SHARE-BASED PAYMENTS

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

SHARE-BASED PAYMENTS

The Company, under the 2018 Amended and Restated Omnibus Equity Incentive Compensation Plan (the “Compensation Plan”), maintains an equity incentive plan for directors, executives, eligible employees and consultants. Equity incentive awards include employee stock options, restricted stock units (“RSUs”) and stock appreciation rights ("SARs"). The Company issues new shares of common stock to satisfy exercises and vesting under all of its equity incentive awards. At June 30, 2020, a total of 12,053,470 Common Shares were authorized for equity incentive plan awards.

Employee Stock Options

The Company, under the Compensation Plan, may grant options to directors, executives, employees and consultants to purchase Common Shares of the Company. The exercise price of the options is set as the higher of the Company’s closing share price on the day before the grant date or the five-day volume weighted average price ("VWAP"). Stock options granted under the Compensation Plan generally vest over a period of two years or more and are generally exercisable over a period of five years from the grant date not to exceed 10 years. The value of each option award is estimated at the grant date using the Black-Scholes Option Valuation Model. There were 0.30 million options granted in the six months ended June 30, 2020 (June 30, 2019 – 0.30 million options). At June 30, 2020, there were 1.94 million options outstanding with 1.58 million options exercisable, at a weighted average exercise price of $2.87 and $3.06 respectively, with a weighted average remaining contractual life of 3.52 years. The fully vested options had no intrinsic value at June 30, 2020.

The fair value of the options granted under the Compensation Plan for the six months ended June 30, 2020 was estimated at the date of grant, using the Black-Scholes Option Valuation Model, with the following weighted average assumptions:



Risk-free interest rate	1.6	%
Expected life	5.0 years
Expected volatility	61.6	%	*
Expected dividend yield	—	%
Weighted average expected life of option	5.0 years
Weighted average grant date fair value	$0.64

* Expected volatility is measured based on the Company’s historical share price volatility over a period equivalent to the expected life of the options.

The summary of the Company’s stock options at June 30, 2020 and December 31, 2019, and the changes for the fiscal periods ending on those dates is presented below:



	Range of Exercise Prices	Weighted Average Exercise Price		Number of Options
Balance, December 31, 2018	$1.70 - $15.61	$	3.84	1,732,754
Granted	2.92	2.92		296,450
Exercised	1.70 - 2.92	2.27		(54,805	)
Forfeited	1.70 - 7.42	3.94		(342,866	)
Expired	6.97	6.97		(144,100	)
Balance, December 31, 2019	$1.70 - $15.61	$	3.43	1,487,433
Granted	1.76	1.76		566,102
Exercised	—	—		—
Forfeited	4.44 - 5.18	4.49		(19,251	)
Expired	4.12 - 5.22	4.40		(98,512	)
Balance, June 30, 2020	$1.70 - $15.61	$	2.87	1,935,772

A summary of the status and activity of non-vested stock options for the six months ended June 30, 2020 is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested December 31, 2019	223,381		$	1.32
Granted	566,102		0.64
Vested	(435,973	)	0.85
Forfeited	—		—
Non-vested June 30, 2020	353,510		$	0.82

Restricted Stock Units

The Company grants RSUs to directors, executives and eligible employees. Awards are determined as a target percentage of base salary and generally vest over periods of three years. Prior to vesting, holders of restricted stock units do not have voting rights. The RSUs are subject to forfeiture risk and other restrictions. Upon vesting, the employee is entitled to receive one share of the Company’s common stock for each RSU for no additional payment. During the six months ended June 30, 2020, the Company's Board of Directors issued 0.74 million RSUs under the Compensation Plan (June 30, 2019 - 0.72 million).

A summary of the status and activity of non-vested RSUs at June 30, 2020 is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested December 31, 2019	1,315,536		$	2.45
Granted	735,146		1.66
Vested	(746,477	)	2.46
Forfeited	—		—
Non-vested June 30, 2020	1,304,205		$	2.01

The total intrinsic value and fair value of RSUs that vested and were settled for equity in the six months ended June 30, 2020 was $1.54 million (June 30, 2019 – $2.44 million).

Stock Appreciation Rights

During the six months ended June 30, 2019, the Company's Board of Directors issued 2.20 million stock appreciation rights (SARs) under the Compensation Plan with a fair value of $1.25 per SAR. These SARs are intended to provide additional long-term performance-based equity incentives for the Corporation’s senior management. The SARs are performance based, because they only vest upon the achievement of performance goals designed to significantly increase shareholder value.

Each SAR outstanding entitles the holder, on exercise, to a payment in cash or shares (at the election of the Company) equal to the difference between the market price of the Common Shares at the time of exercise and $2.92 (the market price at the time of grant) over a five-year period, but vest only upon the achievement of the following performance goals: as to one-third of the SARs granted upon the VWAP of the Common Shares on the NYSE American equaling or exceeding $5.00 for any continuous 90-calendar day period; as to an additional one-third of the SARs granted, upon the VWAP of the Common Shares on the NYSE American equaling or exceeding $7.00 for any continuous 90 calendar-day period; and as to the final one-third of the SARs granted, upon the VWAP of the Common Shares on the NYSE American equaling or exceeding $10.00 for any continuous 90 calendar-day period. Further, notwithstanding the foregoing vesting schedule, no SARs may be exercised by the holder for an initial period of one year from the Date of Grant; the date first exercisable being January 22, 2020.

The share-based compensation recorded during the three and six months ended June 30, 2020 was $1.00 million and $1.70 million (three and six months ended June 30, 2019 - $0.66 million and $1.78 million).

At June 30, 2020, there were $0.13 million, $1.68 million and $1.05 million of unrecognized compensation costs related to the unvested stock options, RSU awards and SARs, respectively. These costs are expected to be recognized over a period of approximately two years.