SHARE-BASED PAYMENTS

The Company, under the 2018 Omnibus Equity Incentive Compensation Plan (the “Compensation Plan”), maintains a stock incentive plan for directors, executives, eligible employees and consultants. Stock 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 stock incentive awards. At March 31, 2019, a total of 9,310,268 Common Shares were authorized for stock 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. 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 0.35 million options granted in the three months ended March 31, 2019 (three months ended March 31, 2018 – 0.42 million options). At March 31, 2019, there were 1.68 million options outstanding with 1.40 million options exercisable, at a weighted average exercise price of $3.32 and $3.48 respectively, with a weighted average remaining contractual life of 3.69 years. The aggregate intrinsic value of the fully vested options was $0.90 million.

The fair value of the options granted under the Compensation Plan for the three months ended March 31, 2019 was estimated at the date of grant, using the Black-Scholes Option Valuation Model, with the following weighted-average assumptions:



Risk-free interest rate	2.620
Expected life	5.0 years
Expected volatility	59.4	*
Expected dividend yield	0.00%
Weighted-average expected life of option	5.00
Weighted-average grant date fair value	$1.54


*	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 March 31, 2019 and December 31, 2018, 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, 2017	$1.77 - $15.61	$	4.48	2,028,847
Granted	1.70 - 2.88	1.75		442,956
Exercised	1.70 - 2.55	2.15		(355,092	)
Forfeited	1.70 - 6.63	3.96		(213,393	)
Expired	5.86 - 10.36	8.18		(170,564	)
Balance, December 31, 2018	$1.70 - $15.61	$	3.84	1,732,754
Granted	2.92	2.92		354,844
Exercised	1.70 - 2.88	2.40		(33,906	)
Forfeited	4.44 - 7.42	4.78		(227,117	)
Expired	6.77	6.77		(141,800	)
Balance, March 31, 2019	$1.70 - $15.61	$	3.32	1,684,775

A summary of the status and activity of non-vested stock options for the three months ended March 31, 2019 is as follows:



	Number of shares		Weighted Average Grant- Date Fair Value
Non-vested December 31, 2018	297,044		$	1.06
Granted	354,844		1.54
Vested	(363,016	)	1.31
Forfeited	—		—
Non-vested March 31, 2019	288,872		$	1.33

Restricted Stock Units

The Company grants RSUs to 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 the right to vote the underlying shares. 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 three months ended March 31, 2019, the Company's Board of Directors issued 0.72 million RSUs under the Compensation Plan (March 31, 2018 - 1.13 million).

A summary of the status and activity of non-vested RSUs at March 31, 2019 is as follows:



	RSU
	Number of shares		Weighted Average Grant- Date Fair Value
Non-vested December 31, 2018	1,580,187		$	1.99
Granted	721,750		2.92
Vested	(839,348	)	1.99
Forfeited	(105,706	)	2.24
Non-vested March 31, 2019	1,356,882		$	2.47

The total intrinsic value and fair value of RSUs that vested and were settled for equity in the three months ended March 31, 2019 was $2.44 million (March 31, 2018 – $2.41 million).

Share Appreciation Rights

During the three months ended March 31, 2019, the Company's Board of Directors issued 2.20 million SARs under the Compensation Plan (March 31, 2018 - $nil) 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 purely performance based, because they only vest upon the achievement of aggressive performance goals designed to significantly increase shareholder value.

Each SAR granted entitles the holder, on exercise, to a payment in cash or shares (at the election of the Corporation) 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 volume weighted average price (“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 Corporation’s 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 Corporation’s 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 months ended March 31, 2019 was $1.12 million (three months ended March 31, 2018 - $1.20 million).

At March 31, 2019, there were $0.20 million, $1.64 million and $2.40 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.