11.

COMMON STOCK

As of June 30, 2015, the Company had outstanding approximately 229,374,605 shares of common stock.

Warrants

On June 23, 2014, 47,618 common share purchase warrants were transferred to a non-related party.

On October 3, 2014, a warrant holder of the Company acquired 47,618 shares of the Company’s common stock, upon exercising warrants, at an exercise price of $0.105 per share of common stock for gross proceeds to the Company of $5,000.

The following table summarizes the Company’s warrants outstanding as of June 30, 2015:

	Shares Underlying Warrants Outstanding						Shares Underlying Warrants Exercisable
Range of Exercise Price	Shares Underlying Warrants Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Shares Underlying Warrants Exercisable		Weighted Average Exercise Price

$0.105 at June 30, 2015		71,857,141		0.40		0.105		71,857,141		0.105
$0.075 at June 30, 2015		520,000		0.98		0.075		520,000		0.075
		72,377,141		0.40		0.105		72,377,141		0.105

The following is a summary of warrant activity for the period ended June 30, 2015:

	Number of Warrants		Weighted Average Exercise Price		Intrinsic Value

Balance, September 30, 2014		72,424,759	$	0.105	$	0.215
Cancelled		–		–		–
Granted		–		–		–
Exercised		47,618		0.105		–
Balance, June 30, 2015		72,377,141	$	0.105	$	–

Outstanding Warrants, June 30, 2015		72,377,141	$	0.105	$	–
Exercisable Warrants, June 30, 2015		72,377,141	$	0.105	$	–

There were 72,377,141 warrants outstanding as of June 30, 2015 (September 30, 2014 – 72,424,759), which have a historical fair market value of $1,738,336 (September 30, 2014 - $1,738,336).

Measurement Uncertainty for Warrants

The Company used the Black-Scholes option pricing model (“Black-Scholes”) to value the options and warrants. This model was developed for use in estimating the fair value of traded “European” options which are liquid and that have no vesting restrictions and are fully transferable. The stock options that are granted to employees and directors and the warrants attached to the units issued by the Company are non-transferable and some vest over time, and all are “American” options. Option pricing models require the input of subjective assumptions including expected share price volatility. The fair value estimate can vary materially as a result of changes in the assumptions. The following assumptions are used in the Black-Scholes option-pricing model:

Expected Term – Expected term of 5 years represents the period that the Company’s stock-based awards are expected to be outstanding.

Expected Volatility – Expected volatilities are based on historical volatility of the Company’s stock, adjusted where determined by management for unusual and non-representative stock price activity not expected to recur. The expected volatility used ranged from 96% to 116%.

Expected Dividend – The Black-Scholes valuation model calls for a single expected dividend yield as an input. The Company currently pays no dividends and does not expect to pay dividends in the foreseeable future.

Risk-Free Interest rate – The Company bases the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The risk-free rate used ranged from 0.62% to 1.31%.