11.     STOCK OPTIONS

The purpose of the Company’s equity incentive plan, is to attract, retain and motivate persons of training, experience and leadership to the Company, including their directors, officers and employees, and to advance the interests of the Company by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Company.

Options or other securities may be granted in respect of authorized and unissued shares, provided that the aggregate number of shares reserved for issuance upon the exercise of all options or other securities granted under the Plan shall not exceed 15% of the shares of common stock and Exchangeable Shares issued and outstanding (determined as of January 1 of each year). Optioned shares in respect of which options are not exercised shall be available for subsequent options.

On April 26, 2016, the Company issued 1,667 options to an employee with an exercise price of $150.00 per share that will vest over three years at the anniversary date. The grant fair value was $213,750. During the three and six months ended September 30, 2019 $Nil and $3,431 (September 30, 2018 -  $17,813 and $35,625) was recognized as stock compensation expense  due to the employee leaving the Company.

On February 6, 2017, the Company issued 2,667 options to an employee with an exercise price of $105.00 per share that will vest over three years at the anniversary date. The grant fair value was $245,200. During the three and six months ended September 30, 2019 $20,433 and $40,867 (September 30, 2018 – $20,433 and $40,867) of stock compensation expense was recognized.

On September 1, 2017, the Company granted 81,436 options at $24.15 per share equally to an executive officer and a consultant, who is now the Chairman of the Company. 27,148 options have vested and 50% of the remaining options vest on performance being met and 50% vest annually over 5 years for the CEO, for our Chairman the options vest over 5 years. The grant date fair value was $1,832,304 and  $133,605 and $190,865 is the current expense for the three and six months ended September 30, 2019 (September 30, 2018 - $190,865 and $229,037.

On January 24, 2018, the Company granted 24,267 options at $23.25 per share to employees that vest equally on January 24, 2019, 2020 and 2021.  7,334 options were cancelled for the year ended March 31, 2019 and 778 for the three and six month period ended September 30, 2019. The grant fair value was $491,036 and $26,306 and $54,860 is the current stock compensation expense for the three and six months ended September 30, 2019 (September 30, 2018 -  $37,266 and $76,968).

On April 30, 2018, the Company granted to an executive officer, 40,000 options with an exercise price of $9.74 that vest immediately with a 10‑year expiry. These options were valued using the Black Scholes model and the following inputs were used: expected life  10 years, expected volatility 114% and a risk-free rate of 1.59%. As these options  vested immediately as of the grant date and $363,714 of stock compensation expense was recorded for the year ended March 31, 2019.

On June 11, 2018, the Company granted to an executive officer, 5,000 options with an exercise price of $6.93 per share that vest over three years from the anniversary of the grant and expire in 7 years. The options were valued using the Black Scholes model and the following inputs were used: expected life of 7 years, expected volatility of 114% and a risk -free rate of 1.59%. The grant fair value was $30,341 and $Nil and $1,686 of stock compensation was recognized for three and six months ended September 30, 2019 (September 30, 2018 $2,528 and $3,090).This executive left the Company and all 5,000 options were cancelled, as they had not vested.

On May 31, 2019 169,882 options were issued to employees and directors of the Company with an exercise price of $3.16 per share that vest over 18 months,with one third immediately vesting and one third vesting in each of the following two 6-month periods and expire in 7 years. The options were valued using the Black Scholes model and the following inputs were used: expected life of 7 years, expected volatility of 114% and a risk-free rate of 1.59%. The grant fair value was $453,585 and $84,601 and $260,995 of stock compensation was recognized for three and six months ended September 30, 2019.

On July 26, 2019, 484,612 options were granted to employees and consultants at an exercise price of $3.595. The options were using the Black Scholes model and the following inputs were used: expected life of 7 years, expected volatility of 114% and a risk-free rate of 1.59%. The grant fair value was $1,525,525 and $372,923 of stock compensation was recognized for three and six months ended September 30, 2019.

On September 3, 2019, 5,000 options were granted to an employee at an exercise price of $3.20 which vest over three years starting September 3, 2020. The options were valued using the Black Scholes model and the following inputs were used: expected life of 7 years, expected volatility of 114% and a risk-free rate of 1.59%. The grant fair value was $14,010 and $350 of stock compensation was recognized for the three and six months ended September 30, 2019

During the three and six months ended September 30, 2019, the Company recorded $638,219 and $925,976 in share-based compensation related to the vesting of stock options (September 30, 2018 – $439,328 and $1,034,740).

The following is a summary of stock options outstanding and exercisable as of September 30, 2019:

 

 

The weighted-average remaining contractual term of the outstanding options is 6.78 years (March 31, 2019 – 7.20 years) and for the options that are exercisable the weighted average is 6.62 years (March 31, 2019 – 5.74 years).