SHARE BASED PAYMENTS [Text Block] | 6. SHARE BASED PAYMENTS (a) Stock options 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. The continuity of stock options for the periods as at December 31, 2015 and March 31, 2015, are as follows: Weighted Average Aggregate Exercise Price Intrinsic Value Number (CAD) (CAD) Balance outstanding at March 31, 2015 4,920,000 $ 1.14 $ 10,120,000 Exercised (94,640 ) $ 0.60 - Granted 1,850,000 0.88 - Balance outstanding at December 31, 2015 6,675,360 $ 1.08 $ 2,588,702 Balance exercisable at December 31, 2015 4,272,279 $ 1.16 $ 1,637,490 The options outstanding and exercisable at December 31, 2015 are as follows: Options outstanding remaining Number of Number of contractual life Exercise Grant date fair options options Expiry date (years) Price (CAD) value (CAD) exercisable 3,520,000 June 18, 2019 3.46 $ 0.60 $ 0.23 2,346,667 155,360 June 20, 2019 3.46 $ 0.60 $ 0.23 124,110 100,000 July 14, 2017 1.54 $ 2.52 $ 1.06 100,000 450,000 December 8, 2019 3.94 $ 2.92 $ 1.65 450,000 100,000 December 8, 2019 3.94 $ 2.92 $ 1.49 66,667 400,000 December 8, 2019 3.94 $ 2.96 $ 1.56 300,000 100,000 March 16, 2020 4.21 $ 3.20 $ 1.61 33,334 50,000 August 15, 2015 4.62 $ 0.98 $ 0.39 16,667 750,000 October 21, 2020 4.81 $ 0.87 $ 0.33 187,500 550,000 October 28, 2020 4.83 $ 0.84 $ 0.44 550,000 400,000 October 28,2020 4.83 $ 0.84 $ 0.36 64,000 100,000 December 31, 2020 5.00 $ 1.24 $ 0.50 33,334 6,675,360 4,272,279 The fair value of stock options granted during the periods ended December 31, 2015 and 2014 were estimated using the Black-Scholes option pricing model with the following weighted average assumptions: December 31, 2015 December 31, 2014 Stock price $0.822 $1.33 Exercise Price $0.878 $1.10 Expected life 3.6 years 3.9 years Expected volatility 67.85% 67.85% Risk – free interest rate 0.84% 1.32% Dividend rate 0.00% 0.00% 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. 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 Neurohabilitation Corporation (“NHC”) 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 NHC’s functional currency. Stock options awarded to non-employees that are not vested are re-measured at their respective fair values at each reporting period and accounted for as equity awards until the terms associated with their vesting requirements have been met. The changes in fair value of the unvested non-employee awards are reflected in their respective operating expense classification in the Company’s Consolidated Statement of Comprehensive Income (Loss). The non-employee stock options and warrants that are required to be accounted for as liabilities are summarized as follows for the periods ended December 31, 2015 and March 31, 2015: Nine months ended December 31, 2015 $ Nine months ended December 31, 2014 $ Fair value of non-employee options, beginning of the period 1,581,444 - Issuance - 767,879 Reallocation of vested non-employee options 690,885 42,227 Change in fair value of non-employee stock options during the period (725,520) 739,375 Fair value of non-employee options, end of the period 1,546,809 1,549,481 The non-employee options that have vested 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. Share-based payments are classified in the Company’s Statement of Loss as follows for the period ended December 31, 2015 and 2014: Three months ended December 31, 2015 Nine months ended December 31, 2015 Three months ended December 31, 2014 Nine months ended December 31, 2014 Consulting fees (36,300) (45,199) 871,269 1,033,200 Research and development 315,031 57,550 239,463 578,120 Wages and salaries 52,737 419,635 (77,784) 359,025 331,468 431,986 1,032,948 1,970,345 (b) Share Purchase Warrants The continuity of warrants for the nine months ended December 31, 2015 is as follows: Number of warrants Weighted Average Exercise Price CAD US CAD $ US $ Balance March 31, 2015 8,444,400 - $1.00 - Granted 1,750,831 - 2.06 Exercised (14,400) - $1.00 - Balance December 31, 2015 8,430,000 1,750,831 $1.00 2.06 The warrants outstanding and exercisable at December 31, 2015 are as follows: Number of warrants outstanding Exercise Price Expiry Date 8,430,000 CAD $1.00 May 30, 2016 452,032 US $3.00 April 30, 2018 167,731 US $3.00 June 26, 2018 18,978 US $2.15 June 26, 2020 62,878 US $3.00 July 17, 2018 7,545 US $2.15 July 17, 2020 1,041,667 US $1.44 November 10, 2018 During the nine months ended December 31, 2015, the Company issued an aggregate of 1,750,931 common stock purchase warrants that are required to be accounted for as liabilities pursuant to ASC 815 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 the Company’s functional currency. Pursuant to the guidance of ASC 815, warrants having an exercise price denominated in a currency other than the functional currency of the Company are required to be accounted for as liabilities are accounted for at their respective fair values, with the change in fair value recorded on the consolidated statement of operations as other income. The warrants having an exercise price denominated in a currency other than the functional currency of the Company that are required to be accounted for as liabilities are summarized as follows for the periods ended December 31, 2015 and 2014: Nine months ended December 31, 2015 $ Nine months ended December 31, 2014 $ Fair value of warrants, beginning of the period - - Issuance 739,190 - Change in fair value of warrants during the period (387,871) - Fair value of warrants, end of the period 351,319 - The fair value of the warrants issued during the periods ended December 31, 2015 and 2014 were estimated using the Black-Scholes pricing model with the following weighted average assumptions: December 31, 2015 December 31, 2014 Stock price $0.73 - Exercise Price $1.44 - Expected life 3.0 years - Expected volatility 67.85% - Risk – free interest rate 0.96% - Dividend rate 0.00% - The warrants 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 warrants 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. | 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 |