Quarterly report pursuant to Section 13 or 15(d)

STOCK PURCHASE WARRANTS

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STOCK PURCHASE WARRANTS
6 Months Ended
May 31, 2013
STOCK PURCHASE WARRANTS [Text Block]
7.

STOCK PURCHASE WARRANTS

   
 

Year ended November 30, 2012

   
 

On January 4, 2012, the board of directors issued warrants to a Company in which the Chief Operating officer has an interest in, to acquire a total of 800,000 common shares. These warrants were issued at an exercise price of $0.13 per share with an expiry term of four years. The Company expensed stock based compensation cost of $100,148. The fair value of each warrant used for the purpose of estimating the compensation expense is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:


  Risk free rate   2.00%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   206.87%  
  Market price of Company’s common stock on date of grant of options $ 0.13  
  Compensation expense $ 100,148  

On March 9, 2012, all of the issued and outstanding stock options for common shares in the Company’s capital stock previously issued to Elad, Ilan Shalev and Haim Danon (being principals of Elad) were exchanged into warrants on terms identical to the terms of the existing stock options in the Company. The Company thus cancelled 850,000 options having an exercise price of $0.25 per common share and expiring on June 30, 2014 and issued 850,000 warrants at exercise price of $0.25 per common share and expiring June 30, 2014 (see note 6)

On August 9, 2012, the board of directors issued warrants to a Company owned and controlled by a director, to acquire a total of 400,000 common shares. These warrants were issued at an exercise price of $0.20 per share with an expiry term of four years. The Company expensed stock based compensation cost of $75,013. The fair value of each warrant used for the purpose of estimating the compensation expense is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   3.63%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   183.31%  
  Market price of Company’s common stock on date of grant of options $ 0.20  
  Compensation expense $ 75,013  

On October 3, 2012, the board of directors issued warrants to a consultant, to acquire a total of 75,000 common shares. These warrants were issued at an exercise price of $0.42 per share with an expiry term of three years. The Company expensed stock based compensation cost of $28,911. The fair value of each warrant used for the purpose of estimating the compensation expense is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   1.5%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   199.60%  
  Market price of Company’s common stock on date of grant of options $ 0.42  
  Compensation expense $ 28,911  

On September 19, 2012 the board of directors approved the cancellation of 905,000 options issued on January 4, 2012, to be exchanged into 905,000 warrants on terms identical to the terms of the existing stock options in the Company. The cancellation of 905,000 options and issuance of 905,000 warrants in lieu thereof was effective October 8, 2012 (see note 6).

Six months ended May 31, 2013

On January 30, 2013, the board of directors granted 100,000 warrants as an incentive to a lender who provided a working capital loan of $193,400 (CAD $200,000). These warrants were issued at an exercise price of $0.50 per share and vest immediately with an expiry term of two years. The fair value of incentive warrants used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   1.35%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   187.87%  
  Market price of Company’s common stock on date      
  of grant of options $ 0.47  
  Compensation expense $ 38,183  

On March 14, the board of directors granted 50,000 warrants as an incentive to a director who provided a working capital loan of $96,700 (CAD $100,000). These warrants were issued at an exercise price of $0.50 per share and vest immediately with an expiry term of two years. The fair value of incentive warrants used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   1.35%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   182.13%  
  Market price of Company’s common stock on date      
  of grant of options $ 0.40  
  Compensation expense $ 15,637  

On April 12, 2013, the board of directors granted 100,000 warrants as an incentive to a lender who provided a working capital loan of $193,400 (CAD $200,000).. These warrants were issued at an exercise price of $0.50 per share and vest immediately with an expiry term of two years. The fair value of incentive warrants used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   1.35%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   168.05%  
  Market price of Company’s common stock on date      
  of grant of options $ 0.35  
  Compensation expense $ 25,351  

On May 14, 2013, the board of directors granted 75,000 warrants as an incentive to a lender who provided a working capital loan of $145,050 (CAD$150,000). These warrants were issued at an exercise price of $0.50 per share and vest immediately with an expiry term of two years. The fair value of incentive warrants used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

  Risk free rate   1.35%  
  Expected dividends   0%  
  Forfeiture rate   0%  
  Volatility   181.17%  
  Market price of Company’s common stock on date      
  of grant of options $ 0.35  
  Compensation expense $ 20,074