Common Stock Options and Warrants

3 Months Ended

Apr. 30, 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 fair 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 25, 2013 the Company issued stock options to purchase 4,000,000 shares of common stock to an individual providing contract CFO services to the Company, half of which vested upon issuance and twenty five percent which will vest in each of the subsequent two years of service to the Company.  The options were priced at $0.02 per share and will 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 $79,498 Based on the following assumptions: expected life of the options of 5 years, expected volatility of 243.9%, risk-free interest rate of 0.80% and no dividend yield.  These options will be expensed over their vesting schedule.

On March 25, 2013 the Company issued stock options to purchase 500,000 shares of common stock to an individual providing contract accounting services to the Company, half of which vested upon issuance and the other half which will vest after one year of service to the Company.  The options were priced at $0.02 per share and will 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 $9,937 Based on the following assumptions: expected life of the options of 5 years, expected volatility of 243.9%, risk-free interest rate of 0.80% and no dividend yield.  These options will be expensed over their vesting schedule.

Options	Number of Shares	Weighted Average Exercise Price
Outstanding at January 31, 2013	10,250,000	$0.17
Issued	4,500,000	$0.02
Exercised	-	-
Expired/Cancelled	-	-
Outstanding at April 30, 2013	14,750,000	$0.12
Exercisable at April 30, 2013	12,500,000	$0.14

The following table summarizes information about stock options at April 30, 2013:

Range of Prices	Weighted Average Number Outstanding	Contractual Life	Weighted Average Exercise Price	Weighted Average Number Exercisable	Weighted Average Exercise Price
$0.02	4,500,000	4.91 yrs	$0.02	2,250,000	$0.02
$0.05	2,000,000	3.06 yrs	$0.05	2,000,000	$0.05
$0.06	5,650,000	2.69 yrs	$0.06	5,650,000	$0.06
$0.08	500,000	1.73 yrs	$0.08	500,000	$0.08
$0.30	100,000	1.73 yrs	$0.30	100,000	$0.30
$0.60	2,000,000	2.60 yrs	$0.60	2,000,000	$0.60

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.

On April 26, 2013 and April 30, 2013 the Company closed on investments from two investors for $10,000 and $25,000, respectively, by the issuance of 500,000 shares and 1,250,000 shares respectively at $0.02 per share.  Each share included one-half warrant exercisable at $0.25 per share with a term of five years from issuance. Accordingly, the Company issued a total of 875,000 warrants to purchase common stock to these investors exercisable at $0.25 per share for a five year term.

Warrants	Number of Shares	Weighted Average Exercise Price
Outstanding at January 31, 2013	8,814,000	$0.02
Issued	875,000	$0.25
Exercised	-	-
Expired/Cancelled	-	-
Outstanding at April 30, 2013	9,689,000	$0.04
Exercisable at April 30, 2013	9,689,000	$0.04

On April 30, 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
$0.02	1,000,000	2.69 yrs	$20,000	$0.02
$0.02	6,814,000	4.34 yrs	$136,280	$0.02
$0.05	1,000,000	2.14 yrs	$50,000	$0.05
$0.25	875,000	3.00 yrs	$218,750	$0.25