Common Stock Options and Warrants

12 Months Ended

Jan. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 8 - Common Stock Options and Warrants    

The Company's 2012 Stock Option Plan adopted by the Board of Directors on September 17, 2012 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 2012 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.

On March 29, 2012, the Company issued stock options of 2,500,000 to the officers and directors. The options were priced at $0.06 per share and expire five 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 $99,924 based on the following assumptions: expected life of options of 5 years, expected volatility of 305.3%, risk-free interest rate of 1.01% and no dividend yield.

Options	Number of Shares	Weighted Average Exercise Price
Outstanding at January 31, 2011	15,000,000	$0.25
Issued	2,000,000	$0.05
Exercised	(300,000)	$0.10
Expired/Cancelled	(3,250,000)	$0.09
Outstanding at January 31, 2012	13,450,000	$0.25
Issued	2,500,000	$0.06
Exercised	-	-
Expired/Cancelled	(5,700,000)	$0.31
Outstanding at January 31, 2013	10,250,000	$0.17
Exercisable at January 31, 2013	10,250,000	$0.17

The following table summarizes information about stock options at January 31, 2013:

Range of Prices	Weighted Average Number Outstanding	Contractual Life	Weighted Average Exercise Price	Weighted Average Number Exercisable	Weighted Average Exercise Price
$0.05	2,000,000	3.30 yrs	$0.05	2,000,000	$0.05
$0.06	5,650,000	2.93yrs	$0.06	3,150,000	$0.06
$0.08	500,000	1.97 yrs	$0.08	500,000	$0.08
$0.30	100,000	1.97 yrs	$0.30	100,000	$0.30
$0.60	2,000,000	2.84 yrs	$0.60	2,000,000	$0.60

During the year ended January 31, 2013, 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 expiration date of the warrants. Warrants in the amount of 2,859,820 were exercised by two shareholders in settlement of debt. During the year ended January 31, 2013, 3,766,666 warrants expired.

On June 19, 2012 the Company issued 2,000,000 shares of common stock and a warrant to purchase 1,000,000 shares of common stock at $0.05 per share within a three year period.

On August 31, 2012, in connection with a note payable, the Company entered into a Warrant Purchase Agreement with an unaffiliated accredited investor. As part of the terms of the note, the Company issued a five year warrant to the lender to purchase 6,814,000 shares of Company common stock, exercisable at $0.02 per share. The fair value of these warrants at the date of grant was $132,332 using a Black Scholes option pricing model and the following assumptions: expected life of warrants is five years, expected volatility rate of 194.81%, risk free rate of 0.59%, and an exercise price of $0.02.  The $132,332 was fully expensed on the date of issuance.

On January 7, 2013, in connection with a note payable, the Company entered into a Warrant for Purchase of Common Stock agreement with a related party investor. As stated in the agreement, the Company granted 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share. The fair value of these warrants at the date of grant was $25,417 using a Black Scholes option pricing model and the following assumptions: expected life of warrants is three years, expected volatility rate of 210.18%, risk free rate of 0.41%, and an exercise price of $0.02.  The $25,417 was fully expensed on the date of issuance.

Warrants	Number of Shares	Weighted Average Exercise Price
Outstanding at January 31, 2011	6,626,486	$0.12
Issued	-
Exercised	-
Expired/Cancelled	(2,859,820)	$0.12
Outstanding at January 31, 2012	3,766,666	$0.12
Issued	8,814,000	$0.02
Exercised	-	-
Expired/Cancelled	(3,766,666)	$0.12
Outstanding at January 31, 2013	8,814,000	$0.02
Exercisable at January 31, 2013	8,814,000	$0.12

On January 31, 2013, 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
$0.05	1,000,000	2.38 yrs	$50,000	$0.05	$0.00
$0.02	6,814,000	4.58 yrs	$136,280	$0.02	$0.00
$0.02	1,000,000	2.93 yrs	$20,000	$0.02	$0.00