STOCK OPTIONS AND WARRANTS

12 Months Ended

Aug. 31, 2013

STOCK OPTIONS AND WARRANTS [Text Block]

11.	STOCK OPTIONS AND WARRANTS
	On October 1, 2011, the Company granted 200,000 stock options to a consultant with an exercise price of $0.15, of which 50,000 stock options will be vested as of December 1, 2011 and 50,000 stock options will be vested in each subsequent quarter to be fully vested by September 1, 2012, and the options expire on October 1, 2016.
	On November 15, 2011, the Company granted 40,000 stock options to a consultant with an exercise price of $0.10, which vested immediately and expire on November 15, 2016 (cancelled during the year ended August 31, 2012).
	On March 19, 2012, the Company granted 450,000 stock options to a director and advisors to the Company with an exercise price of $0.15, of which 225,000 vested immediately and 225,000 vesting on August 15, 2012 and expire March 19, 2017 ( 200,000 of the options were cancelled during year ended August 31, 2013).
	On March 27, 2012, the Company granted 250,000 stock options to an Investor Relations company with an exercise price of $0.15, of which 125,000 vested immediately and 125,000 vesting on June 27, 2012 and expire on March 27, 2017 (cancelled during year ended August 31, 2013).
	On April 10, 2012, the Company granted 25,000 stock options to a consultant of the Company with an exercise price of $0.15, which vested immediately and expire on April 10, 2017 (cancelled during year ended August 31, 2013).
	For the year ended August 31, 2013, the Company recorded $Nil (August 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 years ended August 31, 2013 and 2012 are presented below:

				Options Outstanding
				Weighted Average
	Number of Shares			Exercise Price
Balance, August 31, 2011	3,260,000		$	0.15
Granted	965,000		$	0.15
Cancelled	(40,000	)	$	0.10
Balance, August 31, 2012	4,185,000		$	0.15
Expired	(350,000	)	$	0.20
Cancelled	(1,380,000	)	$	0.14
Balance, August 31, 2013	2,455,000		$	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:

	Year ended August 31, 2012
Expected volatility	134.43% - 142.22%
Risk-free interest rate	1.32% - 1.46%
Expected life	5.00 years
Dividend yield	0.00%
Weighted average fair value of the options	$0.06

The Company has the following options outstanding and exercisable.

August 31, 2013	Options outstanding				Options exercisable
Exercise prices	Number of shares	Remaining contractual life		Exercise Price	Number of shares exercisable		Exercise Price
$0.10	400,000	1.14 years	$	0.10	400,000	$	0.10
$0.10	450,000	1.33 years	$	0.10	450,000	$	0.10
$0.15	655,000	2.46 years	$	0.15	655,000	$	0.15
$0.15	150,000	2.44 years	$	0.15	150,000	$	0.15
$0.15	250,000	3.55 years	$	0.15	250,000	$	0.15
$0.18	150,000	1.98 years	$	0.18	150,000	$	0.18
$0.20	100,000	1.98 years	$	0.20	150,000	$	0.20
$0.25	300,000	2.76 years	$	0.25	300,000	$	0.25
	2,455,000	2.18 years	$	0.15	2,455,000	$	0.15

August 31, 2012	Options outstanding				Options exercisable
Exercise prices	Number of shares	Remaining contractual life		Exercise Price	Number of shares exercisable		Exercise Price
$0.10	500,000	2.14 years	$	0.10	500,000	$	0.10
$0.10	650,000	2.33 years	$	0.10	650,000	$	0.10
$0.15	910,000	3.46 years	$	0.15	910,000	$	0.15
$0.15	150,000	3.53 years	$	0.15	150,000	$	0.15
$0.15	200,000	4.09 years	$	0.15	100,000	$	0.15
$0.15	450,000	4.55 years	$	0.15	225,000	$	0.15
$0.15	250,000	4.57 years	$	0.15	125,000	$	0.15
$0.15	25,000	4.61 years	$	0.15	25,000	$	0.15
$0.18	150,000	3.54 years	$	0.18	150,000	$	0.18
$0.20	350,000	0.29 years	$	0.20	350,000	$	0.20
$0.20	150,000	2.98 years	$	0.20	150,000	$	0.20
$0.20	100,000	3.19 years	$	0.20	100,000	$	0.20
$0.25	300,000	3.76 years	$	0.15	300,000	$	0.15
	4,185,000	3.10 years	$	0.15	3,775,000	$	0.15

Warrants

As at August 31, 2013, the Company has 5,429,800 warrants issued and outstanding. A summary of warrants as at August 31, 2013 and 2012 is as follows:

				Warrant Outstanding
				Weighted Average
	Number of warrant			Exercise Price
Balance, August 31, 2012 and 2011	12,278,500		$	0.18
Expired	(9,218,300	)	$	0.20
Granted	2,369,600		$	0.10
Balance, August 31, 2013	5,429,800		$	0.12

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	August 24, 2015
1,154,000	$0.10 ; $0.20 after 12 months	September 28, 2015
1,215,600	$0.10 ; $0.20 after 12 months	November 15, 2015
5,429,800

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.