Annual report pursuant to Section 13 and 15(d)

SHARE-BASED COMPENSATION

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SHARE-BASED COMPENSATION
12 Months Ended
Dec. 31, 2022
SHARE-BASED COMPENSATION  
SHARE-BASED COMPENSATION

13.SHARE-BASED COMPENSATION

2015 Stock Option Plan

The Company maintains the 2015 Stock Option Plan (“2015 Option Plan”). In June 2015, the 2007 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, 2022 and 2021, the Company had 396,080 and 281,798 options, respectively, available for grant under the 2015 Option Plan.

The following table summarizes the activity of the share options under the 2015 Option Plan for the years ended December 31, 2022 and 2021. All amounts are denominated in Canadian dollars, 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 January 1, 2021

 

646,195

$

7.80

 

4.8

$

1,155,145

Granted

 

197,291

 

12.00

 

  

 

  

Forfeited

 

(104,166)

 

14.40

 

  

 

  

Expired

 

(1,283)

 

18.00

 

  

 

  

Outstanding as of December 31, 2021

 

738,037

 

8.40

 

5.1

$

2,231,293

Granted

 

360,000

 

7.54

 

  

 

  

Forfeited

 

(55,012)

 

15.98

 

  

 

  

Outstanding as of December 31, 2022

 

1,043,025

 

5.60

 

6.1

$

1,183,860

Vested and exercisable as of December 31, 2022

 

665,185

$

5.35

 

4.3

$

1,183,860

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.

During the years ended December 31, 2022 and 2021, the Company granted share options with a grant date fair value of C$2,103,016 and C$1,225,433, respectively. During the years ended December 31, 2022 and 2021, there were no options exercised.

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

Year Ended

 

December 31, 

    

2022

    

2021

Weighted average fair value of Common Shares

C$

5.84

C$

6.00

Expected volatility

 

95

%  

92

%

Risk-free interest rate

 

2.71

%  

0.95

%

Expected dividend yield

 

%  

%

Expected term (years)

 

6.0

 

4.5

Expected volatility is based on historical volatility of our shares over the expected life of the option, as our options are not readily tradable.

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, 2022.

Share-based Payment Expense

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

Year Ended December 31, 

2022

    

2021

Research and development

$

297,933

$

144,905

General and administrative

 

189,697

 

370,724

Total share-based compensation

$

487,630

$

515,629

As of December 31, 2022, there was $1,617,412 of unrecognized share-based compensation related to options outstanding, which were expected to be recognized over weighted-average remaining service period of 3.2 years.