9.SHARE-BASED COMPENSATION

2015 Stock Option Plan

The Company maintains the 2015 Stock Option Plan (“2015 Option Plan”), originally referred to as the 2007 Option Plan. In June 2015, the 2015 Option Plan was amended from a fixed option plan to a rolling share option plan pursuant to which the Company is authorized to grant options of up to 20% of its issued and outstanding Common Shares. Share options granted vest at various rates and have a term not exceeding ten years. As of December 31, 2023 and 2022, the Company had 471,843 and 396,080 options, respectively, available for grant under the 2015 Option Plan.

Canadian Dollar Share Options

Share options under the 2015 Option Plan are granted in either US$ or C$. Upon the change in the Company’s functional currency, effective July 1, 2023, C$ share options previously classified as equity were reclassified as liabilities. On July 1, 2023, these options had a fair value of $1,768,515, which was recorded as share-based compensation liability, of which $1,435,912 was reclassified from additional paid-in-capital and the remainder of $332,602 was recorded as additional share-based compensation expense. The C$ options were re-measured as of December 31, 2023 and had a fair value of $442,002, resulting in a decrease in fair value of $1,013,910 during

the year ended December 31, 2023, of which $332,602 was reduced from share-based compensation expense in the Company’s consolidated statement of operations and comprehensive loss, with the remaining reduction of $681,308 applied to additional paid-in-capital.

The following table summarizes the activity of the C$ share options under the 2015 Option Plan for the years ended December 31, 2023 and 2022. All amounts are denominated in Canadian dollars, except year and share amounts:

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The aggregate intrinsic value of options outstanding, exercisable, and vested and exercisable is calculated as the difference between the exercise price of the underlying options, and the fair value of the Company’s Common Shares. There were no C$ share options granted during the year ended December 31, 2023.

The following table summarizes the weighted average of significant assumptions used to calculate the fair value of C$ share options outstanding and exercisable as of July 1, 2023 and December 31, 2023:

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Expected volatility is based on historical volatility of the Company’s Common Shares over the expected life of the option, as the Company’s options are not readily tradable.

US Dollar Share Options

The Company began making share option grants denominated in US$ following the Company’s change in functional currency in July 2023.  During the year ended December 31, 2023, the Company granted 69,000 share options with a grant date fair value of $105,790 and there were no options exercised or forfeited.

The fair value of the US$ share options granted was estimated using Black Scholes with the following assumptions:

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DSU Plan

The Company has a Deferred Share Unit plan (“DSU Plan”) for senior officers. Under the DSU Plan, rights to the Company’s Common Shares may be awarded on a deferred payment basis up to a maximum of 16,666 common share units. Each common share unit will fully vest upon cessation of employment with the Company and then can be redeemed for one common share of the Company by the unitholder. The Company has 1,061 units outstanding as of December 31, 2023.

Share-based Payment Expense

The following table summarizes total share-based compensation for both the C$ and US$ share options included in the Company’s accompanying consolidated statements of operations and comprehensive loss:

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Total share-based compensation expense for C$ and US$ denominated share options was $266,701 and $4,841, respectively, for the year ended December 31, 2023. As of December 31, 2023, there was $100,948 of unrecognized share-based compensation related to US$ options outstanding, which is expected to be recognized over a weighted-average remaining service period of 3.8 years.