8. 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 February 25, 2020 the Company granted 2,000,000 stock options to a consultant of the Company with an exercise price of $0.02, expiring February 25, 2022.

For the year ended August 31, 2020, the Company recorded $17,308 (2019 - $Nil) stock-based compensation expense.

A summary of the changes in stock options is presented below:

				Options Outstanding
				Weighted Average
	Number of Shares			Exercise Price
Balance, August 31, 2018	8,570,000		$	0.07
Expired	(250,000	)		0.06
Balance, August 31, 2019	8,320,000		$	0.07
Granted	2,000,000			0.02
Expired	(1,000,000	)		0.10
Balance, August 31, 2020	9,320,000		$	0.06

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:

	August 31, 2020	August 31, 2019
Expected volatility	163%	N/A
Risk-free interest rate	1.16%	N/A
Expected life	2 years	N/A
Dividend yield	NIL	N/A
Estimated fair value per option	$0.01	N/A

The Company has the following options outstanding and exercisable.

August 31, 2020
	Options outstanding and exercisable
	Number	Remaining
Exercise prices	of shares	contractual life (years)
$0.07	550,000	2.73
$0.06	535,000	2.70
$0.05	800,000	2.16
$0.10	500,000	1.67
$0.02	2,000,000	1.49
$0.07	1,500,000	1.42
$0.07	1,535,000	1.39
$0.07	800,000	1.05
$0.05	1,100,000*	0.15
	9,320,000	1.48

The aggregate intrinsic value for options outstanding and exercisable as at August 31, 2020 was $Nil.

* Expired subsequent to the year ended August 31, 2020.

Warrants

There were no warrants issued during the year ended August 31, 2020.

During the year ended August 31, 2019, the Company issued 7,731,769 warrants attached to units in private placements and 705,100 broker warrants in connection with the private placements. The fair value of the brokers warrants was $12,861, recorded as share issuance costs off-setting the gross proceeds of private placements in additional-paid-in-capital, and was calculated using the Black Scholes option pricing model, with the following weighted average assumptions: expected volatility 150%, risk-free interest rate: 2.38%, expected life: 3.71 years, dividend yield: 0.00%.

A summary of changes in warrants is presented below:

				Warrants Outstanding
				Weighted Average
	Number of warrants			Exercise Price
Balance, August 31, 2018	40,739,060		$	0.06
Expired	(23,034,470	)		0.07
Issued	8,436,869			0.04
Balance, August 31, 2019	26,141,459		$	0.06
Expired	(12,904,590	)		0.07
Balance, August 31, 2020	13,236,869		$	0.05

The Company has the following warrants outstanding and exercisable:

Number		Exercise	Expiry
Outstanding¹		Price	Date
6,009,369	$	0.040	March 27, 2023
2,427,500	$	0.050	September 21, 2021
4,800,000	$	0.050	August 31, 2021
13,236,869

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