CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2014 |
CAPITAL STOCK [Text Block] | 8 | CAPITAL STOCK | | | | | | | | | | | | |
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| (a) | Authorized stock | | | | | | | | | | | |
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On July 2, 2013, the Board of Directors, through unanimous written consent, adopted a proposal to amend the Articles of Incorporation to increase the number of authorized shares of common stock to 500,000,000 shares and the number of authorized shares of preferred stock to 100,000,000 shares. The proposal was approved by the stockholders at the Annual General Meeting held on September 5, 2013. |
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| (b) | Preferred stock | | | | | | | | | | | |
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During the year ended December 31, 2005, the Company designated and issued 6,825,000 shares of Series A preferred stock with a par value of $0.001 per share. Each share of preferred stock was convertible into one common share at any time at the holder’s option, subject to the adjustments to the conversion ratio. The preferred stock was unlisted, non-retractable and non-redeemable. The preferred stockholders were entitled to the number of votes equal to the number of whole shares of common stock into which the preferred stock are convertible. The preferred stockholders were further entitled to the same dividends and distributions as the common stockholders. |
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On February 4, 2013, the Company filed with the Nevada Secretary of State a Certificate of Withdrawal of Certificate of Designations, Preferences and Rights of the Series A convertible preferred stock. The Company has no shares of Series A convertible preferred stock outstanding or authorized to be issued. |
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On January 18, 2011, the Company’s Board of Directors adopted a stockholders’ rights plan and pursuant to this plan, the Company entered into a rights agreement (the “ Rights Agreement ”) with its transfer agent, as rights agent of the stockholders. In connection with the adoption of the Rights Agreement, effective January 18, 2011, the Board of Directors declared a dividend distribution of one right (“ Right ”) for each outstanding share of the Company’s common stock, payable to stockholders of record January 28, 2011. Each Right, when exercisable, entitles the registered holder to purchase from the Company one one-thousandth of one share of Series B junior participating preferred stock (“ Series B Preferred Stock ”) at a price of $4.00 per share, subject to adjustment. |
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Pursuant to the rights plan, a total of 500,000 shares of series B preferred stock are reserved for issuance upon exercise of the rights. At December 31, 2014, there were no shares of Series B preferred stock issued and outstanding. |
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| (c) | Common stock | | | | | | | | | | | |
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During the year ended December 31, 2014, the Company: |
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| • | Issued 730,000 shares of common stock at a fair value of $306,600 to management, employees and consultants, under the Management Compensation Pool. Share certificates for 175,000 shares issued to staff in Chile have been distributed, while the remaining share certificates for 555,000 shares issued to consultants and directors and officers have been withheld from distribution. The Board of Directors of the Company elected to place these shares under a voluntary escrow until the Company completes its Environmental Impact Statement (“EIS”). | | | | | | | | | | | |
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| • | Closed the sale of 5,000,000 second tranche units (the “ Second Tranche Units ”) in April 2014 with Million Cheer Investment Limited (“ MCIL ”), a company formed in Hong Kong. The sale of the units was pursuant to a binding Memorandum of Understanding (the “ MOU ”) dated April 10, 2014, entered into with Grand Agriculture Investment Limited (the “ Investor ”), whereby the Investor agreed to purchase a total of 20,000,000 Second Tranche Units. The purchase price for the 5,000,000 Second Tranche Units was $0.40 per unit for gross proceeds of $2,000,000. Each Second Tranche Unit consists of one share of common stock and 90% of one warrant to purchase one share of common stock at $0.55 per share with expiration date of December 31, 2017 (the “ Second Tranche Warrants ”). The Company paid $140,000 in commissions. | | | | | | | | | | | |
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| • | Closed an additional sale of 6,250,000 Second Tranche Units with an accredited investor in August 2014, pursuant to a MOU. The sale price for the 6,250,000 Second Tranche Units was $0.40 per unit for gross proceeds of $2,500,000. Each Second Tranche Unit consists of one share of common stock and a warrant to purchase 90% of one share of common stock at $0.55 per share exercise price with an expiration date of December 31, 2017. The Company paid $175,000 in commissions. | | | | | | | | | | | |
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| • | Issued 70,000 shares of common stock to a former Chief Financial Officer with no cash consideration in November 2014. These shares were measured at a fair market value of $21,000 at the issuance date. | | | | | | | | | | | |
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During the year ended December 31, 2013, the Company: |
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| • | Issued 4,304,418 units for gross proceeds of $3,013,100 by way of a private placement priced at $0.70 per unit. Each unit consisted of one share of common stock and one-half warrant, each whole warrant exercisable at $0.90 until July 25, 2014. | | | | | | | | | | | |
| | The Company paid commissions, finders and legal fees of $250,349. In addition, 215,221 compensation warrants were issued to agents. The terms and conditions of the agent warrants are essentially identical to the terms and conditions of the warrants sold to investors as part of the units, except that the agent warrants had an original expiration date of March 12, 2015. | | | | | | | | | | | |
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| • | Closed the sale of the 5,714,285 First Tranche Units (the “First Tranche Units”) pursuant to the binding MOU dated December 3, 2013, with the Investor. The purchase price per unit for the First Tranche Units was $0.35 per unit for gross proceeds to the Company of $2,000,000. Each First Tranche Unit consisted of one share of the Company’s common stock and one warrant to purchase one share of common stock at $0.45 exercisable until December 31, 2016. The Company paid $12,000 in commissions. | | | | | | | | | | | |
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| (d) | Stock options | | | | | | | | | | | |
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The Company has a stock option plan, adopted in 2005, and a Stock Option/Stock Issuance Plan, adopted in 2010 (individually the “ 2005 Plan ” and the “ 2010 Plan ”, respectively and, collectively, the “ Plans ”). Under the Plans, the Company is authorized to grant options to executive officers and directors, employees and consultants of the Company. The 2005 Plan was originally authorized to grant 3,140,000 shares; the 2010 Plan was originally authorized to issue 4,901,740 shares, which amount is increased at the end of each year to represent 10% of the total outstanding shares at year-end, up to a maximum of 3,800,000. The terms of any stock options granted under the Plans may not exceed five years and the exercise price of any stock option plan granted may not be discounted below the maximum discount permitted under the policies of the Toronto Stock Exchange. |
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The Company has also adopted a management compensation pool (the “pool”) for the benefit of officers, directors and employees of the Company. The pool will consist of 1% of the outstanding shares at the end of each year. |
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In October 2014, the Company granted 1,075,000(2013 – nil) stock options to directors and officers to purchase the common stock of the Company at an exercise price of $0.45 per share. The options were granted subject to and in accordance with the terms of the Company’s 2010 Plan. The options were fully vested and immediately exercisable with expiration dates of December 31, 2017 for 700,000 options and October 2, 2017 for 375,000 options. |
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The fair value of the options granted during the year ended December 31, 2014 has been estimated at the date of grant or the date when it became measurable using the Black-Scholes option pricing model with the following weighted-average assumptions: (i) dividend yield 0.00%; (ii) expected volatility of 64.00%; (iii) risk-free interest rate of 1.01%; and (iv) expected life of three years. The fair market value was determined to be $163,892 and was charged against expenses for the year. The Company has assumed no forfeiture rate. The weighted average grant date fair value of options is $0.15. |
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The following table represents service-based stock option activity during the years ended December 31, 2014 and 2013: |
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| | | 31-Dec-14 | | | 31-Dec-13 | |
| | | | | | Weighted | | | | | | Weighted | |
| | | | | | Average | | | | | | Average | |
| | | Number of | | | Exercise | | | Number of | | | Exercise | |
| | | Shares | | | Price | | | Shares | | | Price | |
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| Outstanding - beginning of year | | 150,000 | | $ | 1.3 | | | 315,000 | | $ | 1.14 | |
| Granted | | 1,075,000 | | | 0.45 | | | - | | $ | - | |
| Expired | | - | | $ | - | | | (165,000 | ) | $ | 1 | |
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| Outstanding and exercisable – end of year | | 1,225,000 | | $ | 0.55 | | | 150,000 | | $ | 1.3 | |
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As at December 31, 2014 and 2013, the following stock options were outstanding and exercisable: |
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| | | Exercise | | | December 31, | | | December 31, | | | | |
| Expiry Date | | Price | | | 2014 | | | 2013 | | | | |
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| 2-Oct-17 | $ | 0.45 | | | 375,000 | | | - | | | | |
| 31-Dec-17 | $ | 0.45 | | | 700,000 | | | - | | | | |
| 1-Oct-17 | $ | 1.3 | | | 150,000 | | | 150,000 | | | | |
| | | | | | 1,225,000 | | | 150,000 | | | | |
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The shares under option at December 31, 2014, were in the following exercise price ranges: |
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| | | | | | | | | Weighted Average | | | | |
| Weighted Average | | Number of Shares | | | Aggregate Intrinsic | | | Remaining Contractual | | | | |
| Exercise Price | | under Option | | | Value | | | Life in Years | | | | |
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| $0.45 - $1.30 | | 1,225,000 | | $ | - | | | 2.6 | | | | |
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The shares under option at December 31, 2013 were in the following exercise price ranges: |
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| | | | | | | | | Weighted Average | | | | |
| Weighted Average | | Number of Shares | | | Aggregate Intrinsic | | | Remaining Contractual | | | | |
| Exercise Price | | under Option | | | Value | | | Life in Years | | | | |
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| $1.30 | | 150,000 | | $ | - | | | 3.75 | | | | |
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| (e) | Stock-based compensation | | | | | | | | | | | |
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During the year ended December 31, 2014, $136,680 (2013 - $164,912) was recognized as stock-based compensation for the 2,000,000 management warrants issued to directors and officers (Note 8(f)). Effective October 29, 2014, these warrants were modified. As a result of the modification, $168,907 (2013 - $nil) representing the unamortized portion of the grant date fair value of the original warrants along with $71,001 (2013 - $nil) representing the incremental fair value of the replacement warrants was recognized as stock-based compensation. The incremental fair value of the replacement warrants were measured using the Black-Scholes option pricing model with the following weighted average assumptions: exercise price of $0.65, risk-free interest rate of 0.93%, expected life of 3 years, an expected volatility factor of 64%, a dividend yield of 0.00% . The replacement warrants are fully vested as a result of the modification. |
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During the year ended December 31, 2014, the Company included bonus shares issuable as a result of achieving certain performance and market conditions (Note 11 and 13). As a result, $47,768 was recognized as stock-based compensation measured at $0.36 per common share as at the contract dates. |
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Total stock-based compensation recognized for shares issued and options and warrants granted for services was as follows: |
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| | | December 31, | | | December 31, | | | December 31, | | | | |
| | | 2014 | | | 2013 | | | 2012 | | | | |
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| Management fees | $ | 630,248 | | $ | 164,912 | | $ | 493,412 | | | | |
| Consulting fees - directors and officers | | 155,400 | | | - | | | 704,025 | | | | |
| Consulting fees | | 96,600 | | | - | | | 153,300 | | | | |
| Professional fees | | 21,000 | | | - | | | - | | | | |
| Office | | 12,600 | | | - | | | 190,530 | | | | |
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| | $ | 915,848 | | $ | 164,912 | | $ | 1,541,267 | | | | |
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| (f) | Warrants | | | | | | | | | | | |
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During the year ended December 31, 2010, the Company issued 2,000,000 warrants to two officers and directors of the Company as compensation, as approved by the Board of Directors in January 2010. These warrants are exercisable at $1.50 per share, expiring December 31, 2015. Effective October 29, 2014, the Company amended these warrants with term changes as follows: |
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| (i) | The original 2,000,000 warrants were cancelled and replaced by the issuance of 600,000 new warrants; | | | | | | | | | | | |
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| (ii) | The expiration date of these warrants was extended to December 31, 2017; and | | | | | | | | | | | |
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| (iii) | The exercise price was reset to $0.65 per share. | | | | | | | | | | | |
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These amended warrants were fully vested. . |
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In March 2013, the Company issued warrants to purchase 2,152,216 shares of common stock, as part of a private placement offering (Note 8(c)). Each whole warrant is exercisable at $0.90 per share until July 25, 2014. In addition, 215,221 compensation warrants were issued to agents. The terms and conditions of the agent warrants are identical to the terms and conditions of the warrants sold to investors as part of the private placement units, except that the agent warrants had an original expiration date of March 12, 2015. |
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On September 5, 2013, the Board of Directors amended all outstanding warrants (except those held by a member of management) to extend the expiration date of the warrants to December 31, 2015. On October 7, 2013, the Board of Directors approved the re-pricing of the exercise price of all outstanding warrants, excluding any warrants held by management, to $0.65. |
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In December 2013, the Company issued warrants to purchase 5,714,286 shares of common stock, as part of a private placement offering (Note 8(c)). Each whole warrant is exercisable at $0.45 until December 31, 2016. |
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In April and August 2014, the Company issued investors warrants to purchase 4,500,000 and 5,625,000 shares of common stock, respectively, as part of a private placement offering (Note 8(c)). Each whole warrant is exercisable at $0.55 until December 31, 2017. |
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Details of stock purchase warrant activity for the years ended December 31, 2014 and December 31, 2013 are as follows: |
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| | | 31-Dec-14 | | | 31-Dec-13 | |
| | | | | | Weighted | | | | | | Weighted | |
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| | | Number | | | Exercise | | | Number | | | Exercise | |
| | | of Warrants | | | Price | | | of Warrants | | | Price | |
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| Outstanding - beginning of year | | 12,762,585 | | $ | 0.69 | | | 4,716,862 | | $ | 1.01 | |
| Issued | | 10,725,000 | | | 0.55 | | | 8,081,723 | | | 0.51 | |
| Expired | | - | | | - | | | (36,000 | ) | | - | |
| Cancelled | | (2,000,000 | ) | | (1.50 | ) | | | | | (1.18 | ) |
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| Outstanding - end of year | | 21,487,585 | | $ | 0.55 | | | 12,762,585 | | $ | 0.69 | |
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As at December 31, 2014 and 2013, the following share purchase warrants were outstanding: |
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| | | | | | December 31, | | | December 31, | | | | |
| Expiry Date | | Exercise Price | | | 2014 | | | 2013 | | | | |
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| 31-Dec-15 | $ | 1.5 | | | - | | | 2,000,000 | | | | |
| 31-Dec-15 | $ | 0.65 | | | 1,770,328 | | | 1,770,328 | | | | |
| 31-Dec-15 | $ | 0.65 | | | 910,534 | | | 910,534 | | | | |
| 31-Dec-15 | $ | 0.65 | | | 2,367,437 | | | 2,367,437 | | | | |
| 31-Dec-16 | $ | 0.45 | | | 5,714,286 | | | 5,714,286 | | | | |
| 31-Dec-17 | $ | 0.65 | | | 600,000 | | | - | | | | |
| 31-Dec-17 | $ | 0.55 | | | 4,500,000 | | | - | | | | |
| 31-Dec-17 | $ | 0.55 | | | 5,625,000 | | | - | | | | |
| | | | | | 21,487,585 | | | 12,762,585 | | | | |