2012 Annual Report - Prometic - Life Science, Inc.

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Warrants and rights Expiry date Exercise price to acquire shares 375,000 April 2013 $0.22 1,454,546 October 2013 $0.18 1,945,454 November 2013 $0.18 1,861,545 December 2013 $0.18 2,857,139 January 2014 $0.14 909,090 March 2014 $0.18 1,254,545 April 2014 $0.18 3,636,362 May 2014 $0.18 545,454 June 2014 $0.18 2,857,139 February 2015 $0.14 14,495,452 February 2017 $0.47 30,296,036 February 2017 $0.47 The Company uses the Black-Scholes option pricing model to calculate the fair value of warrants and rights to acquire shares. During the year ended December 31, 2012, 9,202,590 warrants were issued having a fair value of $1,181 and expiring from March 2014 to February 2015. During the year ended December 31, 2011, 8,118,684 warrants were issued having a fair value of $999 and expiring in October 2013, November 2013, December 2013 and January 2014. c) Stock options: The Company has established a stock option plan for its directors, officers and employees or service providers. The plan provides that the aggregate number of shares reserved for issuance at any time under the plan and any other employee incentive plans may not exceed 15,913,317 common shares. The new options issued may be exercised over a period not exceeding five years and one month from the date they were granted (with the exception of certain options which are either immediately vested on grant, or vest after one year from grant, most options vest 20% per annum, after one year following the date at which they were granted or immediately as they are granted). The exercise price is based on the average strike price of the five business days prior to the grant. As at December 31, 2012, the number of options still available to be issued is 2,896,179 (4,116,666 as at December 31, 2011). The following table summarizes the changes in the number of stock options outstanding over the last two years. Options Weighted average exercise price per share Total number of options as at December 31, 2010 8,987,451 0.33 Granted 2,765,750 0.14 Exercised (100,000) 0.17 Forfeited (127,900) 0.24 Expired (471,250) 0.37 Total number of options as at December 31, 2011 11,054,051 0.28 Granted 3,957,000 0.13 Forfeited (224,929) 0.19 Expired (2,511,584) 0.51 Total number of options as at December 31, 2012 12,274,538 0.19 PROMETIC LIFE SCIENCES INC. 46 Weighted average remaining Weighted Weighted Range of Number contractual life average Number average exercise price outstanding (in years) exercise price exercisable exercise price 0.11 - 0.18 10,181,621 3.33 0.15 7,081,421 0.15 0.19 - 0.40 2,092,917 0.70 0.40 1,804,417 0.40 12,274,538 2.88 0.19 8,885,838 0.20
d) Stock-based compensation: The Company uses the Black-Scholes option pricing model (a binomial model) to calculate the fair value of options at the date of grant, using the following assumptions: The fair value of each option granted was estimated on the grant date for purposes of determining stock-based compensation expense using the binomial option pricing model. The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices over a historical period equal to the expected life of the option. The weighted average inputs into the model and the resulting grant date fair values were as follows: Years ended December 31, 2012 2011 Expected dividend yield $ 0.00 $ 0.00 Expected volatility of share price 88.52 % 90.16 % Risk-free interest rate 1.32 % 1.72 % Expected life in years 5 years 5 years Weighted average grant date fair value $ 0.09 $ 0.09 A compensation expense of $365 was recorded in the stock-based compensation for the year 2012 ($198 for the year 2011) as a result of stock options granted to directors, officers, employees and consultants. The risk-free rate used in determining the fair value of the share option awards are based on the Government of Canada yield curve. The resulting fair value is expensed over the service period of one to five years on the assumption that 5.35% (5.67% in 2011) of the options will lapse over the service period as employees leave the Company. e) Restricted share units In May 2011, the Company granted a total of 3,200,000 equity-settled restricted share units (“RSUs”) to certain executive officers of the Company, as part of its incentive program designed to align the interests of its executives with those of its shareholders, and in accordance with its Long Term Incentive Plan (“LTIP”). The RSUs only vest upon achievement of various important corporate and commercial objectives that would create significant shareholder value. The expense is evaluated taking into consideration the probability of each objective being reached and the estimated date (which cannot exceed December 31, 2013), upon which it is expected that each objective will likely be reached. A compensation expense of $140 for the year ended December 31, 2012 ($113 for the year ended December 31, 2011) was recorded in the stock-based compensation. 21. RELATED PARTY TRANSACTIONS Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Company and other related parties are disclosed below and in other notes accordingly. Camofi Guarantee On December 5, 2008, the Company entered into an agreement to provide a guarantee (the “Guarantee”) in favour of Camofi Master LDC (“Camofi”), relating to an amended and restated loan agreement (the “Loan”) that Camofi had provided to a company (the “borrower”) whollyowned by a senior officer of the Company. The Loan was originally contracted in December 2007 for the purposes of purchasing shares of the Company. The Guarantee provides that the Company must be prepared to fulfill the borrower’s obligations with respect to the full payment of capital and interest for the Loan if the borrower is unable to do so. Any such payment shall be made within two days of receipt of notice of default from Camofi. Alternatively, the borrower can force Camofi to liquidate some or all of the shares of the Company that are held as collateral to cover the Loan. If called upon under the Guarantee, the Company may chose either to pay in cash or request that the borrower instruct Camofi to liquidate up to 2,300,000 shares of the Company to repay the Loan. PROMETIC LIFE SCIENCES INC. 47
Page 1 and 2: ANNUAL REPORT 2012 We believe in ou
Page 3 and 4: We have + 14 + 28 applications and
Page 5 and 6: WHO WE ARE ProMetic Life Sciences I
Page 7 and 8: On May 15, 2012, ProMetic received
Page 9 and 10: alliance for the manufacturing of o
Page 11 and 12: PROMETIC’S BUSINESS IS ORGANIZED
Page 17 and 18: MANAGEMENT’S DISCUSSION & ANALYSI
Page 19 and 20: Although the Company achieved its f
Page 21 and 22: During the year ended December 31,
Page 23 and 24: FOURTH QUARTER The following inform
Page 25 and 26: Following a consulting agreement en
Page 27 and 28: CONSOLIDATED STATEMENTS OF FINANCIA
Page 29 and 30: CONSOLIDATED STATEMENTS OF CHANGES
Page 31 and 32: NOTES TO CONSOLIDATED FINANCIAL STA
Page 33 and 34: The gain or loss arising on the dis
Page 35 and 36: n) Income taxes The Company uses th
Page 37 and 38: IFRS 12 Disclosure of Involvement w
Page 39 and 40: 11. CAPITAL ASSETS Leasehold Equipm
Page 41 and 42: 13. BANK AND OTHER LOANS 2012 2011
Page 43 and 44: (b) Other loans: 1) Loan for an ini
Page 45 and 46: purposes. Consequently, the loans w
Page 47: 2012 During the year ended December
Page 51 and 52: 22. CAPITAL DISCLOSURES December 31
Page 53 and 54: Fair value hierarchy Financial inst
Page 55 and 56: December 31, 2012 December 31, 2011
Page 57 and 58: The Company has tax losses which ar
Page 59 and 60: d) Acquisition of capital assets an
Page 61 and 62: On March 7, 2013, the share purchas
Page 63 and 64: CORPORATE INFORMATION HEADQUARTERS

2012 Annual Report - Prometic - Life Science, Inc.

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