FENNEC PHARMACEUTICALS INC. Stock Compensation Disclosure

4.      Stock Options

The Compensation Committee of the Board of Directors administers the Company’s 2020 Equity Incentive Plan (the “Plan”). The Compensation Committee designates eligible participants to be included under the Plan and approves the number of options, restricted stock, and other awards to be granted from time to time under the Plan. The maximum number of common shares issuable under the Plan is the number of shares that represents twenty-five percent (25%) of the total number of all the Company’s issued and outstanding common shares. Based upon the current shares outstanding, a maximum of 6.9 million of our common shares are authorized for issuance under the Plan. The option exercise price for all options issued under the Plan is based on the fair value of the underlying shares on the date of grant. All options vest within three years or less and are exercisable for a period of ten years from the date of grant. The Plan allows the issuance of Canadian and U.S. dollar grants. A summary of the stock option transactions, U.S. dollar grants, for the years ended December 31, 2024 and 2023 is below. Unrecognized stock-based compensation at December 31, 2024 was $5,020 that will be recognized over a weighted-average service period of 2.3 years. There are no outstanding $CAD denominated options.

Summary of $USD Option Activity

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Summary of $USD Option Remaining Life

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Stock compensation expense for the years ended December 31, 2024, and 2023 was $5,061 and $5,354, respectively. These amounts have been included in general and administrative expenses for the respective periods. The weighted average fair value per share of options granted and or vested during the years ended December 31, 2024, and 2023 was $4.55 and $4.73, respectively. The intrinsic value (being the difference between the share price at December 31, 2024 and exercise price) of stock options exercisable at December 31, 2024 was $3,331. The intrinsic value of options exercised during the year ended December 31, 2024, was $1,820.

The fair value of all options vested during the year ended December 31, 2024, was $2,622. The fair values of options granted in years ended December 31, 2024 and 2023 were estimated on the date the options were granted based on the Black-Scholes option-pricing model, using the following weighted average assumptions for all options with a ten-year expiration:

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The Company uses the historical volatility and adjusts for available relevant market information pertaining to the Company’s share price.

Restricted Share Units Activity

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The Plan allows for the issuance of restricted share units (“RSUs”). The following is a summary of RSU activity for the years ended December 31, 2024, and 2023. Prior to June 2021, there was no activity involving RSUs. During the year ended December 31, 2024, 316 RSUs were awarded, 30 were forfeited and 180 were released from restriction. The Company recognized $1,382 in RSU expense for the year ended December 31, 2024, and $1,300 for the same period in 2023. Standard vesting of  RSUs is over three years with 1/3 vesting on the first anniversary date of the grant and then 1/24 on the last day of each subsequent month. The Compensation Committee may also award RSUs with alternative vesting.

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