6.	Stock Options and Warrants

In 2007, the Company's Board of Directors approved the 2007 Stock Option Plan (amended September 29, 2008) (“the Plan”) to offer an incentive to obtain services of key employees, directors and consultants of the Company. The Plan provides for the reservation for awards of an aggregate of 10% of the total shares of Common Stock outstanding from time to time. No Plan participant may receive stock options exercisable for more than 500,000 shares of Common Stock in any one calendar year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of the Company's capital stock on the date of grant). The term of stock options granted under the Plan is not to exceed ten years and the stock options vest immediately upon granting.

The following is a summary of stock option activity and status at March 31, 2014:

Options Outstanding and Exercisable By Quarter	Stock Options #		Weighted Average Exercise Price $	Remaining Contractual Life (years)		Aggregate Intrinsic value
As at December 31, 2011		1,810,000	0.550		4.28		36,500
Forfeited during quarter		(40,000)	1.300		-		-
Granted during quarter		320,000	0.250		-		-
As at March, 31, 2012		2,090,000	0.450		4.21		42,000
Granted during quarter		40,000	0.325		-		-
As at June, 30, 2012		2,130,000	0.485		3.97		34,125
Forfeited during quarter		(200,000)	1.300		-		-
Granted during quarter		-	-		-		-
As at September 30, 2012		1,930,000	0.400		3.74		52,500
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at December 31, 2012		1,930,000	0.400		3.51		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at March 31, 2013		1,930,000	0.400		3.28		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at June 30, 2013		1,930,000	0.400		3.06		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at September 30, 2013		1,930,000	0.400		2.83		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at December 31, 2013		1,930,000	0.400		2.60		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at March 31, 2014		1,930,000	0.400		2.38		Nil
Forfeited during quarter		-	-		-		-
Granted during quarter		-	-		-		-
As at June 30, 2014		1,930,000	0.400		2.15		Nil

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options as of each date presented.

The total fair value of options granted for the six months ended June 30, 2014 was nil (June 30, 2013: $nil) and expensed in full as options were vested in full on grant. The fair value of options are determined using the Black Scholes option pricing model that takes into account the exercise price, the expected life of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. Management determined 2.50 years to be the average expected likely life of the options and utilized the simplified method due to the fact that the Company has not had significant options granted to develop historical data to provide a reasonable basis to estimate option lives.

The total fair value of options granted for the three months ended September 30, 2013 was nil (September 30, 2012: $nil) and expensed in full as options were vested in full on grant. The fair value of options are determined using the Black Scholes option pricing model that takes into account the exercise price, the expected life of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. Management determined 2.50 years to be the average expected likely life of the options and utilized the simplified method due to the fact that the Company has not had significant options granted to develop historical data to provide a reasonable basis to estimate option lives.

The total fair value of options granted for the three months ended June 30, 2013 was nil (June 30, 2012: $11,979) and expensed in full as options were vested in full on grant. The fair value of options are determined using the Black Scholes option pricing model that takes into account the exercise price, the expected life of the option, the share price at grant date (April 10, 2012) and expected price volatility of the underlying share, the expected dividend yield (nil assumed) and the risk free interest rate (4.50% used) for the term of the option. Management determined 2.50 years to be the average expected likely life of the options and utilized the simplified method due to the fact that the Company has not had significant options granted to develop historical data to provide a reasonable basis to estimate option lives. Volatility rates were calculated at the grant date of each option tranche and rates of 161.04% respectively were used.

The total fair value of options granted for the period ended March 31, 2013 was nil (March 31, 2012: $43,681) and expensed in full as options were vested in full on grant. The fair value of options are determined using the Black Scholes option pricing model that takes into account the exercise price, the expected life of the option, the share price at grant date (January 13, 2012) and expected price volatility of the underlying share, the expected dividend yield (nil assumed) and the risk free interest rate (4.50% used) for the term of the option. Management determined 2.50 years to be the average expected likely life of the options and utilized the simplified method due to the fact that the Company has not had significant options granted to develop historical data to provide a reasonable basis to estimate option lives. Volatility rates were calculated at the grant date of each option tranche and rates of 120.89% were used.

As of June 30, 2014, there are 3,760,000 outstanding Warrants to purchase shares of common stock at respective prices of $0.15 for 2 years and $0.07 for 2 years (June 30, 2013: 1,930,000).