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SHARE BASED PAYMENTS | 12 Months Ended
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Mar. 31, 2015
SHARE BASED PAYMENTS [Text Block] |
6. | SHARE BASED PAYMENTS
(a) | Stock options
The number of securities below reflects the Recapitalization and the exchange ratio retrospectively. The Company has a stock option plan whereby the Company is authorized to grant up to 12,108,016 options. Vesting and the term of an option is determined at the discretion of the Board of Directors of the Company. On April 1, 2013, the Company granted a consultant company 930,031 options for 10 years upon completion of certain services in accordance with a consulting agreement to lead the design and manufacturing program of the Company’s technology. On December 4, 2013, 654,481 options vested. On May 11, 2014, all these options had vested and were exercised for 930,031 common shares. On October 30, 2013, the Company granted 2,300,000 options exercisable for 10 years to a consultant company for strategic business advisory services which are to vest upon completion of two milestones. On February 11, 2014, 1,150,000 options were vested upon completion of the first of the two milestones. On April 28, 2014, the remaining 1,150,000 options were vested upon completion of the second milestone. On May 1, 2014, all 2,300,000 options were exercised for 2,300,000 shares. On June 19, 2014, the Company granted 3,520,000 options to directors, officers, and consultants exercisable at CAD $0.60 for 5 years. One third of these options vested immediately upon granting. The remaining two thirds of the options will vest on June 19, 2015, and June 19, 2016 respectively. On June 20, 2014, the Company granted 250,000 options to an investor relations consultant exercisable at CAD $0.60 for 5 years. 12.5% of these options vested immediately upon granting. The remaining 87.5% will vest at a rate of 12.5% every three months beginning September 20, 2014. On July 14, 2014, the Company granted 100,000 options to a consultant exercisable at CAD $2.52 for 3 years. 25% of these options vested immediately upon granting. The remaining options will vest at a rate of 25% on September 30, 2014, December 31, 2014, and March 31, 2015, respectively. On December 8, 2014, the Company granted 450,000 options to members of its scientific advisory board exercisable at CAD $2.92 for 5 years. All of these options vested immediately upon granting. On December 8, 2014, the Company granted 100,000 options to a new director exercisable at CAD $2.92 for 5 years. One third of these options vested immediately upon granting. The remaining two thirds of the options will vest on December 8, 2015, and December 8, 2016 respectively. On December 8, 2014, the Company granted 400,000 options to its new Chief Medical Officer exercisable at CAD $2.96 for 5 years. 25% of these options vested immediately upon granting. The remaining options will vest at a rate of 25% on June 8, 2015, December 8, 2015, and June 8, 2016, respectively. On March 16, 2015, the Company granted 100,000 options to a new director exercisable at CAD $3.20 for 5 years. One third of these options vested immediately upon granting. The remaining two thirds of the options will vest on March 16, 2016, and March 16, 2017 respectively. The continuity of stock options for the period ended March 31, 2015 and 2014 is as follows:
|  |  |  |  | Weighted |  |  |  |
|  |  |  |  | Average |  |  | Aggregate |
|  |  |  |  | Exercise Price |  |  | Intrinsic Value |
|  | Number |  |  | (CAD) |  |  | (CAD) |
Balance, March 31, 2013 |  | - |  |  | - |  |  |  |
Granted |  | 3,230,031 |  | $ | 0.0003 |  | $ | - |
Balance, March 31, 2014 |  | 3,230,031 |  | $ | 0.0003 |  | $ | - |
Granted |  | 4,920,000 |  | $ | 1.14 |  | $ | - |
Exercised |  | (3,230,031 | ) | $ | 0.0003 |  | $ | - |
Balance outstanding at March 31, 2015 |  | 4,920,000 |  | $ | 1.14 |  | $ | 10,120,000 |
Balance exercisable at March 31, 2015 |  | 2,015,001 |  | $ | 1.41 |  | $ | 7,757,667 |
The options outstanding and exercisable at March 31, 2015 are as follows:
|  |  |  |  | Options |  |  |  |  |  |  |  |  |  |
|  |  |  |  | outstanding |  |  |  |  |  |  |  |  |  |
|  |  |  |  | remaining |  |  |  |  |  |  |  |  |  |
|  |  |  |  | contractual life |  |  | Exercise |  |  | Grant date fair |  |  | Number of options |
Number of options |  | Expiry date |  |  | (years) |  |  | Price (CAD) |  |  | value (CAD) |  |  | exercisable |
3,520,000 |  | June 18, 2019 |  |  | 4.22 |  | $ | 0.60 |  | $ | 0.23 |  |  | 1,173,333 |
250,000 |  | June 20, 2019 |  |  | 4.22 |  | $ | 0.60 |  | $ | 0.23 |  |  | 125,000 |
100,000 |  | July 14, 2017 |  |  | 2.29 |  | $ | 2.52 |  | $ | 1.06 |  |  | 100,000 |
450,000 |  | December 8, 2019 |  |  | 4.69 |  | $ | 2.92 |  | $ | 1.65 |  |  | 450,000 |
100,000 |  | December 8, 2019 |  |  | 4.69 |  | $ | 2.92 |  | $ | 1.49 |  |  | 33,334 |
400,000 |  | December 8, 2019 |  |  | 4.69 |  | $ | 2.96 |  | $ | 1.56 |  |  | 100,000 |
100,000 |  | March 16, 2020 |  |  | 4.96 |  | $ | 3.20 |  | $ | 1.61 |  |  | 33,334 |
4,920,000 |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,015,001 |
The weighted average grant date fair value of stock options granted during the year ended March 31, 2015 of CAD$0.54 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price - CAD$1.06 ; exercise price - CAD$1.14 ; expected risk-free interest rate - 1.08%; expected life - 4.1 years; expected volatility - 67.85% and expected dividend rate - 0%. The Company has adopted the simplified method prescribed by the SEC in SAB Topic 14 in respect of estimating the expected term of its stock options as its limited share purchase option history does not provide a reasonable basis to estimate the expected terms. As well, expected volatility was determined by reference to the average volatility rates of other companies in the same industry due to the Company’s limited trading history. Non-Employee Stock Options In accordance with the guidance of ASC 815-40-15, stock options awarded to non-employees that are performing services for Neuro are required to be accounted for as derivative liabilities once the services have been performed and the options have vested because they are considered not to be indexed to the Company’s stock due to their exercise price being denominated in a currency other than Neuro’s functional currency. Stock options awarded to non-employees that are not vested are accounted for as equity awards until the terms associated with their vesting requirements have been met. The non-employee stock options are accounted for at their respective fair values and are summarized as follows for the years ended March 31, 2015 and 2014:
|  | 2015 |  |  | 2014 |
|  | $ |  |  | $ |
Fair value of non-employee options, beginning of the period |  | - |  |  | - |
Fair value of non-employee options, at issuance |  | 767,879 |  |  | - |
Reallocation of vested non-employee options |  | 74,190 |  |  |  |
Change in fair value of non-employee stock options during the period |  | 739,375 |  |  | - |
Fair value of non-employee options, end of the period |  | 1,581,444 |  |  | - |
The non-employee options are required to be re-valued with the change in fair value of the liability recorded as a gain or loss on the change of fair value of derivative liability and included in other items in the Company’s Consolidated Statements of Loss at the end of each reporting period. The fair value of the options will continue to be classified as a liability until such time as they are exercised, expire or there is an amendment to the respective agreements that renders these financial instruments to be no longer classified as a liability. Stock-based compensation related to the grant of each of employee and non-employee options is summarized as follows for the years ended March 31, 2015 and 2014 and for the period from January 22, 2013 (date of incorporation) to March 31, 2013:
Date of grant |  | Number |  |  | 2015 |  |  | 2014 |  |  | 2013 |
|  |  |  |  | (restated) $ |  |  | $ |  |  | $ |
Employee options |  |  |  |  |  |  |  |  |  |  |  |
April 1, 2013 |  | 930,031 |  |  | - |  |  | 247,075 |  |  | - |
October 30, 2013 |  | 2,300,000 |  |  | 50,303 |  |  | 560,082 |  |  | - |
June 19, 2014 |  | 1,970,000 |  |  | 165,996 |  |  | - |  |  | - |
July 14, 2014 |  | 75,000 |  |  | 74,190 |  |  | - |  |  | - |
December 8, 2014 |  | 100,000 |  |  | 43,229 |  |  | - |  |  | - |
December 8, 2014 |  | 400,000 |  |  | 135,564 |  |  | - |  |  | - |
March 16, 2015 |  | 100,000 |  |  | 41,987 |  |  | - |  |  | - |
|  | 5,875,031 |  |  | 511,269 |  |  | 807,157 |  |  | - |
Options exercised |  | (3,230,031 | ) |  | - |  |  | - |  |  | - |
|  | 2,645,000 |  |  | 511,269 |  |  |  |  |  |  |
Non-employee |  |  |  |  |  |  |  |  |  |  |  |
options |  |  |  |  |  |  |  |  |  |  |  |
June 19, 2014 |  | 1,800,000 |  |  | 1,158,822 |  |  | - |  |  | - |
July 14, 2014 |  | 25,000 |  |  | 24,730 |  |  | - |  |  | - |
December 8, 2014 |  | 450,000 |  |  | 646,055 |  |  | - |  |  | - |
|  | 2,275,000 |  |  | 1,824,607 |  |  | - |  |  | - |
|  | 4,920,000 |  |  | 2,340,876 |  |  | 807,157 |  |  | - |
Share-based payments are classified in the Company’s Statement of Loss as follows for the years ended March 31, 2015 and 2014 and for the period from January 22, 2013 (date of incorporation) to March 31, 2013:
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (restated) $ |  |  | $ |  |  | $ |
Consulting fees |  | 1,167,281 |  |  | 807,157 |  |  | 4,250,000 |
Research and development |  | 721,601 |  |  | - |  |  | 4,250,000 |
Wages and salaries |  | 451,994 |  |  | - |  |  |  |
|  | 2,340,876 |  |  | 807,157 |  |  | 8,500,000 |
At March 31, 2015, the aggregate unamortized stock based compensation cost remaining to be recognized totals $2,303,664 with $2,070,656 expected to be recognized in the year ended March 31, 2016 and $233,008 expected to be recognized in the fiscal year ended March 31, 2017. The Company used the Black Scholes option pricing model to estimate the fair value of the options as the fair value of the services provided could not be reliably calculated. The following assumptions were used:
|  |  |  |  | March 31, 2015 |  |  | March 31, 2014 |
Stock Price |  | CAD$ |  |  | 0.50 - 3.18 |  |  | 0.27 |
Exercise Price |  | CAD$ |  |  | 0.60 - 3.20 |  |  | 0.0003 |
Risk-free interest rate (%) |  |  |  |  | 0.53 - 1.42 |  |  | 1.20 - 1.65 |
Dividend yield (%) |  |  |  |  | 0.00 |  |  | 0.00 |
Expected volatility (%) |  |  |  |  | 67.85 |  |  | 97.73 - 116.82 |
Expected option life (years) |  |  |  |  | 3.00 - 5.00 |  |  | 4.33 - 5.00 |
The Black Scholes option pricing model was developed for use in estimating the fair value of share options that have no vesting provisions and are fully transferable. Also, option-pricing models require the use of estimates and assumptions including the expected volatility. The Company uses expected volatility rates which are based upon the average volatility rates of other companies in the same industry, due to the Company’s limited history. The Company based the current stock price on the value per shares issued to date. Changes in the underlying assumptions can materially affect the fair value estimates.
(b) | Share Purchase Warrants
The Company closed its Private Placement at CAD $0.50 per unit of 15,240,000 units raising CAD $7.62 million on May 30, 2014. Each unit consists of one common stock of the Company and one half of a warrant of the Company where one full warrant is exercisable for 2 years at CAD $1.00 into one common share. The proceeds of the private placement were allocated between the common shares and the warrants on a relative fair value basis with an amount of $578,961 allocated to the warrants. In addition, the Company issued 824,400 finder’s warrants exercisable at CAD $1.00 for 2 years. The fair value of the finders’ warrants was determined to be $67,709. The fair values attributable to the warrants were determined by using the Black Scholes model based on the following assumptions:
Stock price |  | CAD$0.50 |
Exercise price |  | CAD$1.00 |
Risk-free interest rate (%) |  | 1.09 |
Dividend yield (%) |  | - |
Expected volatility (%) |  | 67.85 |
Expected option life (years) |  | 1.17 |
The continuity of warrants for the period ended March 31, 2015 and 2014 is as follows:
|  |  |  |  | Warrants Outstanding |
|  | Number of |  |  | Weighted Average Exercise Price |
|  | warrants |  |  |  |
Balance, March 31, 2013 and 2014 |  | - |  | $ | - |
Granted |  | 8,444,400 |  | $ | CAD1.00 |
Balance, March 31, 2015 |  | 8,444,400 |  | $ | CAD1.00 |
The warrants outstanding and exercisable at March 31, 2015 are as follows:
|  |  |  |  | Grant date |  |  |  |
Number of warrants outstanding |  | Exercise Price (CAD) |  |  | Fair value (CAD) |  |  | Expiry Date |
7,620,000 |  | $1.00 |  |  | $0.0899 |  |  | May 30, 2016 |
824,400 |  | $1.00 |  |  | $0.0899 |  |  | May 30, 2016 |

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References No definition available. + Details
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