5. Share capital

Authorized

The Company has authorized an unlimited number of common shares participating, voting and without par value. Each holder of common shares is entitled to one vote for each share owned on all matters voted upon by shareholders.

On October 28, 2024, the Company completed a reverse share split at the ratio of 1-for-2, resulting in 3,952,366 common shares after conversion.

Conversion of promissory notes

On May 3, 2024, the Company issued convertible notes in the principal amount of $5,172,500. The convertible notes accrued interest at the rate of 10% per annum, payable in-kind semi-annually in arrears in the form of either cash or common shares of the Company, at the election of the holder, and had a maturity date of December 31, 2025.

Prior to January 1, 2025, the convertible notes would automatically convert to common shares in the event that the Company completed an initial public offering in the United States, at a conversion price equal to the greater of (i) a 20% discount to the initial public offering price and (ii) $4.00; or if there had been a change of control, at a conversion price of $4.00 per common share. On or after January 1, 2025, conversion would be at the option of the holder at a conversion price of $4.00 per common share. The Company had the option to redeem all or any portion of the convertible notes at a price equal to 100% of the outstanding principal plus accrued and unpaid interest up to but not including the date of redemption. In the event of a change of control, the Company would offer to repurchase the convertible notes at a price equal to 101% of the principal plus accrued and unpaid interest up to but not including the date of repurchase. The Company elected to account for the convertible notes in their entirety at fair value through profit and loss.

Subsequently, the note holders were given the option to convert at a conversion price of $4.00 per share prior to July 31, 2024. On June 28, 2024, all of the holders of the convertible notes elected to convert to common shares. The Company paid cash interest of $40,563 and accrued interest of $38,462 was converted, along with the principal amount of $5,172,500, into 1,308,798 common shares.

Private placement

On June 28, 2024, the Company issued 1,461,250 common shares as part of a private placement for total proceeds of $5,845,000 at $4.00 per common share. The company incurred finders' fees of $375,000, which were recognized in equity as deduction from the gross proceeds received.

Regulation A Offering

On March 10, 2025, the Company closed its Tier II Regulation A offering with gross proceeds of $4,200,000. The Company issued 1,490,000 units at a price of $2.80 per unit. Each unit consisted of one common share of the Company and one warrant to purchase one common share (the "Regulation A Warrants"). The Regulation A Warrants have an exercise price of $2.80 per share and will expire 5 years from the date of issuance. The Company incurred total issuance costs of $483,020, including legal fees and placement fees incurred directly related to the issuance. The issuance costs incurred were recognized as a reduction in equity and allocated based on the relative fair values of the Regulation A Warrants and common shares on a standalone basis. The fair values of the common shares was based on the Company's stock price on the day of issuance of $3.40 and the fair value of the Regulation A Warrants was $2.64 per warrant. The Regulation A Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

The fair value of the Regulation A Warrants was estimated using the Black-Scholes model with the following assumptions:

		Issue Date March 10, 2025
Valuation date share price	$	3.40
Exercise price	$	2.80
Dividend yield		-
Risk-free interest rate		3.98%
Expected warrant life		5.00 years
Expected volatility		97.81%

As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised. The Company recorded a receivable of $14,000 related to the warrant exercises which is included in prepaid expenses and other currents on the Company’s condensed consolidated balance sheet as of March 31, 2025.

Initial Public Offering

On November 14, 2024, the Company completed the sale of 970,000 Units, with each Unit (the "Unit") consisting of one common share and one warrant (the "Public Warrants") to purchase one common share at the price of $4.125 per Unit. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the 'Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from the IPO were $4,002,705, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2,218,014, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.

The incremental costs directly associated with the issuance were recognized as a deduction in equity and allocated based on the relative fair values of the Public Warrants and common shares on a standalone basis.

The fair value of the common shares was based on the Company's stock price on the day of issuance of $2.65 and the fair value of the Public Warrants was $1.7419 per warrant. The Public Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

The fair value of the Public Warrants was estimated using the Black-Scholes option pricing model with the following inputs:

		2024
Valuation date share price	$	2.65
Exercise price	$	4.64
Expected dividend yield		-
Risk-free interest rate		4.32%
Expected term (in years)		5 years
Expected volatility		95%

The number of Public Warrants outstanding as of March 31, 2025:

Public Warrants outstanding
Expiry date		Exercise price	Number outstanding
November 15, 2029	$	4.64	1,115,500
March 10, 2030	$	2.80	1,485,000

Standby Equity Purchase Agreement

On February 10, 2025, the Company also announced that it had entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. ("Yorkville"). Pursuant to the SEPA and subject to the satisfaction of certain conditions, Yorkville has committed to purchase the Company's common shares, no par value, in increments (each purchase, an "Advance") up to an aggregate gross sales price of up to $15,000,000 during the 36 months following the date of the SEPA (such shares, the "Shares"). The Shares will be sold at the Company's option pursuant to the SEPA at 97% of the Market Price (as defined pursuant to the SEPA) and purchases are subject to certain limitations set forth in the SEPA. As consideration for Yorkville's commitment to purchase the common shares pursuant to the SEPA, the Company paid Yorkville a structuring fee in the amount of $25,000 and issued to Yorkville 105,840 common shares with a stock price of $2.83 at issuance. These costs together are classified as deferred issuance costs on the accompanying condensed consolidated balance sheet and will be recorded as a reduction of common shares when a financing under the SEPA occurs. As of March 31, 2025, there have been no sales made under the SEPA.