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Stockholders’ Deficiency

3 Months Ended

Mar. 31, 2025

Stockholders’ Deficiency [Abstract]

STOCKHOLDERS’ DEFICIENCY

NOTE 11 – STOCKHOLDERS’ DEFICIENCY

Authorized Share Capital

The Company is authorized to issue the following share capital:

●

Unlimited common voting shares without par value (“Common Share”)

●

Unlimited Class A restricted voting shares without par value (“Restricted Share”)

●

Unlimited Class B Preferred Series A voting shares without par value, convertible on a 1:1 basis into Common Share (“Class B Preferred Share”)

Issued Share Capital

During the three months period ended March 31, 2025, the Company did not issue any Common Shares, Restricted Shares or Class B Preferred Shares.

Warrants

During the three months period ended March 31, 2025, the Company did not issue any warrants.

The schedule of activity for the warrants is as follows:

		Number of Warrants				Weighted Average Exercise Price (as converted)				Remaining Contractual Term (Years)
Balance, December 31, 2024			3,635,962			$	7.37				3.30
Balance, March 31, 2025			3,635,962			$	7.37				3.05

A summary of the warrants outstanding and exercisable as of March 31, 2025, is as follows:

Warrants Outstanding				Exercise Price				Expiry Date
	133,193			$	7.75			August 31, 2026
	35,064			$	7.75			October 16, 2026
	101,000			$	7.75			November 8, 2026
	394,572			$	7.75			December 22, 2026
	720,123			$	7.75			January 19, 2027
	585,609			$	7.23			February 16, 2028
	86,200			$	6.78 (CAD$9.75	)		February 16, 2028
	28,796			$	6.78 (CAD$9.75	)		March 15, 2028
	262,287			$	7.08			March 15, 2028
	430,805			$	7.19			September 24, 2029
	642,892			$	7.18			November 8, 2029
	215,421			$	7.19			November 13, 2029
	3,635,962

Warrants Liabilities

a)	On August 31, 2023, the Company’s functional currency changed to the USD from the CAD; as such, the Company recorded a derivative liability on the warrants outstanding with CAD exercises prices. This derivative liability is being revalued at each reporting period.

As of March 31, 2025 and December 31, 2024, the Company revalued the derivative liability to $415,434 and $503,129, respectively, and recorded a gain on revaluation of $87,695 for the three months ended March 31, 2025 (three months ended March 31, 2024 – loss of $619,989).

Balance as of December 31, 2024		$	503,129
Revaluation of derivative liability			(87,695	)
Balance as of March 31, 2025		$	415,434

A summary of warrants not issued for services with CAD exercise prices outstanding and exercisable as of March 31, 2025, is as follows:

Warrants Outstanding				Exercise Price				Expiry Date
	86,200			$	6.78 (CAD$9.75	)		February 16, 2028
	15,810			$	6.78 (CAD$9.75	)		March 15, 2028
	102,010

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the re-valuations as of March 31, 2025 and December 31, 2024:

		March 31, 2025				December 31, 2024
Risk-free interest rate			4.27	%			4.27	%
Dividend yield			-				-
Expected life (in years)			2.89				3.14
Volatility			158	%			158	%
Weighted average fair value per warrant		$	4.07			$	4.93

b)	On September 24, 2024, the Company entered into SPAs with various third party lenders for the issuance of the 430,805 Initial Debenture Warrants and 215,421 Additional Debenture Warrants .

The Initial Debenture Warrants were exercisable at a price of $10.55 per share until September 24, 2029. Upon closing of a Qualified Offering, each Initial Debenture Warrant holder received Additional Warrants with identical terms as the Initial Debenture Warrants. The exercise price of the Debenture Warrants are subject to adjustment upon the completion of a Qualified Offering to the lower of (i) the existing Debenture Warrant exercise price, (ii) the exercise price of any common share purchase warrants issued in the Qualified Offering, or (iii) if no common share purchase warrants are issued in the Qualified Offering, the closing price of the common shares on the Canadian Securities Exchange (as converted into U.S. dollars) immediately prior to the pricing news release of the Qualified Offering.

The fundamental transaction clause in the warrant agreement stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Under ASC 815 (Derivatives and Hedging), an instrument must be classified as equity if it passes the “fixed-for-fixed” indexation test, meaning both the exercise price and the number of shares to be issued must be fixed at issuance. In this case, the volatility input is predetermined and fixed in the agreement “an expected volatility equal to the greater of 100% and the 30 day volatility from the “HVT” function on Bloomberg”, and is therefore not indexed to the Company’s stock. As a result, the Initial and Additional Debenture Warrants fail the “fixed-for-fixed” test and are classified as derivative liabilities in accordance with ASC 815.

As at March 31, 2025, the Company revalued the derivative liabilities to $2,123,352 (December 31, 2024 - $2,646,843) and recorded a gain on revaluation of $523,491 and $nil for the three months ended March 31, 2025 and 2024, respectively.

A summary of the Initial and Additional Debenture Warrants issued and outstanding as of March 31, 2025, is as follows:

Warrants Outstanding				Exercise Price				Expiry Date
	430,805			$	7.19			September 24, 2029
	215,421			$	7.19			November 13, 2029
	646,226

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the revaluation for the Initial and Additional Debenture Warrant as of December 31, 2024 and March 31, 2025:

		March 31, 2025				December 31, 2024
Risk-free interest rate			3.96	%			4.38	%
Dividend yield			-				-
Expected life (in years)			4.53				4.73
Volatility			93	%			94	%

c)	Agent Warrants issued in connection with the public offering.

Upon completion of the public offering, the Company issued 608,696 agent warrants and an additional 34,196 agent warrants for the over-allotment. In the warrant agreement it included the fundamental transaction clause that stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Under ASC 815 (Derivatives and Hedging), an instrument must be classified as equity if it passes the “fixed-for-fixed” indexation test, meaning both the exercise price and the number of shares to be issued must be fixed at issuance. In this case, the volatility input is predetermined and fixed in the agreement “an expected volatility equal to the greater of 100% and the 30 day volatility from the “HVT” function on Bloomberg”, and is therefore not indexed to the Company’s stock. As a result, the agent warrants fail the “fixed-for-fixed” test and are classified as derivative liabilities in accordance with ASC 815.

As at March 31, 2025, the Company revalued the derivative liabilities to $2,133,690 (December 31, 2024 - $2,670,386) and recorded a gain on revaluation of $536,696 and $nil for the three months ended March 31, 2025 and 2024, respectively.

A summary of the agent warrants issued and outstanding as of March 31, 2025, is as follows:

Warrants Outstanding				Exercise Price				Expiry Date
	642,892			$	7.18			November 9, 2029

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the revaluations:

		March 31, 2025				December 31, 2024
Risk-free interest rate			3.96	%			4.38	%
Dividend yield			-				-
Expected life (in years)			4.61				4.86
Volatility			94	%			95	%

Share Options

Common Share Options

The Company’s 2023 Share Option Plan (the “2023 Option Plan”) for its officers, directors, employees and consultants was approved by stockholders on June 27, 2023. Pursuant to the 2023 Option Plan, the Company may grant non-transferable share options totaling in aggregate up to 20% of the Company’s issued and outstanding Common Shares and Restricted Shares, exercisable for a period of up to ten years from the date of grant, and at an exercise price that will not be lower than the greater of the last closing price for the Common Shares as quoted on the CSE: (i) on the trading day prior to the date of grant; and (ii) the date of grant. All options granted pursuant to the 2023 Option Plan will be subject to such vesting requirements as may be imposed by the Board. In the event of a Change of Control, as defined in the 2023 Option Plan, all unvested options will vest immediately.

The 2022 Option Plan was previously adopted by the board and approved by stockholders on July 19, 2022, pursuant to which incentive share options were granted to certain directors, officers, employees and consultants (the “2022 Option Plan”). Under the 2022 Option Plan, the Company could grant non-transferable share options totaling in aggregate up to 10% of the Company’s issued and outstanding Common Shares, exercisable for a period of up to ten years from the date of grant, and at an exercise price which is not less than that permitted by the TSX-V. In connection with listing of the Common Shares on the CSE, the Company adopted the 2023 Option Plan and determined that the 2022 Option Plan be closed to new grants. The options outstanding under the 2022 Option Plan, issued prior to the adoption of the 2023 Option Plan (“2022 Options”) are not included in the maximum number of share options available for grant pursuant to the 2023 Option Plan and are not subject to the terms of the 2023 Option Plan; as such, the 2022 Options will continue to be governed by the 2022 Option Plan.

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of the Common Share options issued:

		March 31, 2025				December 31, 2024
Risk-free interest rate			4.31	%			4.34	%
Expected life (in years)			10				10
Volatility			82	%			82	%
Weighted average fair value per option		$	4.91			$	5.58

The following table summarizes the total amount of share-based compensation expense related to service conditions for Common Share options during the three months ended March 31, 2025, and 2024:

		For the Three Months Ended
		March 31, 2025				March 31, 2024
Research and development		$	33,079			$	87,847
General and administrative			1,322,294				260,238
Total share-based compensation		$	1,355,373			$	348,085

As of March 31, 2025, there was an unrecognized share-based compensation expense relating to service conditions for common share options of $5,286,397.

Common share option activity is as follows:

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (Years)				Aggregate Intrinsic Value⁽¹⁾
Balance, December 31, 2024			888,529			$	4.58				8.36			$	1,159,843
Granted			1,165,522				5.93
Balance, March 31, 2025			2,054,121				5.32				8.80				725,617
Options exercisable, March 31, 2025			746,240			$	4.50				7.20			$	563,504

(1)

The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common share. The calculation excludes options with an exercise price higher than the closing price of the Company’s share on the reporting date.

A summary of the Common Share options outstanding at March 31, 2025, is as follows:

Options Outstanding				Options Exercisable				Exercise Price					Expiry Date

	7,300				7,300				4.87	(CAD$7.00	)		September 30, 2025
	82,367				82,367				3.83	(CAD$5.50	)		September 30, 2025
	1,566				1,566			$	10.00				June 1, 2029
	1,566				1,566			$	10.00				July 22, 2030
	104,000				104,000			$	4.87	(CAD$7.00	)		August 3, 2031
	37,600				37,600			$	4.87	(CAD$7.00	)		December 20, 2031
	8,600				8,600			$	4.87	(CAD$7.00	)		February 14, 2032
	18,000				18,000			$	4.87	(CAD$7.00	)		May 31, 2032
	477,600				347,006			$	3.83	(CAD$5.50	)		June 8, 2033
	32,000				2,667			$	10.43	(CAD$15.00	)		October 21, 2034
	84,000				7,001			$	5.70	(CAD$8.20	)		November 26, 2034
	34,000				2,834			$	5.03				December 24, 2034
	10,000				-				6.00				January 14, 2035
	52,500				-				5.80				February 12, 2035
	1,005,822				125,732				5.93				February 25, 2035
	8,000				-				5.75				March 4, 2035
	89,200				-				5.55				March 20, 2035
	2,054,121				746,240

ACI Canada Legacy Performance Options

The Company retained ACI Canada’s share option plan whereby ACI Canada could grant share options to directors, officers, employees and consultants enabling them to acquire common shares. Options granted had a maximum term of ten years and the board of directors determined the vesting requirements. From time to time, the Company granted performance-based share options to management and consultants. These options vest based on the Company’s achievement of certain performance goals and operational metrics, as applicable, subject to continuous employment by each recipient.

The Company did not recognize any share-based compensation expense relating to service or performance conditions for the ACI Canada legacy performance options during the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, there was no unrecognized share-based compensation expense relating to service condition awards.

The following table summarizes ACI Canada legacy performance option activity for the Company:

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (Years)				Aggregate Intrinsic Value⁽¹⁾
Balance, December 31, 2024			265,642				0.22				3.48				1,506,321
Balance, March 31, 2025			265,642				0.22				3.23				1,285,838
Options exercisable, March 31, 2025			258,362			$	0.22				3.21			$	1,250,821

(1)

The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common share. The calculation excludes options with an exercise price higher than the closing price of the Company’s shares on the reporting date

A summary of the ACI Canada legacy performance options outstanding at March 31, 2025, is as follows:

Options Outstanding				Options Exercisable				Exercise Price				Expiry Date
	36,000				36,000			$	0.025			February 1, 2026
	27,642				27,642			$	0.25			December 31, 2027
	122,000				121,120			$	0.25			September 1, 2028
	80,000				73,600			$	0.25			June 1, 2029
	265,642				258,362