| Stock Options | Note 7. Stock Options On December 30, 2016, the Board of Directors
of the Company adopted the 2017 Stock Option and Stock Bonus Plan (the “2017 Plan”). The Board of Directors adopted
the 2017 Plan as it anticipates utilizing equity compensation as part of its ongoing standard corporate operations and in connection
with its contemplated activities going forward. The aggregate number of shares that may
be issued under the 2017 Plan is 30,000,000 shares subject to adjustment as provided therein. The 2017 Plan includes two
types of options. Options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code
of 1986, as amended are referred to as incentive options. Options which are not intended to qualify as incentive options
are referred to as non-qualified options. As of September 30, 2018, 25,600,000 options
and no shares of common stock have been granted and are outstanding under the 2017 Plan. The 2017 Plan is administered by the Board
of Directors, or a committee appointed by the Board of Directors. In addition to determining who will be granted options
or stock bonuses, the committee has the authority and discretion to determine when options and bonuses will be granted and the
number of options and bonuses to be granted. The committee also may determine a vesting and/or forfeiture schedule for bonuses
and/or options granted, the time or times when each option becomes exercisable, the duration of the exercise period for options
and the form or forms of the agreements, certificates or other instruments evidencing grants made under the 2017 Plan. The
committee may determine the purchase price of the shares of common stock covered by each option. The committee also may impose
additional conditions or restrictions not inconsistent with the provisions of the 2017 Plan. The committee may adopt, amend
and rescind such rules and regulations as in its opinion may be advisable for the administration of the 2017 Plan. In the event that a change, such as a stock
split, is made in the Company’s capitalization which results in an exchange or other adjustment of each share of common stock
for or into a greater or lesser number of shares, appropriate adjustments will be made to unvested bonuses and in the exercise
price and in the number of shares subject to each outstanding option. The committee also may make provisions for adjusting
the number of bonuses or underlying outstanding options in the event the Company effects one or more reorganizations, recapitalizations,
rights offerings, or other increases or reductions of shares of its outstanding common stock. Options and bonuses may provide
that in the event of the dissolution or liquidation of the Company, a corporate separation or division or the merger or consolidation
of the Company, the holder may exercise the option on such terms as it may have been exercised immediately prior to such dissolution,
corporate separation or division or merger or consolidation; or in the alternative, the committee may provide that each option
granted under the 2017 Plan shall terminate as of a date fixed by the committee. The exercise price of any option granted
under the 2017 Plan must be no less than 100% of the “fair market value” of the Company’s common stock on the
date of grant. The exercise period of any option shall not exceed ten years from the date of grant of the option. Any incentive
stock option granted under the 2017 Plan to a person owning more than 10% of the total combined voting power of the common stock
must be at a price of no less than 110% of the fair market value per share on the date of grant and the term shall be for no more
than five years. Stock option transactions are summarized
as follows:
Number of Stock Options
Weighted Average Exercise Price
Weighted Average Fair Value Weighted Average Remaining Life
$ $ (Years)
Outstanding, December 31, 2017 44,100,000 0.06 0.05
Options expired (1,600,000 ) 0.07 0.03
Options granted 1,400,000 0.07 0.09
Outstanding, September 30, 2018 43,900,000 0.06 0.05 2.05 The fair values of the stock options
granted during the nine month periods ended September 30, 2018 and 2017 were estimated using the Black-Scholes Option Pricing
Model for total share-based compensation expense of $614,427 (2017 - $587,077). The weighted average assumptions used
in the pricing model for these options are as follows:
September 30, 2018 September 30, 2017
Risk-free interest rate 1.51 % 1.05 %
Dividend yield 0.00 % 0.00 %
Expected stock price volatility 125.00 % 125.00 %
Expected forfeiture rate 0.00 % 0.00 %
Expected life 3.61 years 3.46 years The following non-qualified stock options
were outstanding and exercisable at September 30, 2018:
Expiry date Exercise Price
Number of Options Outstanding
Number of Options Exercisable
$
February 25, 2020 0.04 2,000,000 -
February 28, 2020 0.04 5,000,000 5,000,000
December 31, 2019 0.08 11,000,000 11,000,000
October 05, 2018 0.08 300,000 300,000
December 31, 2020 0.05 12,200,000 12,200,000
August 31, 2021 0.06 11,000,000 11,000,000
November 14, 2021 0.07 1,000,000 750,000
December 31, 2022 0.06 800,000 600,000
August 31, 2023 0.08 600,000 -
43,900,000 40,850,000 As at September 30, 2018, the aggregate
intrinsic value of the Company’s stock options is $2,209,000 (December 31, 2017 – $272,000). The weighted average fair
value of stock options granted during the nine month period ended September 30, 2018 is $0.09 (2017 - $0.06). |
