Additional paid-in capital

12 Months Ended

Dec. 31, 2021

7. Additional paid-in capital

Stock options

A summary of stock option activity is as follows:


	Year Ended December 31, 2021						Year Ended December 31, 2020
	Number of Options			Weighted Average Exercise Price			Number of Options			Weighted Average Exercise Price
Outstanding, beginning of year		5,362,701,500			0.004			5,236,401,500		$	0.003
Granted		165,000,000			0.050			139,800,000		$	0.047
Exercised		(800,000	)		(0.015	)		—		$	—
Cancelled		(29,900,000	)		(0.034	)		(13,500,000	)	$	(0.034	)
Outstanding, end of year		5,497,001,500			0.006			5,362,701,500		$	0.004

Exercisable, end of year		5,221,701,500			0.004			5,202,701,500		$	0.003

During the year ended December 31, 2021:

On January 28, 2021, the Company granted the option to acquire an aggregate 32,000,000 shares of common stock at a price of $0.05 per share to six individuals. All of the options will vest according to performance or time-based conditions. Options to acquire 22,000,000 shares of common stock will expire December 31, 2025, and options to acquire 10,000,000 shares of common stock will expire May 17, 2024. As at December 31, 2021, 1,000,000 options have vested to date. The fair value of the options granted totals $1,706,244, of which $573,292 relates to stock options that have time-based vesting conditions and $1,132,952 relates to stock options that have performance vesting conditions. During the current year, $248,189 relates to the stock options with time-based vesting conditions, which was recorded. The remaining fair value of $1,458,055 has not been recorded.

On February 22, 2021, the Company granted the option to acquire an aggregate 5,000,000 shares of common stock at a price of $0.05 per share. These options were granted to three individuals and have an expiry date of May 17, 2024. None of these options have vested to date. The fair value of the options granted totals $225,141. During the current year, $57,730 related to stock options with time-based vesting conditions was recognized. The remaining fair value of $167,411 has not been recorded.

On April 14, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 28,500,000 shares of common stock at a price of $0.05 per share until December 31, 2025 to five individuals. All of the options will vest according to performance or time-based conditions; 200,000 options have vested to date. The fair value of the options granted totals $1,565,812, of which $351,621 relates to stock options that have time-based vesting conditions and $1,214,191 relates to stock options that have performance vesting conditions. During the current year, $88,540 related to the stock options with time-based vesting conditions was recognized. The remaining fair value of $1,477,272 has not been recorded.

On May 12, 2021, the Company’s Board of Directors amended the option to acquire 2,000,000 shares, previously granted on January 28, 2021 to a consultant, to increase the option by 1,000,000 to provide the optionee the option to acquire an aggregate 3,000,000 shares of common stock at a price of $0.05 per share until December 31, 2025. All other terms of the January 28, 2021 grant remain the same and the options are subject to performance vesting conditions. The fair value of the additional 1,000,000 amended options granted totaling $54,940 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On May 31, 2021, the Company granted one consultant the option to acquire 5,000,000 shares of common stock of the Company at a price of $0.05 per share until December 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaling $254,708 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On June 27, 2021, the Company cancelled 7,400,000 stock options with an average exercise price of $0.033.

On June 27, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 21,000,000 shares of common stock at a price of $0.05 per share until June 30, 2026 to four individuals. All of the options will vest according to performance or time-based conditions. The fair value of the options granted totals $1,374,208, of which $26,175 relates to stock options that have time-based vesting conditions and $1,348,033 relates to stock options that have performance vesting conditions. During the current year, $9,816 related to the stock options with time-based vesting conditions was recognized. The remaining fair value of $1,364,392 has not been recorded.

On June 30, 2021, the Company amended the option to acquire 4,365,001,300 shares of common stock granted on July 1, 2016 by extending the expiry date from July 1, 2021 to April 12, 2024. The options were granted in connection with lines of credit provided by the Chairman and his spouse, which are currently outstanding (note 5). All of the options had vested in previous years. The fair value of the amendments totaled $1,287,834 and was recorded during the current period in interest expense.

Effective July 22, 2021, the Company cancelled 22,500,000 stock options exercisable at $0.035 related to the termination of certain contractors and advisors.

On August 27, 2021, the Company granted a member of the Board of Directors the option to acquire 5,000,000 shares of common stock at a price of $0.05 per share until June 30, 2026. The fair value of the options granted totaling $304,692 was fully recorded at grant.

On October 4, 2021, the Company granted two individuals the option to acquire an aggregate 17,500,000 options at an exercise price of $0.05 per share until September 30, 2026; 15,000,000 of the options will vest according to time-based conditions and 2,500,000 will vest according to performance conditions. None of the options have vested to date. The fair value of the options granted totals $1,043,690, of which $894,592 relates to stock options that have time-based vesting conditions and $149,098 relates to stock options that have performance vesting conditions. During the current year, $101,758 related to the stock options with time-based vesting conditions was recognized. The remaining fair value of $941,932 has not been recorded.

On December 10, 2021, the Company granted one creditor the option to acquire 40,000,000 shares of common stock of the Company at a price of $0.05 per share until December 31, 2026 in connection with receiving line of credit financing (note 5). The fair value of the options granted totaled $2,137,286 and was fully recorded upon the Company entering into the financing agreement with the creditor.

On December 10, 2021, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.05 per share until December 31, 2026 subject to performance vesting conditions. The fair value of the options granted totaling $534,321 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

During the year ended December 31, 2021, the Company recorded a further $167,373 in compensation expense related to the vesting of stock options granted in previous years.

During the year ended December 31, 2020:

On April 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock at a price of $0.035 per share for a term of five years. The fair value of the options granted totaling $391,843 was fully recorded at grant.

On May 12, 2020, the Company amended the option to acquire 40,000,000 shares of common stock granted on June 12, 2019 to extend the period of vesting from May 31, 2020 to December 31, 2020. None of these options have vested to date.

On May 18, 2020, the Company granted one consultant the option to acquire 500,000 shares of common stock of the Company at a price of $0.035 per share until May 17, 2024. The fair value of the options granted totaling $18,725 was fully recorded at grant.

On June 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaling $621,853 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On June 5, 2020, the Company granted one sales agent the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the agent enrolling 20,000 patients into the ALRT Diabetes Solution by May 31, 2021. The fair value of the options granted totaling $494,868 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On September 1, 2020, the Company granted 13 individuals the option to acquire an aggregate 74,500,000 options at an exercise price of $0.05 per share; 22,000,000 stock options, which vested at the time of grant, will expire on May 17, 2024 and 52,500,000 stock options, which vest upon achievement of performance conditions, will expire on May 31, 2025. None of the stock options with performance vesting conditions have vested. The fair value of the options granted totals $3,854,619, of which $1,137,397 related to the stock options that have vested was recorded and $2,717,222 related to the options that have not vested was not recorded.

On October 12, 2020, the Company granted eight individuals the option to acquire an aggregate 34,800,000 options at an exercise price of $0.05 per share until May 31, 2025; 18,300,000 vested at the time of grant and 16,500,000 of the stock options granted will vest upon achievement of performance conditions. None of the stock options with performance vesting conditions had vested as at December 31, 2020 and 1,000,000 vested during the year ended December 31, 2021. The fair value of the options granted totaled $2,434,053, of which $1,279,973 related to the stock options that have vested was recorded and $1,154,080 related to the options that have not vested was not recorded.

During the year ended December 31, 2020, the Company recorded a further $79 in compensation expense relating to the vesting of stock options granted in previous years.

Outstanding

The options outstanding at December 31, 2021 and 2020 were as follows:

Schedule of Options Outstanding
	December 31, 2021						December 31, 2020
Expiry Date	Options		Exercise Price		Intrinsic Value		Options		Exercise Price		Intrinsic Value
July 1, 2021		—	$	0.002		0.058		4,365,001,300	$	0.002	$	0.069
November 27, 2022		5,600,000	$	0.015		0.045		6,950,000	$	0.015	$	0.056
January 31, 2023		40,500,000	$	0.015		0.045		40,500,000	$	0.015	$	0.056
June 13, 2023		5,000,000	$	0.015		0.045		5,000,000	$	0.015	$	0.056
October 1, 2023		—	$	0.050		0.010		300,000	$	0.050	$	0.021
February 3, 2024		—	$	0.035		0.025		10,000,000	$	0.035	$	0.036
March 14, 2024		6,650,000	$	0.035		0.025		9,150,000	$	0.035	$	0.036
April 12, 2024		4,925,001,500	$	0.002		0.058		560,000,200	$	0.002	$	0.069
April 12, 2024		3,350,000	$	0.015		0.045		3,900,000	$	0.015	$	0.056
April 12, 2024		200,000	$	0.030		0.030		200,000	$	0.030	$	0.041
May 6, 2024		13,000,000	$	0.035		0.025		13,000,000	$	0.035	$	0.036
May 17, 2024		77,000,000	$	0.050		0.010		62,000,000	$	0.050	$	0.021
May 17, 2024		19,400,000	$	0.035		0.025		25,400,000	$	0.035	$	0.036
June 17, 2024		5,000,000	$	0.050		0.010		5,000,000	$	0.050	$	0.021
June 17, 2024		—	$	0.035		0.025		5,000,000	$	0.035	$	0.036
August 16, 2024		2,500,000	$	0.050		0.010		2,500,000	$	0.050	$	0.021
September 6, 2024		1,000,000	$	0.050		0.010		1,000,000	$	0.050	$	0.021
September 17, 2024		—	$	0.035		0.025		5,000,000	$	0.035	$	0.036
October 3, 2024		3,500,000	$	0.035		0.025		3,500,000	$	0.035	$	0.036
October 24, 2024		2,000,000	$	0.035		0.025		2,000,000	$	0.035	$	0.036
December 11, 2024		120,000,000	$	0.015		0.045		120,000,000	$	0.015	$	0.056
April 1, 2025		10,000,000	$	0.035		0.025		10,000,000	$	0.035	$	0.036
May 31, 2025		20,000,000	$	0.035		0.025		20,000,000	$	0.035	$	0.036
May 31, 2025		87,300,000	$	0.050		0.010		87,300,000	$	0.050	$	0.021
December 31, 2025		56,500,000	$	0.050		0.010		—	$	—	$	—
June 30, 2026		26,000,000	$	0.050		0.010		—	$	—	$	—
September 30, 2026		17,500,000	$	0.050		0.010		—	$	—	$	—
December 31, 2026		50,000,000	$	0.050		0.010		—	$	—	$	—
Total		5,497,001,500	$	0.006		0.054		5,362,701,500	$	0.004	$	0.066

Weighted Average Remaining Contractual Life				2.37						1.05

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


	December 31, 2021		December 31, 2020
Interest expense	$	3,425,120	$	—
Product development expense		222,178		1,156,195
Professional expense		169,382		741,564
Selling, general and administration expenses		586,538		930,258
Fair value of the stock options granted	$	4,403,218	$	2,828,017

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, 2021			December 31, 2020
Risk-free interest rate		0.87	%		0.20	%
Expected life		4.8 years			4.6 years
Expected dividends		0	%		0	%
Expected volatility		278	%		312	%
Forfeiture rate		0	%		0	%

The weighted average fair value for the options granted during 2021 was $0.06 (2020 - $0.06).