Quarterly report pursuant to Section 13 or 15(d)

Share Capital

v3.7.0.1
Share Capital
9 Months Ended
Jun. 30, 2017
Share Capital [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
8.
Share Capital
 
The Company had the following transactions in share capital:
 
 
 
Nine Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
 
 
 
 
 
 
Number of common shares issued
 
 
383,838
 
 
464,000
 
 
 
 
 
 
 
 
 
Proceeds from exercise of warrants
 
$
-
 
$
1,368,260
 
Transfer to common shares on issuance of performance shares
 
 
1,070,909
 
 
-
 
Transfer to common shares on exercise of warrants
 
 
-
 
 
1,853,581
 
Share-based compensation
 
 
92,480
 
 
209,781
 
 
Performance shares
 
Pursuant to a performance share plan approved by shareholders in 2010, 1,000,000 common shares were reserved for issuance to certain officers, directors and employees of the Company upon achievement of certain milestones related to completion of method development for commercial-scale manufacture of KLH, compilation and regulatory submittal of all required chemistry, manufacturing and control data and completion of preclinical toxicity and immunogenicity testing of products. Share-based compensation was recorded over the estimated vesting period ending in August 2012.
 
At June 30, 2017, all vested performance shares under the plan have been issued, and the performance share plan was terminated.
 
Black-Scholes option valuation model
 
The Company uses the Black-Scholes option valuation model to determine the fair value of warrants, broker units and share options. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company has used historical volatility to estimate the volatility of the share price. Changes in the subjective input assumptions can materially affect the fair value estimates, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s warrants, broker units and share options.
 
Warrants
 
A summary of the Company’s warrants activity is as follows:
 
 
 
 
Weighted
 
 
 
 
 
 
Number of
 
Average
 
 
 
 
 
 
Warrants
 
Exercise Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2015
 
 
1,022,761
 
$
9.04
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
1,265,626
 
 
4.50
 
 
 
 
Granted
 
 
40,000
 
 
4.00
 
 
CDN $
 
Exercised
 
 
(424,000)
 
 
4.00
 
 
CDN $
 
Expired
 
 
(598,761)
 
 
13.33
 
 
 
 
Expired
 
 
(40,000)
 
 
4.00
 
 
CDN $
 
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2016 and June 30, 2017
 
 
1,265,626
 
$
4.50
 
 
 
 
 
There were no outstanding warrants with exercise prices denominated in Canadian dollars at June 30, 2017.
 
The weighted average contractual life remaining on the outstanding warrants at June 30, 2017 is 54 months.
 
The following table summarizes information about the warrants outstanding at June 30, 2017:
 
 
 
Number of
 
 
 
Exercise Price
 
Warrants
 
Expiry Date
 
 
 
 
 
 
 
$
4.50
 
 
1,265,626
 
January 6, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
1,265,626
 
 
 
 
Warrant liability
 
All warrants with exercise prices denominated in Canadian dollars were exercised or have expired. Therefore, there was no outstanding warrant liability at June 30, 2017.
 
Equity offerings conducted by the Company in prior years included the issuance of warrants with exercise prices denominated in Canadian dollars. The Company’s functional currency is the U.S. dollar. As a result of having exercise prices denominated in other than the Company’s functional currency, those warrants met the definition of derivatives and were therefore classified as derivative liabilities measured at fair value with adjustments to fair value recognized through the consolidated statements of operations. The fair value of those warrants was determined using the Black-Scholes option valuation model at the end of each reporting period. On the date those warrants were exercised, the fair value of warrant liability was reclassified to common shares along with the proceeds from the exercise. If those warrants expired, the related decrease in warrant liability was recognized in profit or loss, as part of the change in fair value of warrant liability. There was no cash flow impact as a result of this accounting treatment.
 
The fair value of warrants exercised was determined using the Black-Scholes option valuation model, using the following weighted average assumptions:
 
 
 
Nine Months Ended
 
 
 
June 30,
 
 
 
2016
 
Risk free interest rate
 
 
0.48
%
Expected life (years)
 
 
0.04
 
Expected share price volatility
 
 
92
%
 
There were no warrants exercised during the nine months ended June 30, 2017.
 
The fair value of warrants granted was determined using the Black-Scholes option valuation model, using the following weighted average assumptions:
 
 
 
Nine Months Ended
 
 
 
June 30,
 
 
 
2016
 
Risk free interest rate
 
 
0.52
%
Expected life (years)
 
 
0.01
 
Expected share price volatility
 
 
91
%
Expected dividend yield
 
 
0
%
 
There were no warrants granted during the nine months ended June 30, 2017.
 
Broker units
 
The Company granted broker units as finders’ fees in conjunction with equity offerings in prior years. Broker units were fully vested when granted and allowed the holders to purchase equity units. A unit consisted of one common share and either one whole warrant or one half warrant.
 
A summary of broker units activity is as follows:
 
 
 
 
 
Weighted
 
 
 
 
 
Number of
 
Average
 
 
 
 
 
Units
 
Exercise Price
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2015
 
 
46,600
 
$
1.87
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercised
 
 
(40,000)
 
 
2.50
 
CDN $
 
Expired
 
 
(6,600)
 
 
2.50
 
CDN $
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2016 and June 30, 2017
 
 
-
 
$
-
 
 
 
 
There were no broker units granted or exercised during the nine months ended June 30, 2017 and 2016.
 
Options
 
The Company has an incentive compensation plan adopted in 2017 (the “Plan”) administered by the Board of Directors, which amended and restated the 2013 fixed share option plan (the “2013 Plan”). Options, restricted shares and restricted share units are eligible for grants under the Plan. The number of shares available for issuance under the Plan is 1,597,000, including shares available for the exercise of outstanding options under the 2013 Plan. No restricted shares or restricted share units have been granted as of June 30, 2017.
 
The exercise price of an option is set at the closing price of the Company’s common shares on the date of grant. Share options granted to directors, officers, employees and certain individual consultants for past service are subject to the following vesting schedule: (a) one-third shall vest immediately, (b) one-third shall vest at 12 months from the date of grant and (c) one-third shall vest at 18 months from the date of grant.
 
Share options granted to directors, officers, employees and certain individual consultants for future service are subject to the following vesting schedule: (x) one-third shall vest at 12 months from the date of grant, (y) one-third shall vest at 24 months from the date of grant and (z) one-third shall vest at 36 months from the date of grant.
 
Share options granted to certain individual investor relations consultants are subject to the following vesting schedule: (aa) 25% shall vest at 3 months from the date of grant, (bb) 25% shall vest at 6 months from the date of grant, (cc) 25% shall vest at 12 months from the date of grant and (dd) 25% shall vest at 15 months from the date of grant.
 
Options have been granted under the Plan allowing the holders to purchase common shares of the Company as follows:
 
 
 
 
 
Weighted
 
 
 
 
 
Number of
 
Average
 
 
 
 
 
Options
 
Exercise Price
 
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2015
 
 
557,638
 
$
5.17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
56,300
 
 
6.47
 
 
 
 
Expired
 
 
(21,334)
 
 
10.70
 
 
 
 
Expired
 
 
(53,501)
 
 
5.22
 
 
CDN $
 
 
 
 
 
 
 
 
 
 
 
 
Balance - September 30, 2016
 
 
539,103
 
$
5.29
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
71,600
 
 
1.89
 
 
 
 
Expired
 
 
(18,233)
 
 
7.16
 
 
 
 
Expired
 
 
(167,500)
 
 
2.84
 
 
CDN $
 
 
 
 
 
 
 
 
 
 
 
 
Balance - June 30, 2017
 
 
424,970
 
$
5.88
 
 
 
 
 
The weighted average contractual life remaining on the outstanding options is 38 months.
 
The following table summarizes information about the options under the Plan outstanding and exercisable at June 30, 2017:
 
Number of
 
Exercisable at
 
Range of exercise
 
 
 
 
Options
 
June 30, 2017
 
prices
 
 
Expiry Dates
 
 
117,110
 
 
117,110
 
 
CDN$0.01 - 5.00
 
 
Apr 2017-Dec 2019
 
 
79,900
 
 
14,967
 
 
$0.01 - 5.00
 
 
Sep 2023-Mar 2024
 
 
141,860
 
 
141,860
 
 
CDN$5.01 - 10.00
 
 
Oct 2017-Jun 2022
 
 
15,100
 
 
15,100
 
 
$5.01 - 10.00
 
 
Dec 2022
 
 
21,500
 
 
21,500
 
 
CDN$15.01 - 20.00
 
 
Nov 2018-Nov 2021
 
 
49,500
 
 
49,500
 
 
$15.01 - 20.00
 
 
Nov 2020
 
 
424,970
 
 
360,037
 
 
 
 
 
 
 
 
The estimated fair value of the share options granted during the nine months ended June 30, 2017 and 2016 was determined using a Black-Scholes option valuation model with the following weighted average assumptions:
 
 
 
Nine Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
Risk free interest rate
 
 
1.44
%
 
1.05
%
Expected life (years)
 
 
7.00
 
 
7.00
 
Expected share price volatility
 
 
166
%
 
108
%
Expected dividend yield
 
 
0
%
 
0
%
 
The weighted average fair value of share options awarded during the nine months ended June 30, 2017 and 2016 was $1.84 and $7.08, respectively.
 
As of June 30, 2017, the Company had approximately $79,000 of unrecognized share-based compensation expense, which is expected to be recognized over a period of 33 months.
 
There were no options exercised during the nine months ended June 30, 2017 and 2016. There was no intrinsic value of the vested options at June 30, 2017.