9. STOCK-BASED COMPENSATION

6 Months Ended

Jul. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

Stock Options

The Company has a stock-based compensation plan known as the 2007 Stock Option Plan (the “Plan”). The Plan provides for the granting of incentive and non-qualified stock options to acquire common shares in the capital of California Gold Corp. The number of shares authorized under the Plan is 16,000,000. As of July 31, 2013, 6,000,000 shares remain available for future grants under the Plan.

On July 27, 2011, the Company granted options to purchase 11,000,000 shares of its common stock to its employees and outside consultants. These options have a 10-year term and were granted with an exercise price of $0.09. One-third of these options, or 3,666,667, vested on the date of the grant, with the remaining two-thirds vesting on the first and second anniversaries of the date of grant. As of July 31, 2013, a total of 10,000,000 options had vested, which included an additional 3,333,333 options which vested on July 27, 2012, the first anniversary of the grant date, and an additional 3,333,333 options which vested on July 27, 2013, the second anniversary of the grant date. All vested options are exercisable, in full or in part, at any time after vesting, until termination. On May 4, 2012, one of the Company’s directors resigned and therefore, all of his 666,667 non-vested options terminated on that date and his vested but unexercised options totaling 333,333 expired and were forfeited on August 4, 2012.

The Company recorded the stock-based compensation expense - related party attributable to options of $74,998 and $149,995 during the three and six months ended July 31, 2013, respectively. The Company recorded the stock-based compensation expense - related party attributable to options of $75,284 and $157,782 during the three and six months ended July 31, 2012. As of July 31, 2013, there was no unrecognized compensation cost related to non-vested stock options. Outstanding options had $0 intrinsic value at July 31, 2013, due to the exercise price being greater than the value of the Company’s common stock at the reporting date.

The fair value of options granted in July 2011 was measured at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Market price of the Company’s common stock on grant date	$	0.09
Risk free interest rate (1)		3.01	%
Dividend yield		0.00	%
Volatility		259.13	%
Expected life	6 years
Expected forfeiture rate		0.00	%

(1) The risk-free interest rate was determined by management using the 10-year Treasury Bill yield as of the grant date.