8.	SHARE CAPITAL

Authorized

500,000,000 common shares without par value. At December 31, 2015 and 2014 there were 116,313,638 shares issued and outstanding.

Share issuances

During the fourth quarter of 2014, the Company closed a non-brokered private placement financing through the issuance of 18,245,000 common shares issued at C$0.46 per share for gross proceeds of $7,315,917. The financing closed on December 11, 2014. Total share issuance costs for this non-brokered private placement financing amounted to $24,828.

Stock options

The Company adopted an incentive stock option plan in 2006, as amended September 19, 2012 and re-approved on May 28, 2015 at the Company’s Annual General Meeting (the “2006 Plan”). The essential elements of the 2006 Plan provide that the aggregate number of common shares of the Company’s capital stock that may be made issuable pursuant to options granted under the 2006 Plan may not exceed 10% of the number of issued shares of the Company at the time of the granting of the options. Options granted under the 2006 Plan will have a maximum term of ten years. The exercise price of options granted under the 2006 Plan shall be fixed in compliance with the applicable provisions of the TSX Company Manual in force at the time of grant and, in any event, shall not be less than the closing price of the Company’s common shares on the TSX on the trading day immediately preceding the day on which the option is granted, or such other price as may be agreed to by the Company and accepted by the Toronto Stock Exchange. Options granted under the 2006 Plan vest immediately, unless otherwise determined by the directors at the date of grant.

During the year ended December 31, 2015, the Company granted incentive stock options to certain officers, employees and consultants of the Company to purchase a total of 2,135,200 common shares in the capital stock of the Company. All options granted during the years ended December 31, 2015 and 2014 vest as to one-third on the grant date, one-third on the first anniversary, and one-third on the second anniversary.

A summary of the status of the stock option plan as of December 31, 2015 and 2014 and changes during the periods is presented below:

	Year Ended				Year Ended
	December 31, 2015				December 31, 2014
	Number of Options		Weighted Average Exercise Price (C$)		Number of Options		Weighted Average Exercise Price (C$)

Balance, beginning of the year		5,854,000	$	2.68		5,493,000	$	3.57
Granted		2,135,200	$	0.80		2,480,000	$	1.00
Expired		-	$	-		-	$	-
Forfeited		-	$	-		(600,000)	$	3.17
Cancelled		(1,923,000)	$	4.01		(1,519,000)	$	2.97
Balance, end of the year		6,066,200	$	1.60		5,854,000	$	2.68

The weighted average remaining life of options outstanding at December 31, 2015 was 5.1 years.

Stock options outstanding are as follows:

	December 31, 2015						December 31, 2014
Expiry Date	Exercise Price (C$)		Number of Options		Exercisable		Exercise Price (C$)		Number of Options		Exercisable
August 23, 2016	$	-		-		-	$	8.07		600,000		600,000
January 9, 2017	$	-		-		-	$	4.60		30,000		30,000
August 24, 2017	$	3.17		1,675,000		1,675,000	$	3.17		2,275,000		2,275,000
March 14, 2018	$	2.18		319,000		319,000	$	2.18		469,000		312,660
February 25, 2022	$	1.11		1,030,000		686,666	$	1.11		1,360,000		453,333
February 25, 2022	$	0.73		594,000		396,000	$	0.73		690,000		230,000
March 10, 2022	$	1.11		430,000		286,666	$	1.11		430,000		143,333
March 16, 2023	$	1.00		1,260,000		419,999	$	-		-		-
March 16, 2023	$	0.50		728,200		242,733	$	-		-		-
June 9, 2023	$	1.00		30,000		10,000	$	-		-		-
				6,066,200		4,036,064				5,854,000		4,044,326

A summary of the non-vested options as of December 31, 2015 and 2014 and changes during the fiscal years ended December 31, 2015 and 2014 is as follows:

Non-vested options:	Number of options		Weighted average grant-date fair value (C$)
Outstanding at December 31, 2013		1,802,017	$	1.38
Granted		2,480,000	$	0.49
Vested		(2,272,342)	$	1.10
Forfeited		(200,001)	$	1.61
Outstanding at December 31, 2014		1,809,674	$	0.49
Granted		2,135,200	$	0.25
Vested		(1,914,738)	$	0.39
Outstanding at December 31, 2015		2,030,136	$	0.34

At December 31, 2015 there was unrecognized compensation expense of C$164,678 related to non-vested options outstanding. The cost is expected to be recognized over a weighted-average remaining period of approximately 0.82 years.

Share-based payments

During the year ended December 31, 2015, the Company granted 2,135,200 stock options with a fair value of C$540,101, calculated using the Black-Scholes option pricing model. The Company recognized share-based payment expense of $540,468, $1,285,385 and $3,564,273 during the years ended December 31, 2015, 2014 and 2013, respectively.

The following weighted average assumptions were used for the Black-Scholes option pricing model calculations:

	Year ended December 31, 2015			Year ended December 31, 2014

Expected life of options		6 years			6 years
Risk-free interest rate		0.97	%		1.83	%
Expected volatility		80.60	%		81.02	%
Dividend rate		0.00	%		0.00	%
Exercise price (C$)	$	0.80		$	1.00

The expected volatility used in the Black-Scholes option pricing model is based on the historical volatility of the Company’s shares.