XML 18 R17.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Note 12 - Share-Based Payments
 6 Months Ended
Jun. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
12. SHARE-BASED PAYMENTS

 
(a)
Stock options

The Company’s 1996 Stock Option Plan (the “1996 Plan”) was established for the benefit of the employees, officers, directors and certain consultants of the Company. The maximum number of common shares which may be set aside for issuance under the 1996 Plan was 11,150,000 shares, provided that the Board of Directors of the Company has the right, from time to time, to increase such number subject to the approval of the stockholders of the Company when required by law or regulatory authority. Generally, options issued under the 1996 Plan vest over a four-year period. The 1996 Plan expired on February 25, 2006 and no options have been issued from the 1996 Plan after that date.

The Company’s Amended and Restated 2006 Equity Compensation Plan (the “2006 Plan”), serves as a successor to the 1996 Plan. The 2006 Plan was established for the benefit of the employees, officers, directors and certain consultants of the Company. The Plan was amended and restated at the Annual General Meeting of the Stockholders on September 7, 2010 to extend the term thereof to September 6, 2020 and to increase the number of shares of common stock authorized for issuance thereunder from 5,000,000 to 6,900,000. The 6,900,000 common shares that have been set aside for issuance under the 2006 Plan are to provide eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in Tucows. Generally, options issued under the 2006 Plan vest over a four-year period and have a term not exceeding seven years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, consistent with the guidance on stock compensation. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatility of the Company’s common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of our common shares at the date of grant.

No stock options were granted during the three and six months ended June 30, 2011.

During the three and six months ended June 30, 2010, stock options to purchase 1,574,000 common shares were granted. The stock options granted during the three and six months ended June 30, 2010 expire on various dates through 2017.

Details of stock option transactions for the three months ended June 30, 2011 and June 30, 2010 are as follows:

   
Three months ended
   
Three months ended
 
   
June 30, 2011
   
June 30, 2010
 
         
Weighted
         
Weighted
 
         
Average
         
Average
 
   
Number of
   
exercise price
   
Number of
   
exercise price
 
   
Shares
   
per share
   
Shares
   
per share
 
Outstanding, beginning of period
    8,254,749     $ 0.56       6,795,170     $ 0.53  
Granted
    —       —       1,574,000       0.70  
Exercised
    —       —       (23,245 )     0.44  
Forfeited
    (17,625 )     0.69       (23,125 )     0.70  
Expired
    —       —       (98,717 )     1.17  
Outstanding, end of period
    8,237,124     $ 0.55       8,224,083     $ 0.56  
Options exercisable, end of period
    6,972,124     $ 0.53       6,069,833     $ 0.51  

Details of stock option transactions for the six months ended June 30, 2011 and June 30, 2010 are as follows:

 
Six months ended
 
Six months ended
 
June 30, 2011
 
June 30, 2010
     
Weighted
     
Weighted
     
Average
     
Average
 
Number of
 
exercise price
 
Number of
 
exercise price
 
Shares
 
per share
 
Shares
 
per share
Outstanding, beginning of period
8,272,249 
$
0.56
 
7,203,977 
$
0.56
Granted
—
 
—
 
1,574,000 
 
0.70
Exercised
(7,250)
 
0.48
 
(33,678)
 
0.44
Forfeited
(27,875)
 
0.70
 
(38,125)
 
0.67
Expired
—
 
—
 
(482,091)
 
1.02
Outstanding, end of period
8,237,124 
$
0.55
 
8,224,083 
$
0.56
Options exercisable, end of period
6,972,124 
$
0.53
 
6,069,833 
$
0.51

As of June 30, 2011, the exercise prices, weighted average remaining contractual life and intrinsic values of outstanding options were as follows:

   
Options outstanding
 
Options exercisable
 
Exercise price
 
Number
outstanding
 
Weighted
average
exercise price
per share
 
Weighted
average
remaining
contractual
life (years)
 
Aggregate
intrinsic
value
 
Number
exercisable
 
Weighted
average
exercise price
per share
 
Aggregate
intrinsic
value
 
$ 0.31-$0.49  
3,680,295
 
$
0.38
 
2.0
 
$
1,538,341
 
3,680,295
 
$
0.38
 
$
1,538,341
 
$ 0.56-$0.71  
3,430,829
 
$
0.64
 
4.5
 
546,600
 
2,165,829
 
$
0.61
 
402,325
 
$ 0.80-$0.99  
1,126,000
 
$
0.86
 
2.6
 
—
 
1,126,000
 
$
0.86
 
—
 
     
8,237,124
 
$
0.55
 
3.1
 
$
2,084,941
 
6,972,124
 
$
0.53
 
$
1,940,666
 

Total unrecognized compensation cost relating to unvested stock options at June 30, 2011, prior to the consideration of expected forfeitures, was approximately $461,000 and is expected to be recognized over a weighted average period of 2.6 years.

The Company recorded stock-based compensation of $53,202 and $101,049 for the three months ended June 30, 2011 and 2010, respectively.

The Company recorded stock-based compensation of $127,374 and $157,485 for the six months ended June 30, 2011 and 2010, respectively.

The Company has not capitalized any stock-based compensation expense as part of the cost of an asset.

 
(b)
Restricted stock awards

During the three and six months ended June 30, 2011, no restricted stock awards were granted to any employees of the Company.

Restricted stock awards generally vest annually over a four year period. Holders of restricted stock may not sell, assign, transfer, pledge or otherwise dispose of an unvested stock. Unvested shares of restricted stock are held in escrow by the Company until the holder’s interest in such shares vests.

Holders of restricted stock have full stockholder rights with respect to any shares of Company stock issued to the participant under a stock award, whether or not the holder’s interest in those shares is vested. Accordingly, the holder has the right to vote such shares and to receive any regular cash dividends paid on such shares.

Total unrecognized compensation cost relating to unvested restricted stock awards at June 30, 2011, prior to the consideration of expected forfeitures, was approximately $1,300 and is expected to be recognized over a weighted average period of 1.8 years.

The Company recorded stock-based compensation associated with restricted stock awards of $197 and $224 for the three months ended June 30, 2011 and 2010, respectively.

The Company recorded stock-based compensation associated with restricted stock awards of $356 and $417 for the six months ended June 30, 2011 and 2010, respectively.