Quarterly report pursuant to Section 13 or 15(d)

Common Stock

v2.4.0.6
Common Stock
 3 Months Ended
Mar. 31, 2013
Common Stock [Abstract]  
COMMON STOCK
5. COMMON STOCK

 

[a] Authorized

25,000,000 authorized common shares, par value of $0.001, and 5,000,000 preferred shares, par value of $0.001.

 

[b] Issued and outstanding shares

During the three month period ended March 31, 2013, we issued 3,100 and 10,004 common shares to satisfy stock option exercises and restricted stock unit settlements, respectively, compared with the issuance of 300 common shares to satisfy stock option exercises during the three month period ended March 31, 2012. There were no restricted stock unit settlements in 2012.

 

[c] Stock options

2010 Performance Incentive Plan

As of March 31, 2013 we had reserved, pursuant to various plans, 1,417,507 common shares for issuance upon exercise of stock options and settlement of restricted stock units by employees, directors, officers and consultants of ours, of which 980,227 are reserved for options currently outstanding, 382,919 are reserved for restricted stock units currently outstanding and 54,361 are available for future equity grants.

Stock Option Summary

Options vest in accordance with terms as determined by our Board of Directors, or the Board, which terms are typically four years for employee grants and one to three years for Board option grants. The expiry date for each option is set by the Board, which is typically seven to ten years. The exercise price of the options is determined by the Board, but generally will be at least equal to the fair value of the share at the grant date.

Stock option transactions and the number of stock options outstanding are summarized below:

 

                 
    Number
of
Optioned
Common
Shares		     Weighted
Average
Exercise
Price		  
    #     $  

Balance, December 31, 2012

     804,781       11.34  

Option grants

     182,182       11.97  

Option expirations

     (3,061 )      4.11  

Option exercises

     (3,475 )      3.00  

Option forfeitures

     (200 )      14.49  
   

 

 

    

 

 

  

Balance, March 31, 2013

     980,227       11.51  

The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on the weighted-average assumptions noted in the following table:

 

                 
    Three months ended
March 31,		  
    2013     2012  
     

Risk-free interest rates

     1.12 %      —    
     

Expected dividend yield

     0 %      —    
     

Expected life

     5.9 years       —    
     

Expected volatility

     88 %      —    

 

The expected life was calculated based on the simplified method as permitted by the SEC’s Staff Accounting Bulletin 110, Share-Based Payment. The expected volatility of options granted in 2012 and 2013 was calculated based on the historical volatility of the shares of our common stock. The computation of expected volatility of options granted prior to 2012 was based on the historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate is based on a U.S. Treasury instrument whose term is consistent with the expected life of the stock options. In addition to the assumptions above, as required under ASC 718, management made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest.

The results for the periods set forth below included share-based compensation expense for stock options and restricted stock in the following expense categories of the consolidated statements of loss (in thousands):

 

                 
    Three Months Ended  
  March 31,  
    2013     2012  
    $     $  

Research and development

     312       135  

General and administrative

     436       185  
   

 

 

    

 

 

  
     

Total share-based compensation

     748       320  

As of March 31, 2013 and December 31, 2012, the total unrecognized compensation expense related to stock options granted was $3.8 million and $2.7 million respectively, which is expected to be recognized as expense over a period of approximately four years.

As of March 31, 2013 and December 31, 2012, a total of 3.0 million and 2.6 million, respectively, of options, restricted stock units and warrants that have not been included in the calculation of potential common shares in the loss per share computation as their effect on diluted per share amounts would have been anti-dilutive.

 

[d] Restricted Stock Unit Awards

We grant restricted stock unit awards that generally vest and are expensed over a four year period. In 2013, we also granted restricted stock unit awards that vest in conjunction with certain performance conditions to certain executive officers and key employees. At each reporting date, we are required to evaluate whether achievement of the performance conditions is probable. Compensation expense is recorded over the appropriate service period based upon our assessment of accomplishing each performance provision. For the three months ended March 31, 2013, $0.3 million of compensation expense was recognized related to these awards. No restricted stock unit awards were granted during the three months ended March 31, 2012.

 

The following table summarizes our restricted stock unit award activity during the three months ended March 31, 2013 and 2012:

 

                                 
    2013     2012  
    Stock
Awards
# 		    Weighted-
Average
Grant
Date Fair
Value
$ 		    Stock
Awards
# 		    Weighted-
Average
Grant
Date Fair
Value
$ 		 

Outstanding January 1

     172,035       13.01       —         —    

Granted

     225,345       11.96       —         —    

Vested

     (13,899 )      13.00       —         —    

Forfeited or expired

     (562 )      13.00       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

  

Outstanding March 31

     382,919       12.39       —         —    

As of March 31, 2013, we had approximately $3.6 million in total unrecognized compensation expense related to our restricted stock unit awards that is to be recognized over a weighted-average period of approximately 3.4 years.

 

[e] Non-employee options and restricted stock units

We recognize non-employee stock-based compensation expense over the period of expected service by the non-employee. As the service is performed, we are required to update our valuation assumptions, remeasure unvested options and restricted stock units and record the stock-based compensation using the valuation as of the vesting date. This differs from the accounting for employee awards where the fair value is determined at the grant date and is not subsequently adjusted. This remeasurement may result in higher or lower stock-based compensation expense in the statement of operations. As such, changes in the market price of our stock could materially change the value of an option or restricted stock unit and the resulting stock-based compensation expense.

 

[f] Stock Warrants

As of March 31, 2013, there were exercisable warrants outstanding to purchase 1,587,301 shares of common stock at an exercise price of $20 per share, expiring in October 2015. No warrants were exercised during the three month periods ended March 31, 2013 or 2012.

The estimated fair value of warrants issued is reassessed at each balance sheet date using the Black-Scholes option pricing model. The following assumptions were used to value the warrants on the following balance sheet dates:

 

                 
    Three Months Ended
March  31, 		 
    2013     2012  
     

Risk-free interest rates

     0.31 %      0.66 % 
     

Expected dividend yield

     0 %      0 % 
     

Expected life

     2.6 years       3.6 years  
     

Expected volatility

     44 %      77 %