ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN

9 Months Ended

Jul. 31, 2012

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 vested on November 17, 2011 and the balance will vest 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
Outstanding at October 31, 2011 and Jul 31, 2012	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 81/4 years. At July 31, 2012 there are 1,666,666 options exercisable.

The total value of the outstanding unvested options equates to $127,736 and is being amortised over the vesting periods.

For the nine months ended July 31, 2012, the amortization amounted to $338,778.

(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 vested on February 1, 2012 and the balance will vest 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
Outstanding at October 31, 2011 and July 31, 2012	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 51/2  years. At July 31, 2012 there are 500,000 options exercisable.

The total value of the outstanding unvested options equates to $71,320 and is being amortised over the vesting periods.

For the nine months ended July 31, 2012, the amortization amounted to $185,658.