ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN

9 Months Ended

Jul. 31, 2011

ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN

(8)           ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN

(i) Effective December 13, 2010, the Company issued 2,500,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 on December 13, 2010, 1/3 will vest on November 17, 2011 and the balance on November 17, 2012. The exercise price of the options is US$1.00 and the latest exercise date for the options is November 17, 2020.  

The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model.

An external consultant has calculated the fair value of the 2,500,000 options using the Binomial valuation method using the following inputs:

Grant date	Dec 13, 2010	Dec 13, 2010	Dec 13, 2010
Grant date share price	US$1.10	US$1.10	US$1.10
Vesting date	Dec 13, 2010	Nov 17, 2011	Nov 17, 2012
Expected life in years	4.5	5.0	5.5
Risk-free rate	1.91%	1.91%	1.91%
Volatility	95%	95%	95%
Exercise price	US$1.00	US$1.00	US$1.00
Call option value	US$0.78	US$0.81	US$0.83

	Options		Option Price Per Share US$		Weighted Average Exercise Price US$
Outstanding at November 1, 2010		-		-		-
Granted		2,500,000		1.00		1.00
Forfeited		-		-		-
Outstanding at July 31, 2011		2,500,000		1.00		1.00

	The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.81 and the weighted average remaining contractual life of those options is 9½ years. There are 833,333 options currently exercisable.
	The total value of the outstanding unvested options equates to $723,700 and is being amortised over the vesting periods.
	For the nine months ended July 31, 2011, the amortization amounted to $1,292,967.
(ii)	In May 2011, the Company issued 750,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 upon grant date, 1/3 will vest on February 1, 2012 and the balance on February 1, 2013. The exercise price of the options is US$1.00 and the latest exercise date for the options is February 1, 2018.
	The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model.
	An external consultant has calculated the fair value of the 750,000 options using the Binomial valuation method using the following inputs:

Grant date	May 1, 2011	May 1, 2011	May 1, 2011
Grant date share price	US$1.30	US$1.30	US$1.30
Vesting date	May 1, 2011	Feb 1, 2012	Feb 1, 2013
Expected life in years	3.5	4.0	4.5
Risk-free rate	1.04%	2.02%	2.02%
Volatility	100%	100%	100%
Exercise price	US$1.00	US$1.00	US$1.00
Call option value	US$0.91	US$0.95	US$0.99

	Options		Option Price Per Share US$		Weighted Average Exercise Price US$
Outstanding at November 1, 2010		-		-		-
Granted		750,000		1.00		1.00
Forfeited		-		-		-
Outstanding at July 31, 2011		750,000		1.00		1.00

The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.95 and the weighted average remaining contractual life of those options is 6½ years. There are 250,000 options currently exercisable.

The total value of the outstanding unvested options equates to $306,933 and is being amortised over the vesting periods.

For the nine months ended July 31, 2011, the amortization amounted to $405,567.