Capital Stock

6 Months Ended

Jun. 30, 2012

Capital Stock [Text Block]

3.	Capital Stock
	Class A Convertible Preferred Shares
	The Class A convertible preferred shares issued in 2003 have a par value of $0.001 and are convertible to common shares at $4.00 per share during the first 180 days following issuance, and thereafter at the average of twenty consecutive days closing prices, but shall not be less than $1.50 per share or greater than $6.00 per share. The Company has the right to redeem its Class A convertible preferred stock at any time by paying to the holders thereof the sum of $4 per share.
	The aggregate liquidation value of the Class A convertible preferred shares is $792,000. A merger or consolidation of the Company that results in the Company’s stockholders immediately prior to the transaction not holding at least 50% of the voting power of the surviving entity shall be deemed a liquidation event.
	Stock Option Plan
	The Company’s board of directors approved a stock option plan. Under the plan directors, employees and consultants may be granted options to purchase common stock of the Company at a price of not less than 100% of the fair market value of the stock. The total number of options granted must not exceed 15% of the outstanding common stock of the Company. The plan expires on July 1, 2017.
	Stock-based Compensation
	In previous periods, the Company granted share purchase options to directors, employees, and consultants of the Company at the closing price of the Company’s common stock on the date of the grants. The options have been granted with a term of 5 years.
	The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate and therefore the Black-Scholes model does not necessarily provide a reliable single measure of the fair value of the Company’s share purchase options.
	During the six month periods ended June 30, 2012 and 2011 the Company did not grant any stock options to directors, employees, or consultants.
	During the period ended June 30, 2012, the change in share purchase options outstanding are as follows:

				Weighted	Weighted
				Average	Average		Aggregate
				Exercise	Remaining		Intrinsic
	Shares			Price	Contractual Life		Value
Options outstanding at December 31, 2010	3,175,000		$	0.15	2.42 years	$	-
Cancelled during the period	(50,000	)	$	0.15	2.42 years		-
Options outstanding at December 31, 2011	3,125,000		$	0.15	1.42 years	$	-
Options outstanding at June 30, 2012	3,125,000		$	0.15	0.92 years	$	-

As at June 30, 2012, the Company had share purchase options outstanding as follows:

Number of Options	Exercise Price	Expiry Date
3,125,000	$0.15	June 1, 2013

As at June 30, 2012 and December 31, 2011 all of the outstanding share purchase options were exercisable.