Stockholders' Deficiency:

The holders of common stock are entitled to

one

vote for each share held. There are

restrictions that limit the Company's ability to pay dividends on its common stock. The Company has

not

declared any dividends since incorporation. The Company's common stock has

par value per common stock.

(a) Common stock issuances:

During the quarter ended

June 30, 2017,

the Company closed a TSX Venture Exchange approved non-brokered private placement financing totaling

CAD$1.045

million (

$790,281

less issuance costs of

$4,553

). The private placement consisted of

2,323,779

units priced at

CAD$0.45

(

$0.34

) per unit. Each Unit was comprised of

one

common share and

one

share purchase warrant. Each share purchase warrant is exercisable into

one

common share of the Company for

months following closing. The exercise price of the warrants is Canadian

$0.55

per share for the

first

six

months following closing and Canadian

$0.65

per share for the period which is

months following closing.

The warrants have an exercise price in Canadian dollars whilst the Company's functional currency is US Dollars. Therefore, in accordance with ASU

815

- Derivatives and Hedging, the warrants have a derivative liability value. This liability value has

effect on the cashflow of the Company and does

not

represent a cash payment of any kind.

The fair value of derivative liability of

$123,283

has been estimated on the date of the subscription using the Binomial Lattice pricing model with the following assumptions:

	June 30, 2017
Average stock price		CAD$0.64
Expected dividend yield		-
Expected stock price volatility		33	%
Risk-free interest rate		0.71	%
Expected life of warrants (in years)		1

The average stock price is calculated on the probability weighted average price of the exercise of the warrants.

(b) Stock option plans:

options were granted or exercised during the period ended

June 30, 2017.

	Number of options			Weighted average exercise price
Outstanding and exercisable, December 31, 2015		-		$	-

Granted		1,010,000			0.42
Exercised		-			-

Outstanding, December 31, 2016		1,010,000			0.42

Granted		-			-
Expired		(70,000	)		0.42
Exercised		-			-

Outstanding, June 30, 2017		940,000			0.42

The fair value of each option grant has been estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

	June 30, 2017		December 31, 2016
Exercise price		-		CAD$0.54
Expiry date		-		December 21, 2021
Expected dividend yield		-		-
Expected stock price volatility		-		78	%
Weighted average volatility		-		78	%
Risk-free interest rate		-		1.9	%
Expected life of options (in years)		-		5
Forfeiture rate		-		0	%
Intrinsic value	$	50,683	$	0

Subsequent to the quarter ended

June 30, 2017,

35,000

options were cancelled unexercised.