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5. Capital Stock
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| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
5. Capital
Stock
a) Authorized
share capital
350,000,000
shares of common stock with a par value of $0.001 per
share
b) Issued
share capital
On
March 6, 2011, 450,000 stock options, with an exercise
price of $0.10 per share, were exercised for a reduction in
advances payable totalling $45,000.
On
October 12, 2011, the Company announced that it had set
aside 10,000,000 common shares (to be issued directly or
upon the exercise incentive stock options) to allocate to
individuals joining the Company in the future, such as
future directors, consultants and members of management.
The shares will be issued to such persons, at such price or
prices as determined by the Board of Directors, or a
Committee thereof duly authorized by the Board.
c) Stock
options
During
the three months ended March 31, 2012:
Pursuant
to the terms of the option agreement with the Chairman of
the Company, as described below, 1,933,848 stock options
have vested for which the Company had recognized expense of
$231,948, representing the fair value as calculated using
the Black-Scholes model.
During
the year ended December 31, 2011:
On
January 3, 2011, the Company granted a creditor, who is a
relative of a Director and Officer of the Company,
20,000,000 stock options of the Company exercisable at
$0.05 per share expiring November 29, 2015. The stock
options were granted in exchange for providing an increase
in the borrowing limit on its line of credit from
$1,000,000 to $2,000,000.
Also
as consideration for providing this additional financing,
the Company has modified the terms of 10,000,000 stock
options granted to the Creditor on March 7, 2010 and
previously modified August 8, 2010. The terms have been
modified as follows:
- Increased
the number of stock options granted from 10,000,000 to
20,000,000
- Reduced
the exercise price of the 20,000,000 stock options granted
from $0.10 per share to $0.05 per share.
The
Company valued the stock-based compensation resulting from
these transactions at $1,493,702.
On
March 6, 2011, the Chairman of the Company established a
line of credit of up to $2.5 million with the Company for
the exclusive purpose of funding the costs of a
comprehensive marketing campaign. Under a related
agreement, also dated as of March 6, 2011, the Chairman was
granted 20,000,000 stock options of the Company exercisable
at $0.125 per share, expiring March 5, 2016. Such options
will vest on the basis of eight (8) options for each one
($1.00) dollar of principal borrowed to meet the costs of
the sales and marketing program. The Company valued the
stock-based compensation resulting from this grant at
$2,400,000. During the year ended December 31, 2011,
7,624,488 stock options have vested for which the Company
had recognized expense of $914,491, representing the fair
value as calculated using the Black-Scholes model. To date,
including those that vested in 2012 as described above,
9,171,513 stock options have vested.
Also
on March 6, 2011, the Company granted 250,000 stock options
to a consultant. The stock options were exercisable at
$0.10 per share for five years from the date of grant.
Furthermore, 200,000 stock options granted to a consultant
on July 1, 2010, were modified as follows:
-
All
200,000 stock options are to vest immediately
-
The
exercise price of the option was reduced from $0.25 per
share to $0.10 per share.
All
450,000 of these stock options were exercised immediately
after the Board of Directors approved the above described
transaction. The Company valued the stock-based
compensation resulting from these transactions at
$44,455.
On
May 4, 2011, the Company granted 1,000,000 stock options to
an officer of the Company for services provided in getting
the Company’s FDA submission completed. The options
are exercisable at $0.20 per share for five years from the
date of grant. The Company valued the stock-based
compensation resulting from this grant at $210,000 and
allocated this to selling, general and administration
expenses.
On
May 24, 2011, the Company granted 100,000 stock options to
a consultant of the Company for services rendered. The
options are exercisable at $0.20 per share for five years
from the date of grant. The Company valued the stock-based
compensation resulting from this grant at $21,000.
A
summary of stock option activity is as follows:
The
options outstanding at March 31, 2012 and December 31, 2011
were as follows:
The
aggregate intrinsic value in the table above represents the
total pre-tax intrinsic value for in-the-money options,
based on the $0.08 (December 31, 2011: $0.08) closing stock
price of the Company’s common stock on the NASDAQ
over-the-counter market (OTC) on March 31, 2012. As of
March 31, 2012, 40,000,000 (December 31, 2011: 40,000,000)
of the stock options outstanding were in-the-money.
The
Company uses the fair value method for determining
stock-based compensation for all options granted during the
fiscal periods. The fair value was determined using the
Black-Scholes option pricing model based on the following
weighted average assumptions (no options were granted
during the period ended March 31, 2012):
The
weighted average fair value for the options granted during
the three months ended March 31, 2012 was $nil (2011:
$0.07).
The
compensation cost of the stock options granted was
allocated as follows:
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