The DiaMedica Therapeutics Inc. Amended and Restated Deferred Share Unit Plan (“DSU Plan”) promotes greater alignment of long-term interests between non-executive directors and executive officers of the Company and its shareholders through the issuance of deferred share units (“DSUs”). Since the value of DSUs increases or decreases with the market price of the common shares, DSUs reflect a philosophy of aligning the interests of directors and executive officers by tying compensation to share price performance. For the year ended and there were DSUs or common shares underlying DSUs issued. The Company has reserved for issuance up to common shares under the DSU Plan and DSUs were outstanding at and

 

 

The DiaMedica Therapeutics Inc. Stock Option Plan Amended and Restated the “Option Plan”) allows the Board of Directors from time to time, in its sole discretion, and in accordance with the requirements of the Nasdaq Stock Market, to grant the Company’s directors, officers, employees and certain consultants (as such terms are used in the Option Plan) non-transferable options to purchase common shares. The shareholders approved the adoption of the Option Plan on which was then amended and restated on and The number of common shares reserved for issuance under the Option Plan at any time is equal to the lesser of: (subject to adjustment) and of the issued common shares at the relevant time and the aggregate number of common shares reserved for issuance under any other compensation or incentive mechanism or plan (including deferred share unit plans or employee stock option plans, if any), shall exceed of our issued shares at the relevant time. In addition, the maximum number of common shares that be issued under the Option Plan upon the exercise of incentive stock options within the meaning of Section of the United States Internal Revenue Code of as amended (the “Code”) is shares (subject to adjustment).

 

As of options to purchase common shares were outstanding. Options granted vest at various rates and have terms of up to years. As the TSX Venture Exchange was the principal trading market for the Company’s common shares, all options previously granted under the Option Plan have been priced in Canadian dollars.

 

The aggregate number of common shares reserved for issuance under the Option Plan and the DSU Plan as of was

 

Share-based compensation expense for each of the periods presented is as follows (in thousands):

 

		December 31, 2018				December 31, 2017
Research and development		$	170			$	60
General and administrative			450				349
Total share-based compensation		$	620			$	409

 

We recognize share-based compensation based on the fair value of each award as estimated using the Black-Scholes option valuation model. Ultimately, the actual expense recognized over the vesting period will only be for those shares that actually vest.

 

A summary of option activity is as follows (in thousands except share and per share amounts):

 

		Shares Underlying Options				Weighted Average Exercise Price Per Share (CAD$)				Aggregate Intrinsic Value (CAD$)
Balances at December 31, 2016			427,850			$	7.68			$	187
Granted			127,635				6.11
Exercised			(3,000	)			3.00
Expired/cancelled			(72,450	)			13.29
Forfeited			—				—
Balances at December 31, 2017			480,035			$	6.45			$	674
Granted			196,800				11.08
Exercised			(16,954	)			3.29
Expired/cancelled			—				—
Forfeited			(20,522	)			8.99
Balances at December 31, 2018			639,359			$	7.87			$	—

 

 

A summary of the status of our unvested shares during the year ended and as of is as follows:

 

		Shares Under Option				Weighted Average Grant Date Fair Value Per Share (CAD$)
Unvested at December 31, 2017			216,793			$	3.69
Granted			196,800				9.30
Vested			(150,739	)			4.48
Forfeitures			(20,522	)			7.27
Unvested at December 31, 2018		$	242,332			$	7.45

 

Information about stock options outstanding, vested and expected to vest as of is as follows:

 

				Outstanding, Vested and Expected to Vest												Options Vested and Exercisable
Per Share Exercise Price				Shares				Weighted Average Remaining Contractual Life (Years)				Weighted Average Exercise Price (CAD$)				Options Exercisable				Weighted Average Remaining Contractual Life (Years)
$2.00	-	$2.60			50,000				6.8			$	2.00				50,000				6.8
$2.80	-	$3.20			125,400				6.9				3.00				125,400				6.9
$3.40	-	$5.20			130,405				8.0				5.12				91,239				8.0
$5.40	-	$10.20			98,063				8.5				6.39				50,563				8.5
$10.40	-	$34.00			235,491				8.2				13.86				79,825				5.9
					639,359				7.8			$	7.87				397,027				7.1

 

The cumulative grant date fair value of employee options vested during the years ended and was and respectively. Total proceeds received for options exercised during the years ended and were and respectively.

 

As of and total compensation expense related to unvested employee stock options yet recognized was million and respectively, which is expected to be allocated to expenses over a weighted-average period of and years, respectively.

 

The aggregate intrinsic value of stock options exercised during the years ended and was and respectively.

 

The assumptions used in calculating the fair value under the Black-Scholes option valuation model are set forth in the following table for options issued by the Company for the years ended and

 

		2018					2017
Common share fair value		$8.84	-	$9.33			$5.20	-	$8.40
Risk-free interest rate		2.1	–	2.2%				1.1%
Expected dividend yield			0%					0%
Expected option life		4.8	–	5.0				4.5
Expected stock price volatility		123.5	–	135.7%			84.7	–	156.8%

 

 

We account for stock options granted to nonemployees in accordance with FASB ASC In connection with stock options granted to nonemployees, we recorded and for nonemployee share-based compensation during the years ended and respectively.

 

These amounts were based upon the fair values of the vested portion of the grants. Amounts expensed during the remaining vesting period will be determined based on the fair value at the time of vesting.