Full Press Release Details
CARDIOL THERAPEUTICS INC.
CONDENSED INTERIM FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED
(EXPRESSED IN CANADIAN DOLLARS)
Cardiol Therapeutics Inc.
Condensed Interim Statements of Financial Position
(Expressed in Canadian Dollars)
| As at June 30, 2021 | As at December 31, 2020 | ||||||||||||
| ASSETS | |||||||||||||
| Current assets | |||||||||||||
| Cash and cash equivalents (note 3) | $ | 32,719,238 | $ | 14,025,187 | |||||||||
| Accounts receivable | 113,524 | 5,793 | |||||||||||
| Other receivables | 570,660 | 214,130 | |||||||||||
| Prepaid expenses (note 12) | 2,173,208 | 347,808 | |||||||||||
| Prepaid inventory (note 11(iv)) | 339,051 | 339,051 | |||||||||||
| Inventory | - | 17,968 | |||||||||||
| Total current assets | 35,915,681 | 14,949,937 | |||||||||||
| Non-current assets | |||||||||||||
| Property and equipment (note 4) | 412,535 | 479,554 | |||||||||||
| Intangible assets (note 6) | 421,468 | 463,690 | |||||||||||
| Total assets | $ | 36,749,684 | $ | 15,893,181 | |||||||||
| EQUITY AND LIABILITIES | |||||||||||||
| Current liabilities | |||||||||||||
| Accounts payable and accrued liabilities (note 12) | $ | 2,874,803 | $ | 2,466,262 | |||||||||
| Current portion of lease liability (note 5) | 52,203 | 51,915 | |||||||||||
| Total current liabilities | 2,927,006 | 2,518,177 | |||||||||||
| Non-current liabilities | |||||||||||||
| Lease liability (note 5) | 85,255 | 104,651 | |||||||||||
| Total liabilities | 3,012,261 | 2,622,828 | |||||||||||
| Equity (deficiency) | |||||||||||||
| Share capital (note 7) | 85,526,589 | 51,923,471 | |||||||||||
| Warrants (note 9) | 5,090,206 | 4,460,728 | |||||||||||
| Contributed surplus (note 8) | 10,471,038 | 8,765,773 | |||||||||||
| Deficit | (67,350,410 ) | (51,879,619 ) | |||||||||||
| Total equity (deficiency) | 33,737,423 | 13,270,353 | |||||||||||
| Total equity (deficiency) and liabilities | $ | 36,749,684 | $ | 15,893,181 |
The accompanying notes to the unaudited condensed interim financial statements are an integral part of these financial statements.
Commitments (notes 6 and 11)
Subsequent event (note 14)
Approved on behalf of the Board:
Cardiol Therapeutics Inc.
Condensed Interim Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||
| Sales | $ | 78,760 | $ | - | $ | 78,760 | $ | - | |||||||||||||||||
| Operating expenses (note 12) | |||||||||||||||||||||||||
| Administration | $ | 1,427,133 | $ | 714,185 | $ | 2,846,721 | $ | 1,393,730 | |||||||||||||||||
| Depreciation of property and equipment (note 4) | 33,510 | 36,337 | 67,019 | 71,580 | |||||||||||||||||||||
| Amortization of intangible assets (note 6) | 21,111 | 21,111 | 42,222 | 42,222 | |||||||||||||||||||||
| Corporate communications, marketing and investor relations | 1,561,943 | 216,865 | 3,140,622 | 664,237 | |||||||||||||||||||||
| Research and development | 1,899,860 | 818,059 | 4,509,065 | 1,402,312 | |||||||||||||||||||||
| Salaries and benefits | 591,869 | 648,861 | 1,722,078 | 1,160,392 | |||||||||||||||||||||
| Transfer agent and regulatory | 139,990 | 58,386 | 186,607 | 107,608 | |||||||||||||||||||||
| Share-based compensation (note 8) | 826,653 | 1,070,188 | 2,967,945 | 1,818,881 | |||||||||||||||||||||
| Loss before other income (expenses) | (6,423,309 ) | (3,583,992 ) | (15,403,519 ) | (6,660,962 ) | |||||||||||||||||||||
| Interest income | 25,480 | 13,904 | 42,304 | 33,692 | |||||||||||||||||||||
| Gain (loss) on foreign exchange | (163,114 ) | (54,430 ) | (109,576 ) | 46,707 | |||||||||||||||||||||
| Other income | - | - | - | 7,398 | |||||||||||||||||||||
| Net loss and comprehensive loss for the period | $ | (6,560,943 ) | $ | (3,624,518 ) | $ | (15,470,791 ) | $ | (6,573,165 ) | |||||||||||||||||
| Basic and diluted net loss per share (note 10) | $ | (0.16 ) | $ | (0.13 ) | $ | (0.41 ) | $ | (0.24 ) | |||||||||||||||||
| Weighted average number of common shares outstanding | 40,057,578 | 27,856,029 | 37,346,482 | 26,866,895 |
The accompanying notes to the unaudited condensed interim financial statements are an integral part of these financial statements.
Cardiol Therapeutics Inc.
Condensed Interim Statements of Cash Flows
(Expressed in Canadian Dollars)
| Six Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | ||||||||||||
| Operating activities | |||||||||||||
| Net loss and other comprehensive loss for the period | $ | (15,470,791 ) | $ | (6,573,165 ) | |||||||||
| Adjustments for: | |||||||||||||
| Depreciation of property and equipment | 67,019 | 71,580 | |||||||||||
| Amortization of intangible assets | 42,222 | 42,222 | |||||||||||
| Share-based compensation | 2,967,945 | 1,818,881 | |||||||||||
| Accretion on lease liability | 6,850 | 8,478 | |||||||||||
| Shares for services | 1,092,257 | 20,742 | |||||||||||
| Research and development expenses to be settled through warrant exercise | - | 32,032 | |||||||||||
| Changes in non-cash working capital items: | |||||||||||||
| Accounts receivable | (107,731 ) | 3,730 | |||||||||||
| Other receivables | (356,530 ) | 747,966 | |||||||||||
| Prepaid expenses | (1,825,400 ) | (477,521 ) | |||||||||||
| Inventory | 17,968 | 191,819 | |||||||||||
| Accounts payable and accrued liabilities | 408,541 | 499,367 | |||||||||||
| Net cash used in operating activities | (13,157,650 ) | (3,613,869 ) | |||||||||||
| Investing activities | |||||||||||||
| Purchase of property and equipment | - | (20,102 ) | |||||||||||
| Net cash used in investing activities | - | (20,102 ) | |||||||||||
| Financing activities | |||||||||||||
| Issuance of units | 22,003,200 | 17,250,000 | |||||||||||
| Share issuance costs | (1,378,225 ) | (1,113,684 ) | |||||||||||
| Issuance of warrants, net of issuance costs | 8,147 | - | |||||||||||
| Proceeds from stock options exercised | 2,708,249 | - | |||||||||||
| Proceeds from warrants exercised | 8,536,288 | - | |||||||||||
| Payment of lease liability | (25,958 ) | (24,516 ) | |||||||||||
| Net cash provided by financing activities | 31,851,701 | 16,111,800 | |||||||||||
| Net change in cash and cash equivalents | 18,694,051 | 12,477,829 | |||||||||||
| Cash and cash equivalents, beginning of period | 14,025,187 | 6,956,203 | |||||||||||
| Cash and cash equivalents, end of period | $ | 32,719,238 | $ | 19,434,032 |
The accompanying notes to the unaudited condensed interim financial statements are an integral part of these financial statements.
Cardiol Therapeutics Inc.
Condensed Interim Statements of Changes in Equity (Deficiency)
(Expressed in Canadian Dollars)
| Share capital | Warrants | Contributed surplus | Deficit | Total | |||||||||||||||||||||||||||||||||
| Number | Amount | ||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | 25,877,686 | $ | 39,413,506 | $ | 1,731,250 | $ | 4,765,965 | $ | (31,238,684 ) | $ | 14,672,037 | ||||||||||||||||||||||||||
| Issuance of units | 6,900,000 | 13,446,249 | 3,803,751 | - | - | 17,250,000 | |||||||||||||||||||||||||||||||
| Share issuance costs | - | (1,263,357 ) | 149,673 | - | - | (1,113,684 ) | |||||||||||||||||||||||||||||||
| Fair value of warrants expired | - | - | (35,144 ) | 35,144 | - | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | 1,818,881 | - | 1,818,881 | |||||||||||||||||||||||||||||||
| Shares for services | 6,914 | 20,742 | - | - | - | 20,742 | |||||||||||||||||||||||||||||||
| Fair value of warrants earned | - | - | 32,032 | - | - | 32,032 | |||||||||||||||||||||||||||||||
| Net loss and comprehensive loss for the period | - | - | - | - | (6,573,165 ) | (6,573,165 ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | 32,784,600 | $ | 51,617,140 | $ | 5,681,562 | $ | 6,619,990 | $ | (37,811,849 ) | $ | 26,106,843 | ||||||||||||||||||||||||||
| Balance, December 31, 2020 | 32,860,291 | $ | 51,923,471 | $ | 4,460,728 | $ | 8,765,773 | $ | (51,879,619 ) | $ | 13,270,353 | ||||||||||||||||||||||||||
| Issuance of units | 6,112,000 | 18,211,000 | 3,792,200 | - | - | 22,003,200 | |||||||||||||||||||||||||||||||
| Issuance of warrants, net of issuance costs | - | - | 8,147 | - | - | 8,147 | |||||||||||||||||||||||||||||||
| Share issuance costs | - | (1,140,691 ) | (237,534 ) | - | - | (1,378,225 ) | |||||||||||||||||||||||||||||||
| Options exercised | 956,666 | 2,708,249 | - | - | - | 2,708,249 | |||||||||||||||||||||||||||||||
| Fair value of options exercised | - | 1,262,680 | - | (1,262,680 ) | |||||||||||||||||||||||||||||||||
| Warrants exercised | 2,672,987 | 8,391,527 | 144,761 | 8,536,288 | |||||||||||||||||||||||||||||||||
| Fair value of warrants exercised | - | 3,078,096 | (3,078,096 ) | - | - | - | |||||||||||||||||||||||||||||||
| Shares for services | 344,650 | 1,092,257 | - | - | - | 1,092,257 | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | 2,967,945 | 2,967,945 | |||||||||||||||||||||||||||||||||
| Net loss and comprehensive loss for the period | - | - | - | (15,470,791 ) | (15,470,791 ) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | 42,946,594 | $ | 85,526,589 | $ | 5,090,206 | $ | 10,471,038 | $ | (67,350,410 ) | $ | 33,737,423 |
The accompanying notes to the unaudited condensed interim financial statements are an integral part of these financial statements.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Nature of operations
Cardiol Therapeutics Inc. (the "Company") was incorporated under the laws of the Province of Ontario on January 19, 2017. The Company's registered and legal office is located at 2265 Upper Middle Rd. E., Suite 602, Oakville, Ontario, L6H 0G5, Canada.
The Corporation is a clinical-stage biotechnology company focused on the research and clinical development of anti- inflammatory therapies for the treatment of cardiovascular disease ("CVD"). The Corporation recently received approval from the U.S. Food and Drug Administration (the "FDA") for its Investigational New Drug ("IND") application to commence a Phase II/III, double-blind, placebo-controlled clinical trial investigating the efficacy and safety of its lead product, CardiolRx , in hospitalized COVID-19 patients with a prior history of, or risk factors for, CVD. CardiolRx is an ultra-pure, high concentration cannabidiol oral formulation that is pharmaceutically produced, manufactured under cGMP, and is THC free (<10 ppm).
Cardiol is planning a Phase II international trial of CardiolRx in acute myocarditis, a condition caused by inflammation in heart tissue, which remains the most common cause of sudden cardiac death in people less than 35 years of age and is developing a subcutaneous formulation of CardiolRx for the treatment of inflammation in the heart that is associated with the development and progression of heart failure.
On December 20, 2018, the Company completed its initial public offering (the "IPO") on the Toronto Stock Exchange (the "TSX"). As a result, the Company's common shares commenced trading on that date on the TSX under the symbol "CRDL", and on May 12, 2021, warrants commenced trading under the symbol "CRDL.WT.A". On May 30, 2019, the Company also began trading on the OTCQX Best Market ("OTCQX") under the symbol "CRTPF". On August 10, 2021, the Company's common shares commenced trading on the Nasdaq Capital Market ("Nasdaq") under the symbol "CRDL". Concurrent with the listing on the Nasdaq, the common shares ceased to be quoted on the OTCQX.
Significant accounting policies
Statement of compliance
The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations by IFRIC.
The policies applied in these unaudited condensed interim financial statements are based on IFRSs issued and outstanding as of August 10, 2021, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim financial statements as compared with the most recent annual financial statements as at and for the year ended December 31, 2020. Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending December 31, 2021, could result in restatement of these unaudited condensed interim financial statements.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Cash and cash equivalents
Cash and cash equivalents include a cashable Guaranteed Investment Certificate totaling $61,506 earning interest of 0.1% per annum and maturing on December 4, 2021 (December 31, 2020 - cashable Guaranteed Investment Certificate totaling $61,506 earning interest of 0.1% per annum and maturing on December 4, 2021). The Guaranteed Investment Certificate may be redeemed prior to maturity without penalty.
Property and equipment
| Cost | Right-of- use asset | Equipment | Leasehold improvements | Office equipment | Computer equipment | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | 200,319 | $ | 116,578 | $ | 234,772 | $ | 52,917 | $ | 55,772 | $ | 660,358 | |||||||||||||||||||||||||
| Additions | - | 6,480 | 2,476 | 12,799 | 18,847 | 40,602 | |||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 200,319 | 123,058 | 237,248 | $ | 65,716 | $ | 74,619 | $ | 700,960 | ||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | 200,319 | $ | 123,058 | $ | 237,248 | $ | 65,716 | $ | 74,619 | $ | 700,960 |
| Accumulated Depreciation | Right-of- use asset | Equipment | Leasehold improvements | Office equipment | Computer equipment | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | 23,373 | $ | 23,996 | $ | 4,192 | $ | 3,816 | $ | 20,934 | $ | 76,311 | |||||||||||||||||||||||||
| Depreciation for the year | 40,068 | 29,056 | 50,840 | 11,828 | 13,303 | 145,095 | |||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | 63,441 | $ | 53,052 | $ | 55,032 | $ | 15,644 | $ | 34,237 | $ | 221,406 | |||||||||||||||||||||||||
| Depreciation for the period | 20,034 | 10,501 | 25,420 | 5,007 | 6,057 | 67,019 | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | 83,475 | $ | 63,553 | $ | 80,452 | $ | 20,651 | $ | 40,294 | $ | 288,425 |
| Carrying value | Right-of- use asset | Equipment | Leasehold improvements | Office equipment | Computer equipment | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | 136,878 | $ | 70,006 | $ | 182,216$ | 50,072 | $ | 40,382 | $ | 479,554 | ||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | 116,844 | $ | 59,505 | $ | 156,796$ | 45,065 | $ | 34,325 | $ | 412,535 |
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
| Carrying Value | |||||||||||||
| Balance, December 31, 2019 | $ | 190,752 | |||||||||||
| Repayments | (50,472 ) | ||||||||||||
| Accretion | 16,286 | ||||||||||||
| Balance, December 31, 2020 | $ | 156,566 | |||||||||||
| Repayments | (25,958 ) | ||||||||||||
| Accretion | 6,850 | ||||||||||||
| Balance, June 30, 2021 | $ | 137,458 | |||||||||||
| Current portion | 52,203 | ||||||||||||
| Long-term portion | $ | 85,255 |
(i) When measuring the lease liability for the property lease that was classified as an operating lease, the Company discounted the lease payments using its incremental borrowing rate. The property lease expires on May 31, 2024 and the lease payments were discounted with a 9% interest rate.
| Cost | Exclusive global license agreement | ||||||||||||
| Balance, December 31, 2019, December 31, 2020, and June 30, 2021 | $ | 767,228 |
| Accumulated Amortization | Exclusive global license agreement | |||||||||
| Balance, December 31, 2019 | $ | 219,094 | ||||||||
| Amortization for the year | 84,444 | |||||||||
| Balance, December 31, 2020 | $ | 303,538 | ||||||||
| Amortization for the period | 42,222 | |||||||||
| Balance, June 30, 2021 | $ | 345,760 |
| Carrying Value | Exclusive global license agreement | ||||||||||||
| Balance, December 31, 2020 | $ | 463,690 | |||||||||||
| Balance, June 30, 2021 | $ | 421,468 |
Exclusive global agreement ("Meros License Agreement")
In 2017, the Company was granted by Meros Polymers Inc. ("Meros") the sole, exclusive, irrevocable license to patented nanotechnologies for use with any drugs to diagnose, or treat, cardiovascular disease, cardiopulmonary disease, and cardiac arrhythmias. Meros is focused on the advancement of nanotechnologies developed at the University of Alberta.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Intangible assets (continued)
Under the Meros License Agreement, Cardiol agreed to certain milestones and milestone payments, including the following: (i) payment of $100,000 upon enrolling the first patient in a Phase IIB clinical trial designed to investigate the safety and indications of efficacy of one of the licensed technologies; (ii) payment of $500,000 upon enrolling the first patient in a Pivotal Phase III clinical trial designed to investigate the safety and efficacy of one of the licensed technologies; (iii) $1,000,000 upon receiving regulatory approval from the FDA for any therapeutic and/or prophylactic treatment incorporating the licensed technologies. Cardiol also agreed to pay Meros the following royalties:
(a) 5% of worldwide proceeds of net sales of the licensed technologies containing cannabinoids, excluding non-royalty sub-license income in (b) below, that Cardiol receives from human and animal disease indications and derivatives as outlined in the Meros License Agreement;
(b) 7% of any non-royalty sub-license income that Cardiol receives from human and animal disease indications and derivatives for licensed technologies containing cannabinoids as outlined in the Meros License Agreement;
(c) 3.7% of worldwide proceeds of net sales that Cardiol receives from the licensed technology in relation to human and animal cardiovascular and/or cardiopulmonary disease, heart failure, and/or cardiac arrhythmia diagnosis and/or treatments using the drugs, excluding cannabinoids included in (a) above, outlined in the Meros License Agreement; and
(d) 5% of any non-royalty sub-license income that Cardiol receives in relation to any human and animal heart disease, heart failure and/or arrhythmias indications, excluding cannabinoids included in (b) above, as outlined in the Meros License Agreement.
In addition, as part of the consideration under the Meros License Agreement, Cardiol (i) issued to Meros 1,020,000 common shares; and (ii) issued to Meros 1,020,000 special warrants convertible automatically into common shares for no additional consideration upon the first patient being enrolled in a Phase 1 clinical trial using the licensed technologies as described in the Meros License Agreement.
a) Authorized share capital
The authorized share capital consisted of unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Share capital (continued)
b) Common shares issued
| Number of common shares | Amount | ||||||||||||
| Balance, December 31, 2019 | 25,877,686 | $ | 39,413,506 | ||||||||||
| Issuance of units (ii) | 6,900,000 | 17,250,000 | |||||||||||
| Shares for services (i) | 6,914 | 20,742 | |||||||||||
| Share issuance costs (ii) | - | (1,263,357 ) | |||||||||||
| Fair value of warrants (note 9) | - | (3,803,751 ) | |||||||||||
| Balance, June 30, 2020 | 32,784,600 | $ | 51,617,140 | ||||||||||
| Balance, December 31, 2020 | 32,860,291 | $ | 51,923,471 | ||||||||||
| Shares for services (iii) | 344,650 | 1,092,257 | |||||||||||
| Issuance of units (iv) | 6,112,000 | 22,003,200 | |||||||||||
| Fair value of warrants (iv) | - | (3,792,200 ) | |||||||||||
| Stock options exercised (note 8) | 956,666 | 2,708,249 | |||||||||||
| Fair value of stock options exercised (note 8) | - | 1,262,680 | |||||||||||
| Warrants exercised (note 9) | 2,672,987 | 8,391,527 | |||||||||||
| Fair value of warrants exercised (note 9) | - | 3,078,096 | |||||||||||
| Share issuance cost (iv) | - | (1,140,691 ) | |||||||||||
| Balance, June 30, 2021 | 42,946,594 | $ | 85,526,589 |
(i) March 30, 2020, the Company issued 6,914 common shares, with a fair value of $20,742, in exchange for $28,140 of services rendered. The valuation was based on the fair value of the shares issued. As a result, the Company recorded other income of $7,398.
(ii) On June 4, 2020, the Company completed its short form prospectus offering by issuing 6,900,000 common share units at $2.50 per unit for gross proceeds of $17,250,000. Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable into one common share at the price of $3.25 per share for a period of two years from closing, subject to accelerated expiry if, at any time, the volume weighted average trading price of the common shares is equal to or greater than $4.50 for any 10 consecutive trading day period.
The fair value of $3,803,751 was assigned to the 3,450,000 warrants issued as part of the units based on as estimated by using a fair value market technique incorporating the Black-Scholes option pricing model, using the following assumptions: a risk-free interest rate of 0.32%; an expected volatility factor of 85%; an expected dividend yield of 0%; and an expected life of 2 years.
The underwriters were paid cash fees of $735,000 and 294,000 compensation warrants. Each compensation warrant entitles the holder to acquire one additional common share unit of the Company at $2.50 for a period of 24 months from closing. The grant date fair value of $507,059 was assigned to the compensation warrants issued as estimated by using a fair value market technique incorporating the Black-Scholes option pricing model, using the following assumptions: a risk-free interest rate of 0.32%; an expected volatility factor of 85%; an expected dividend yield of 0%; and an expected life of 2 years.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Share capital (continued)
(iii) During the six months ended June 30, 2021, the Company issued the following shares for services: January 11, 2021, the Company issued 12,054 common shares with a fair value of $33,750; January 27, 2021, the Company issued 2,500 common shares with a fair value of $7,975; March 8, 2021, the Company issued 106,618 common shares with a fair value of $441,400; March 19, 2021, the Company issued 37,000 common shares with a fair value of $166,500; March 31, 2021, the Company issued 2,478 common shares with a fair value of $11,250; April 12, 2021, the Company issued 53,500 common shares with a fair value of $228,980 and 100,000 restricted common shares that contain service-based conditions and vest 1/4 on each of September 29, 2021, March 29, 2022, September 29, 2022 and March 29, 2023. The grant date fair value of these shares is equal to $428,000, of which $113,102 has been expensed; and May 19, 2021, the Company issued 30,500 common shares with a fair value of $89,300. The fair value of the shares were determined to be equal to the value of the services rendered.
(iv) On May 12, 2021, the Company completed its short form base shelf prospectus offering by issuing 6,112,000 common share units at $3.60 per unit for gross proceeds of $22,003,200, as well as an additional 433,400 warrants at $0.02 per warrant for $8,668. Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable into one common share at the price of $4.60 per share for a period of three years from closing. The underwriters were paid cash fees of $1,025,590.
The fair value of $3,792,200 was assigned to the 3,056,000 warrants issued as part of the units based on as estimated by using a fair value market technique incorporating the Black-Scholes option pricing model, using the following assumptions: a risk-free interest rate of 0.53%; an expected volatility factor of 81%; an expected dividend yield of 0%; and an expected life of 3 years.
Share-based payments
The Company has adopted an Omnibus Equity Incentive Plan in accordance with the policies of the TSX, which permits the grant or issuance of options, Restricted Share Units ("RSUs"), Performance Share Units ("PSUs") and Deferred Share Units ("DSUs"), as well as other share-based payment arrangements. The maximum number of shares that may be issued upon the exercise or settlement of awards granted under the plan may not exceed 15% of the Company's issued and outstanding shares from time to time. The Board of Directors determines the price per common share and the number of common shares which may be allotted to directors, officers, employees, and consultants, and all other terms and conditions of the option, subject to the rules of the TSX.
Cardiol Therapeutics Inc.
Notes to Condensed Interim Financial Statements
Three and Six Months Ended June 30, 2021
(Expressed in Canadian Dollars)
Share-based payments (continued)