STOCK OPTIONS AND WARRANTS

9 Months Ended

May 31, 2013

STOCK OPTIONS AND WARRANTS [Text Block]

10.	STOCK OPTIONS AND WARRANTS
	Stock Options
	On April 14, 2011, the shareholders approved and adopted at the Annual General Meeting to consolidate the Company’s 2007 Equity compensation plan and the Company’s 2010 Equity Compensation Plan into a new Company 2011 Stock Option Plan. The purpose of this Plan is to advance the interests of the Corporation, through the grant of Options, by providing an incentive mechanism to foster the interest of eligible persons in the success of the Corporation and its affiliates; encouraging eligible persons to remain with the Corporation or its affiliates; and attracting new Directors, Officers, Employees and Consultants.
	For the nine months ended May 31, 2013, the Company recorded $Nil (May 31, 2012 – $32,581) stock based compensation expenses which has been included in consulting fees.
	A summary of the changes in stock options for the nine months ended May 31, 2013 is presented below:

				Options Outstanding
				Weighted Average
	Number of Shares			Exercise Price
Balance, August 31, 2012	4,185,000		$	0.15
Expired	(350,000	)		-
Cancelled	(450,000	)		-
Balance, May 31, 2013	3,385,000		$	0.15

The fair value of options granted has been estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

	Period ended May 31, 2012
Expected volatility	134.43%
Risk-free interest rate	1.32%
Expected life	5.00 years
Dividend yield	0.00%
Estimated fair value per option	$0.0630 -

The Company has the following options outstanding and exercisable.

May 31, 2013	Options outstanding						Options exercisable
	Number	Remaining		Exercise	Number		Exercise
Exercise prices	of shares	contractual life		Price	of shares		Price
					exercisable
$0.10	500,000	1.39 years	$	0.10	500,000	$	0.10
$0.10	650,000	1.58 years	$	0.10	650,000	$	0.10
$0.15	910,000	2.71 years	$	0.15	910,000	$	0.15
$0.15	150,000	2.77 years	$	0.15	150,000	$	0.15
$0.15	450,000	3.80 years	$	0.15	225,000	$	0.15
$0.15	25,000	4.11 years	$	0.15	25,000	$	0.15
$0.18	150,000	2.23 years	$	0.18	150,000	$	0.18
$0.20	150,000	2.23 years	$	0.20	150,000	$	0.20
$0.20	100,000	2.44 years	$	0.20	100,000	$	0.20
$0.25	300,000	3.01 years	$	0.15	300,000	$	0.15
	3,385,000	2.46 years	$	0.15	3,385,000	$	0.15

Warrants

As at May 31, 2013, the Company has 5,429,800 warrants issued and outstanding. A summary of warrants as at May 31, 2013 is as follows:

Number	Exercise	Expiry
Outstanding 1	Price	Date
2,224,200	$0.15 ; $0.20 after 12 months	April 13, 2014
660,000	$0.10 ; $0.20 after 12 months	July 27, 2015
176,000	$0.10 ; $0.20 after 12 months	Aug 24, 2015
1,154,000	$0.10 ; $0.20 after 12 months	Sep 28, 2015
1,215,600	$0.10 ; $0.20 after 12 months	Nov 15, 2015
5,429,800	$0.12

1. Each warrant entitles a holder to purchase one common share.

8,729,000 Subscribers’ Warrants and 489,300 Broker’s Warrants issued in association with the private placement on March 3, 2011 meet the definition of a derivative. Since the exercise price of these warrants is denominated in Canadian dollars, which is different from the Company’s functional currency, the Subscribers’ Warrants and Broker’s Warrants are not considered indexed to the Company’s common shares and they cannot be classified within equity. The Subscribers’ Warrants and the Broker’s Warrants, which have expired on March 3, 2013, were previously classified as warrants liability on the Company’s consolidated balance sheet.

The fair value of the Subscribers’ Warrants and the Broker’s Warrants was revalued on May 31, 2013, $Nil (August 31, 2012 - $87,939) using the Black-Scholes option pricing model with the following assumptions:

		Period ended May 31, 2013
Exercise price (CDN dollars per warrant)	$	0.20
Expected volatility		0.00%
Risk-free interest rate		1.15%
Expected life		0 year
Dividend yield		0.00%
Estimated fair value per warrant (CDN dollars)	$	0.00