| CAPITAL STOCK | Note
8: Capital Stock 2015 Share Transactions Private placements In January, 2015, the Company entered into
a Securities Purchase Agreement with certain investors for the sale of 7,320,000 units at a purchase price of $0.20 per unit, for
a total purchase price of approximately $1,250,000, net of finders fee and offering expenses of approximately $214,000.
Each unit consisting of (i) one share of the Companys Common Stock, (ii) one Series A warrant to purchase one share of common
stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share of common
stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one share of common
stock (the Series A, B, C, D and E warrants are hereby collectively referred to as the January 2015 Warrants). Series
A warrants are exercisable at $1.50 per share, with a five year term. Series B warrants are exercisable at $0.40 per share, with
a six month term. Series C warrants are exercisable at $1.00 per share, with a five year term. Series D warrants are exercisable
at $0.75 per share only if and to the extent that the Series B warrants are exercised, with a five year term from the date that
the Series B warrants are exercised. Series E warrants are exercisable at $1.25 per share, only if and to the extent that the Series
C warrants are exercised, with a five year term from the date that the Series C warrants are exercised. Pursuant to a placement agent agreement,
the Company agreed to issue warrants to purchase 366,000 common shares with substantially the same terms as the January 2015 Warrants. The Series A warrants were issued with
price reset features. The fair value of these warrants was determined to be $1,346,000 and recognized as a derivative liability. The fair value of Series B, C, D &
E warrants was determined to be $4,635,000 and was included within equity. In March, 2015, the Company entered into
a Securities Purchase Agreement with certain accredited investors for the sale of 5,000,000 units at a purchase price of $0.20
per unit, for a total purchase price of approximately $950,000, net of finders fee and offering expenses of approximately
$50,000. Each unit consisting of (i) one share of the Companys Common Stock, (ii) one Series A warrant to purchase one share
of common stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share
of common stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one
share of common stock (the Series A, B, C, D and E warrants are hereby collectively referred to as the March 2015 Warrants).
The March 2015 Warrants have substantially the same terms as the January 2015 Warrants. Pursuant to a placement agent agreement,
the Company agreed to issue warrants to purchase 125,000 common shares with substantially the same terms as the March 2015 Warrants. The Series A warrants were issued with
price reset features. The fair value of these warrants was determined to be $744,000 and recognized as a derivative liability. The fair value of Series B, C, D &
E warrants was determined to be $2,588,000 and was included within equity. In May 2015, the Company entered into a
restructuring agreement with the investors of the January 2015 and March 2015 private placements, where:
· The exercise price of the Series A warrants was changed from $1.50 per warrant to $0.10 per warrant,
· The exercise price of Series B warrants was changed from $0.40 per warrant to $0.20 per warrant,
· Each warrant of Series B existing prior to the restructuring agreement was replaced with two warrants
of such series,
· The exercise price of the Series C warrants was changed from $1.00 per warrant to $0.50 per warrant,
and
· Each warrant of Series C existing prior to the restructuring agreement was replaced with two warrants
of such series. As a result of the restructuring agreement,
the Company issued an additional 12,320,000 Series B warrants and 12,320,000 Series C Warrants. The incremental fair value of Series A
warrants due to repricing was determined to be $568,000 and recognized as a derivative liability with a corresponding inducement
expense in the Statement of Operations. The incremental fair value of Series B
and Series C warrants due to repricing and increasing the number of warrants was determined to be $7,688,000. The fair value of
these warrants was recognized as additional paid-in capital with a corresponding inducement expense in the Statement of Operations. The fair value was estimated immediately
prior to the date of the restructuring agreement using the Black-Scholes option pricing model with the following weighted average
assumptions:
Share Purchase Warrants Weighted Average Inputs
Date of valuation May 28, 2015
Strike price $ 0.40 1.00
Volatility (annual) 127.00 155.00 %
Risk-free rate .01 - 1.51 %
Contractual term (years) .13 - 4.79
Dividend yield (per share) 0 %
The fair value was estimated immediately
after, on the date of the restructuring agreement, using the Black-Scholes option pricing model with the following weighted average
assumptions:
Share Purchase Warrants Weighted Average Inputs
Date of valuation May 28, 2015
Strike price $ 0.20 0.50
Volatility (annual) 127.00 155.00 %
Risk-free rate .01 - 1.51 %
Contractual term (years) .29 - 4.79
Dividend yield (per share) 0 %
Share Purchase Warrants During the six months ended June 30, 2015, a warrant holder
exercised 5,000,000 of Series C warrants at $0.50 per warrant for a total of $2,500,000. A summary of the Companys share purchase warrants as
of June 30, 2015 and changes during the period is presented below:
Number of Warrants
Weighted Average Exercise Price
Weighted Average Remaining Life
Balance, December 31, 2014 2,659,417 1.83 4.15
Issued 86,730,975 0.54 3.25
Exercised (5,000,000) 0.50 -
Extinguished or expired (7,500) 50.00 -
Balance, June 30, 2015 84,382,892 $ 0.54 3.26 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 February 10, 2015, the Company granted
250,000 stock options at an exercise price of $0.145 per share, of which, 33,333 vested on May 31, 2015 and the remaining vesting
monthly over a nine month period, to a consultant of the Company. The term of the options is five years. The fair value of the
new grant was estimated at $33,000, or $0.133 per option, using the Black-Scholes Option Pricing Model with a risk free interest
rate of 1.52%, a dividend yield of 0%, volatility of 154.6%, and life of 5 years. The expensed portion of the value of these options
during the six months ended June 30, 2015 was $7,635, which was recorded as stock based consultant compensation. On March 6, 2015, the Company granted 150,000
stock options at an exercise price of $0.20 per share, vesting monthly over a twenty four month period, to a director of the Company.
The term of the options is five years. The fair value of the new grant was estimated at $29,000, or $0.194 per option, using the
Black-Scholes Option Pricing Model with a risk free interest rate of 1.70%, a dividend yield of 0%, volatility of 155.2%, and life
of 5 years. The expensed portion of the value of these options during the six months ended June 30, 2015 was $4,850, which was
recorded as stock based management compensation. Share purchase options A summary of the Companys stock
options as of June 30, 2015 and changes during the period is presented below:
Number of Options
Weighted Average Exercise Price
Weighted Average Remaining Life
Balance, December 31, 2013 65,430 18.00 5.04
Issued - - -
Cancelled/Forfeited - - -
Balance, December 31, 2014 65,430 18.00 4.04
Issued 400,000 0.17 4.64
Balance, June 30, 2015 465,430 $ 2.62 4.49 At June 30, 2015, the intrinsic value of
the vested options was equal to $66,000 (2014 - $nil). A summary of the status of the Companys
unvested options as of June 30, 2015 is presented below:
Number of Shares
Weighted Average Grant-Date Fair Value
Unvested, December 31, 2014 278 $ 18.00
Granted 400,000 0.16
Vested (82,685) 0.21
Cancelled - -
Unvested, June 30, 2015 317,593 $ 0.16 |
