Common Stock Options and Warrants

9 Months Ended

Oct. 31, 2011

Compensation Related Costs, Share Based Payments

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

(10)      Common Stock Options and Warrants

The Company's Stock Option Plan states that the exercise price of each option will be granted at an amount that equals the market value at the date of grant. All options vest at a time determined at the discretion of the Company's Board of Directors. All options expire if not exercised within 10 years from the date of grant, unless stated otherwise by the Board of Directors upon issuance.

The Company records compensation expense for the fair value of options granted under the Company's stock option plan. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

During the quarter ending July 31, 2011, the Company issued stock options of 2,000,000 each to the four directors. The options were priced at $0.05 per share and expire 5 years from the date of issuance. The fair value of the option grant was estimated on the date of grant utilizing the Black-Scholes option pricing model. The fair value of these options was determined to be $76,741 based on the following assumptions: expected life of options of 5 years, expected volatility of 186%, risk-free interest rate of 1.6% and no dividend yield.

Options	Number of Shares	Weighted Average Exercise Price	Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at February 1, 2011	15,000,000	$0.24	2.6 yrs	$3,554,000
Issued	2,000,000	$0.05	4.8 yrs	100,000
Exercised	(300,000)	$0.10	-	(30,000)
Expired/Cancelled	(2,650,000)	$0.10	-	(265,000)
Outstanding at October 31, 2011	14,050,000	$0.24	2.5 yrs	$3,359,000
Exercisable at October 31, 2011	14,050,000	$0.24	2.5 yrs	$3,359,000

The following table summarizes information about fixed-price stock options at October 31, 2011:

Range of Prices	Weighted Average Number Outstanding	Contractual Life	Weighted Average Exercise Price	Weighted Average Number Exercisable	Weighted Average Exercise Price
$0.05	600,000	.25 yrs	$0.05	600,000	$0.05
$0.05	2,000,000	4.5 yrs	$0.05	2,000,000	$0.05
$0.06	3,150,000	3.23 yrs	$0.06	3,150,000	$0.06
$0.08	500,000	3.23yrs	$0.08	500,000	$0.08
$0.10	1,700,000	.5 yrs	$0.10	1,700,000	$0.10
$0.30	100,000	3.23 yrs	$0.30	100,000	$0.30
$0.40	4,000,000	1.1 yrs	$0.40	4,000,000	$0.40
$0.60	2,000,000	4.1 yrs	$0.60	2,000,000	$0.60

During the year ended January 31, 2011, the Company issued 6,626,486 warrants in connection with a private placement. The warrants are exercisable for a period of two years for $0.12 per share. However, if the common shares trade at over $0.18 per share in any 20-day period during the life of the warrants, the Company has the right to accelerate the expiry date of the warrants. Warrants in the amount of 2,859,820 were exercised by two shareholders in settlement of debt.

On October 31, 2011, the Company had the following outstanding warrants:

Exercise Price	Number Of Shares	Remaining Contractual Life	Exercise Price times Number of Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value
$0.12	3,766,660	1.0 yrs	$451,999	$0.12	-