| Additional paid in capital |
6. Additional
paid-in capital
A summary of stock option
activity is as follows:
| |
|
|
| |
Year Ended |
Year Ended |
| |
December 31, 2017 |
December 31, 2016 |
| |
|
Weighted Average |
|
Weighted Average |
| |
Number of Options |
Exercise
Price |
Number of
Options |
Exercise
Price |
| Outstanding, beginning of period |
4,962,301,500 |
$ |
0.013 |
579,000,200 |
$ |
0.015 |
| Granted |
6,500,000 |
|
0.002 |
4,390,001,300 |
|
0.002 |
| Cancelled |
(4,950,000) |
|
(0.061) |
(6,700,000) |
|
(0.030) |
| Outstanding, end of period |
4,963,851,500 |
$ |
0.002 |
4,962,301,500 |
$ |
0.004 |
| |
|
|
|
|
|
|
| Exercisable, end of period |
4,958,201,500 |
$ |
0.002 |
4,960,101,500 |
$ |
0.004 |
During the year ended
December 31, 2017:
On November 27, 2017, the
Company’s Board of Directors approved
| |
· |
the grant of the option to 10 individuals to acquire a total of 6,500,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years. 2,350,000 of the approved options were to a director of the Company and 4,150,000 were to consultants of the Company. |
| |
· |
the life of the option held by 4 consultants to acquire an aggregate of 2,200,000 shares of common stock was extended to November 27, 2022. |
The Company recorded compensation
expense of $194,970 related to the grant of options.
The Company recorded a further
$5,259 in compensation expense related to vesting of stock options granted in previous years.
During the year ended
December 31, 2016:
On July 1, 2016, the Company
and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on
the line of credit provided to the Company from $7,000,000 to $8,500,000 (Note 4). In exchange for Mr. Chan making available the
additional loan of $1,500,000 to the Company, the Company:
| |
· |
reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002; |
| |
· |
granted Mr. Chan and his spouse the right and option to purchase, an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years |
The interest expense recognized related to the
option grant was $7,318,539.
The Company recorded a further
$18,014 in compensation expense related to vesting of stock options granted in previous years.
Outstanding
The options outstanding
at December 31, 2017 and 2016 were as follows:
| |
|
|
|
|
|
| |
|
December 31, 2017 |
|
December 31, 2016 |
| Expiry Date |
|
Options |
|
Exercise Price |
|
Intrinsic Value |
|
Options |
|
Exercise Price |
Intrinsic Value |
| |
|
|
|
|
|
|
|
|
|
|
|
| May 27, 2017 |
|
- |
$ |
0.030 |
|
- |
|
400,000 |
$ |
0.030 |
- |
|
| May 31, 2017 |
|
- |
$ |
0.050 |
|
- |
|
500,000 |
$ |
0.050 |
- |
|
| August 16, 2017 |
|
- |
$ |
0.030 |
|
- |
|
250,000 |
$ |
0.030 |
- |
|
| December 28, 2017 |
|
- |
$ |
0.030 |
|
- |
|
1,000,000 |
$ |
0.030 |
- |
|
| January 28, 2018 * |
|
1,200,000 |
$ |
0.030 |
|
- |
|
1,500,000 |
$ |
0.030 |
- |
|
| March 26, 2018 |
|
500,000 |
$ |
0.030 |
|
- |
|
500,000 |
$ |
0.030 |
- |
|
| April 9, 2018 |
|
500,000 |
$ |
0.030 |
|
- |
|
1,000,000 |
$ |
0.030 |
- |
|
| May 21, 2019 |
|
500,000 |
$ |
0.030 |
|
- |
|
500,000 |
$ |
0.030 |
- |
|
| July 25, 2019 |
|
1,000,000 |
$ |
0.030 |
|
- |
|
1,000,000 |
$ |
0.030 |
- |
|
| August 1, 2019 |
|
1,250,000 |
$ |
0.030 |
|
- |
|
1,250,000 |
$ |
0.030 |
- |
|
| August 26, 2019 |
|
- |
$ |
0.030 |
|
- |
|
1,500,000 |
$ |
0.030 |
- |
|
| January 30, 2020 |
|
2,400,000 |
$ |
0.030 |
|
- |
|
2,900,000 |
$ |
0.030 |
- |
|
| May 29, 2020 |
|
560,000,200 |
$ |
0.002 |
|
- |
|
560,000,200 |
$ |
0.002 |
- |
|
| July 21, 2021 |
|
4,390,001,300 |
$ |
0.002 |
|
- |
|
4,390,001,300 |
$ |
0.002 |
- |
|
| November 27, 2022 |
|
6,500,000 |
$ |
0.020 |
|
- |
|
|
$ |
0.020 |
- |
|
| Total |
|
4,963,851,500 |
$ |
0.002 |
|
- |
|
4,962,301,500 |
$ |
0.002 |
- |
|
Weighted Average Remaining
Contractual Life |
|
3.35 |
|
|
|
|
|
4.38 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
Subsequently expired, unexercised.
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,
2017 |
|
December
31,
2016 |
| |
|
|
|
| Risk-free interest
rate |
2.34% |
|
1.68% |
| Expected life |
5
years |
|
5
years |
| Expected dividends |
0% |
|
0% |
| Expected volatility |
330% |
|
210% |
| Forfeiture
rate |
0% |
|
0% |
The weighted average
fair value for the options granted during 2017 was $0.03 (2016: $0.002).
The
fair value of the stock options granted and vested was allocated as follows:
| |
|
|
|
|
| |
|
December
31, 2017 |
|
December
31,
2017 |
| |
|
|
|
|
|
| Interest
expense |
$ |
- |
$ |
7,318,539 |
| Product
development expense |
|
66,800 |
|
14,267 |
| Professional
expense |
|
52,492 |
|
577 |
| Selling,
general and administration expenses: |
|
80,937 |
|
3,170 |
| |
|
|
|
|
| |
|
$ |
200,229 |
$ |
7,336,553 |
|