Capital Structure

As at December 31, 2008, the common shares issued and reserved were as follows:

As at December 31, 2008, a total of 11,349,000 common shares were subject to outstanding options granted under the Company’s Share Option Plan established in 2004 (the “2004 Option Plan”), with exercise prices ranging from $0.29 – $15.45. If exercised, 11,349,000 common shares of the Company would be issued. As of December 31, 2008, 2,174,000 options had met the vesting criteria of which 2,161,500 are in-the-money based on the December 31, 2008 TSX closing price of $3.53 per common share. The maximum number of common shares available for options under the 2004 Option Plan is 7,332,175, representing approximately 7.0% of the Company’s issued and outstanding shares as at December 31, 2008.

Measured at the December 31, 2008 noon exchange rate, as quoted by the Bank of Canada, of $1.2246 CAD$/US$, the balance of the August 2006 Note is convertible into 8,112,975 common shares of the Company (based on the March 25, 2009 Bank of Canada noon exchange rate of $1.2245 CAD$/US$ – 8,112,313 common shares). The March 2007 Note is convertible into 10,714,286 shares of the Company. See “Related Party Transactions – Convertible Notes” above.

On November 11, 2008, the Board of Directors approved a new share option plan (the “2008 Option Plan”) as part of certain incentive compensation arrangements. Options granted under the 2008 Option Plan have an exercise price at no less than the fair market value of the Company’s common shares at the time of the grants, and have a nine-year vesting schedule with 50% becoming exercisable only after the fifth anniversary of the grant date, and the remaining 50% vesting equally on the sixth through ninth anniversary dates. The options will expire ten years after the grant date. The maximum number of common shares available for options under the 2008 Option Plan is 10 million, representing approximately 9.6% of the Company’s issued and outstanding shares as at December 31, 2008. This new share option plan is subject to approval by the Company’s shareholders at the 2009 annual general and special meeting, and is also subject to Toronto Stock Exchange approval. Options to purchase 7 million common shares of the Company were granted under the 2008 Option Plan. As of March 25, 2009, there has been no material change in the number of common shares issuable upon the exercise of options pursuant to either the 2004 Option Plan or the 2008 Option Plan.

On February 3, 2009, the Company issued 7,042,000 common shares at a price of $3.55 per share, resulting in gross proceeds of $25.0 million. Net proceeds of the private placement, which were $24.2 million, were used for general corporate purposes including repayment of funds drawn on the Company’s revolving credit facility.