SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2023

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

6. SHAREHOLDERS’ EQUITY

Stock-based compensation

As of September 30, 2023, the Company had 3,580,000 issued and outstanding stock options that were issued under the 10% Rolling Stock Option Plan, as amended and restated (the “2011 Plan”) and 1,270,000 issued and outstanding stock options that were issued under its 2022 Equity Incentive Plan (the “2022 Plan”).

The 2011 Plan was replaced in 2022 by the 2022 Plan and, as such, no additional stock options can be granted under the 2011 Plan. Under the 2011 Plan, our Board of Directors could from time-to-time grant stock options to eligible directors, officers, employees, and consultants.  The maximum term of any stock option grant under the 2011 Plan was 10 years.

Under the 2022 Plan, as approved by our shareholders at the annual meeting of shareholders on August 23, 2022, our Board of Directors is authorized to grant stock options, stock appreciation rights, restricted stock units, performance stock units and other cash and share-based awards to eligible directors, officers, employees, or consultants up to a maximum of 17,236,689 common shares. The maximum term of any grant under the 2022 Plan is 10 years.

The Company estimates the fair value of its stock option grants using the Black-Scholes option valuation model and the closing price of our common shares on the business day prior to the grant date. The significant assumptions used to estimate the fair value of the 1,020,000 and 1,830,000 stock options awards granted during the nine months ended September 30, 2023 and 2022, respectively, were as follows:  

	Nine Months Ended September 30,
	2023		2022
Risk-free interest rate	1.54	%	1.71	%
Expected volatility	123	%	135-144	%
Expected dividend yield	Nil		Nil
Expected term in years	8		8

The following table summarizes our stock option activity for each of the nine months ended September 30, 2023 and 2022:

	Nine Months Ended September 30,
	2023			2022
		Weighted			Weighted
		Average			Average
	Number of Stock	Exercise		Number of Stock	Exercise
	Options	Price		Options	Price
Outstanding, beginning of period	4,160,000	$	1.26	2,180,000	$	1.18
Granted	1,020,000	$	0.38	1,830,000	$	1.40
Exercised	(330,000)	$	0.07	—	$	—
Outstanding, end of period	4,850,000	$	1.15	4,010,000	$	1.28
Exercisable, end of period	4,006,250	$	1.29	2,605,000	$	1.08
Non-vested, end of period	843,750	$	0.48	1,405,000	$	1.65

The 330,000 options exercised during the nine months ended September 30, 2023, resulted in the issuance of 295,000 common shares on a net settlement basis.

The following table summarizes the intrinsic value and weighted average remaining life for stock options as of September 30, 2023:

			Weighted
			Average
			Remaining
As of September 30, 2023:		Intrinsic Value	Life (Years)
Stock options outstanding	$	204	7.1
Stock options exercisable	$	138	6.7
Stock options non-vested	$	66	9.1

Stock-based compensation expense is included in corporate administration expenses within the Company’s interim condensed consolidated statements of operations. For the three months ended September 30, 2023 and 2022, the Company recognized compensation expense related to stock option awards of $71 and $452, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized compensation expense related to stock option awards of $402 and $2,480, respectively. As of September 30, 2023, there was approximately $127 of total unrecognized compensation cost related to the 843,750 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of approximately one year.

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2023, was $0.35.