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CAPITAL STOCK | 9 Months Ended
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Sep. 30, 2013
Brokers and Dealers [Abstract] |
CAPITAL STOCK | Note 9: Capital Stock Share Capital Prior to March 27, 2007, the authorized capital of the Company consisted of 50,000,000 common shares with $0.001 par value and 5,000,000 non-voting preferred shares with $0.001 par value. On March 27, 2007, the Company’s Articles of Incorporation were amended to increase the authorized shares of common stock from 50,000,000 shares of common stock to 200,000,000 shares. On June 28, 2007, the Company completed a reverse stock split thereby issuing 1 new share for each 2.5 outstanding shares of the Company’s common stock. Accordingly, the Company’s authorized share capital was decreased from 200,000,000 common shares to 80,000,000 common shares. On January 22, 2009 the authorized shares of common stock increased from 80,000,000 shares to 500,000,000 shares. Effective July 10, 2009, the Company executed a further 1 for 10 reverse stock split while simultaneously reducing the authorized shares of common stock to 50,000,000 common shares with a $0.001 par value. Effective February 21, 2010, the Company increased its authorized shares of common stock from 50,000,000 shares to 150,000,000 common shares. The Company maintained its authorized shares of preferred stock at 5,000,000. All prior period share transactions included in the Company’s stock transactions and balances have been retroactively restated for the transactions described above. 2013 Share Transactions In January 2013, the Company issued 231,332 shares of its common stock for conversion of one of the two November 1, 2012 Notes (Note 5) at a conversion price of $.0662 per share. The fair value of the shares was determined to be $36,550 based on the quoted market price of $0.158 per share. The Company recorded $21,230 as loss on settlement of debt. In February 2013, the Company issued 250,000 common shares to a consultant pursuant to a consulting agreement. The fair value of the shares was determined to be $28,925 based on the quoted market price of $0.116 per share. In February 2013, the Company issued 1,898,588 common shares on a cashless conversion of 3,000,000 warrants at an exercise price of $0.0572. The fair value of the shares was determined to be $246,816 based on the quoted market price of $0.13 per share. In March 2013, the Company issued 100,000 common shares to a consultant pursuant to a consulting agreement. The fair value of the shares was determined to be $10,010 based on the quoted market price of $0.1001 per share. In February and March 2013, the Company received subscription proceeds of $242,950. The subscribers purchased 3,470,709 share units at $0.07 per unit. Each unit consists of one share of Company’s common stock and one warrant exercisable at $0.07, which expires in two years. The fair value of these warrants was determined to be $245,000. During the nine month period ended September 30, 2013, the Company issued 3,176,334 shares of its common stock for conversion of December 14, 2012 Note (Note 5) at a conversion price of $.0603 per share. The fair value of the shares was determined to be $404,849 based on the average quoted market price of $0.1245 per share. The Company recorded $213,316 as loss on settlement of debt. During the nine month period ended September 30, 2013, the Company issued 1,944,444 shares of its common stock for partial conversion of September 18, 2012 Note (Note 5) at an average conversion price of $.036 per share. The fair value of the shares was determined to be $166,667 based on the average quoted market price of $0.0857 per share. The Company recorded $96,667 as loss on settlement of debt. During the nine month period ended September 30, 2013, the Company issued 1,050,000 shares of its common stock for partial conversion of August 8, 2012 Note (Note 5) at an average conversion price of $.0681 per share. The fair value of the shares was determined to be $110,700 based on the average quoted market price of $0.1063 per share. The Company recorded $39,160 as loss on settlement of debt. In April 2013, the Company issued 281,490 shares of its common stock for conversion of the balance of the November 1, 2012 Notes (Note 5) at a conversion price of $.0607 per share. The fair value of the shares was determined to be $28,490 based on the quoted market price of $0.108 per share. The Company recorded $11,059 as loss on settlement of debt. During the nine month period ended September 30, 2013, the Company issued 18,464,921 shares of its common stock for settlement of accounts payable in the amount of $510,572. The fair value of the shares was determined to be $1,101,527 based on the average quoted market price of $0.0597 per share. The Company recorded $585,955 as loss on settlement of debt. During the nine month period ended September 30, 2013, the Company issued 250,000 shares of its restricted common stock under a settlement agreement with a former director of the Company. The fair value of the shares was determined to be $8,175 based on the average quoted market price of $0.0327 per share. The Company recorded $8,175 as stock-based management fee. During the nine month period ended September 30, 2013, the Company issued 5,368,956 shares of its common stock for conversion of October 9, 2012 Convertible Notes (Note 5). The fair value of the shares was determined to be $248,278 based on the average quoted market price of $0.0462 per share. The Company recorded $135,527 as loss on settlement of debt. During the nine month period ended September 30, 2013, the Company issued 3,000,000 shares of its common stock for conversion of the balances of the August 8, 2012 Note and November 20, 2013 Note (Note 5) at an average conversion price of $.021 per share. The fair value of the shares was determined to be $137,200 based on the average quoted market price of $0.0457 per share. The Company recorded $74,200 as loss on settlement of debt. Between July and September 30, 2013, the Company issued 10,818,783 shares of its common stock for conversion of June 19, 2013 Convertible Note (Note 5). The fair value of the shares was determined to be $181,606 based on the average quoted market price of $0.0168 per share. The Company recorded $79,078 as loss on settlement of debt. In August, 2013, the Company issued 5,000,000 shares of its common stock for conversion of July 12, 2013 Convertible Note (Note 5). The fair value of the shares was determined to be $52,500 based on the quoted market price of $0.0105 per share. The Company recorded $24,300 as loss on settlement of debt. In August and September 2013, the Company issued 3,600,000 shares and is obligated to issue additional 2,047,238 shares of its common stock for conversion of November 20, 2012 Convertible Note (Note 5). The fair value of the shares was determined to be $52,960 based on the average quoted market price of $0.0147 per share. The Company recorded $22,748 as loss on settlement of debt. In September, 2013, the Company issued 1,000,000 shares of its common stock for partial conversion of September 18, 2012 Note (Note 5) at an average conversion price of $.005 per share. The fair value of the shares was determined to be $10,500 based on the quoted market price of $0.0105 per share. The Company recorded $5,500 as loss on settlement of debt. In August and September 2013, the Company issued 8,000,000 shares of its common stock as part of the settlement agreement of February 8, 2013. The fair value of the shares was determined to be $110,100 based on the average quoted market price of $0.0138 per share. The Company recorded $110,100 as loss on settlement of debt. 2012 Share Transactions On March 15, 2012, the Company issued 333,334 shares of its restricted common stock to related parties, pursuant to debt settlement agreements to settle $50,000 of outstanding trade payable. At the time of issuance the fair value of the shares was determined to be $50,000 based on the quoted market price of $0.15 per share. On March 15, 2012, the Company issued 400,000 shares of its restricted common stock pursuant to a debt settlement and a consulting agreement. At the time of issuance the fair value of the shares was determined to be $71,200 based on the quoted market price of $0.15 per share. The Company recorded $9,930 as gain on settlement of debt. On March 15, 2012, the Company issued 789,778 shares of its restricted common stock in settlement of accrued interest on the outstanding 2011 Notes. At the time of issuance the fair value of the shares was determined to be $118,467 based on the quoted market price of $0.15 per share. No gain or loss was recorded on settlement. In March 2012, the Company received subscription proceeds of $85,000. The subscribers purchased 733,334 share units at $0.15 per unit. Each unit consists of 1 share of Company’s common stock and half a warrant exercisable at $0.40, which expires in two years. The fair value of these warrants was determined to be $5,133. In April 2012, the Company received subscription proceeds of $345,000. The subscribers purchased 2,300,000 share units at $0.15 per unit. Each unit consists of 1 share of Company’s common stock and half a warrant exercisable at $0.40, which expires in two years. The fair value of these warrants was determined to be $123,000. In April, 2012, the Company issued 1 00,000 shares of its restricted common stock pursuant to a debt settlement and a consulting agreement. At the time of issuance the fair value of the shares was determined to be $18,500 based on the quoted market price of $0.185 per share. The Company recorded $18,758 as gain on settlement. In April 2012, the Company issued 933,333 restricted common shares, at $0.15 per share, for proceeds of $140,000 received in October 2011, in a private placement. In April 2012, the Company issued 1,000,000 common shares to a consultant pursuant to a consulting agreement effective October 1, 2011. In April, 2012, the Company issued 163,334 shares of its restricted common stock in settlement of accrued interest on the outstanding 2011 Notes. At the time of issuance the fair value of the shares was determined to be $24,500 based on the quoted market price of $0.15 per share. No gain or loss was recorded on settlement. In May 2012, the Company issued 14,000,000 common shares to consultants pursuant to a consulting agreement (Note 12). At the time of issuance the fair value of the shares was determined to be $1,918,000 based on the quoted market price of $0.137 per share. In June 2012, the Company issued 35,179 shares of its restricted common stock pursuant to a consulting agreement. The fair value of the shares was determined to be $6,000 based on the quoted market price of $0.17 per share. In August 2012, the Company issued 500,000 shares of its restricted common stock pursuant to a consulting agreement. The fair value of the shares was determined to be $74,000 based on the quoted market price of $0.148 per share. In September 2012, the Company issued 500,000 shares of its restricted common stock to the holder of a promissory note in exchange for the note holder’s agreement to forebear from pursuing collection action on that note (Note 7). The fair value of the shares was determined to be $72,750 based on the quoted market price of $0.146 per share. In November 2012, the Company issued 437,063 shares of its common stock on election by the holder to convert part of a convertible debt (Note 5) at a conversion price of $.0572 per share. The fair value of the shares was determined to be $55,944 based on the quoted market price of $0.128 per share. The Company recorded $30,944 as loss on settlement of debt. In November 2012, the Company issued 597,185 shares of its common stock on election by the holder to convert part of a convertible debt (Note 5) at a conversion price of $.0586 per share. The fair value of the shares was determined to be $63,003 based on the quoted market price of $0.106 per share. The Company recorded $28,003 as loss on settlement of debt. In November 2012, the Company issued 228,479 shares of its common stock on election by the holder to convert part of a convertible debt (Note 5) at a conversion price of $.0601 per share. The fair value of the shares was determined to be $21,591 based on the quoted market price of $0.095 per share. The Company recorded $7,854 as loss on settlement of debt. In December 2012, the Company issued 1,078,477 shares of its common stock as payment of installment of $65,032 for a convertible debt (Note 5) at a conversion price of $.0603 per share. The fair value of the shares was determined to be $96,523 based on the quoted market price of $0.09 per share. The Company recorded $31,491 as loss on settlement of debt. Stock Compensation Plan On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”) which supersedes and replaces the 2007 Stock Plan. The 2009 Plan allows for the issuance of up to 10,000,000 common shares. Options granted under the Plan shall be at prices and for terms as determined by the Board of Directors. On April 30, 2012, the Company granted 250,000 stock options to a management at an exercise price of $0.18 per share, vesting monthly over thirty six month period. The aggregate fair value of the grant was estimated at $45,000, or $0.18 per option, using the Black-Scholes Option Pricing Model with weighted average assumptions as follows: a risk free interest rate of 1.95%, a dividend yield of 0%, an expected volatility of 199.0%, and an expected life of 10 years. On May 8, 2012, the Company granted 250,000 stock options to a consultant at an exercise price of $0.17 per share, vesting monthly over twelve month period. The aggregate fair value of the grant was estimated at $40,000, or $0.17 per option, using the Black-Scholes Option Pricing Model with weighted average assumptions as follows: a risk free interest rate of 1.71%, a dividend yield of 0%, an expected volatility of 199.0%, and an expected life of 10 years. The expensed portion of the value of the vesting options during the nine months ended September 30, 2013 was $43,091 (September 30, 2012 - $106,072) which was recorded as stock based consulting and management fees. During the period, stock-based consulting and management fees also includes share based compensation. Share purchase options A summary of the Company’s stock options as of September 30, 2013 and changes during the period is presented below:
|  | Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Life
| Balance, December 31, 2011 |  |  |  | 6,278,000 |  |  | $ | 0.18 |  |  |  | 6.85 |
| Issued |  |  |  | 500,000 |  |  |  | 0.17 |  |  |  | 9.35 |
| Cancelled/Forfeited |  |  |  | (250,000 | ) |  |  | 0.35 |  |  |  | — |
| Balance, December 31, 2012 |  |  |  | 6,528,000 |  |  |  | 0.18 |  |  |  | 6.05 |
| Issued |  |  |  | — |  |  |  | — |  |  |  | — |
| Cancelled/Forfeited |  |  |  | — |  |  |  | — |  |  |  | — |
| Balance, September 30, 2013 |  |  |  | 6,528,000 |  |  | $ | 0.18 |  |  |  | 5.30 |
At September 30, 2013, the intrinsic value of the vested options was equal to $nil (December 31, 2012 - $nil). A summary of the status of the Company’s unvested options as of September 30, 2013 is presented below:
|  | Number of Shares |  | Weighted Average Grant-Date Fair Value
| Unvested, December 31, 2012 |  |  |  | 379,575 |  |  | $ | 0.18 |
| Granted |  |  |  | — |  |  |  | — |
| Vested |  |  |  | (247,630 | ) |  |  | 0.18 |
| Cancelled/Forfeited |  |  |  | — |  |  |  | — |
| Unvested, September 30, 2013 |  |  |  | 131,945 |  |  | $ | 0.17 |
Share Purchase Warrants In March, 2012, the Company issued 366,668 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.40 per share for an exercise period of up to two years from the issuance date. The warrants were issued pursuant to the private placement of $110,000 and included within equity. The fair value of these warrants was determined to be $5,133, using the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.37%, a dividend yield of 0%, and an expected volatility of 63%. In April, 2012, the Company issued 1,150,000 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.40 per share for an exercise period of up to two years from the issuance date. The warrants were issued pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $123,000, using the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.27%, a dividend yield of 0%, and an expected volatility of 146.6%. In October, 2012, the Company issued 3,000,000 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.25 per share for an exercise period of up to four years from the issuance date. The warrants were issued pursuant to a convertible debt with price adjustment features. The residual fair value of these warrants was determined to be $300,000 and recognized as a derivative liability. In December, 2012, the Company issued 1,000,000 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.10 per share for an exercise period of up to five years from the issuance date. The warrants were issued pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $178,000, using the Black-Scholes Option Pricing Model with an expected life of 5 years, a risk free interest rate of 0.87%, a dividend yield of 0%, and an expected volatility of 199.0%. In March, 2013, the Company issued 3,470,709 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.07 per share for an exercise period of up to two years from the issuance date. The warrants were issued pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $245,000, using the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.24%, a dividend yield of 0%, and an expected volatility of 131.02%. In May, 2013, the Company issued 2,000,000 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.06 per share for an exercise period of up to four years from the issuance date. The warrants were issued pursuant to a convertible debt with price adjustment features. The residual fair value of these warrants was determined to be $96,000 and recognized as a derivative liability. In July, 2013, the Company issued 4,166,667 share purchase warrants to acquire an equivalent number of common shares of the Company, at an exercise price of $0.04 per share for an exercise period of up to five years from the issuance date. The warrants were issued pursuant to a convertible debt with price adjustment features. The residual fair value of these warrants was determined to be $104,000 and recognized as a derivative liability. A summary of the Company’s share purchase warrants as of September 30, 2013 and changes during the period is presented below:
|  | Number of Warrants |  | Weighted Average Exercise Price |  | Weighted Average Remaining Life
Balance, December 31, 2011 |  |  | 12,106,355 |  |  | $ | 0.56 |  |  |  | 2.81 |
Issued |  |  | 5,516,668 |  |  |  | 0.26 |  |  |  | 3.32 |
Exercised, cancelled or expired |  |  | (714,400 | ) |  |  | 2.33 |  |  |  | — |
Balance, December 31, 2012 |  |  | 16,908,623 |  |  | $ | 0.39 |  |  |  | 2.19 |
Issued |  |  | 9,637,376 |  |  |  | 0.05 |  |  |  | 2.52 |
Exercised |  |  | (3,000,000 | ) |  |  | 0.25 |  |  |  | — |
Extinguished or expired |  |  | (3,696,071 | ) |  |  | 0.39 |  |  |  | — |
Balance, September 30, 2013 |  |  | 19,849,928 |  |  | $ | 0.24 |  |  |  | 3.35 |

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- Definition Tabular disclosure of computation of net capital under the SEC Regulations which may include a reconciliation (including appropriate explanations) if material differences exist between the computations made by the independent auditor based on the audited financial statements and the broker-dealer's original unaudited Part II or IIA filing, a statement that a reconciliation is not necessary if no material differences exist between the computations made by the independent auditor based on the audited financial statements and the broker-dealer's unaudited Part II or IIA filing, when different, total assets and total liabilities, as reported in the statement of financial condition, are reconciled to the total current assets and total liabilities, respectively, as reported in the statement of computation of minimum net capital. Disclosure may also include stockholder's equity, stockholders' equity not allowable for net capital, stockholders' equity qualified for net capital, subordinated borrowings allowable in computation of net capital, other deductions or allowable credits and total capital and allowable subordinated borrowings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-BRD -Paragraph 80 -Subparagraph Exhibit 4-8 -IssueDate 2006-05-01 -Chapter 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Rule 15c3 -Number 240 -Section 1 -Paragraph 1 -Article 15c3 -Subsection a + Details
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