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Note 8 - Capital Shares
 12 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

8. Capital shares

 

Equity offerings

 

On November 2, 2022, the Company completed a private placement of units consisting of 384,475 common shares, Class A warrants to purchase up to an aggregate of 192,248 common shares and Class B warrants to purchase up to an aggregate of 192,248 common shares. Net proceeds from the offering were $2.9 million, which were allocated between the relative fair values of the common shares (using a fair value of $2.7 million) and the common share purchase warrants (using a total fair value of $1.2 million). The warrants became exercisable December 23, 2022. The Class A warrants have an exercise price of $10.50 per share and will expire on December 23, 2025. The Class B warrants have an exercise price of $7.00 per share and expired on December 23, 2023. The warrants are considered contracts on the Company’s own shares and are classified as equity.

 

Equity distribution agreement

 

On March 27, 2023, the Company entered into the Canaccord ATM, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20.0 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $8.4 million. The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms. During the year ended September 30, 2024, the Company sold a total of 171,916 common shares pursuant to the agreement for gross proceeds of approximately $0.7 million. During the year ended September 30, 2023, the Company sold a total of 196,401 common shares pursuant to the agreement for gross proceeds of approximately $1.3 million. The Canaccord ATM was terminated on October 3, 2024.

 

At The Market Offering Agreement

 

On October 4, 2024, the Company entered into an At The Market Offering Agreement with H.C. Wainwright & Co., LLC as a sales agent (HCW ATM) pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $3.87 million in gross proceeds. The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms. Subsequent to the year ended September 30, 2024, the Company sold a total of 220,269 common shares pursuant to the agreement for net proceeds of approximately $0.6 million after deducting sales agent commissions.

 

Black-Scholes option valuation model

 

The Company uses the Black-Scholes option valuation model to determine the fair value of share-based compensation for share options and compensation warrants granted and the fair value of warrants issued. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company calculates expected volatility based on historical volatility of the Company’s share price. When there is insufficient data available, the Company uses a peer group that is publicly traded to calculate expected volatility. The Company adopted interest-free rates by reference to the U.S. treasury yield rates. The Company calculated the fair value of share options granted based on the expected life of 5 years considering expected forfeitures during the option term of 10 years. Expected life of warrants is based on warrant terms. The Company did not and is not expected to declare any dividends. 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 and share options.

 

Warrants

 

A summary of the Company’s warrants activity is as follows:

 

   

Number of Warrant Shares (#)

    

Weighted Average Exercise Price

  
                 

Balance - September 30, 2022

     521,718     $ 28.00  
                 

Issued

     384,496       8.75  

Exercised

     (100,760 )     7.65  

Expired

     (84,545 )     37.29  
                 
                 

Balance - September 30, 2023

     720,909     $ 19.51  
                 

Expired

     (111,192 )     7.26  
                 

Balance - September 30, 2024

     609,717     $ 21.74  

 

 

The weighted average contractual life remaining on the outstanding warrants at September 30, 2024 is 29 months.

 

The following table summarizes information about the warrants outstanding at September 30, 2024:

 

Number of Warrants (#)

    

Exercise Prices

   

Expiry Dates
1,687     $ 22.40    

January 2025
173,614     $ 10.50    

December 2025
15,627     $ 56.00    

February 2026
27,399     $ 31.94    

March 2027
391,390     $ 24.64    

September 2027
609,717              

 

There were no warrants issued during the year ended September 30, 2024. The fair value of warrants issued during the year ended September 30, 2023 were estimated using the Black-Scholes option valuation model using the following assumptions:

 

   

Year Ended September 30,2023

  
   

Class A Warrants

    

Class B Warrants

  
                 

Risk free interest rate

     4.54 %     4.76 %

Expected life (years)

  

 

3.14

 

    

 

1.14

 

  

Expected share price volatility

     90.73 %     89.70 %

Expected dividend yield

     0.00 %     0.00 %

 

 

Share options

 

The Company adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) administered by the independent members of the Board of Directors, which amended and restated prior plans. Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan. The total number of shares available for issuance under the terms of the 2019 Plan is 642,737. The remaining number of shares available to grant at September 30, 2024 is 141,099.

 

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers. Under the 2019 Plan, the option term is not to exceed 10 years and the exercise price of each option is determined by the independent members of the Board of Directors.

 

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

 

   

Number of Options (#)

    

Weighted Average Exercise Price

    

Weighted Average Grant Date Fair Value

  
                         

Balance - September 30, 2022

     314,853     $ 32.62     $ 23.94  
                         

Granted

     118,579       7.47       5.23  

Forfeited

     (12,779 )     22.76       16.23  

Expired

     (38 )     1,973.20       1,973.20  
                         

Balance - September 30, 2023

     420,615     $ 25.60     $ 18.84  
                         

Granted

     500       4.10       3.10  

Forfeited

     (2,401 )     15.00       10.70  

Expired

     (35,674 )     33.18       25  
                         

Balance - September 30, 2024

     383,040     $ 24.93     $ 18.33  

 

There were no options exercised during the years ended September 30, 2024 or September 30, 2023. The intrinsic value of options outstanding at September 30, 2024 was $200.00.

 

The weighted average contractual life remaining on the outstanding options at September 30, 2024 is 80 months.

 

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at September 30, 2024:

 

Number of Options (#)

   

Exercisable at
September 30, 2024 (#)

   

Range of Exercise Prices

   

Expiry Dates
374       374     $ 246.96    

March 2025
37,719       37,719     C$ 15.12    

August 2027 - Dec 2028
43,031       43,031     $ 22.12    

Feb 2030
51,006       51,006     $ 52.08 - 56.49    

September 2030 - Oct 2030
81,041       81,013     $ 36.75 - 40.18    

March 2025 - Sep 2031
58,753       52,957     $ 25.97    

March 2025 - Feb 2032
111,116       62,288     $ 4.10 - 10.01    

March 2025 - Oct 2033
383,040       328,388              

 

The options exercisable at September 30, 2024 had a weighted average exercise price of $27.55 and an intrinsic value of $66.00 and a weighted average remaining life of 76 months. There were 54,652 options at September 30, 2024 that had not vested with a weighted average exercise price of $9.24 and an intrinsic value of $134.00 and a weighted average remaining life of 102 months.

 

The fair value of options granted during the years ended September 30, 2024 and 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

 

   

Years Ended

  
   

September 30, 2024

    

September 30, 2023

  
                 

Risk free interest rate

     4.92 %     3.62% - 4.18 %

Expected life (years)

  

 

5

 

    

 

5

 

  

Expected share price volatility

     97.26 %     95.3% - 97.34 %

Expected dividend yield

     0.00 %     0.00 %

 

 

The Company recorded $0.5 million and $1.2 million of share-based compensation expenses for the years ended September 30, 2024 and 2023, respectively.

 

As of September 30, 2024, the Company had approximately $0.1 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 24 months.

 

Restricted share units

 

The Company's 2019 Plan allows restricted share units (RSUs) to be granted to directors, officers, employees and certain external consultants and advisers. Under the 2019 Plan, the RSU term is not to exceed 10 years. The fair value is based on the 5-day VWAP of the Company's common shares up to the date of grant.

 

The following is a summary of changes in the status of RSUs from October 1, 2022 through September 30, 2024:

 

   

Number of RSU (#)

    

Weighted Average Grant Date Fair Value

  
                 

Balance - September 30, 2022

     -     $ -  
                 

Granted

     46,602       5.60  

Converted to common shares

     (13,557 )     5.60  
                 

Balance - September 30, 2023

     33,045     $ 5.60  
                 

Granted

     30,159     $ 4.56  
                 

Balance - September 30, 2024

     63,204     $ 5.10  

 

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at September 30, 2024:

 

   

Number of RSU (#)

   

Expiry Date

Fully-vested RSUs

     63,204    

August 2033 - September 2034

 

The RSUs that were granted in the current year was for compensation to the Company’s Chief Executive Officer who is receiving 50% of his salary in RSUs. In the comparative period, RSUs were granted in lieu of cash bonuses for certain employees and in lieu of payments on consulting invoices for services prior to the appointment of the new Chief Financial Officer. All RSUs that were granted vested immediately upon the grant date. The outstanding RSUs can be converted to common shares by the holder at any time prior to the expiry date.

 

There is no future unrecorded compensation expense for the RSUs.