Additional paid in capital

9 Months Ended

Sep. 30, 2020

Additional Paid in Capital [Abstract]

Additional paid in capital

7.       Additional Paid-in Capital

Stock options

A summary of stock option activity is as follows:

	Nine Months Ended			Year Ended
	September 30, 2020			December 31, 2019
		Weighted Average			Weighted Average
	Number of Options	Exercise Price		Number of Options	Exercise Price
Outstanding, beginning of period	5,236,401,500	$	0.003	5,014,851,500	$	0.002
Granted	105,000,000	$	0.046	254,050,000	$	0.028
Exercised	-	$	-	(26,000,000)	$	(0.003)
Cancelled / Expired	(13,500,000)	$	(0.034)	(6,500,000)	$	(0.015)
Outstanding, end of period	5,327,901,500	$	0.004	5,236,401,500	$	0.003
Exercisable, end of period	5,184,401,500	$	0.003	5,154,901,500	$	0.003

During the period ended September 30, 2020:

On April 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock at a price of $0.035 per share for a term of five years. The fair value of the options granted totaling $391,843 was fully recorded at grant.

On May 12, 2020, the Company amended the option to acquire 40,000,000 shares of common stock granted on June 12, 2019 to extend the period of vesting from May 31, 2020 to December 31, 2020. None of these options have vested to date.

On May 18, 2020, the Company granted one consultant the option to acquire 500,000 shares of common stock of the Company at a price of $0.035 per share until May 17, 2024. The fair value of the options granted totaling $18,725 was fully recorded at grant.

On June 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the consultant contributing to the successful launch of the ALRT Diabetes Solution in Canada, including the enrolment of at least 20,000 patients. The fair value of the options granted totaling $621,853 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On June 5, 2020, the Company granted one sales agent the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the agent enrolling 20,000 patients into the ALRT Diabetes Solution by May 31, 2021. The fair value of the options granted totaling $494,868 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.

On September 1, 2020, the Company granted 13 individuals the option to acquire an aggregate 74,500,000 options at an exercise price of $0.05 per share; 22,000,000 stock options, which vested at the time of grant, will expire on May 17, 2024 and 52,500,000 stock options, which vest upon achievement of performance conditions, will expire on May 31, 2025. None of the stock options with performance vesting conditions have vested. The fair value of the options granted totals $3,854,619, of which $1,137,397 related to the stock options that have vested was recorded and $2,717,222 related to the options that have not vested was not recorded.

During the nine months ended September 30, 2020, the Company recorded a further $79 (September 30, 2019 - $1,062) in compensation expense related to vesting of stock options granted in previous years.

During the year ended December 31, 2019:

On February 4, 2019, the Company granted a consultant the option to acquire a total of 2,500,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $99,723 and was fully recorded at grant.

On March 15, 2019, the Company granted an option to acquire 9,150,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The option to acquire 2,500,000 shares of common stock was granted to one consultant and the option to acquire 6,650,000 shares of common stock was granted to one director. The fair value of the options granted totaled $364,058 and was fully recorded at grant.

On April 12, 2019, the Company modified options to acquire 564,350,200 shares of common stock of the Company by extending the expiry date to April 12, 2024. The options modified had:

· exercise prices ranging from $0.002 to $0.03 per share; and

· expiration dates ranging from April 19, 2019 to May 29, 2020 immediately prior to the modification.

The fair value related to the extension of the life of the options totaled $1,150,060 and was recorded at the modification date.

On May 6, 2019, the Company granted options to acquire 13,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to three directors of the Company. The fair value of the options granted totaled $467,845 and was fully recorded at grant.

On May 17, 2019, the Company granted options to acquire 27,900,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to eleven consultants, one director and one employee of the Company. The fair value of the options granted totaled $1,059,856 and was fully recorded at grant.

On May 31, 2019, the Company granted options to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of one year to one consultant. The option to acquire 10,000,000 shares would vest based on achievements of performance milestones. The fair value of the options granted totaling $399,722 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met. These options expired on May 30, 2020.

On June 12, 2019, the Company granted options to acquire 40,000,000 shares of common stock of the Company at a price of $0.05 per share until May 15, 2024 to three sales agents. The option to acquire 40,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $1,595,316 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.

On June 17, 2019, the Company granted options to acquire 5,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to one advisor. The fair value of the options granted totaled $189,865 and was fully recorded at grant.

On June 17, 2019, the Company granted options to acquire 5,000,000 shares of common stock of the Company at a price of $0.05 per share for a term of five years to a sales agent. The option to acquire 5,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaled $189,833 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.

On June 24, 2019, options granted on January 31, 2018 to acquire 24,000,000 shares of common stock at a price of $0.015 for a term of five years that were subject to vest based on the achievement of certain performance milestones were modified as follows:

· the option to acquire 4,000,000 shares of common stock was cancelled; and

· the performance conditions were modified.

No compensation expense was reversed related to the cancellation of the unvested options as no compensation expense related to these options had been previously recorded. No compensation expense related to the modification of the options was recorded, as the change in vesting conditions did not make it more likely than not that the performance conditions will be met.

On July 15, 2019, the Company granted a consultant options to acquire 7,500,000 shares of common stock of the Company at a price of $0.035 per share exercisable until February 3, 2024. The fair value of the options granted totaled $318,530 and was fully recorded at grant.

On August 16, 2019, the Company granted a consultant the option to acquire an aggregate 2,500,000 shares of common stock of the Company at a price of $0.05 per share. The option to acquire 2,500,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $108,655 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.

On September 6, 2019, the Company granted a consultant the option to acquire 1,000,000 shares of common stock of the Company at a price of $0.05 per share for a term of five years. The option to acquire 1,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $40,863 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.

On September 17, 2019, the Company granted a consultant the option to acquire 5,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $194,850 and was fully recorded at grant.

On October 3, 2019, the Company granted two advisors the option to acquire an aggregate 3,500,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. Options to acquire 2,500,000 shares of common stock will vest upon the advisor entering into a full-time role with the Company. The fair value of the options granted totaled $136,399 of which $38,971 has been recorded related to the vested options.

On October 24, 2019, the Company granted two advisors the option to acquire an aggregate 2,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $63,940 and was fully recorded at grant.

On December 11, 2019 the Company granted one creditor the option to acquire 120,000,000 shares of common of the Company at a price of $0.015 per share for a term of five years in connection with receiving line of credit financing (note 5). The fair value of the options granted totaled $2,158,441 and was fully recorded upon the Company entering into the financing agreement with the creditor.

During the year ended December 31, 2019, the Company recorded a further $18,630 in compensation expense related to vesting of stock options granted in previous years.

Options outstanding:

The options outstanding at September 30, 2020 and December 31, 2019 were as follows:

	September 30, 2020					December 31, 2019
Expiry Date	Options	Exercise Price		Intrinsic Value		Options	Exercise Price			Intrinsic Value
May 30, 2020	-	$	-	$	-	10,000,000	$		0.035	$	-
July 1, 2021	4,365,001,300	$	0.002	$	0.069	4,365,001,300	$		0.002	$	0.015
November 27, 2022	6,950,000	$	0.015	$	0.056	7,200,000	$		0.015	$	0.002
January 31, 2023	40,500,000	$	0.015	$	0.056	40,500,000	$		0.015	$	0.002
June 13, 2023	5,000,000	$	0.015	$	0.056	5,000,000	$		0.015	$	0.002
October 1, 2023	300,000	$	0.050	$	0.021	300,000	$		0.050	$	-
February 3, 2024	10,000,000	$	0.035	$	0.036	10,000,000	$		0.035	$	-
March 14, 2024	9,150,000	$	0.035	$	0.036	9,150,000	$		0.035	$	-
April 12, 2024	560,000,200	$	0.002	$	0.069	560,000,200	$		0.002	$	0.015
April 12, 2024	3,900,000	$	0.015	$	0.056	4,150,000	$		0.015	$	0.002
April 12, 2024	200,000	$	0.030	$	0.041	200,000	$		0.030	$	-
May 6, 2024	13,000,000	$	0.035	$	0.036	13,000,000	$		0.035	$	-
May 17, 2024	62,000,000	$	0.050	$	0.021	40,000,000	$		0.050	$	-
May 17, 2024	25,400,000	$	0.035	$	0.036	27,900,000	$		0.035	$	-
June 17, 2024	5,000,000	$	0.050	$	0.021	5,000,000	$		0.050	$	-
June 17, 2024	5,000,000	$	0.035	$	0.036	5,000,000	$		0.035	$	-
August 16, 2024	2,500,000	$	0.050	$	0.021	2,500,000	$		0.050	$	-
September 6, 2024	1,000,000	$	0.050	$	0.021	1,000,000	$		0.050	$	-
September 17, 2024	5,000,000	$	0.035	$	0.036	5,000,000	$		0.035	$	-
October 3, 2024	3,500,000	$	0.035	$	0.036	3,500,000	$		0.035	$	-
October 24, 2024	2,000,000	$	0.035	$	0.036	2,000,000	$		0.035	$	-
December 11, 2024	120,000,000	$	0.015	$	0.056	120,000,000	$		0.015	$	0.002
April 1, 2025	10,000,000	$	0.035	$	0.036	-	$		-	$	-
May 31, 2025	20,000,000	$	0.035	$	0.036	-	$		-	$	-
May 31, 2025	52,500,000	$	0.050	$	0.021	-	$		-	$	-
Total	5,327,901,500	$	0.004	$	0.067	5,236,401,500	$		0.003	$	0.014
Weighted Average Remaining Contractual Life			1.28					1.96

The expense incurred related to stock options was allocated as follows:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
General, selling and administration	$	—	$	318,530	$	—	$	1,124,395
Interest expense		—		—		—		1,085,371
Product development		1,137,397		195,088		1,156,201		1,243,406
Professional		—		—		391,843		392,677
	$	1,137,397	$	513,618	$	1,548,044	$	3,845,849

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, 2020			December 31, 2019
Risk-free interest rate		0.27	%		1.84	%
Expected life		4.6 years			5 years
Expected dividends		0	%		0	%
Expected volatility		313	%		306	%
Forfeiture rate		0	%		0	%

The weighted average fair value for the options granted during the nine months ended September 30, 2020 was $0.05 (year ended December 31, 2019 - $0.03).