CAPITAL STOCK

9 Months Ended

Sep. 30, 2016

7.	CAPITAL STOCK

(a)

Common stock

During the nine months ended September 30, 2016, no common stock was issued.

(b)

Preferred stock

During the period ended September 30, 2016, the Company designated 19,000,100 shares of Series A preferred stock with a par value of $0.001 per share. Each share of preferred stock is convertible into one common share at any time at the holder’s option, at a conversion of $0.12 per share subject to the adjustments to the conversion ratio. The adjustment to the conversion price of these preferred shares is based on the lowest of the share price of any common shares issued, the exercise price of any options granted or repriced, or any common shares issued after the issuance of these preferred shares.

The preferred stock is unlisted, non-retractable and non-redeemable. The preferred stockholders are entitled to the number of votes equal to the number of whole shares of common stock into which the preferred stock is convertible. The preferred stockholders are further entitled to the same dividends and distributions as the common stockholders.

In connection with the issuance of the Convertible Note ( Note 6 ), 100 shares of Series A Preferred Stock, $0.001 par value, were issued to the note holder.

(c)

Stock options

The Company has a stock option plan, adopted in 2005, and a stock option/stock issuance plan, adopted in 2010, which has been replaced by a stock incentive plan adopted in June 2015 (individually, the “2005 Plan”, the “2010 Plan”, and the “2015 Plan”, respectively, and, collectively, the “Plans”). Under the Plans, the Company is authorized to grant options to executive officers and directors, employees and consultants of the Company. The 2005 Plan was originally authorized to grant 3,140,000 shares, and the 2015 Plan was originally authorized to grant 4,641,040 shares, which amount is increased at the end of each year to represent 10% of the total number of shares of Common Stock outstanding on the last trading day in December of the immediately preceding calendar year, less 3,949,500 shares. Effective January 1, 2016, the 2015 Plan authorized shares automatically increased to 5,661,944 shares. The terms of any stock options granted under the 2005 Plan may not exceed five years and the exercise price of any stock option granted may not be discounted below the maximum discount permitted under the policies of the Toronto Stock Exchange. The terms of any stock options granted under the 2015 Plan may not exceed ten years and the exercise price of any stock option plan is fixed by the plan administrator.

The Company originally also adopted a management compensation pool for the benefit of officers, directors and employees of the Company. The pool consists of 1% of the outstanding shares at the end of each year. The shares granted under the compensation pool program are issued under the 2015 Plan.

The following table represents service-based stock option activity during the nine months ended September 30, 2016 and the year ended December 31, 2015:

	September 30, 2016				December 31, 2015
	Number of			Weighted Average	Number of			Weighted Average
	Shares			Exercise Price	Shares			Exercise Price

Outstanding - beginning of period	1,375,000		$	0.45	1,225,000		$	0.55
Granted	-		$	-	300,000		$	0.45
Expired /Cancelled	(700,000	)	$	0.45	(150,000	)	$	1.30

Outstanding and exercisable – end of period	675,000		$	0.45	1,375,000		$	0.45

As at September 30, 2016 and December 31, 2015, the following stock options were outstanding:

		Exercise	September 30,	December 31,
Expiry Date		Price	2016	2015

October 2, 2017	$	0.45	375,000	375,000
December 31, 2017	$	0.45	300,000	1,000,000
			675,000	1,375,000

The shares under option at September 30, 2016 had an intrinsic value of $nil (December 31, 2015 - $nil) and a weighted average remaining contractual life of 1.12 (December 31, 2015 – 1.94) years.

(d)

Stock-based compensation

During the nine months ended September 30, 2016, $129,007 (2015 - $451,369) was recognized as stock-based compensation for shares of common stock issuable upon the market performance of the Company’s stock.

(e)

Warrants

On March 16, 2016, the Company issued warrants to purchase 8,333,333 shares of Common Stock, in connection with the issuance of Convertible Promissory Note ( Note 6 ). Each whole warrant is exercisable at $0.30 per share until March 16, 2019.

Stock purchase warrant activity for the period ended September 30, 2016 and the year ended December 31, 2015 is as follows:

	September 30, 2016				December 31, 2015
	Number			Weighted	Number		Weighted
	of Warrants			Average	of Warrants		Average
				Exercise Price			Exercise Price

Outstanding - beginning of year	35,362,585		$	0.34	21,487,585	$	0.55
Issued	8,333,333			0.30	13,875,000		0.35
Expired	(5,048,299	)		0.30	-
Outstanding	38,647,619		$	0.34	35,362,585	$	0.34

As at September 30, 2016 and December 31, 2015, the following warrants were outstanding:

			September30	December 31,
Expiry Date		Exercise Price	2016	2015
April 30, 2016	$	0.30	-	1,770,328
April 30, 2016	$	0.30	-	910,534
April 30, 2016	$	0.30	-	2,367,437
December 31, 2017	$	0.30	5,714,286	5,714,286

December 31, 2017	$	0.65	600,000	600,000
December 31, 2018	$	0.35	4,500,000	4,500,000
December 31, 2018	$	0.35	5,625,000	5,625,000
December 31, 2018	$	0.35	13,875,000	13,875,000
March 16, 2019	$	0.30	8,333,333	-
			38,647,619	35,362,585

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
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+ Details

WHITE MOUNTAIN TITANIUM CORP 10-Q