(10) 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 vested 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 October 31, 2012	2,500,000	1.00	1.00
Granted	-	-	-
Forfeited	-	-	-
Outstanding at October 31, 2013	2,500,000	1.00	1.00
Granted	-	-	-
Forfeited	-	-	-
Outstanding at October 31, 2014	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 6 years. There are 2,500,000 options currently exercisable.

As a result of the termination of the employee holding the options, the employee had a period of 90 days from the date of termination to exercise the options. The holders did not exercise the options therefore the options have expired post October 31, 2014.

(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 vested 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.

As a result of the termination of the employees holding the options, the employees had a period of 90 days from the date of termination to exercise the options. The holders did not exercise the options therefore the options have expired in April, 2014.