,287,049

$

0.95

$

64,782

2,947,049

$

0.97

$

235,200

The weighted average remaining life of options outstanding at September 30, 2022 was 2.4 years.

Stock options outstanding as at September 30, 2022 and December 31, 2021 are as follows:

    

September 30, 2022

  

 

December 31, 2021

Exercise

Number of

  

    

Exercise

Number of

Expiry Date

    

Price (C$)

    

Options

    

Exercisable

Price (C$)

    

Options

    

Exercisable

March 25, 2022*

 

 

$

1.11

510,000

 

510,000

March 25, 2022*

 

 

$

0.73

270,000

 

270,000

March 25, 2022*

 

 

$

1.11

120,000

 

120,000

March 16, 2023

$

1.00

 

580,000

 

580,000

$

1.00

580,000

 

580,000

March 16, 2023

$

0.50

 

130,000

 

130,000

$

0.50

130,000

 

130,000

June 9, 2023

$

1.00

 

30,000

 

30,000

$

1.00

30,000

 

30,000

March 21, 2024

$

0.61

 

374,817

 

374,817

$

0.61

374,817

 

374,817

February 1, 2025

$

1.35

 

250,000

 

250,000

$

1.35

250,000

 

250,000

August 8, 2025

$

0.85

187,232

187,232

$

0.85

187,232

187,232

May 27, 2026

$

0.92

255,000

255,000

$

0.92

255,000

170,000

May 25, 2027

$

1.31

240,000

160,000

$

1.31

240,000

80,000

May 24, 2028

$

0.92

240,000

80,000

 

2,287,049

 

2,047,049

 

2,947,049

 

2,702,049

* Expiry date automatically extended to March 25, 2022, the tenth business day following the end of a blackout period imposed on the holders of the stock options, pursuant to the terms of the Stock Option Plan.

A summary of the non-vested options as of September 30, 2022 and changes during the nine months ended September 30, 2022 is as follows:

Weighted average 

Number of

grant-date fair value

Non-vested options:

    

options

    

(C$)

Outstanding at December 31, 2021

 

245,000

$

0.91

Granted

240,000

0.60

Vested

 

(245,000)

0.78

Outstanding at September 30, 2022

 

240,000

$

0.73

At September 30, 2022, there was unrecognized compensation expense of C$95,715 related to non-vested options outstanding. The cost is expected to be recognized over a weighted-average remaining period of approximately 1.1 years.

Deferred Share Unit Incentive Plan

On April 4, 2017, the Company adopted a Deferred Share Unit Plan (the “DSU Plan”). The DSU Plan was approved by the Company’s shareholders on May 24, 2017 and reapproved by the Company’s shareholders on May 27, 2020 and May 25, 2021. The maximum aggregate number of common shares that may be issued under the DSU Plan and the Stock Option Plan is 10% of the number of issued and outstanding common shares (on a non-diluted basis).

During the nine months ended September 30, 2022, in accordance with the DSU Plan, the Company granted each of the members of the Company’s Board of Directors (other than those directors nominated for election by Paulson & Co. Inc.) 90,217 deferred share units (“DSUs”) for a total of 451,085 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares traded on the exchange with the most volume for the five days immediately preceding the grant) of C$0.92 per DSU, representing C$83,000 per director or C$415,000 in the aggregate.

DSUs outstanding as at September 30, 2022 and December 31, 2021 are as follows:

    

Nine Months Ended

Year Ended

September 30, 2022

  

  

December 31, 2021

    

Weighted Average

    

Weighted

Number of

Exercise Price

Number of

Average Exercise

Units

(C$)

Units

Price (C$)

Balance, beginning of the period

 

2,151,276

$

0.88

 

1,834,481

$

0.81

Issued

 

451,085

$

0.92

 

316,795

$

1.31

Balance, end of the period

 

2,602,361

$

0.89

 

2,151,276

$

0.88

Share-based payments

During the nine months ended September 30, 2022, there were 240,000 stock options granted under the Stock Option Plan and 451,085 DSUs granted for common shares of the Company under the DSU Plan. Share-based payment compensation for the nine months ended September 30, 2022 totaled $427,834 ($114,811 related to stock options and $313,023 related to DSUs). Of the total expense for the period ended September 30, 2022, $320,762 was included in consulting fees ($7,739 related to stock options and $313,023 related to DSUs), $7,138 was included in investor relations, and $99,934 was included in wages and benefits in the statement of operations and comprehensive loss.

During the nine months ended September 30, 2021, there were 240,000 stock options granted under the Stock Option Plan and 316,795 DSUs granted for common shares of the Company under the DSU Plan. Share-based payment compensation for the nine months ended September 30, 2021 totaled $505,101 ($137,251 related to stock options and $367,850 related to DSUs). Of the total expense for the period ended September 30, 2021, $378,645 was included in consulting fees ($10,795 related to stock options and $367,850 related to DSUs), $8,430 was included in investor relations, and $118,026 was included in wages and benefits in the statement of operations and comprehensive loss.

The following weighted average assumptions were used for the Black-Scholes valuation model for stock options granted during the period:

    

YTD September 30, 2022

Expected life of options

 

6 years

Risk-free interest rate

 

2.64%

Annualized volatility

 

76.75%

Dividend rate

 

0.00%

Exercise price (C$)

$

0.92