4. CAPITAL STOCK

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

NOTE 4 - CAPITAL STOCK

Capitalization

The authorized capital of the Company is 500,000,000 shares of capital stock, divided into 480,000,000 shares of common stock with a par value of $0.001 per share, and 20,000,000 shares of preferred stock with a par value of $0.001 per share. The Company reserved 10,000,000 shares of common stock for issuance under its 2016 Omnibus Equity Incentive Plan. The Company has issued 50,605,965 common shares and no preferred shares. During the six months ended June 30, 2020, the Company did not issue any shares of its common stock.

Options

A total of 10,000,000 options are issued and outstanding, of which 9,750,000 were vested at June 30, 2020. The remaining 250,000 will vest on November 20, 2020.

On November 20, 2018, the Company granted 500,000 non-qualified stock options pursuant to its Equity Incentive Plan, to key outside consultants, with 50% vesting after one year and 50% vesting after two years. Each option is exercisable into one share of the Company’s common stock at a price of $0.06 per share, for a term of five years. The options had an estimated grant date fair value of $10,408. For the six month period ended June 30, 2020, $1,979 (June 30, 2019 - $5,446) was included in consulting services expense, based on fair value estimates determined using the Black-Scholes option pricing model with an average risk-free rate of 2.88%, a weighted average life of 5 years, volatility of 195.37%, and dividend yield of 0%. At June 30, 2020, the options (including the unvested 250,000) had an intrinsic value of $40,000 (December 31, 2019: $7,000) based on the exercise price of $0.06 per option and a market price of $0.14 per share on the closest trading date (December 31, 2019: $0.074).

On February 14, 2017, the Company granted 9,500,000 non-qualified stock options pursuant to its Equity Incentive Plan, to key corporate officers and outside consultants, with 25% vesting immediately and a further 25% vesting every six months thereafter for eighteen months. Each option is exercisable into one share of the Company’s common stock at a price of $0.06 per share, equal to the closing price of the common stock on the grant date, for a term of five years. The options had an estimated grant date fair value of $536,750. The options were fully expensed by the end of the third quarter of 2018, based on fair value estimates determined using the Black-Scholes option pricing model. Therefore, no related expense was incurred in the current 2020 period or the comparative 2019 period. At June 30, 2020, the options had an intrinsic value of $760,000 (December 31, 2019: $133,000) based on the exercise price of $0.06 per option and a market price of $0.14 per share on the closest trading date (December 31, 2019: $0.074).

Summary of option activity in the current six-month period and options outstanding at June 30, 2020:

					Years
					Life Remaining				Years			June 30, 2020
	Options				(Issued)				Weighted Average			Intrinsic
					Dec 31		Jun 30		Life Remaining			Value
	Issued		Vested		2019		2020		(Issued)		Expiry Date	(Issued)
Issued February 14, 2017 Exercise Price: $0.06		9,500,000		9,500,000		2.13		1.63			February 14, 2022	$760,000
Issued November 20, 2018 Exercise Price: $0.06		500,000		250,000		3.89		3.39			November 20, 2023	$40,000
Balance December 31, 2019		10,000,000		9,750,000						2.21
Issued / Expired / Exercised		—		—
Vested		—		—
Balance June 30, 2020		10,000,000		9,750,000						1.71		$800,000

Warrants

During the six months ended June 30, 2020, no warrants to purchase shares of common stock were issued, exercised, or expired. At June 30, 2020, warrants issued in 2015 had an intrinsic value of $400,327 (December 31, 2019: $180,147), based on the exercise price of $0.02 per warrant and a market price of $0.14 per share on the closest trading date (December 31, 2019: $0.074).

Summary of warrant activity in the current six-month period and warrants outstanding at June 30, 2020:

	Number of Warrants		Exercise Price		Weighted Average Exercise Price		Weighted Average Life Remaining (Years)		Expiry Date	Intrinsic Value
Balance December 31, 2019		3,336,060	$	0.02	$	0.02		0.89	November 19, 2020	$	180,847
Issued / Expired / Exercised		—
Balance outstanding and exercisable at June 30, 2020		3,336,060	$	0.02	$	0.02		0.39	November 19, 2020	$	400,327