5. SHARE CAPITAL

Common shares

Common shares: 900,000,000 authorized; $0.001 par value. As of March 31, 2021 and December 31, 2020, there were 56,598,777 and 56,378,939 common shares issued and outstanding (“Common Shares”), respectively.

Stock options

On December 10, 2020, our shareholders approved amendments to the Company’s stock option plan, which amended the plan previously approved on November 20, 2019 (the “Amended Stock Option Plan”). As of March 31, 2021, an aggregate of 5,659,878 shares of common stock (10% of the issued and outstanding shares of common stock) were available for issuance under the Amended Stock Option Plan. Of this amount, stock options in respect of 4,983,000 common shares have been issued.

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Options under the Plan are granted from time to time at the discretion of the Board of Directors, with vesting periods and other terms as determined by the Board of Directors.

A summary of the stock option activity is presented below:

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The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at March 31, 2021:

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The Company uses the Black-Scholes option pricing model to determine the estimated fair value of options. The fair value of each option grant is determined on the date of grant and the expense is recorded on a straight-line basis and is included as a component of general and administrative expense in the consolidated statements of operations. The assumptions used in the model include expected life, volatility, risk-free interest rate, dividend yield and forfeiture rate. The Company’s determination of these assumptions are outlined below.

Expected life — The expected life assumption is based on an analysis of the Company’s historical employee exercise patterns.

Volatility — Volatility is calculated using the historical volatility of the Company’s common stock for a term consistent with the expected life.

Risk-free interest rate — The risk-free interest rate assumption is based on the U.S. Treasury rate for issues with remaining terms similar to the expected life of the options.

Dividend yield — Expected dividend yield is calculated based on cash dividends declared by the Board for the previous four quarters and dividing that result by the average closing price of the Company’s common stock for the quarter. The Company has not declared a dividend to date.

Forfeiture rate — The Company does not estimate a forfeiture rate at the time of the grant due to the limited number of historical forfeitures. As a result, the forfeitures are recorded at the time the grant is forfeited.

There were no stock option grants during the three months ended March 31, 2020.The following assumptions were used to value the awards granted during the three months ended March 31, 2021:

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Stock-based compensation expense recognized in our consolidated financial statements for the three months ended March 31, 2021 and 2020 was $279 thousand and $205 thousand, respectively. As of March 31, 2021, there was approximately $1.2 million of total unrecognized compensation cost related to 2,344,533 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 2.6 years.

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Derivative Liability

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Stock options granted to consultants that have an exercise price this is stated in a different currency than the Company’s functional currency are treated as a liability and are revalued at the end of each reporting period for the term of the vesting period. Any change in the fair value of the stock option subsequent to the initial recognition is recorded as a component of other income, net in the consolidated statements of operations.

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Changes in the Company’s stock option liability for the three months ended March 31, 2021 was as follows (stated in thousands):

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There were no stock options granted during the three months ended March 31, 2021.

The assumptions used for the Black-Scholes Option Pricing Model to revalue the stock options granted to consultants as of March 31, 2021 were as follows:

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Warrants

As of March 31, 2021 and December 31, 2020, there were 18,325,028 warrants outstanding.