6. ADDITIONAL PAID IN CAPITAL

3 Months Ended

Mar. 31, 2013

Additional Paid in Capital [Abstract]

ADDITIONAL PAID IN CAPITAL

Stock-based compensation

We have two stock option plans under which options are outstanding and exercisable, namely the Fixed Stock Option Plan and the 10% Rolling Stock Option Plan. The Fixed Stock Option Plan was originally approved by shareholders on December 11, 2002 and subsequently approved by shareholders on December 7, 2009 following certain amendments to the Fixed Stock Option Plan. The Fixed Stock Option Plan expired upon the adoption of the 10% Rolling Stock Option Plan which was approved by shareholders on December 2, 2011, and as such, we may no longer grant options under the Fixed Stock Option Plan. However, the terms of the Fixed Stock Option Plan continue to govern all prior awards granted under such plan until such awards have been cancelled, forfeited or exercised in accordance with the terms thereof. As of March 31, 2013, we had 2,555,000 options outstanding under our Fixed Stock Option Plan, as amended, and 1,755,000 options outstanding under our 10% Rolling Stock Option Plan.

The fair value of each employee stock option award is estimated at the grant date using the Black-Scholes option pricing model and our common shares price on the date of grant. The significant assumptions used to estimate the fair value of stock options awarded during the three months ended March 31, 2013 and 2012 using the Black-Scholes model are as follows:

	March 31,
	2013	2012
Risk-free interest rate	0.44%	0.12% - 0.36%
Expected volatility	80%	80%
Expected dividend yield	Nil	Nil
Expected term in years	3	3

The compensation expense recognized in our consolidated financial statements for the three months ended March 31, 2013 and 2012 for stock option awards was $575 and $2,827, respectively. As of March 31, 2013, there was $724 of total unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted-average remaining vesting period of 0.4 years.

The following table summarizes our stock option activity for the three-month period ended March 31, 2013:

	For the three-month periods ended March 31,
	2013		2012
	Number of Stock Options	Weighted Average Exercise Price	Number of Stock Options	Weighted Average Exercise Price
Outstanding, beginning of period	4,331,000	$      6.42	4,605,500	$        6.29
Granted	10,000	2.96	127,000	6.72
Cancelled	(31,000)	4.72	(230,000)	15.20
Exercised	-	-	(139,000)	1.16
Outstanding, end of period	4,310,000	$      6.32	4,363,500	$        5.96
Exercisable, end of period	3,507,800	$      6.78	2,606,700	$        5.06
Weighted-average fair value per share of options granted during period	$                2.96		$               3.65