11.

COMMON STOCK

As of September 30, 2015, the Company had outstanding 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.

On July 28, 2015, the Company’s Board approved the extension of the expiration date of some warrants to purchase shares of the Company’s common stock. The exercise price of the warrants remained unchanged at $0.105 per share. As a result of this extension, the expiration dates of the warrants were amended from the original expiry date of November 23, 2015 to November 23, 2016, with all other terms of the original warrants remaining in full force and effect. In consideration of extending the expiry date of this series of warrants, the number of outstanding warrants was reduced from 71,857,141 to 52,155,221 common share purchase warrants.

The Company valued the affected warrants immediately before and after the warrants modification. The value of the warrants after the modification was increased by $443,062, resulting in an accounting adjustment to additional paid-in capital and accumulated deficit in the consolidated statements of shareholders’ equity.

The following table summarizes the Company’s warrants outstanding as of September 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 September 30, 2015		52,155,221		1.15	$	0.105		52,155,221	$	0.105
$0.075 at September 30, 2015		520,000		0.72		0.075		520,000		0.075
		52,675,221		1.15	$	0.105		52,675,221	$	0.105

The following is a summary of warrant activity for the year ended September 30, 2015:

	Number of Warrants			Weighted Average Exercise Price		Intrinsic Value

Balance, September 30, 2014		72,424,759		$	0.105	$	0.215
Exercised		(47,618	)		0.105		–
Cancelled due to warrants extension		(19,701,920	)		0.105		–
Granted		–			–		–
Balance, September 30, 2015		52,675,221		$	0.105	$	–

Outstanding Warrants, September 30, 2015		52,675,221		$	0.105	$	–
Exercisable Warrants, September 30, 2015		52,675,221		$	0.105	$	–

There were 52,675,221 warrants outstanding as of September 30, 2015 (September 30, 2014 – 72,424,759), which have a fair value of $3,153,216 (September 30, 2014 - $1,743,336).

Measurement Uncertainty for Warrants

The Company used the Black-Scholes option pricing model (“Black-Scholes”) to value the warrants. This pricing model was developed for use in estimating the fair value of traded “European” options. The private placement warrants issued by the Company are transferable and have no vesting restrictions and can be exercised at any time up to their expiration date, and are “American” options. This pricing model requires 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, and therefore can materially affect the calculated fair value of the warrants. The following assumptions were used in the Black-Scholes pricing model to value the warrants:

Expected Term – Expected term of 1.34 years, represents the period that the warrants were 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 180%.

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 0.67%.