5. Capital Stock

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

5. Capital Stock

5. Capital Stock

a) Authorized share capital

2,000,000,000 shares of common stock with a par value of $0.001 per share and 500,000,000 shares of preferred stock with a par value of $0.001 per share.

b) Issued share capital

During the period ended September 30, 2015:

There were no issuances for the nine month period ended September 30, 2015.

During the year ended December 31, 2014:

On May 21, 2014, consultants of the Company exercised their option to acquire 1,550,000 shares of common stock of the Company at an exercise price of $0.03 per share. As consideration, the Company retired accounts payable of $135,000, resulting in a gain on settlement of debt of $88,500. The Company received full release of any additional claim to debt.

On August 15, 2014, a director of the Company exercised their option to acquire 1,250,000 shares of common stock of the Company at an exercise price of $0.03 per share. As consideration, the Company retired accrued interest payable of $37,500.

On October 2, 2014, a consultant of the Company exercised their option to acquire 500,000 shares of common stock of the Company at an exercise price of $0.05 per share. As consideration, the Company retired accounts payable of $25,000 and received a full release of any additional claim to debt.

c) Stock options

During the period ended September 30, 2015:

On January 30, 2015, the Company granted the option to acquire 4,500,000 shares of common stock of the Company at a price of $0.03 per share for five years to 14 employees and consultants of the Company. The option to acquire the shares of common stock vest as follows:

• 650,000 at January 30, 2016,

• 650,000 at January 30, 2017,

• 1,050,000 at January 30, 2018,

• 1,050,000 at January 30, 2019, and

• 1,100,000 at January 30, 2020.

Included above, the respective option to acquire 500,000 shares of common stock granted to two consultants of the Company will only vest if the individual accepts a full-time role with the Company. The compensation expense recognized related to the vested stock options was $7,974. The compensation expense related to the unvested stock options to be recognized if the options vest is $34,884.

On April 22, 2015, the Company’s Board of Directors reduced the exercise price of the option to acquire 12,900,000 shares of common stock held by 21 consultants, officers, directors and employees of the Company from $0.03 per share to $0.015 per share. To date, none of the option amendments have been finalized.

On May 29, 2015, in connection with the amendment to increase the borrowing limit on the line of credit provided by the Chairman to the Company, the Company:

• granted the right and option to purchase, an additional 330,000,100 shares of common stock at a price of $0.015 per share until May 29, 2020, and

• reduced the exercise price of the option to acquire 230,000,100 shares of common stock from $0.03 to $0.015 and extended the expiry date of the option to acquire those 230,000,100 shares of common stock to May 29, 2020.

The compensation expense recognized related to the option grants was $3,184,459. There was no additional compensation expense recognized as a result of the modification to the exercise price of the previously granted options.

The Company recorded $26,327 in compensation expense related to vesting of stock options granted in previous periods.

During the year ended December 31, 2014:

On February 7, 2014, the Company:

1) granted the option to acquire 300,000 shares of common stock at an exercise price of $0.03 per share to a consultant of the Company. The option to acquire the shares of common stock vest as follows:

• 150,000 at the time of the grant, and

• 150,000 one year from the date of grant.

The compensation expense recognized related to this option grant was $17,940.

2) granted the option to acquire 400,000 shares of common stock at an exercise price of $0.03 per share to a consultant of the Company. The option to acquire the shares of common stock vest as follows:

• 100,000 at the time of grant, and

• three respective performance conditions, each for the option to acquire 100,000 shares, with respect to sales and partnership arrangements for the Company’s Health-e-Connect product.

The compensation expense recognized related to this option grant was $2,990. The compensation expense related to the unvested stock options to be recognized if the options vest is $8,970.

On April 1, 2014, the Company:

a) agreed to the following in exchange for amending the borrowing limit on its line of credit with the Chairman, increasing it from $4,000,000 to $5,500,000:

i. granted the option to acquire 83,333,400 shares of common stock of the Company at a price of $0.03 per share for a term of five years,

ii. modified the exercise price of the options to acquire 35,750,000 shares of common stock of the Company, granted June 2012, from $0.05 per share to $0.03 per share,

iii. modified the exercise price of the options to acquire 14,250,000 shares of common stock of the Company, granted December 2012, from $0.05 per share to $0.03 per share,

iv. modified the exercise price of the options granted January 2011 to the spouse of the Chairman, to acquire 20,000,000 shares of common stock of the Company from $0.05 per share to $0.03 per share, and

v. granted the option to the spouse of the Chairman to acquire 26,666,700 shares of common stock of the Company at an exercise price of $0.03 per share for a term of five years.

The compensation expense recognized related to the option grants was $3,280,929. There was no additional compensation expense recognized as a result of the modification to the exercise price of the previously granted options. These options were further modified May 29, 2015 as disclosed.

b) reduced the exercise price of 3,200,000 stock options from $0.05 per share to $0.03 per share. There was no additional compensation expense recognized as a result of the modification to the exercise price of these previously granted options. One individual, a Director of the Company, has exercised their option to acquire 1,250,000 shares of common stock which were modified during 2014.

c) allowed 500,000 stock options, with an exercise price of $0.03 per share, to vest. The options were previously to vest if the optionee entered into a full-time employment or equivalent role with the Company. The compensation expense recognized related to this option grant was $19,987.

On April 18, 2014, the Company:

a) granted the option to acquire 1,500,000 shares of common stock at a price of $0.03 per share for a term of five years to a Director of the Company. The options vested on May 19, 2014 when the individual assumed the role as President of the Company. The compensation expense recognized related to the option grant was $37,263.

b) granted the option to acquire 500,000 shares of common stock at a price of $0.03 per share for a term of five years to a consultant of the Company. Options vest as follow:

• 100,000 shares vest immediately, and

• 400,000 shares vest upon the completion of a partnership with a specified major multinational pharmaceutical company.

The compensation expense recognized related to this option grant was $2,484. The compensation expense related to the unvested stock options to be recognized if the options vest is $9,937.

On May 21, 2014, the Company:

a) granted a consultant the option to acquire 500,000 shares of common stock at a price of $0.03 per share for a term of five years. Options vest as follow:

• 100,000 shares vest twelve months from the date of the grant,

• 200,000 shares vest twenty four months from the date of the grant, and

• 200,000 shares vest thirty six months from the date of the grant

The compensation expense recognized related to this option grant was $10,029. The compensation expense related to the unvested stock options to be recognized if the options vest is $4,890.

b) granted a consultant the option to acquire 100,000 shares of common stock at a price of $0.03 per share until June 27, 2017. This option to acquire 100,000 shares of common stock was exercised as part of a debt settlement agreement. The compensation expense recognized related to this option grant was $2,906.

c) entered into agreements with three consultants to modify the exercise price of their collective options to acquire 1,450,000 shares of common stock from $0.07 to $0.03. The options to acquire 1,450,000 shares of common stock was exercised as part of a debt settlement agreement. There was no additional compensation expense recognized related to this option modification.

On July 25, 2014, the Company granted two directors each the option to acquire 1,000,000 shares of common stock at a price of $0.03 per share for a term of five years. One of the directors exercised their option to acquire 1,000,000 shares of common stock of the Company. The compensation expense related to the option grants was $49,590.

On August 1, 2014, the Company:

a) granted a director the option to acquire 500,000 shares of common stock at a price of $0.03 per share for a term of five years The compensation expense recognized was $12,393.

b) granted a consultant the option to acquire 250,000 shares of common stock at a price of $0.03 per share for a term of five years. The compensation expense was $6,196.

c) granted a consultant the option to acquire 500,000 shares of common stock at a price of $0.03 per share for a term of five years subject to:

i. Consenting to act as an advisor to the Board of Directors of the Company;

ii. Satisfactory completion, at the sole discretion of the Board of Directors, of a six month term as an advisor to the Board of Directors

iii. Completion of an on-going arrangement with the Company in a material capacity immediately subsequent to the completion of the six month term referenced above in ii.

The compensation expense of $12,393 was recognized at the time the options vested.

On August 26, 2014, the Company granted a creditor of the Company the option to acquire 2,000,000 shares of common stock of the Company at a price of $0.05 per share for a term of five years. The options vest on the basis of 20 options for each dollar advanced to the Company to fund a public relations campaign. The option to acquire 500,000 shares of common stock has vested. The compensation expense recognized related to the vested stock options was $15,413. The compensation expense related to the unvested stock options to be recognized if the options vest is $46,238.

A summary of stock option activity is as follows:

	Nine Months Ended						Year Ended
	September 30, 2015 (unaudited)						December 31, 2014
	Number of			Weighted Average			Number of			Weighted Average
	Options			Exercise Price			Options			Exercise Price
Outstanding, beginning of period		245,700,100			0.030			130,550,000		$	0.04
Granted		334,500,100			0.015			118,550,100			0.03
Cancelled		—			—			(100,000	)		(0.07	)
Exercised		—			—			(3,300,000	)		(0.03	)
Expired		(1,200,000	)		(0.250	)		(3,300,000	)		(0.03	)
Outstanding, end of period		579,000,200			0.021			245,700,100		$	0.03
Exercisable, end of period		570,600,200			0.021			240,650,100		$	0.03

The options outstanding at September 30, 2015 and December 31, 2014 were as follows:

	September 30, 2015						December 31, 2014
Expiry Date	Options		Exercise Price		Intrinsic Value		Options		Exercise Price		Intrinsic Value
September 30, 2015		—	$	0.250		—		1,200,000		0.250		—
November 29, 2015		—	$	0.030		—		20,000,000		0.030		—
March 6, 2016		—	$	0.030		—		35,750,000		0.030		—
May 4, 2016		1,000,000	$	0.050		—		1,000,000		0.050		—
May 23, 2016		100,000	$	0.030		—		100,000		0.030		—
May 27, 2017		400,000	$	0.030		—		400,000		0.030		—
May 31, 2017		500,000	$	0.250		—		500,000		0.250		—
August 16, 2017		250,000	$	0.030		—		250,000		0.030		—
December 28, 2017		—	$	0.030		—		14,250,000		0.030		—
December 28, 2017		1,000,000	$	0.030		—		51,000,000		0.030		—
January 28, 2018		2,300,000	$	0.030		—		2,300,000		0.030		—
March 26, 2018		500,000	$	0.030		—		500,000		0.030		—
April 9, 2018		1,000,000	$	0.030		—		1,000,000		0.030		—
October 1, 2018		500,000	$	0.030		—		500,000		0.030		—
February 7, 2019		700,000	$	0.030		—		700,000		0.030		—
April 1, 2019		—	$	0.030		—		110,000,100		0.030		—
April 18, 2019		2,000,000	$	0.030		—		2,000,000		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		1,500,000	$	0.030		—		1,500,000		0.030		—
January 30, 2020		4,500,000	$	0.030		—		—		—		—
May 29, 2020		560,000,200	$	0.015		—		—		—		—
Total		579,000,200	$	0.020		—		245,700,100		0.03		—
Weighted Average Remaining Contractual Life		4.58						3.09

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:

	September 30, 2015 (unaudited)			December 31, 2014
Risk-free interest rate		1.68	%		2.50	%
Expected life		5 years			5 years
Expected dividends		0	%		0	%
Expected volatility		194	%		245	%
Forfeiture rate		0	%		0	%

The weighted average fair value for the options granted during the nine months ended September 30, 2015 was $0.01   (2014: $0.03).

The fair value of the stock options granted was allocated as follows:

	Three Months Ended September 30, 2015 (unaudited)		Three Months Ended September 30 2014 (unaudited)		Nine Months Ended September 30 2015 (unaudited)		Nine Months Ended September 30 2014 (unaudited)
Interest expense:
Related parties	$	—	$	9,248	$	3,184,459	$	3,296,342
Product Development:
Non-employees	$	1,631	$	1,699	$	12,899	$	17,847
Professional
Non-employees	$	815	$	11,152	$	2,989	$	44,610
Selling, general and administration:
Directors and Officers	$	—	$	—	$	—	$	37,263
Non-employees		1,787		63,972		18,412		67,782
	$	4,233	$	86,071	$	3,218,759	$	3,463,844