6. Stock-based compensation

In 2023, the Company approved the Equity Incentive Plan (the "Plan"). The Plan provides both for the direct award or sale of shares and for the grant of options to purchase shares. Under the plan the total number of shares available for options cannot exceed 10% of the Company's issued and outstanding common shares at the time of any grant. The Company is authorized to issue options to employees, non-employee directors and consultants under the plan.

On June 25, 2024, the Board of Directors approved the acceleration of vesting for all outstanding share options to June 25, 2024, resulting in the Company recognizing the remaining expense for all share options outstanding and unvested as of that date.

On June 13, 2025, the Company granted 100,000 stock options to an employee under the Company's equity incentive plan. The options have an exercise price of $2.60 per share and a term of five years. The options vest in five equal annual installments, with 20,000 options vesting on each anniversary of the grant date.

On July 22, 2025, the Board of Directors of the Company approved the acceleration of vesting for 100,000 share options granted on December 17, 2024, 210,000 share options granted on December 17, 2024, and for 100,000 options granted on June 30, 2025, resulting in the Company recognizing $663,998 of remaining expense for such accelerated share options.

On July 22, 2025, the Company issued 700,000 stock options to individuals of the Company consisting of its directors, officers, and employees. The options are exercisable at $3.08 per share, expire five years from the grant date, and vest quarterly over a one-year period.

On August 29, 2025, the Company issued 25,000 stock options to a director of the Company. The options are exercisable at $1.94 per share, expire five years from the grant date, and vest quarterly over a one year period.

On December 16, 2025, the Company issued 685,000 stock options to individuals of the Company consisting of its directors, officers, and employees. The options are exercisable at $1.80 per share, expire five years from the grant date, and vest quarterly over a one year period.

The following table summarizes option transactions for the Plan:

Number of
options

Weighted
average
exercise price
$

Weighted
average
remaining
contractual life
(years)

Aggregate
intrinsic value
$

Outstanding at December 31, 2023

812,500

0.88

4.82

2.15

Granted

485,000

2.66

Forfeited

(112,500

)

2.22

Outstanding at December 31, 2024

1,185,000

1.47

4.18

1.18

Granted

1,510,000

2.46

4.81

Exercised

(145,000

)

1.11

Forfeited

(45,000

)

2.76

Outstanding at December 31, 2025

2,505,000

2.05

2.75

Exercisable at December 31, 2025

1,313,750

1.81

3.49

Unvested at December 31, 2025

1,191,250

2.33

4.79

The weighted average grant-date fair value of options granted during the years ended December 31, 2025 and December 31, 2024 was $1.80 and C$2.82, respectively. The weighted average grant-date fair value of options forfeited during the year ended December 31, 2025 was 2.44 (December 31, 2024 - C$2.36).

As of December 31, 2025 and December 31, 2024, there were $1,701,722 and $565,986 of unrecognized stock-based compensation cost related to share options outstanding, which is expected to be recognized over a weighted-average period of 2.75 and 2.25 years, respectively.

For the years ended December 31, 2025 and 2024, stock-based compensation expense was $1,512,194 and $713,119, respectively. Stock-based compensation expense has been reported in the Company's consolidated statements of operations and comprehensive loss within the line items 'general and administrative' and 'research and development' expenses.

The following table presents the assumptions that were used in the Black-Scholes option pricing model to determine the fair value of share options granted during the year:

	2025	2024
Expected dividend yield	-	-
Risk-free interest rate	3.68% - 4.02%	2.95% - 4.24%
Expected term (in years)	5 years	5 years
Expected volatility	87.31% - 101.54%	95% - 100%

The expected volatility is based on the share price volatility observed for comparable publicly traded companies over a period similar to the life of the options. The expected option life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the options.