Quarterly report pursuant to Section 13 or 15(d)

SHARE-BASED COMPENSATION

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SHARE-BASED COMPENSATION
6 Months Ended
Jun. 30, 2024
SHARE-BASED COMPENSATION  
SHARE-BASED COMPENSATION

8.

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 June 30, 2024 and December 31, 2023, the Company had 2,704,730 and 471,843 options available for grant under the 2015 Option Plan, respectively. 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. All grants following the Company’s change in functional currency are in US$.

Canadian Dollar Share Options

The following table summarizes the C$ share options outstanding under the 2015 Option Plan for the six months ended June 30, 2024. All amounts are denominated in C$, except year and share amounts:

    

    

    

Weighted

    

 

 

Weighted

 

Average

 

 

 

Average

 

Remaining

 

Number of

 

Exercise

 

Contractual

Aggregate

Share

 

Price Per

 

Term

Intrinsic

Options

Share

 

(years)

Value

Outstanding as of December 31, 2023

 

898,262

$

7.58

 

6.5

$

Expired

 

(79,769)

 

9.16

 

 

Outstanding as of June 30, 2024

 

818,493

 

7.49

 

6.5

Vested and exercisable as of June 30, 2024

 

728,466

$

7.34

 

6.5

$

The aggregate intrinsic value of options outstanding 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 when the exercise price is below fair value.  There were no C$ options exercised or granted during the six months ended June 30, 2024.

Upon the change in the Company’s functional currency effective July 1, 2023 C$ share options previously classified as equity were reclassified as liabilities. The C$ options were re-measured as of December 31, 2023 and had a fair value of $442,002. The C$ options were re-measured as of June 30, 2024 and had a fair value of $465,488, resulting in an increase to the fair value of the liability and a decrease from additional paid-in-capital of $43,486.

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 June 30, 2024 and December 31, 2023:

Period Ended

 

June 30, 

December 31,

    

2024

    

2023

Weighted average fair value of C$ Options

C$

0.64

C$

0.53

Expected volatility

 

100.8

%  

116.3

%

Risk-free interest rate

 

4.51

%  

4.04

%

Expected dividend yield

 

%  

%

Expected term (years)

 

6.5

 

6.5

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 following table summarizes the US$ share options outstanding under the 2015 Option Plan for the six months ended June 30, 2024. All amounts are denominated in US$, except year and share amounts:

    

    

    

Weighted

    

 

 

Weighted

 

Average

 

 

 

Average

 

Remaining

 

Number of

 

Exercise

 

Contractual

Aggregate

Share

 

Price Per

 

Term

Intrinsic

Options

Share

 

(years)

Value

Outstanding as of December 31, 2023

 

69,000

$

1.87

 

$

Granted

 

200,000

 

1.17

 

  

 

44,000

Outstanding as of June 30, 2024

 

269,000

 

1.35

 

9.5

66,000

Vested and exercisable as of June 30, 2024

 

70,833

$

1.17

 

9.5

$

23,375

During the six months ended June 30, 2024, the Company granted US$ share options with a grant date fair value of $182,820. During the six months ended June 30, 2024 there were no US$ share options exercised.

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

Six Months Ended

June 30, 2024

Weighted average fair value of US$ Options

$

0.91

Expected volatility

98.6

%

Risk-free interest rate

3.90

%

Expected dividend yield

%

Expected term (years)

5.8

 

Share-based Compensation

The following table summarizes total share-based compensation included in the Company’s accompanying unaudited condensed consolidated statements of operations and comprehensive loss:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Research and development

$

3,813

$

39,109

$

7,625

$

78,018

General and administrative

 

14,186

 

95,082

 

73,958

 

188,683

Total share-based compensation

$

17,999

$

134,191

$

81,583

$

266,701

As of June 30, 2024, there was $98,526 of unrecognized share-based compensation liability related to C$ options outstanding but unvested, which is expected to be recognized over weighted-average remaining service period of 1.5 years. There was $202,186 of unrecognized share-based compensation expense related to US$ options outstanding but unvested, which is expected to be recognized over the remaining service period of 2.9 years.