10. Options and warrants
During the quarter ended March 31, 2009, the Company issued 4,100,000 options (March 31st, 2008 – 4,400,000
options) and recognized $1,170,750 (March 31st, 2008 - $459,750) of expense using the fair value method. The fair
value of each option granted was determined to be $1.40 and is estimated on the date of the grant using the Black-
Scholes option-pricing model with the following weighted average assumptions used for grants: dividend yield of 0%
(December 31st, 2008 – 0%), expected volatility of 106% (December 31st, 2008 – 50%), risk free interest rate of
3.45% (December 31st, 2008 – 3.91 - 4.62%), and expected life of 1,825 days (December 31st, 2008 – 365 - 1,825
days). The options granted in the most recent quarter vest over three years and the Company is bringing the related
item into income on an accelerated basis during those 3 years with 1/3 being expensed over 3 years, 1/3 being
expensed over 2 years and 1/3 being expensed over 1 year.

Bear with me as I do not do this for a living.

Dale's gain from the sale of his shares(assuming his SP average is very low, I will use zero for arguments sake)

500,000 shares at $2.65= $1,350,000.00 he keeps 75% $990,000.00

If from the above he was granted 2.1 million options.1/3 of the total comes in at 700,000 shares @1.4 comes to around $980,000.00.

His cost base is not zero but all that would translate into is less options.

Getting options prior to good news makes sense as you could get them at a lower price.

Hopefully we see that transaction in the coming days on the insider trading site.