21 SHARE-BASED PAYMENTS (CONTINUED) All options granted are in respect of ordinary shares in INOVIQ Limited and confer a right of one ordinary share for each option held. Per the terms and conditions of the Incentive Option Plan, directors retain the right to vary the terms of issued options as long as the variation does not result in a lessening of the holder’s rights. Movement in the number of share options on issue: 2023 2022 Number of Options Weighted Average Exercise Price ($) Number of Options Weighted Average Exercise Price ($) Total Options Outstanding at the beginning of the year 9,336,978 $1.257 1,668,145 $1.412 Granted 650,000* $1.020 8,109,965* $2.388 Forfeited (63,000) $1.264 (184,311) $0.610 Exercised - - (83,778) $0.600 Expired (69,331) $1.440 (173,043) $2.813 Outstanding at year-end 9,854,647* $2.161 9,336,978* $2.229 Exercisable at year-end 7,104,647* $2.131 7,076,311* $2.136 * Includes 5,909,965 options issued to shareholders pursuant to the share placement and SPP completed in August 2021. Options Reserve The number of options granted during the year pursuant to the ESOP was 650,000 (2021: 2,200,000), while no employee share options were exercised (2022: 83,778) and 132,331 either expired or were forfeited during the financial year (2022: 357,354). The value of employee share options issued during the financial year has been calculated by using either a modified binomial or Monte Carlo option pricing model applying the following inputs: Exercise prices $0.82 and $1.08 Underlying share prices Between $0.52 and $0.69 Days to expiration 1,221 to 1,264 Days to vesting 125 to 899 Expected share price volatility Between 85% and 109% Risk free interest rate Between 3.26% and 3.50% Historical volatility is assumed to be indicative of future volatility however future volatility may not replicate historical volatility. The life of the options is based on the contracted expiry date. Recognised share-based payment transactions Share based payment transactions recognised as operating expenses in the statement of comprehensive income during the financial years were as follows: For the year ended 30 June 2023 $ For the year ended 30 June 2022 $ Reversal of option expense for forfeited options that had not vested(i) (53,573) (104,013) Options grant expense for options issued during the year(ii) 338,684 335,480 285,111 231,467 (i) R eversal of option expense for forfeited options that had not vested 63,000 options lapsed without vesting during the financial year (2022: 184,311). (ii) Options grant expense for options issued during the year Notes to the Financial Statements for the year ended 30 June 2023 62 INOVIQ Limited
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