STOCK OPTIONS AND WARRANTS

9 Months Ended

May 31, 2016

STOCK OPTIONS AND WARRANTS [Text Block]

10.	STOCK OPTIONS AND WARRANTS
	Stock Options
	On July 15, 2014, the shareholders approved and adopted at the Annual General Meeting the Company’s 2014 Stock Option Plan. 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 these Plans 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.
	On November 3, 2014 the Company granted 2,100,000 stock options to directors, officers, and consultant of the Company with an exercise price of $0.10 vested immediately, expiring November 3, 2019.
	On November 18, 2014, the Company granted 100,000 stock options to consultant of the Company with an exercise price of $0.10 vested immediately, expiring November 13, 2019.
	On October 23, 2015, the Company granted 1,850,000 stock options to directors, officers and consultant of the Company with an exercise price of $0.05 vested immediately, expiring October 23, 2020.

On February 4, 2016, the Company granted 100,000 stock options to Advisor of the Board of the Company with an exercise price of $0.05 vested immediately, expiring February 4, 2021.

For the nine months ended May 31, 2016, the Company recorded $37,107 (May 31, 2015 – $177,596) 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, 2016 is presented below:

		Options Outstanding
		Weighted Average
	Number of Shares	Exercise Price
Balance, August 31, 2015	3,955,000	$          0.20
Cancelled	(1,550,000)	0.16 - 0.70
Expired	(655,000)	0.15 - 0.20
Exercised	(240,000)	0.05
Granted	1,950,000	0.05
Balance, May 31, 2016	3,210,000	$          0.07

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:

	May 31, 2016	August 31, 2015
Expected volatility	220%- 216%	216%- 219%
Risk-free interest rate	1.25%- 1.43%	1.63%- 1.79%
Expected life	5.00 years	5.00 years
Dividend yield	0.00%	0.00%
Estimated fair value per option	$0.01 -$0.05	$0.05 -$0.07

The Company has the following options outstanding and exercisable.

May 31, 2016		Options outstanding		Options exercisable
	Number	Remaining	Exercise	Number	Exercise
Exercise prices	of shares	contractual	Price	of shares	Price
		life		exercisable
$0.05	100,000	4.68 years	$0.05	100,000	$0.05
$0.05	1,560,000	4.39 years	$0.05	1,560,000	$0.05
$0.10	1,050,000	3.42 years	$0.10	1,050,000	$0.10
$0.06	500,000	2.43 years	$0.06	500,000	$0.06
	3,210,000	3.78 years	$0.07	3,210,000	$0.07

August 31, 2015		Options outstanding		Options exercisable
		Remaining		Number
	Number	contractual	Exercise	of shares	Exercise
Exercise prices	of shares	life	price	exercisable	Price
$0.10	100,000	4.22 years	$0.10	100,000	$0.10
$0.10	1,600,000	4.18 years	$0.10	1,600,000	$0.10
$0.50	50,000	3.60 years	$0.50	50,000	$0.50
$0.70	500,000	3.57 years	$0.70	500,000	$0.70
$0.35	50,000	3.43 years	$0.35	50,000	$0.35
$0.16	250,000	3.37 years	$0.16	250,000	$0.16
$0.06	550,000	3.18 years	$0.06	550,000	$0.06
$0.15	555,000	0.45 years	$0.15	555,000	$0.15
$0.15	150,000	0.52 years	$0.15	150,000	$0.15
$0.20	100,000	0.19 years	$0.20	100,000 *	$0.20
$0.25	50,000	0.75 years	$0.25	50,000	$0.25
	3,955,000	3.09 years	$0.20	3,955,000	$0.20

Warrants

On December 16, 2015, the Company submitted to the CSE the Form 13 for extending two classes of warrants by two years with all other terms and conditions remaining the same. The Company approved the expiry extension from January 31, 2016 till January 31, 2018 on 1,871,000 warrants that remain outstanding as of May 31, 2016 from the non-brokered private placement that closed on January 31, 2014. The Company approved the expiry extension from February 13, 2016 till February 13, 2018 on 6,231,500 warrants that remain outstanding as of May 31, 2016 from the non-brokered private placement that closed on February 13, 2014.

On May 20, 2016, the Company closed the first tranche of a private placement of 6,413,333 units at a price of CAD$0.015 per unit for gross proceeds of CAD$96,200 and Broker warrants of 469,333. Each unit consists of one common share of the Company and one non-transferable share purchase warrant, each full warrant entitling the holder to purchase one additional common share of the Company for a period of 36 months from the date of issuance, at a purchase price $0.05 during the first 18 months and US$0.10 after eighteen months.

A summary of warrants as at May 31, 2016 and August 31, 2015 is as follows:

		Warrant Outstanding
		Weighted Average
	Number of warrant	Exercise Price
Balance, August 31, 2015	15,435,085	$        0.14
Expired	(708,945)	0.20
Issued	6,882,666	0.05
Balance, May 31, 2016	21,608,806	$       0.11

Number	Exercise	Expiry
Outstanding 1	Price	Date
1,468,000	$0.10	November 26, 2016
1,438,800	$0.10	December 23, 2016
2,167,160	$0.15	January 31, 2018
7,227,340	$0.15	February 13, 2018
1,787,640	$0.10 and $0.15 after 24 months	January 30, 2018
637,200	$0.10 and $0.15 after 24 months	March 12, 2018
6,882,666	$0.05 and $0.10 after 18 months	May 20, 2019
21,608,806

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