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Commitments

3 Months Ended

Dec. 31, 2014

Note 9

Commitments

	a)	Share Purchase Warrants

		A summary of the Company’s share purchase warrants outstanding is presented below:

				Weighted
				Average
				Exercise
	Number of Shares			Price
Balance, October 1, 2013	9,149,479		$	0.75
Expired	(2,700,513	)	$	0.75
Issued	68,466,666		$	0.36
Balance, September 30, 2014	74,915,632		$	0.40
Issued	4,300,000		$	0.35
Balance, December 31,2 014	79,215,632		$	0.39

At December 31, 2014, the Company has 78,915,632 currently exercisable share purchase warrants outstanding as follows:

Number		Exercise Price	Expiry Date
6,448,966	$	0.75	July 5, 2018
500,000	$	0.75	February 14, 2019
120,000	$	1.00	February 24, 2019
33,833,333	$	0.30	March 13, 2019
33,833,333	$	0.42	March 13, 2019
180,000	$	0.31	May 31, 2019
2,000,000	$	0.30	October 22, 2019
2,000,000	$	0.42	October 22, 2019
250,000	$	0.19	January 31, 2015
50,000	$	0.31	May 31, 2019
79,215,632

During the three months ended December 31, 2014, the Company issued 250,000 warrants exercisable at $0.19 per share until January 31, 2015 to a consultant of the Company pursuant to a consulting agreement dated October 24, 2014. The warrants were to vest in the event the Company entered into a license agreement or direct sales transaction as a direct result of the consultant. Subsequent to December 31, 2014, these warrants expired unvested and unexercised. No stock-based compensation has been or will be recorded in the financial statements as none of the performance conditions for vesting were met.

		During the three months ended December 31, 2014, the Company issued 50,000 warrants exercisable at $0.31 per share until May 31, 2019 to a consultant of the Company pursuant to a consulting agreement. The fair value of these warrants at issuance was calculated to be $6,000 based on the Black-Scholes option pricing model using the following assumptions: expected term 4.59 years, expected volatility 102.33%, expected dividend yield 0.00%, risk free interest rate 1.58%. Stock based compensation will be recorded in the financial statements over the vesting term of three years from the date of grant.

		All of the 6,448,966 warrants expiring on July 5, 2018 and the 500,000 warrants expiring February 14, 2019 contain a contingent call provision whereby the Company may have the option to call for cancellation of all or any portion of the warrants for consideration equal to $0.001 per share, provided the quoted market price of the Company’s common stock exceeds $1.50 for a period of twenty consecutive trading days, subject to certain minimum volume restrictions and other restrictions as provided in the warrant agreements.

	b)	Stock–based Compensation Plan

		In April, 2007, the Company adopted a stock option plan which provides for the granting of stock options to selected directors, officers, employees or consultants in an aggregate amount of up to 3,000,000 common shares of the Company and, in any case, the number of shares to be issued to any one individual pursuant to the exercise of options shall not exceed 10% of the issued and outstanding share capital. The granting of stock options, exercise prices and terms are determined by the Company's Board of Directors. If no vesting schedule is specified by the Board of Directors on the grant of options, then the options shall vest over a 4 -year period with 25% of the granted options vesting each year commencing 1 year from the grant date. For stockholders who have greater than 10% of the outstanding common shares of the Company and who have granted options, the exercise price of their options shall not be less than 110% of the fair of the stock on grant date. Otherwise, options granted shall have an exercise price equal to their fair value on grant date.

		On February 2, 2011, the Company amended and restated the 2007 stock option plan to increase the number of options authorized to 4,000,000.


		A summary of the status of Company’s outstanding stock purchase options for the three months ended December 31, 2014 and for the year ended September 30, 2014 is presented below:

				Weighted		Weighted
	Number of			Average		Average Grant
	Shares			Exercise Price		Date fairv alue
Outstanding at October 1, 2013	3,075,000		$	1.26
Expired	(705,000	)	$	2.70
Granted	800,000		$	0.32	$	0.25
Outstanding at September 30, 2014 and December 31, 2014	3,170,000		$	0.70
Exercisable at December 31, 2014	2,100,000		$	0.56
Exercisable at September 30, 2014	2,100,000		$	0.56

At December 31, 2014, the following stock options were outstanding:

Number of Shares						Aggregate	Remaining
		Number		Exercise		Intrinsic	Contractual
Total		Vested		Price	Expiry Date	Value	Life (yrs)
100,000	⁽¹⁾	100,000	$	3.67	March 30, 2016	-	1.25
270,000	⁽²⁾	-	$	3.00	February 8, 2017	-	2.11
2,000,000	⁽³⁾	2,000,000	$	0.40	July 5, 2023	-	8.52
300,000	⁽⁴⁾	-	$	0.30	May 7, 2024	-	9.36
500,000	⁽⁵⁾	-	$	0.33	May 8, 2024	-	9.36
3,170,000		2,100,000				-

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s stock for the options that were in-the-money at December 31, 2014.

	⁽¹⁾	As of December 31, 2014 and September 30, 2014, these options had fully vested. These options were granted during the year ended September 30, 2011 and vested over a period of one year from the date of grant. The fair value of these options at issuance was calculated to be $267,000. The Company did not recognize any stock- based compensation during the three months ended December 31, 2014 (2013: $Nil).

	⁽²⁾	As of December 31, 2014 and September 30, 2014, none of these options had vested. The options vest upon one or more compounds: entering Phase II trial – 90,000 options; entering Phase III trial – 90,000 options; and receiving FDA approval – 90,000 options. No stock-based compensation has been recorded in the financial statements as none of the performance conditions have yet been met.


	⁽³⁾	As of December 31, 2014 and September 30, 2014 these options had fully vested. These options were granted during the year ended September 30, 2013 and vested immediately upon granting. The Company recognized stock based compensation expense of $Nil during the three months ended December 31, 2014 (2013: $Nil) in connection with these options.

	⁽⁴⁾	As of December 31, 2014 and September 30, 2014, none of these options had vested. These options were issued during the year ended September 30, 2014 and vest annually over a three year period commencing on the first anniversary of the date of the grant. The Company recognized stock based compensation expense of $5,830 during the three months ended December 31, 2014, (2013: $Nil) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

	⁽⁵⁾	As of December 31, 2014 and September 30, 2014, none of these options had vested. These options were issued during the year ended September 30, 2014 and vest annually over a four year period commencing on the first anniversary of the date of the grant. The Company recognized stock based compensation expense of $8,053 during the three months ended December 31, 2014 (2013: $Nil) in connection with these options.

During the three months ended December 31, 2013, 500,000 options expired for which the Company had recognized stock-based compensation of $Nil (2012: $Nil) during the three months ended December 31, 2013

There has been no stock-based compensation recognized in the financial statements for the three months ended December 31, 2014 (2013: $nil) for options that will vest upon the achievement of performance milestones because the Company has determined that satisfaction of the performance milestones was not probable. Compensation relating to stock options exercisable upon achieving performance milestones will be recognized in the period the milestones are achieved.

- Definition

The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights.

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