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5. Capital Stock
 12 Months Ended
Dec. 31, 2012
Stockholders' Equity Note Disclosure [Text Block]
5.     Capital Stock

a)     Authorized share capital

500,000,000 common shares 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 totaling $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.

On August 15, 2012, a creditor and relative of a Director and Officer exercised their option to acquire 20,000,000 shares of common stock of the Company at an exercise of $0.05 per share. The creditor applied $1,000,000 in accrued payable due to the creditor on their promissory notes and line of credit.

On December 31, 2012, a director of the Company exercised their option to acquire 2,500,000 shares of common stock of the Company at an exercise price of $0.03 per share. As consideration, the Company received a reduction of $75,000 in accrued interest due and payable to a Director and Officer of the Company.

c)     Stock options

During the year ended December 31, 2012:

On June 27, 2012, the 20,000,000 stock options granted to the Chairman on March 6, 2011 were modified as follows:

 
-
All stock options remaining unvested were immediately vested

 
-
The exercise price was reduced from $0.125 per share to $0.07 per share and subsequently reduced to $0.05 per share on December 28, 2012

The compensation expense related to the vesting of the un-vested options was $1,252,386 and the compensation expense related to the modification of the stock options was $1,280.

Furthermore, on June 27, 2012, the Company granted the Chairman an additional 15,750,000 stock options with an exercise price of $0.07 per share and expiry date on March 6, 2016. The compensation expense related to these stock options was $1,130,988.

On June 27, 2012, the 1,000,000 stock options issued to the President of the Company on May 4, 2011 were modified to reduce the exercise price from $0.20 per share to $0.07 per share. The modification of the stock options resulted in no change in compensation expense.

On June 27, 2012, the 100,000 stock options issued to a consultant on May 4, 2011, were modified to reduce the exercise price from $0.20 per share to $0.07 per share. The modification of the stock options resulted in no change in compensation expense.

On June 27, 2012, the Company granted 700,000 stock options to five consultants with exercise prices of $0.07 per share, expiring on June 27, 2017. Of the 700,000 stock options, 500,000 stock options vest on the grant date and 200,000 have the following vesting terms:

-       100,000 vest on May 28, 2013

-       100,000 vest on May 29, 2014

As a result of this grant, the Company incurred $36,730 of stock-based compensation expense which was allocated on the Condensed Consolidated Statements of Operations  i) 13,992 to general & administrative ii) 20,989 to market development and iii) $1,749 to development.

On August 15, 2012, a creditor and relative of a Director and Officer exercised 20,000,000 stock options at an exercise of $0.05 per share, which the Company applied against $139,755 in accrued interest due and payable to the creditor on promissory notes and a line of credit.

On August 21, 2012, the Company granted 500,000 stock options to two newly appointed directors of the Company with an exercise price of $0.06 per share and expiry date on August 16, 2017 and vesting immediately upon the grant date. The compensation expense related to these stock options was $29,975.

On December 28, 2012, the Company:

-   
Reduced the exercise price of 20,000,000 stock options granted to the Chairman on March 6, 2011, from $0.07 per share to $0.05 per share. The compensation expense related to the modification of the stock options was immaterial to recognize;

-   
granted 14,250,000 stock options to the Chairman of the Company with an exercise price of $0.05 per share and expiry date on December 28, 2017 and vesting immediately upon the grant date. The compensation related to these stock options was $612,361;

-   
granted 50,000,000 stock options to the Chairman, in connection with the Company’s credit agreement with the Chairman of the Company providing for a credit facility of $1,500,000 with interest at 1% per month on amounts drawn down. The stock options have an exercise price of $0.03 per share and expiry date on December 28, 2017 and vesting immediately upon the grant date. The compensation expense related to these stock options was $2,148,944;

-   
granted an option to the Company’s President to acquire 1,000,000 shares of our common stock at an exercise price of $0.03 per share to expire on December 28, 2017. The compensation expense related to these stock options was $42,979;

-   
 granted an option to a director of the Company to acquire 2,500,000 shares of our common stock at an exercise price of $0.03 per share to expire on December 28, 2017. The compensation expense related to these stock options was $107,447; and

-   
reduced the exercise price for previously granted stock options to acquire 37,750,000 shares of the Company’s common stock from $0.07 per share to $0.05 per share. There was no additional compensation expense related to this modification of stock options.

On December 31, 2012, a director of the Company exercised 2,500,000 stock options at an exercise price of $0.03 per share, which the Company applied against accrued interest due and payable to a Director and Officer of the Company upon the Company receiving written approval from the Director and Officer to use interest accrued of $75,000 as consideration for the exercise price of the consultant’s 2,500,000 stock options. As a result of this exercise of stock options, the Company issued 2,500,000 shares of common stock.

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; and

-   
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. 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 options for each one 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.

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; and

-   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:

 
Year Ended
Year Ended
 
December 31, 2012
December 31, 2010
 
Number of
 
Weighted Average
Number of
 
Weighted Average
 
Options
 
Exercise Price
Options
 
Exercise Price
Outstanding, beginning of period
62,800,000
$
0.04
13,555,000
$
0.13
Granted
84,700,000
 
0.07
51,350,000
 
0.08
Exercised
(22,500,000)
 
(0.05)
(450,000)
 
(0.10)
Expired
-
$
-
(1,655,000)
 
(0.25)
 
           
Outstanding, end of period
125,000,000
$
0.03
62,800,000
$
0.08
 
           
Exercisable, end of period
125,000,000
$
0.03
50,424,488
$
0.07

The options outstanding at December 31, 2012 and December 31, 2011 were as follows:

   
December 31, 2012
 
December 31, 2011
 
Expiry Date
 
Options
 
Exercise
Price
 
Intrinsic
Value
 
Options
 
Exercise
Price
Intrinsic
Value
 
                     
March 7, 2015
 
20,000,000
$
0.05
 
-
 
20,000,000
$
0.05
0.03
September 30, 2015
 
1,200,000
$
0.25
 
-
 
1,200,000
$
0.25
-
November 29, 2015
 
-
$
0.05
 
-
 
20,000,000
$
0.05
0.03
March 6, 2016
 
35,750,000
$
0.05
 
-
 
20,000,000
$
0.13
-
May 4, 2016
 
1,000,000
$
0.05
 
-
 
1,000,000
$
0.20
-
May 23, 2016
 
100,000
$
0.05
 
-
 
100,000
$
0.20
-
May 27, 2017
 
700,000
$
0.05
 
-
 
-
 
-
-
May 31, 2017
 
500,000
$
0.05
 
-
 
500,000
$
0.25
-
August 16, 2017
 
500,000
$
0.05
 
-
         
December 28, 2017
 
14,250,000
$
0.05
 
-
 
-
 
-
-
December 28, 2017
 
51,000,000
$
0.03
 
-
 
-
 
-
-
Total
 
125,000,000
$
0.07
 
-
 
62,800,000
$
0.08
 
Weighted Average Remaining
Contractual Life
 
3.98
         
3.43
     

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options, based on the $0.03 (December 31, 2011: $0.08) closing stock price of the Company’s common stock on the Over-The-Counter Bulletin Board (OTCBB) on December 31, 2012. As of December 31, 2012 none (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:

 
December 31, 2012
 
December 31, 2011
 
     
Risk-free interest rate
2.52%
 
1.46%
Expected life
5 years
 
5 years
Expected dividends
0%
 
0%
Expected volatility
306%
 
308%
Forfeiture rate
0%
 
0%

The weighted average fair value for the options granted during 2012 was $0.03 (2011: $0.07).

The fair value of the stock options granted was allocated as follows:

   
2012
 
2011
 
       
Interest expense:
       
 
Directors and relatives of Directors
$
5,377,907
$
2,408,193
     
5,377,907
 
2,408,193
 
       
Selling, general and administration:
       
 
Directors and officers
 
180,402
 
209,898
 
Non-employees
 
39,353
 
20,989
     
219,755
 
230,877
 
       
Professional fees:
       
 
Non-employees
 
-
 
43,785
   
$
5,597,662
$
2,682,855