10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No. 1

[X]  ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2012

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ___________.

Commission file number 000-53942

URBAN BARNS FOODS INC.
(Exact name of registrant as specified in its charter)

Nevada	20-0215404
(State or Other Jurisdiction of Incorporation of	(I.R.S. Employer Identification No.)
Organization)
7170 Glover Road
Milner BC V0Z 1T0	604-888-0420
(Address of principal executive offices) (ZIP Code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section12 (g) of the Act: Common Stock, $0.001 par value

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ]          No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [   ]          No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]           No [   ] 

Indicate by check mark whether the registration has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that he registrant was required to submit and post such files).

Yes [   ]          No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

[   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  [   ] Accelerated filer   [   ] Non-accelerated filer  [   ] Smaller reporting company  [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)

Yes [   ]          No [X]

State the aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

The aggregate market value of Common Stock held by non-affiliates of the Registrant on January 31, 2012 was $371,920.26 based on a $0.06 closing price for the Common Stock on January 31, 2012. For purposes of this computation, all executive officers and directors have been deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

145,266,817 shares of common stock issued & outstanding as of November 2, 2012

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

On November 2, 2012, management of Urban Barns Foods Inc. (the "Company") concluded that the consolidated financial statements of the Company, for the year ended July 31, 2012 and the related discussion of results of operations and financial condition included in the Company's Annual Report (the "Report") on Form 10-K for the year ended July 31, 2012 filed on October 30, 2012, should no longer be relied on as the Company inadvertently filed a previous version of the Form 10K that did not have the Company’s independent registered accounting firm’s consent and approval. Therefore, this Form 10K/A is being filed today.

TABLE OF CONTENTS
PART I		4
Item 1.	Business	4
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	[Removed and Reserved]	17
PART II		17
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	18
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 8.	Financial Statements and Supplementary Data	23
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	24
Item 9A.	Controls and Procedures	24
Item 9B.	Other Information	25
PART III		25
Item 10.	Directors, Executive Officers and Corporate Governance	25
Item 11.	Executive Compensation	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34
Item 13.	Certain Relationships and Related Transactions, and Director  Independence	35
Item 14.	Principal Accountant Fees and Services.	36
PART IV		36
Item 15.	Exhibits, Financial Statement Schedules	36
Exhibits		37
SIGNATURES		38

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PART I

Item 1. Business

Forward-looking Statements

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.

As used in this annual report, the terms "we", "us", "our", “our company”, and "Urban Barns" mean Urban Barns Foods Inc. and of our subsidiary, unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

Overview

We were incorporated as HL Ventures Inc. on May 21, 2007 under the laws of the State of Nevada. Non Industrial Manufacture Inc. was incorporated on February 10, 2010 under the laws of the Province of Alberta. On June 2, 2011 we acquired all of the issued and outstanding common shares of Non Industrial Manufacture Inc. pursuant to a share exchange agreement dated May 2, 2011. As a result, Non Industrial Manufacture Inc. is now our wholly owned subsidiary. Our principal executive office is located at 7170 Glover Drive, Milner, British Columbia, Canada V0X 1T0. Our telephone number is 604.888.0420. Our fiscal year end is July 31.

Current Business

We are an urban produce production company that aims to be the supplier of choice of fresh, locally grown, high-quality organic and conventional fruits and vegetables for urban consumers.

We have identified a revenue opportunity in the produce industry which we believe is currently underutilized. This consists primarily of producing select fruits and vegetables in a secure, indoor environment in close proximity to urban centers, where the population of potential consumers exceeds that of rural locales, regardless of regional climate or outdoor growing season constraints. Our business plan therefore seeks to eliminate two of the most important logistical problems facing both producers and consumers of organic and conventional fruits and vegetables today:

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• costs and delays related to shipping fresh produce from where it is grown to where it can be sold; and

• variations in climate that prevents certain produce from being grown in certain markets.

Our strategy is to develop a series of “Urban Barns” that we use to grow our fruits and vegetables in a number of urban centers, beginning with Montreal, Canada. To do this, we plan to lease and retrofit a series of warehouse-type facilities in high density strategic locations and purchase and install proprietary growing machines to grow our organic and conventional produce. We hope that this will provide consumers with a desirable degree of food security in addition to the other benefits associated with cubic farming, such as a reduced ecological footprint. As of the date of this Prospectus, we have not secured any such locations and have not begun growing fruit and vegetables in commercially viable quantities.

Our mission is to become the first company to create brand-name awareness for its produce by providing locally-grown fruits and vegetables to local retailers and businesses at prices that compete with those at which conventional and organic produce is typically offered. We believe that this will permit consumers to substitute fresh, healthy, high-quality local equivalents into their diet in place of fruits and vegetables grown in distant regions at a similar or more competitive price point.

Currently, geography and logistics make local grown organic fruit and vegetables specialty or seasonal produce in areas with harsh winters such as the Northeast and Mid-West of the USA and all of Canada. The most common method of tapping into this market is with greenhouses. Unfortunately, this is a solution with high fixed costs and high variable costs. Due to the harsh winters and the encroachment on prime agricultural land, there is no realistic way for greenhouse growers to rapidly scale their operations to service all major urban markets. The main suppliers in the sector are large commercial enterprises in South California, or foreign enterprises in Mexico, Chile and Holland. According to figures generated by our management, shipping currently constitutes about seventy percent of the produce supply chain cost. As such, we believe there is an opportunity for Urban Barns to do two things: lower shipping costs without raising the fixed costs, and differentiate its product from other available produce.

Technology

The technology that we plan to use to cultivate our fruits and vegetables consists of a proprietary cubic farming apparatus used to grow produce indoors which takes up a limited amount of space and subjects plants to a variety of light spectrums over the course of their growing cycles. In addition to the land-use benefits it provides, we believe that the growing apparatus makes efficient use of light, energy, water, temperature, production cycle, transportation and labor, and is capable of producing safe, healthy, fresh, high-quality produce in controlled indoor environments. Our strategy of using this technology strategically located in densely populated urban areas will allow us to reduce the cost of production, water usage, carbon emissions and herbicide and pesticide use as compared to traditional methods of farming.

Our technology was developed by us and although the machine is not yet protected by patent, we have filed Patent Corporation Treaty (which covers approximately 145 member countries), USA and Kingdom of Saudi Arabia patent applications to protect this proprietary technology. Currently, we rely on business secrets and know-how to protect our proprietary technology.

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In addition to our proprietary technology, we are also actively seeking to acquire the rights to patented growing equipment developed by third parties. Our management believes that our growing machines, which are set to occupy approximately 150 square feet of floor space, will be able to yield as much output as 1500 square feet of greenhouse space, and allow a single plant to produce up to five times the crop yield that it would using standard greenhouse cultivation practices.

Products and Services

We plan to initially offer the following fruits and vegetables for sale, as we have found that they are relatively easy to propagate and can be grown to maturity in short production cycles: multiple varieties of lettuce, spinach, basil, various herbs, and strawberries. We have identified these items due to their high demand and profit potential, but this list is by no means exhaustive.

We have identified major urban centers in the United States and Canada, where the population is dense and many people live in areas serviced by a relatively small number of distant large food growers situated in South California, Mexico and Chile. We envision a network of ‘Urban Barns’ delivering hundreds of tons of food daily to retailers servicing these urban centers, and millions of people gaining access to our locally grown, fresh, high-quality produce instead of being shipped from Mexico, California or Chile. We believe that this will effectively increase quality of the produce as well as reduce shipping times and costs to bring fresh produce to market.

Market

Currently, geography and logistics make produce farming a specialty or seasonal enterprise. We are dedicated to changing this perception by growing fresh, safe, healthy organic and conventional fruits and vegetables in urban facilities regardless of climate on a year-round basis in a more environmentally-sustainable manner than traditional or greenhouse cultivation would permit. Through the use of our specialized growing machines and the selection of strategic locations for our “Urban Barns”, we believe that we can both service and expand the ever-increasing market for locally-grown produce in a cost-effective and competitive manner.

The value of the 2008 US vegetable crop was estimated at $10.4 billion, up 4 percent from 2007. In terms of production, the three largest crops were onions, head lettuce and watermelons, which combined to account for 37 percent of the total production. Tomatoes, head lettuce and onions claimed the highest values, accounting for 32 percent of the total value when combined. California continued to be the leader in fresh vegetable and melon production, accounting for 49 percent of annual fresh vegetable and melon output. (Vegetables Annual Summary, NASS, USDA, 2009.)

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There are strong indications that consumers are now, more than ever, interested in purchasing safe, locally-grown produce that is subject to a standard of quality such as organic certification. The recent growth of farmer’s markets and the expansion of supermarket chains such as Whole Foods demonstrates that demand for such produce exists, as do public concern over herbicide and pesticide use, country-of-origin labeling and greenhouse gas emissions associated with shipping produce hundreds, and even thousands, of miles from farm to retail outlet. The “eat locally” movement has even been touted in the mainstream U.S. media as a method of reducing one’s carbon footprint.

Organic products account for less than 2% of Canada’s food supply and occupy less than 1% of its dedicated cropland. Nevertheless, over the past decade the market for such products has grown by approximately 20% and it is projected to continue to grow for the foreseeable future.

We plan to capitalize on the opportunity presented by this shift in consumer attitudes by offering them fresh; locally-grown organic and conventional produce alternatives that are competitively-priced and capable of instilling a measure of brand recognition. To achieve the latter, we plan to employ shop-floor selling techniques (i.e. “taste-before-you-buy” campaigns) at the retail level, engage in targeted print advertising and leverage existing social networks on the Internet. We also plan to target additional markets that require bulk produce on a continuous basis, such as produce processors, hotels and restaurants, and we believe that our ability to provide a constant supply of select high volume fruits and vegetables regardless of the local climate will differentiate our produce from that of our competitors.

Distribution Methods

We plan to become a leading supplier of produce to large retail chains by differentiating our fruits and vegetables from other available produce and substantially lowering the shipping costs required to transport most produce from its point of origin to point of sale. To accomplish this, we plan to acquire and retrofit a network of buildings in high density urban locations and equip them with proprietary growing machines to cultivate a variety of fruits and vegetables. The technology will allow us to grow produce with high yields using a fast growing cycle in any location regardless of the local climate.

Once we have grown our produce, we plan to leverage the infrastructure established by Robyn Jackson, our Vice President, Logistics and Director, to distribute our fruits and vegetables on a cost-effective basis. We anticipate entering into agreements with a variety of regional distributors in any other locations in which we plan to operate once we have established the validity of our business model. Mr. Jackson will be in charge for establishing logistics solutions for Urban Barns fruit and produce as well as development of relationships with local distributors and major retailers.

Locations

We plan to establish our first production “Urban Barn” in Montreal, Quebec, Canada. We have entered into negotiations with property owners, to supply space for our first commercial facility. We targeted Montreal based on the presence of a large potential customer base totaling 4 million population, and a thriving tourism industry whose hotels and restaurants require a supply of fresh, high-quality produce year-round.

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Following the set-up of our first “urban barn”, we anticipate investigating other potential locations in the “Quebec City through Windsor, Ontario, corridor which is home to 18.5 million urban residents. From both our first planned location in Montreal and from Windsor, Ontario offers two strategic locations to expand into the United States.

Competition

We will compete with a number of unrelated seasonal operators of greenhouses spread across our target market areas. This common method of growing high-quality produce is limited in terms of cost and scale. Operators must incur both high fixed and variable costs to build and maintain specialized structures for this purpose, which makes it difficult for them to scale their operations to optimal size in multiple locations.

We plan to establish a network of controlled indoor environments in multiple urban locations for the purpose of growing fresh fruit and vegetables and supplying this produce to major food retailers on a year-round basis. Since we plan to acquire and retrofit existing vacant buildings and use proprietary technology to grow our fruits and vegetables, we will not have to incur a significant capital outlay to establish our “urban barns”, and the only limitations we will face in terms of scale will be related to the cost of acquiring and renovating similar facilities in close proximity to multiple urban centers.

We also face competition from producers of organic fruits and vegetables that are grown and shipped from such locations as California, Mexico and Chile. In many cases, these producers are able to grow produce year-round, but they face uncertainty related to shipping costs and delays and variations in climate, as well as environmental risks related to runoff exposure and the presence of airborne agents from surrounding farms.

Intellectual Property

We own the copyright of our logo and all of the contents of our website, www.urbanbarnsfoods.com. We have not filed for any protection of our trademark and we do not currently own any other intellectual property rights. However, we have filed for patent protection for our growing technology and growing methods in Canada, USA and Internationally. The technology and growing methods that we plan to use to cultivate our fruits and vegetables consists of a proprietary cubic farming apparatus used to grow produce indoors which takes up a limited amount of space and subjects plants to a variety of light spectrums over the course of their growing cycles. In addition to the land-use benefits it provides, we believe that the growing apparatus makes efficient use of light, energy, water, temperature, production cycle, transportation and labor, and is capable of producing safe, healthy, fresh, high-quality produce in controlled indoor environments.

Research and Development

We have spent $3,287 on research and development activities, $33,211 researching, developing and designing our technology for our patent protection filings, and $144,931 on R&D growing machines, lighting and environmental control systems from our inception on February 10, 2010 to July 31, 2012.

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Reports to Security Holders

Although we are not currently subject to the reporting and other requirements of the Exchange Act, we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of our fiscal year.

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Government Regulation

We do not currently require any government approvals for our current business activities. However, once we have established our planned “urban barns” locations, we anticipate that we will have to obtain the necessary government licenses, authorizations and labor permits to legally manage our facilities in the locations in which we plan to operate. Many of our facilities and products will be subject to various laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the quality and safety of products, sanitation, safety and health matters, and environmental control. We believe that we comply with such laws and regulations in all material respects, and that continued compliance with such regulations will not have a material effect upon capital expenditures, earnings, or our competitive position.

While our intended business activities do not currently violate any laws, any regulatory changes that impose restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs, which could have a material adverse effect on our results of operations.

We do not currently incur any significant expenses related to compliance with environmental regulations, and do not believe that this will be a significant expense once we establish our ‘Urban Barns’.

Employees

As of October 30, 2012 we did not have any employees. Our directors and officers provide us with services on a consulting basis. We plan to hire a number of full-time employees in the near future to engage in administrative tasks and the development of our first “urban barn” facility in Montreal, Quebec, Canada. Once we have entered into definitive agreements to distribute our produce, we anticipate hiring additional employees to operate this facility and engaging various consultants to provide legal, accounting, and marketing services to us.

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Item 1A. Risk Factors

Risks Related to Our Business

We are a Developmental Company

We are an early stage company and may face various challenges confronting such companies, including, for example, limited financial and other resources, inability to penetrate markets and recognize sufficient revenues, and the ability to attain profitability.

Moreover, we have a history of operating losses, expect to continue to incur losses, and may never be profitable, and we must be considered to be in the developmental stage. Further, in the past, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totaling approximately $526,299 from inception to July 31, 2012 and incurred losses of approximately $353,320 during fiscal year ended July 31, 2012. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to develop our technology and facilities and products may be more than management currently anticipates; and (ii) we encounter greater costs associated with general and administrative expenses.

There is limited evidence that technology used by producers of select organic and conventional fruits and vegetables in secure and controlled indoor environments to grow vegetables will be profitable in a commercial application.

Although we believe that our technology will enable us to implement our business plan, as of the date hereof, the technology is still in the early stage of commercialization and has only limited results in a research and development setting. As of the date of this Annual Report, only one facility is in operation employing our technology to produce vegetables and that facility has been operating as a Research and Development test for three years. If the technology does not perform as anticipated, we will be unable to achieve profitability.

We are substantially dependent on our indoor cubic farming technology. A disruption in this technology may have a negative effect on our results of operations, financial condition and cash flow.

We use certain equipment associated with our indoor cubic farming technology. In the event that this equipment is not readily available to use or the equipment malfunctions without a source of repair, it could have a material adverse effect on our business.

Our business is dependent on locating suitable facilities, acquiring or leasing such facilities on favorable terms and successfully completing the custom construction necessary to install and operate our indoor cubic farming equipment. If we are not able to accomplish any one of these goals, our growth potential, results of operations and business will be materially and adversely affected.

We expect to raise capital to construct our initial cubic farming facility. This requires that we lease and retrofit appropriate facilities. Assuming we can obtain suitable leasing arrangements, specialized construction will be required to adapt these facilities for our business model. We have not entered into any contracts to build and or operate any indoor cubic farming facilities. There can be no assurance that construction of the facilities will be completed within our anticipated time frame or budget. Construction projects are subject to cost overruns and delays not within our control or that of our subcontractors, such as those caused by acts of governmental entities, financing delays or bad weather. Delays can also arise from design changes and material equipment shortages or delays in delivery. Our inability to construct any facility in a timely fashion and within our projected construction budget could have a material adverse effect on our business and our anticipated financial performance.

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Our facilities will require certain permits to operate, which we may not be able to obtain at all or obtain on a timely basis.

The specific permit and approval requirements are set by the state and the various local jurisdictions, including but not limited to city, town, county, township, and state agencies having control over the specific properties. Permits once given may be withdrawn. We may not be able to secure all the necessary permits for future facilities on a timely basis or at all, which may prevent us from operating such facilities according to our business plan. Inability to obtain or maintain permits to construct, operate or maintain our facilities will severely and adversely affect our business.

Outbreaks of plant diseases or pest infestations can significantly restrict our ability to conduct our operations.

We intend to take all reasonable precautions to ensure that our crops are healthy and that our indoor cubic farming facilities operate in a sanitary and environmentally sound manner. However, notwithstanding our precautions, plant diseases or pest infestations could destroy all or a significant portion of the crops in a facility and could eliminate or significantly reduce production from that facility until we are able to disinfect the facility and grow replacement crops. We do not believe that insurance against crop damage from disease or pest infestations will be available. Therefore, such an infestation or contamination could have a significant adverse impact on our business.

A significant interruption in the operation of our indoor cubic farming facility could potentially disrupt our operations.

Our business plan is to diversify and operate multiple locations, however, initially, we will have only one indoor cubic farming facility supporting our operations. A significant interruption impacting this facility, whether as a result of plant diseases or pest infestations, a natural disaster, technical or labor difficulties, fire or other causes, could impair our ability to timely grow or deliver products, potentially resulting in a material adverse effect on our business, financial position and results of operations.

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Water or power shortages could disrupt our production and have a material adverse effect on our business, financial position and results of operations.

Our production will require a continual supply of utilities such as water and electricity. Interruptions of water or electricity supply could result in temporary shutdowns of our irrigation, HVAC and electrical systems. Any suspension or termination of water or electricity of any significant duration or other unexpected business interruptions could have a material and adverse impact on our crops and consequently on our business, financial condition and results of operations.

Energy and fuel cost variations could adversely affect operating results and expenses.

Energy costs, particularly electricity and natural gas, constitute a substantial portion of our operating expenses. The price and supply of energy and natural gas are unpredictable and fluctuate based on events outside our control, including demand for oil and gas, weather, actions by OPEC and other oil and gas producers, and conflict in oil-producing countries. Price escalations in the cost of electricity or reductions in the supply of natural gas could increase operating expenses and negatively affect our results of operations. We may not be able to pass through all or part of the increased energy and fuel costs to our customers.

Our income will depend on sales of perishable merchandise, which can lose its value quickly; such losses could harm our operating results.

Although the cubic farming concept is intended to reduce the time between harvest and sale, our crops will still be subject to all the risks of any perishable food, including spoilage. Accordingly, any delay in harvesting or shipping our crops could result in losses due to spoilage, which would adversely affect our revenues and net income.

Our business is sensitive to fluctuations in market prices and demand for our products.

Fresh vegetables are highly perishable and generally must be brought to market and sold very shortly after harvest. The selling price for certain types of vegetables depends on factors such as the supply of and demand for such vegetables and the availability and quality of such vegetables in the marketplace.

We will plan our production schedule and crop selection based on our analysis and estimate of future market demand. Demand for our products will depend primarily on consumer-related factors, such as demographics, local preferences and food consumption trends, as well as macroeconomic factors, such as the condition of the economy and the level of consumer confidence. To remain competitive, we will need to continually monitor and adapt to the changing market demand. Our failure or inability to follow or adapt to changes in market demand in a timely manner, if at all, may have a material and adverse effect on our business and our results of operation.

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We face the risk of fluctuations in the cost, availability and quality of our raw materials.

Increases in the cost of raw materials essential to our operations, particularly plant seeds, nutrients, and packaging materials, would increase our costs of production, which we may be unable to recoup through higher prices for our crops. A scarcity of these raw materials could require us to curtail production, which also would have a material adverse effect on our results of operations.

We are subject to the risk of product contamination and product liability claims as well as negative publicity associated with food safety issues.

External factors may depress the prices for our products. General public concerns regarding the quality, safety or health risks associated with particular vegetables could reduce demand and prices for some of our products. Harm to the health of consumers may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growth, storage, handling or transportation phases. We could become subject to claims or lawsuits relating to consumption of our products that are alleged to cause harm to the health of consumers. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or discomfort could adversely affect our reputation with existing and potential customers and our corporate and brand image.

Market demand for our products may also be adversely affected by negative publicity concerning food safety of vegetables produced by other vegetable producers in our target markets. Such negative publicity may lead to a loss of consumer confidence and a decrease in the demand and prices for our products. Despite such decreased demand, circumstances may require us to bring our produce to market promptly, in which case we may experience losses on those products.

A decrease in the selling price received for our products due to product liability claims or perceived issues relating to quality, safety or health risks associated with our products could have a material adverse effect on our business, results of operations and financial condition.

The fresh vegetable market is highly competitive and our growth and results of operations may be adversely affected if we are unable to compete effectively.

Our competitors include, but are not limited to, local, regional, national and international producers of produce of all kinds. Their businesses compete with us for customers and locations. In addition, some are expanding more aggressively in marketing a range of natural and organic foods. Some of these potential competitors may have been in business longer or may have greater financial or marketing resources than we do and may be able to devote greater resources to sourcing, promoting and selling their products.

In addition, although indoor cubic farming is a new business and we believe that our technology gives us certain competitive advantages, there are other indoor agriculture systems available and the cost of entry into the indoor farming business may not prove to be a significant competitive barrier. There can be no assurance that others have not developed or will not independently develop proprietary technology similar to ours. The extent that we may be required in the future to obtain licenses with respect to patents or other proprietary rights obtained by others and the availability and cost of any such licenses are currently unknown. Additional costs incurred as a result of acquiring any patents or licenses may adversely affect our cash flow and net income.

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Our operations will be highly regulated in the areas of food safety and protection of human health and we may be subject to the risk of incurring compliance costs and the risk of potential claims and regulatory actions.

We will be subject to various federal, state and local laws, regulations and administrative practices affecting our business, and we will have to comply with provisions regulating health and sanitation standards, food labeling, equal employment, and minimum wages and licensing, in addition to building codes and fire and other safety regulations. These laws and regulations directly affect our day-to-day operations, and violations of these laws and regulations can result in substantial fines or penalties. There can be no assurance that these fines or penalties would not have a material adverse effect on our business, results of operations and financial condition. To stay compliant with all of the laws and regulations that apply to our operations and produce, we may be required in the future to modify our operations, purchase new raw materials or make capital improvements, which could have a material adverse effect on our operations.

Risks Related to our Common Stock

Sales of a Substantial Number of Shares of Common Stock Into the Public Market by Certain Stockholders May Result in Significant Downward Pressure on the Price of our Common Stock and Could Affect Your Ability to Realize the Current Trading Price of our Common Stock.

Sales of a substantial number of shares of our common stock in the public market by certain stockholders could cause a reduction in the market price of our common stock. As of the date of this Annual Report, we have 145,266,817 shares of common stock issued and outstanding. Of the total number of shares of common stock issued and outstanding, certain stockholders are able to resell shares pursuant to a Registration Statement on S-8 filed with the Securities and Exchange Commission.

As of the date of this Annual Report, there are 109,149,674 outstanding shares of common stock that are restricted securities as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"). Although the Securities Act and Rule 144 place certain prohibitions on the sale of restricted securities, restricted securities may be sold into the public market under certain conditions. Any significant downward pressure on the price of our common stock as the selling stockholders sell their shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock.

The Trading Price of Our Common Stock on the OTC Bulletin Board Will Fluctuate Significantly and Stockholders May Have Difficulty Reselling Their Shares.

As of the date of this Annual Report, our common stock trades on the Over-the-Counter Bulletin Board. There is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our development efforts; (ii) failure to meet our revenue or profit goals or operating budgets; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.

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In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.

Additional Issuance of Equity Securities May Result in Dilution to our Existing Stockholders.

Our Articles of Incorporation authorize the issuance of 500,000,000 Class A, 25,000,000 Class B and 100,000,000 Preferred shares of common stock. The board of directors has the authority to issue additional shares of our capital stock to provide additional financing in the future and the issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance may also cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such possible dilution, your proportionate ownership interest and voting power will be decreased accordingly. Further, any such issuance could result in a change of control.

Because we have complied with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act, as well as the rules enacted by the SEC and the national stock exchanges as a result of the Sarbanes-Oxley Act, requires the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity and efficiency of corporate management and the securities markets and apply to securities which are listed on those exchanges. Because we have complied with many of the corporate governance provisions, our stockholders have limited protections. Certain of these corporate governance provisions are as follows: (i) establishment of an audit committee charter and appointment of members to the audit committee; (ii) adoption of an ethics code; (iii) conduct analysis of our internal and financial control procedures; and (iv) establishment of a compensation committee. Management intends to address these issues within our organizational structure during fiscal year 2012/2013 to ensure the best effective corporate governance and financial management. Management has adopted certain corporate governance practices as follows: (i) adherence to a clear ethical basis within all business operations; (ii) alignment of business goals with such ethical basis; (iii) strategic management which incorporates shareholder value; (iv) identifying corporate organizational structure to effect good corporate governance; and (v) creating reporting systems to provide transparency and accountability.

Until we comply with the corporate governance measures adopted by the national securities exchanges after the enactment of Sarbanes-Oxley Act, regardless of whether such compliance is required, the absence of standards of corporate governance may leave our stockholders without protections against interested director transactions which may not be favorable to the shareholders, conflicts of interest and similar matters, and investors may be reluctant to provide us with funds in the future if we determine it is necessary to raise additional capital. We intend to comply with all applicable corporate governance measures relating to director independence as soon as practicable.

15

Our Common Stock is Classified as a “Penny Stock” Under SEC Rules Which Limits the Market for Our Common Stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules.

Securities analysts may not provide coverage of our common stock or may issue negative reports, which may have a negative impact on the market price of our common stock.

Securities analysts have not historically provided research coverage of our common stock and may elect not to do so in the future. If securities analysts do not cover our common stock, the lack of research coverage may cause the market price of our common stock to decline. The trading market for our common stock may be affected in part by the research and reports that industry or financial analysts publish about our business. If one or more of the analysts who elects to cover us downgrades our stock, our stock price would likely decline substantially. If one or more of these analysts ceases coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline. In addition, rules mandated by the Sarbanes-Oxley Act of 2002 and a global settlement reached in 2003 between the SEC, other regulatory agencies and a number of investment banks have led to a number of fundamental changes in how analysts are reviewed and compensated. In particular, many investment banking firms are required to contract with independent financial analysts for their stock research. It may be difficult for companies such as ours, with smaller market capitalizations, to attract independent financial analysts that will cover our common stock. This could have a negative effect on the market price of our stock.

Our Officer and Directors are Outside the United States with the Result That it May Be Difficult for Investors to Enforce Within the United States Any Judgments Obtained Against Us or Our Directors or Officers.

Our officers and directors are nationals and/or residents of a country other than the United States, and all or a substantial portion of such person's assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on our directors or officers, or enforce within the United States or Canada any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. In addition, investors may not be able to commence an action in a Canadian court predicated upon the civil liability provisions of the securities laws of the United States.

16

Item 1B. Unresolved Staff Comments

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2. Properties

Our executive office is located at 7170 Glover Drive, Milner, British Columbia, Canada V0X 1T0. We have not entered into any agreement regarding this office, which is provided to us at no charge by Jacob Benne, our President, Chief Executive Officer and Director.

Item 3. Legal Proceedings

We are not aware of any pending or threatened legal proceedings which involve us or any of our products or services.

Item 4. [Removed and Reserved]

PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is not traded on any exchange. Our common stock is quoted on OTC Bulletin Board under the trading symbol “URBF.QB”. We cannot assure you that there will be a market in the future for our common stock.

OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.

The following table reflects the high and low bid information for our common stock obtained from Stockwatch and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

17

The high and low bid prices of our common stock for the periods indicated below are as follows:

FINRA OTC Bulletin Board
Quarter Ended	High	Low
July 31, 2012	$0.03	$0.02
April 30, 2012	$0.04	$0.03
January 31, 2012	$0.06	$0.06
October 31, 2011	$0.60	$0.60

Holders

As of October 30, 2012 there were 92 holders of record of our common stock.

Dividends

To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.

Equity Compensation Plans

On July 25, 2011 our board of directors approved the establishment of the 2011 Employee Stock and Option Plan which provides for the issuance of 7,000,000 shares or options to acquire our common stock to our directors, officers, employees and consultants. As of October 30, 2012, 1,400,000 shares and 5,100,000 options had been issued.

Recent Sales of Unregistered Securities

We have not made any previously unreported sales to July 31, 2012.

Recent Purchases of Equity Securities by us and our Affiliated Purchases

We have not repurchased any of our common stock and have no publicly announced repurchase plans or programs as of November 6, 2012.

Item 6. Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

We are a development stage company with limited operations and revenues from our business operations. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional financing to fund our operations. Our only source of cash at this time is investments by others in our company.

18

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including, "could" "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Annual Report.

Liquidity and Capital Resources

As of July 31, 2012, we had cash of $24,051 and total assets of $191,328 compared to cash of $32,907 and total asset of $112,864 as of July 31, 2011. The decrease in cash is attributed to the fact that we incurred more operating costs during the year, which resulted in the greater use of cash. Our assets increased during the year due to additional purchases of property and equipment and cash incurred for the development of patents.

Our working capital deficit at July 31, 2012 was $359,950 compared with a working capital deficit of $134,149 at July 31, 2011. The increase in the working capital deficit was due to the fact that we financed our operating costs with the issuance of convertible debentures which were due on demand.

Since February 10, 2010 (inception) to July 31, 2012, our accumulated deficit was $526,299. We are dependent on the funds raised through our equity or debt financing, investing activities, and revenue generated through the sales of our products to fund our operations.

We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing. We plan to cooperate with various individuals and institutions to acquire the financing required to produce and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our productions independently.

Cashflow from Operating Activities

During the year ended July 31, 2012, we used cash of $164,965 for operating activities compared with use of $12,955 during the year ended July 31, 2011. The increase in cash used for operating activities were attributed to the fact that we had more operating activity compared to prior year and raise more proceeds from financing compared to prior year, which allowed us to incur greater amounts of cash for operating activities.

Cashflow from Investing Activities

During the year ended July 31, 2012, we used cash of $104,853 for investing activities compared with the use of $59,047 during the year ended July 31, 2011. The increase in cash used for investing activities was due to an overall increase of $23,341 for the purchase of property and equipment and $33,211 for the development of patents which was offset by a decrease of $7,990 for the issuance of a loan receivable in the prior year.

Cashflow from Financing Activities

During the year ended July 31, 2012, we received cash of $260,962 from financing activities compared with the receipt of $104,867 from financing activities during the year ended July 31, 2011. The increase in cash provided from financing activities was due to $145,000 of proceeds, less finders’ fees paid of $9,500, from the issuance of convertible debentures which were issued at various times throughout the year and are unsecured, bears interest at 8% per annum, and is convertible into common shares at 45% of the weighted average share price of the three lowest trading transactions for the ten days prior to conversion, where the conversion option is applicable 180 days from the issuance of each convertible debenture. In addition, the Company also received $125,462 of proceeds from the issuance of common shares compared with $104,867 during the year ended July 31, 2011.

19

Plan of Operation

We are an urban produce production company that aims to be the supplier of choice of fresh, locally grown, high-quality organic and conventional fruits and vegetables located close to urban consumers.

We estimate that our expenses over the next 12 months will be approximately $1,934,531 as summarized in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from investors or other sources.

Description	Potential Completion Date	Estimated Expenses ($)
Cost of Sales	12 months	514,531
Sales & Marketing	12 months	552,000
General & Administration	12 months	568,000
Depreciation	12 months	300,000
Total		1,934,531

Our general and administrative expenses for the year will consist of professional fees, office maintenance, communication expenses (cellular, internet, fax and telephone), bank charges, courier and postage costs, office supply costs and fees related to our website. Our professional fees will include legal, accounting and auditing fees related to our regulatory filings throughout the year.

Based on our planned expenditures, we require additional funds of $2,000,000 to proceed with our business plan over the next 12 months. If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Results of Operations for the Years Ended July 31, 2012 and 2011

The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended July 31, 2012 and 2011.

Our operating results for the years ended July 31, 2012 and 2011 are summarized as follows:

20

		Year Ended
		July 31
		2012		2011
Revenue	$	Nil	$	Nil
Depreciation		17,110	$	6,329
Foreign exchange (gain) loss		687	$	(17,041	)
General and administrative		167,323	$	26,377
Professional fees		144,058	$	18,345
Research and development		3,097	$	190

Revenues

We have not earned any revenues since inception.

Expenses

For the year ended July 31, 2012, we have total operating expenses of $335,738 compared to total operating expenses of $34,200 for the year ended July 31, 2011. The increase in operating expenses were attributed to the fact that we incurred more operating activity during the current year and received more proceeds from financing activities which allowed us to incur more operating activity

Net Loss

Our net loss for the year ended July 31, 2012 was $353,320 compared to $34,200 for the year ended July 31, 2011. In addition to operating expenses during the year, we also incurred accretion expense of $12,202 relating to the beneficial conversion feature of convertible debentures, $5,319 of interest expense for interest incurred on the convertible debentures, and a recovery of $6,251 for the change in the fair value of the derivative liabilities relating to the floating conversion price of our convertible debentures.

Since our inception on February 10, 2010 to July 31, 2012, we incurred net a loss of $391,314. Our net loss per share was $0.01 for the year ended July 31, 2012 and $nil for the year ended July 31, 2011.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in conformity with accounting principles generally accepted in the United States of America for financial statements. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

21

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long-lived assets, fair value of convertible debt and share-based payments, and deferred income tax valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Stock-Based Compensation

We record stock-based compensation using the fair value method in accordance with ASC 718, Compensation – Stock Compensation. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

We use the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by our stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.

Loss Per Share

We compute net loss per share in accordance with ASC 260 Earnings Per Share which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, convertible debentures, derivative liabilities, and amount due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Item 7A Qualitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

22

Item 8. Financial Statements and Supplementary Data

URBAN BARNS FOODS INC.

(A Development Stage Company)
Consolidated Financial Statements
July 31, 2012 and 2011
(Expressed in U.S. dollars)

Financial Statement Index

Report of Independent Registered Public Accounting Firm	24
Consolidated Balance Sheets	25
Consolidated Statements of Operations	26
Consolidated Statements of Stockholder's Deficit	27
Consolidated Statements of Cash Flows	28
Notes to the Consolidated Financial Statements	29

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Urban Barns Foods Inc.
(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Urban Barns Foods Inc. (A Development Stage Company) as of July 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and accumulated from February 10, 2010 (Date of Inception) to July 31, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended and accumulated from February 10, 2010 (Date of Inception) to July 31, 2012, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit and has incurred operating losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ SATURNA GROUP CHARTERED ACCOUNTANTS LLP

Saturna Group Chartered Accountants LLP

Vancouver, Canada

November 2, 2012

24

URBAN BARNS FOODS INC.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)

	July 31,		July 31,
	2012		2011
	$		$
ASSETS
Current assets
Cash	24,051		32,907
Prepaid expenses and deposits	12,208		13,606
Total current assets	36,259		46,513
Deferred financing costs	4,438		–
Property and equipment (Note 4)	117,420		66,351
Intangible assets (Note 5)	33,211		–
Total assets	191,328		112,864
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities (Note 8)	175,898		95,425
Convertible debentures, net of unamortized discount of $23,522 (2011 - $nil) (Note 6)	117,702		–
Derivative liabilities (Note 7)	21,249		–
Due to related parties (Note 8)	81,360		85,237
Total liabilities	396,209		180,662
Nature of operations and continuance of business (Note 1)
Subsequent events (Note 14)
Stockholders’ deficit
Preferred stock     Authorized: 100,000,000 common shares, par value $0.001     Issued and outstanding: nil shares	–		–
Common stock, Class A     Authorized: 500,000,000 common shares, par value $0.001     Issued and outstanding: 58,823,618 and 50,261,671 shares, respectively	58,824		50,262
Common stock, Class B     Authorized: 25,000,000 common shares, value of $0.001     Issued and outstanding: nil	–		–
Additional paid-in capital	258,394		54,919
Common stock issuable	4,200		–
Deficit accumulated during the development stage	(526,299	)	(172,979	)
Total stockholders’ deficit	(204,881	)	(67,798	)
Total liabilities and stockholders’ deficit	191,328		112,864

(The accompanying notes are an integral part of these consolidated financial statements)

25

URBAN BARNS FOODS INC.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)

					Accumulated from
	Year		Year		February 10, 2010
	Ended		Ended		(date of inception)
	July 31,		July 31,		to July 31,
	2012		2011		2012
	$		$		$
Revenue	–		–		–
Operating expenses
Depreciation	17,110		6,329		23,439
Foreign exchange loss (gain)	687		(17,041	)	(16,354	)
General and administrative (Note 8)	167,323		26,377		197,494
Professional fees (Note 8)	144,058		18,345		162,403
Research and development	3,097		190		3,287
Write-down of property and equipment	3,463		–		3,463
Total operating expenses	335,738		34,200		373,732
Loss from operations	(335,738	)	(34,200	)	(373,732	)
Other income (expense)
Accretion of discount on convertible debentures (Note 6)	(12,202	)	–		(12,202	)
Amortization of deferred financing costs	(6,312	)	–		(6,312	)
Gain on change in fair value of derivative liabilities (Note 7)	6,251		–		6,251
Interest expense	(5,319	)	–		(5,319	)
Total other income (expense)	(17,582	)	–		(17,582	)
Net loss	(353,320	)	(34,200	)	(391,314	)
Net loss per share, basic and diluted	(0.01	)	–
Weighted average shares outstanding	57,096,450		15,481,000

(The accompanying notes are an integral part of these consolidated financial statements)

26

URBAN BARNS FOODS INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
(Expressed in U.S. dollars)

												Deficit
												Accumulated
	Common Stock								Additional		Common	During the
	Class A				Class B				Paid-In		Stock	Development
	Shares		Amount		Shares		Amount		Capital		Issuable	Stage		Total
	#		$		#		$		$		$	$		$
Balance, February 10, 2010 (Date of Inception)	–		–		–		–		–		–	–		–
Shares issued for cash	–		–		2,500,000		2,500		(2,186	)	–	–		314
Net loss for the period	–		–		–		–		–		–	(3,794	)	(3,794	)
Balance, July 31, 2010	–		–		2,500,000		2,500		(2,186	)	–	(3,794	)	(3,480	)
Shares issued for cash	20,000,000		20,000		–		–		84,867		–	–		104,867
June 2, 2011 – recapitalization transactions
Shares cancelled on acquisition	(20,000,000	)	(20,000	)	–		–		20,000		–	–		–
Shares held by legal parent	261,671		262		–		–		(262	)	–	–		–
Net liabilities assumed upon recapitalization	–		–		–		–		–		–	(134,985	)	(134,985	)
Conversion of Class B common stock	50,000,000		50,000		(2,500,000	)	(2,500	)	(47,500	)	–	–		–
Net loss for the year	–		–		–		–		–		–	(34,200	)	(34,200	)
Balance, July 31, 2011	50,261,671		50,262		–		–		54,919		–	(172,979	)	(67,798	)
Shares issuance pursuant to exercise of stock options	5,100,000		5,100		–		–		120,362		–	–		125,462
Shares issued for conversion of debenture	1,061,947		1,062		–		–		10,938		–	–		12,000
Shares issued for consulting services	2,400,000		2,400		–		–		60,600		–	–		63,000
Shares issuable for consulting services	–		–		–		–		–		4,200	–		4,200
Fair value of stock options granted	–		–		–		–		11,575		–	–		11,575
Net loss for the year	–		–		–		–		–		–	(353,320	)	(353,320	)
Balance, July 31, 2012	58,823,618		58,824		–		–		258,394		4,200	(526,299	)	(204,881	)

(The accompanying notes are an integral part of these consolidated financial statements)

27

URBAN BARNS FOODS INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)

					Accumulated from
					February 10, 2010
	Year Ended		Year Ended		(Date of Inception)
	July 31,		July 31,		to July 31,
	2012		2011		2012
	$		$		$
Operating Activities
Net loss	(353,320	)	(34,200	)	(391,314	)
Adjustments to reconcile net loss to net cash used in activities:
Accretion of discount on convertible debentures	12,202		–		12,202
Amortization of deferred financing costs	6,312		–		6,312
Depreciation	17,110		6,329		23,439
Gain on change in fair value of derivative liabilities	(6,251	)	–		(6,251	)
Shares issued for consulting fees	67,200		–		67,200
Stock-based compensation	11,575		–		11,575
Write-down of property and equipment	3,463		–		3,463
Changes in operating assets and liabilities:
Prepaid expenses and deposits	1,398		(3,356	)	(1,958	)
Accounts payable and accrued liabilities	73,823		7,585		81,408
Due to related parties	1,523		10,687		15,732
Net cash used in operating activities	(164,965	)	(12,955	)	(178,192	)
Investing Activities
Purchase of intangible assets	(33,211	)	–		(33,211	)
Purchase of property and equipment	(71,642	)	(60,821	)	(132,463	)
Cash acquired on recapitalization	–		1,774		1,774
Net cash used in investing activities	(104,853	)	(59,047	)	(163,900	)
Financing Activities
Proceeds from issuance of a convertible debenture	145,000		–		145,000
Finders’ fees paid	(9,500	)	–		(9,500	)
Proceeds from issuance of common shares	125,462		104,867		230,643
Net cash provided by financing activities	260,962		104,867		366,143
Increase (decrease) in cash	(8,856	)	32,865		24,051
Cash, beginning of period	32,907		42		–
Cash, end of period	24,051		32,907		24,051
Non-cash investing and financing activities
Share issued upon conversion of debentures	12,000		–		12,000
Conversion of Class B shares to Class A shares	–		50,000		50,000
Supplemental disclosures
Interest paid	–		–		–
Income tax paid	–		–		–

(The accompanying notes are an integral part of these consolidated financial statements)

28

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

1.	Nature of Operations and Continuance of Business
	Urban Barns Foods Inc. (the “Company”) was incorporated under the laws of the State of Nevada on May 21, 2007 as HL Ventures Inc.
	On December 4, 2009, the Company closed a reverse takeover transaction with Urban Barns Foods Inc., a privately-held company incorporated on July 3, 2009 under the laws of the province of Alberta. In accordance with the transaction, the Company issued 125,000 shares of common stock to the shareholders of Urban Barns in exchange for 100% of the issued and outstanding shares of common stock of Urban Barns. As part of the acquisition, the Company also cancelled 102,500 shares of common stock held by management.
	On June 2, 2011, the Company closed a reverse takeover transaction with Non Industrial Manufacture Inc. (“NIM”), a privately-held company incorporated on February 10, 2010, under the laws of the province of Alberta. In accordance with the transaction, the Company issued 2,500,000 shares of Class B common stock to the shareholders of Non Industrial in exchange for 100% of the issued and outstanding shares of common stock of Non Industrial.
	The Company is a development stage company and is an urban produce production company that aims to be the supplier of choice for fresh and high-quality organic and conventional fruits and vegetables for urban consumers.
	These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at July 31, 2012, the Company has not realized any revenues, has a working capital deficit of $359,950 and has an accumulated deficit of $526,299. The continued operations of the Company are dependent on its ability to generate future cash flows from operations or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.
2.	Significant Accounting Policies
	(a)	Basis of Presentation and Principles of Consolidation
		The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in United States dollars. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Urban Barns Foods (Alberta) Inc., and Non-Industrial Manufacture Inc. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is July 31.
	(b)	Use of Estimates
		The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, valuation of convertible debentures, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

29

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

2.	Significant Accounting Policies (continued)
	(c)	Cash and Cash Equivalents
		The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
	(d)	Property and Equipment
		Property and equipment consists of production equipment and is stated at cost and amortized straight-line over five years.
	(e)	Intangible assets
		Intangible assets consist of patent development costs. Intangible assets acquired are initially recognized and measured at cost and amortized over its expected useful life once the patents are in use. Impairment tests are conducted annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized in income for the excess, if any. The amortization methods and estimated useful lives of intangible assets are reviewed annually.
	(f)	Long-Lived Assets
		In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
	(f)	Comprehensive Loss
		ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at July 31, 2012 and 2011, the Company had no items that affected comprehensive loss.
	(g)	Foreign Currency Translation
		The Company’s functional and reporting currency is the U.S. dollar. Monetary assets and liabilities of integrated operations and other monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.

30

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

2.	Significant Accounting Policies (continued)
	(h)	Income Taxes
		The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
		As of July 31, 2012 and 2011, the Company did not have any amounts recorded pertaining to uncertain tax positions.
		The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its wholly-owned subsidiary’s income tax returns for the years ended July 31, 2012 and 2011.
		The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the years ended July 31, 2012 and 2011, there were no charges for interest or penalties.
	(i)	Loss Per Share
		The Company computes net loss per share in accordance with ASC 260, “Earnings Per Share”, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if- converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at July 31, 2012, the Company had 1,722,222 (2011 – 1,500) potentially dilutive shares.
	(j)	Financial Instruments and Fair Value Measures
		ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

31

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

2.	Significant Accounting Policies (continued)
	(j)	Financial Instruments and Fair Value Measures (continued)

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

	The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, convertible debentures, derivative liabilities, and amount due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(k)	Stock-based Compensation
	The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
(l)	Reclassifications
	Certain account balances have been reclassified to conform to the current year’s financial statement presentation standards.
(m)	Recent Accounting Pronouncements
	The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

32

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

3.	Acquisition of Non Industrial Manufacture Inc. and Recapitalization
	On June 2, 2011, the Company acquired 100% of the issued and outstanding shares of common stock of Non Industrial Manufacture Inc. (“NIM”) in exchange for 2,500,000 shares of Class B common stock. The acquisition was a capital transaction in substance and therefore was accounted for as a recapitalization of the business of NIM. Under recapitalization accounting, NIM is considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of the Company. These financial statements include the accounts of the Company since the effective date of the recapitalization being June 2, 2011, and the historical accounts of the business of NIM since inception being February 10, 2010.
	The assets acquired and liabilities assumed are as follows:

	$
Cash	1,774
Prepaid expenses	10,250
Property and equipment	11,859
Accounts payable	(89,718	)
Due to related parties	(69,150	)
Net liabilities assumed	(134,985	)

4. Property and Equipment

				2012	2011
		Accumulated		Net Carrying	Net Carrying
	Cost	Depreciation	Impairment	Value	Value
	$	$	$	$	$
Production equipment	144,931	24,048	3,463	117,420	66,351

5. Intangible Assets

			2012	2011
		Accumulated	Net Carrying	Net Carrying
	Cost	Depreciation	Value	Value
	$	$	$	$
Patent development costs	33,211	–	33,211	–

6.	Convertible Debentures
	(a)	On January 4, 2012, the Company entered into a convertible promissory note agreement for $27,500, less deferred financing charges of $3,750 and common shares with a fair value of $1,250. Pursuant to the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on October 6, 2012. The note is also convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on July 2, 2012.
		In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $27,500. On July 16, 2012, the Company issued 1,061,947 common shares pursuant to the conversion of $12,000. During the year ended July 31, 2012, the Company recorded accretion expense of $12,202, which increased the carrying value of the convertible note to $202 as at July 31, 2012.

33

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

6.	Convertible Debentures (continued)
	(b)	On February 9, 2012, the Company entered into four convertible promissory note agreements for $85,000. Pursuant to the agreement, the loans are unsecured, bear interest at 8% per annum, and are due on November 9, 2012. The loans are convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holders, commencing on August 5, 2012.
	(c)	On March 30, 2012, the Company entered into a convertible promissory note agreement for $32,500, less deferred financing charges of $5,750. Pursuant to the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on January 4, 2013. The loan is convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on September 26, 2012.
7.	Derivative Liabilities

Derivative liabilities are comprised of the floating conversion price for the convertible debentures. The fair value of the conversion option of the convertible debenture is estimated at its fair values on each balance sheet date, with changes in fair value reflected in the statement of operations.

During the year ended July 31, 2012, the Company recorded an initial derivative liability of $27,500 (2011 - $nil). As at July 31, 2012, the fair value of the derivative liability was $21,249 (2011 - $nil) resulting in a gain on the change in fair value of the derivative liability of $6,251 (2011 - $nil).

The fair value of the derivative financial liabilities was determined using the Black-Scholes option pricing model using the following assumptions:

		Risk-
		free	Expected	Expected
	Expected	Interest	Dividend	Life (in
	Volatility	Rate	Yield	years)
At the issuance date:
January 2012 convertible debenture	213%	0.10%	0%	0.26
As at July 31, 2012:
January 2012 convertible debenture	222%	0.11%	0%	0.18

8.	Related Party Transactions
	(a)	As at July 31, 2012, the Company owed $52,809 (2011 - $76,320) to directors and officers of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(b)	As at July 31, 2012, the Company owed $3,351 (2011 - $3,517) to a company controlled by an officer of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(c)	As at July 31, 2012, the Company owed $25,200 (2011 - $5,400) for amounts owing to the spouse of the President of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(d)	As at July 31, 2012, the Company owed $98,162 (2011 - $37,604) to companies controlled by directors and officers of the Company, which has been recorded in accounts payable and accrued liabilities. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(e)	During the year ended July 31, 2012, the Company incurred professional fees of $21,600 (2011 - $nil) to the spouse of the President of the Company.

34

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

8.	Related Party Transactions (continued)
	(f)	During the year ended July 31, 2012, the Company incurred travel expenses fees of $40,259 (2011 - $nil) to directors and officers of the Company.
	(g)	During the year ended July 31, 2012, the Company incurred consulting fees of $19,020 (2011 - $nil) to directors and officers of the Company.
	(h)	During the year ended July 31, 2012, the Company incurred rental fees of $15,551 (2011 - $10,080) to a company controlled by an officer of the Company.
9.	Common Stock
	Share transactions for the year ended July 31, 2012:
	(a)	On August 8, 2011, the Company issued 3,400,000 shares of Class A common stock pursuant to the exercise of stock options for proceeds of $510,000 of which $82,962 was received and the remaining balance of $427,038 was written off as amounts are deemed to be uncollectible.
	(b)	On August 8, 2011, the Company issued 1,700,000 shares of Class A common stock pursuant to the exercise of stock options for proceeds of $42,500.
	(c)	On August 9, 2011, the Company issued 951,000 shares of Class A common stock with a fair value of $19,020 to management and directors of the Company for consulting services.
	(d)	On August 9, 2011, the Company issued 449,000 shares of Class A common stock with a fair value of $8,980 for consulting services.
	(e)	On February 22, 2012, the Company issued 1,000,000 shares of Class A common stock with a fair value of $35,000 for consulting services.
	(f)	On July 16, 2012, the Company issued 1,061,947 shares of Class A common stock pursuant to the conversion of $12,000 of the convertible debenture, as described in Note 6(a).
	(g)	As at July 31, 2012, the Company had 120,000 shares of Class A common stock issuable with a fair value of $4,200. The shares were issued on August 6, 2012. Refer to Note 14(b).
	Share transactions for the year ended July 31, 2011:
	(h)	In January 2011, NIM issued 19,800,000 shares of common stock at $0.00001 per share for proceeds of $206 (Cdn $198).
	(i)	On February 26, 2011, NIM issued 200,000 shares of common stock at $0.50 per share for proceeds of $104,661 (Cdn $100,000).
	(j)	On May 20, 2011, the Company filed an amendment to its articles of incorporation designating that of the authorized 100,000,000 shares of common stock, 97,500,000 shares would be designated as Class A common stock and 2,500,000 shares would be designated as Class B common stock (the “Designation”). In accordance with the terms of the Designation, each share of Class B common stock is entitled to 20 votes per share, and is convertible into 20 shares of Class A common stock for a period of 12 months from the issuance date.
	(k)	On May 31, 2011, the Company effected a 200:1 reverse stock split of the issued and outstanding common stock. All share amounts have been retroactively adjusted for all periods presented.
	(l)	On June 2, 2011, the Company executed a share exchange agreement whereby the Company acquired 50,000,000 of the issued and outstanding common shares of NIM. As part of the share exchange agreement, the Company issued 2,500,000 shares of Class B common stock of the Company to shareholders of NIM. The 2,500,000 shares of Class B common stock were converted into 50,000,000 shares of Class A common stock.

35

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

9.	Common Stock (continued)
	Share transactions for the year ended July 31, 2011:
	(m)	On June 28, 2011, the Company filed an amendment to its articles of incorporation increasing its authorized capital stock to 525,000,000 shares consisting of 500,000,000 shares of Class A common stock and 25,000,000 shares of Class B common stock. The amendment also amended the Designation providing that the holders of the shares of Class B common stock could convert immediately upon issuance or any time thereafter at the sole option of the holder into shares of Class A common stock.
10.	Share Purchase Warrants
	The following table summarizes the continuity of share purchase warrants:

			Weighted
			Average
			Exercise
	Number of		Price
	Warrants		$
Balance, July 31, 2010	1,858		236
Expired	(358	)	300
Balance, July 31, 2011	1,500		222
Expired	(1,500	)	222
Balance, July 31, 2012	–		–

11.	Stock Options
	On August 8, 2011, the Company granted 1,700,000 stock options at an exercise price of $0.025 per share expiring on November 15, 2011 and granted 3,400,000 stock options at an exercise price of $0.15 per share expiring on November 15, 2011. All stock options were vested immediately. The fair value for these stock options was $11,575, and was estimated at the date of grant using the Black-Scholes option-pricing model assuming a weighted average expected life of 0.25 years, a risk-free rate of 0.03%, an expected volatility of 195%, and a 0% dividend yield. The weighted average fair value of stock options granted was $0.11 per share.
	The following table summarizes the continuity of stock options:

			Weighted
			Average
			Exercise
	Number of		Price
	options		$
Balance, July 31, 2010 and 2011	–		–
Granted	5,100,000		0.11
Exercised	(5,100,000	)	0.11
Balance, July 31, 2012	–		–

36

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

12.	Income Taxes
	The Company has net operating losses carried forward of $981,019 available to offset taxable income in future years which expires in beginning in fiscal 2031.
	The Company is subject to United States federal and state income taxes and Canadian federal and provincial taxes. The reconciliation of the provision for income taxes compared to the Company’s income tax expense as reported is as follows:

	2012		2011
	$		$
Income tax recovery at statutory rate	(101,867	)	(139,708	)
Permanent differences and other	4,062		33,579
Change in enacted tax rates	1,442		2,724
Valuation allowance change	96,363		103,405
Provision for income taxes	–		–

The significant components of deferred income taxes and assets as at July 31, 2012 and 2011 are as follows:

	2012		2011
	$		$
Net operating losses carried forward	273,797		175,321
Property and equipment	(2,113	)	–
Valuation allowance	(271,684	)	(175,321	)
Net deferred income tax asset	–		–

	As at July 31, 2012, the Company is in arrears on filing its statutory corporate income tax returns and the amounts presented above are based on estimates. The actual losses available could differ from these estimates.
13.	Commitments
	On June 25, 2012, the Company entered into an agreement with a director of the Company. In accordance with the terms and provisions of the agreement, the director agreed to aid with introductions to management of the Company with respect to the current round of financing of a minimum of $1,000,000 on a best efforts basis through various sources of capital.
	Pursuant to the agreement, the Company agreed to the following terms and provisions:
	(a)	The Company agreed to pay a finders' fee of 5% on actual funds raised or 2% via third parties with regards to private placements.
	(b)	The Company agreed to pay a finders' fee in the amount of 3% on actual funds loaned or 1.5% via third parties with regards to debt financings.
	(c)	The Company agreed to pay a scalable finders' fee of 5% on the first $2,000,000, 4% of the next $2,000,000 and 3% on the remaining amount of $4,000,000 if the Company is merged with any other private or public entity with regards to an introduction to a third party who wishes to acquire, merger or perform a business combination; and
	(d)	The Company agreed to pay a monthly fee of $4,000 as compensation for his role as a member of the Board of Directors for a twelve-month term upon the closing of a minimum of $1,000,000 raised.

37

URBAN BARNS FOODS INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)

14.	Subsequent Events
	(a)	On August 6, 2012, the Company issued 120,000 shares of Class A common stock for consulting services, which were issuable as of July 31, 2012. Refer to Note 9(g).
	(b)	On August 28, 2012, the Company issued 18,826,134 shares of Class A common stock pursuant to the conversion of $85,000 of convertible debentures, as described in Note 6(b).
	(c)	On September 13, 2012, the Company entered into executive service agreements with three directors of the Company. In accordance with the terms and provisions of the agreements, the Company issued 5,000,000 shares of Class A common stock to each director. Furthermore, the Company issued an additional 15,000,000 share of Class A common stock to one of the directors for directly or indirectly introducing the Company to a third party who invests a minimum of $1,000,000 to the Company. In the event that the director should terminate the agreement by providing a notice of termination prior to the termination date, the director shall return to the Company an aggregate of 1,666,666 shares of Class A common stock for each twelve month period from the effective date that the agreement remains unfulfilled and unperformed.
	(d)	On October 16, 2012, the Company issued 2,804,878 shares of Class A common stock pursuant to the conversion of $44,000 of the convertible debenture, as described in Note 6(a).
	(e)	On October 16, 2012, the Company issued 6,692,158 shares of Class A common stock pursuant to the conversion of $27,438 of the convertible debenture, as described in Note 6(c).
	(f)	On October 22, 2012, the Company issued 26,000,000 shares of Class A common stock at $0.01 per share for proceeds of $260,000. The Company paid a finders’ fee of $13,000 in conjunction with the private placement.
	(g)	On October 23, 2012, the Company issued 2,000,000 shares of its Class A common stock at $0.025 per share for proceeds of $50,000.

38

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

There were no disagreements or reportable events in connection with any changes in accountants undertaken by us.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

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Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of July 31, 2012, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was effective as of the evaluation date.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended July 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance 

The following table sets forth the name, age, and position of our executive officers and directors of as of October 30, 2012.

Name	Age	Position
Jacob Benne	70	President, Chief Executive Officer and Director
Daniel Meikleham	68	Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director
Robyn Jackson	66	Vice President, Logistics and Director
Richard T. Groome	54	Director, Chairman of Audit Committee
Cesar Montilla	69	Director of Business Development and Director

Our Directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

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Jacob Benne, President, Chief Executive Officer and Director

Jacob Benne has been our President, Chief Executive Officer and Director since November 18, 2009.

Mr. Benne graduated from the Dutch Agricultural College in 1960 in the top 5% of his class. Following graduation, he joined the Dutch army and served his country for two years before entering the agricultural/horticultural industry. He has since enjoyed a distinguished 46 year career that began with establishing his first greenhouse entrepreneurial enterprise in August 1963.

Mr. Benne immigrated to Canada in 1981, and upon his arrival he established an eight-acre greenhouse facility with a local partner, acting as its project manager. In nine years, the facility grew to cover fourteen acres. Following this success, Mr. Benne acquired a neighboring property and established Bevo Farms Ltd. in 1987. For the last 22 years he has operated Bevo Farms Ltd. (which subsequently became Bevo Agro Inc.), and in 2000 he took the company public by listing it on the TSX Venture Exchange under the trading symbol BVO.V. Mr. Benne has served as the President and Chief Executive Officer of Bevo Agro Inc. for the past nine years and in that time has built the company into North America’s leading provider of propagated plants, with annual sales in excess of $15 million. Mr. Benne brings his vast experience and enthusiasm to Urban Barns Foods Inc. as its President and is committed to the goal of making the company an international leader in the horticulture business.

Daniel Meikleham, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director

Daniel Meikleham has been our Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer since November 27, 2009. He has also been our Director since September 21, 2009. He is a co-creator of the Urban Barns Foods Inc. business concept.

Mr. Meikleham is the former Chief Financial Officer and current Enterprise Risk Manager for Red Sea Housing Services, a publicly listed corporation in Saudi Arabia that employs over 3,000 people and has a market capitalization of approximately $500 Million. In 2006, he was instrumental in transforming the company from a private enterprise into a listed public company through a $140 million full prospectus IPO. Mr. Meikleham’s responsibilities include strategic planning and overseeing the set-up of subsidiaries positioned throughout the world, including the Caribbean, North and Sub-Saharan Africa, the Middle East and Southeast Asia.

Until 2005, Mr. Meikleham worked in the insurance business for 28 years with three major insurance corporations, culminating in a seven year stint with the Prudential Insurance Company of America during which he was honored five times as President of the Gibraltar Club for being their top national producer. From 1998 to 2000, Mr. Meikleham also served as a co-founder and Director of a Puerto Rico venture capital fund. Mr. Meikleham was educated at the Central College of Commerce and Distribution in Glasgow, Scotland, where he won the annual national British-wide government competition in mathematics.

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Robyn Jackson, Vice President, Logistics and Director

Robyn Jackson has been our Vice President, Logistics and Director since November 20, 2009.

Mr. Jackson founded Robyn’s Transportation & Distribution Services Ltd. (formerly Robyn’s Trucking) in Alberta, Canada in 1976. For the past 33 years he has served as its President and Chief Executive Officer and built the company into a niche refrigerated shipper of food and propagated plants, with annual revenues of more than CAD$17,000,000. Mr. Jackson’s former company owned five refrigerated distribution facilities across Western Canada, employed more than 60 professional drivers and shipped food products and plants to all Wal-Mart, Sobeys and Canadian Tire stores in Canada located west of Thunder Bay, Ontario. It also delivered goods to Canadian Superstore and Safeway warehouses across Western Canada.

Richard T. Groome, Director

Richard T. Groome is Managing Partner of Notre-Dame Capital Inc. His expertise stems from financing small and mid-size emerging growth companies. Prior to NDC, Richard started Groome Capital, and created Canada’s leading underwriter of IPO’s, Private Placements and Secondary offerings on the Internet. The firm was sold to Desjardins in 2001. Mr. Groome joined a new and vibrant executive team with a very aggressive plan to grow Desjardins Securities into the top 10 securities firms in the country. In the year 2005, this was accomplished and Mr. Groome left Desjardins (Canada’s seventh largest financial institution) to set up what is now Notre Dame Capital. Richard has been in the financial industry for more than 20 years at such firms as Groome Capital, Marleau Lemire Securities, Sprott Securities and Levesque Beaubien Geoffrion. Mr. Groome was a director of the CDNX Exchange, the predecessor of the TSX Venture exchange for several years and currently sits on the boards of directors of several private and public companies. He has a BA in Economics from McGill University. Mr. Groome has actively managed or participated in over 400 financings representing some $4 billion of small cap financings. Mr. Groome is very active in numerous philanthropic projects most notably underprivileged children in Montreal and Peru, and the World Wildlife Fund.

Cesar Montilla, Director of Business Development, Director

Mr. Montilla has been the Chief Executive Officer of SPECTRUM Finance Network, an international consulting organization, and private capital firm with expertise and experience, on the structuring, re-structuring, and financing of companies, since 2000. He was also President of Ascender Management Services, Inc. an SEC registered investment advisory firm to individuals and institutions between 2004 and 2007.

He had been Chairman and Chief Executive Officer of Clark Melvin Securities Corporation since 1990. In October 1997 Samuel Ramirez & Co., one of the nation's largest municipal bond dealers, purchased Clark Melvin, and he became a Managing Director at that firm and left in 1998. From 1980 he was Managing Director in charge of Kidder, Peabody's total business in Florida and South America and President of Kidder Peabody, Puerto Rico Inc., until he became a Managing Director of Merrill Lynch, who acquired that region in 1989. He left Merrill Lynch in 1990 to become the principle of Clark Melvin. Prior to 1980, Mr. Montilla was Chairman of the Securities Corporation of Puerto Rico which, at that time, was Puerto Rico's only native investment banking corporation, and an affiliate of the First Boston Corporation. From 1965 to 1973 he was Vice President and stockholder of Blyth, Eastman Dillon and Co.

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A native of Puerto Rico, Mr. Montilla graduated from the Cheshire Academy in Connecticut, attended Cornell University, Ithaca, N.Y., the University of Puerto Rico, and the University of Florida in Gainesville where he studied Architecture. He completed studies at the New York Institute of Finance in 1965.

Mr. Montilla has served on the Board of Directors of the Puerto Rican Society of Financial Analysts and the Puerto Rico Development Fund of the Government Development Bank of Puerto Rico. He has also served on Advisory Councils for the United States Department of Commerce, Banco Popular de Puerto Rico and the New York Stock Exchange. He was a registered principal with the National Association of Securities Dealers (NASD), served on the Public Finance Committee of the Public Securities Association (PSA), the Executive Committee of the Public Securities Association and the Executive Committee of the New York Region of the Securities Industry Association (SIA). He served on the Boards of GM Group and Fajardo Federal Bank until both institutions were sold in 1999; he also served as Chairman of the Salvation Army's Advisory Council and was on the Board of Directors of the Puerto Rico Aqueduct and Sewer Authority (PRASA) for six years.

Mr. Montilla currently sits on the Boards of GM Capital, HIMASan Pablo Hospitals; Sofscape Caribe, Opera de Puerto Rico, Inc., “Fondita de Jesus” and is on the Puerto Rico Advisory Board of the United States Army.

Board of Directors and Director Nominees

Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which the slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board, as well as a list of references.

The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

Some of the factors which the Board considers when evaluating proposed nominees include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from each candidate prior to reaching a determination. The Board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

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Conflicts of Interest

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities, engaged in business activities similar to those we intend to conduct.

In general, officers and directors of a corporation are required to present business opportunities to a corporation if:

• the corporation could financially undertake the opportunity;

• the opportunity is within the corporation’s line of business; and

• it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.

We have a code of ethics manual that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.

Significant Employees

Other than as described above, we do not expect any other individuals to make a significant contribution to our business.

Legal Proceedings

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past ten years:

1.	A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2.	Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.	Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
	i.	Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	ii.	Engaging in any type of business practice; or
	iii.	Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

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4.	Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5.	Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6.	Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7.	Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
	i.	Any Federal or State securities or commodities law or regulation; or
	ii.	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or
	iii.	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8.		Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

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Director Independence

Our securities are quoted on the OTC Bulletin Board which does not have any director independence requirements. Once we engage further directors and officers, we will develop a definition of independence and scrutinize our Board of Directors with regard to this definition.

Audit Committee

The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of us and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.

Significant Employees

Other than the directors and officer described above, we do not expect any other individuals to make a significant contribution to our business.

Family Relationships

There are no family relationships among our officers or directors.

Section 16(a) Beneficial Ownership Compliance Reporting

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended July 31, 2012, all filing requirements applicable to its officers, directors and greater than 10% percent beneficial owners were complied with.

Code of Ethics

Our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our company's officers including our president, chief executive officer and chief financial officer, employees, consultants and advisors. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

1.	honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2.	full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;

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3.	compliance with applicable governmental laws, rules and regulations;
4.	the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5.	accountability for adherence to the Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other things, that all of our company's Senior Officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.

In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly Senior Officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any Senior Officer who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics is being filed with the Securities and Exchange Commission as Exhibit 14.1 to our Registration Statement on Form S-1. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Urban Barns Foods Inc., 7170 Glover Road, Milner, BC V0Z 1T0

Item 11. Executive Compensation

None of our directors or executive officers received any compensation from us during our last two completed fiscal years. Pursuant to Item 402(f)(4) of Regulation S-K we have omitted the Summary Compensation table since no compensation has been awarded to, earned by, or paid to these individuals.

Option Grants

We did not grant any options or stock appreciation rights to our named executive officers or directors from our inception to July 31, 2012. We plan to implement, after we become operational and contract full-time executives and managers to run our operations, our 2012 Stock Plan which allows for the issuance of 20,000,000 shares of our common stock or options to acquire 20,000,000 shares of our common stock.

Management Agreements

On September 13, 2012, the Company entered into executive service agreements with three directors of the Company. In accordance with the terms and provisions of the agreements, the Company issued 5,000,000 shares of Class A common stock to each director. Furthermore, the Company issued an additional 15,000,000 share of Class A common stock to one of the directors for directly or indirectly introducing the Company to a third party who invests a minimum of $1,000,000 to the Company. In the event that the director should terminate the agreement by providing a notice of termination prior to the termination date, the director shall return to the Company an aggregate of 1,666,666 shares of Class A common stock for each twelve month period from the effective date that the agreement remains unfulfilled and unperformed.

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Compensation of Directors

Our directors did not receive any compensation for their services as directors from our inception to July 31, 2012. We may compensate our directors for their services in the future, and such directors are expected in the future to receive shares of our common stock and options to purchase additional shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

Compensation Committee

We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. The Board of Directors as a whole participates in the consideration of executive officer and director compensation.

Change of Control

As of November 6, 2012, we had no pension plans or compensatory plans or other arrangements which provide compensation on the event of termination of employment or change in control of us.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of October 30, 2012 by: (i) each of our directors, (ii) each of our named executive officers and (iii) owners of 5% or more of our common shares. There was no other person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own. All persons named have sole voting and investment power with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Annual Report on Form 10-K.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class (1)
	Jacob Benne (2)
Common	7170 Glover Drive	22,037,500 (3)	15.17
Stock	Milner, British Columbia
	Canada V0X 1T0
	Daniel Meikleham (4)
Common	12936 Elbow Drive SW	22,062,500 (5)	15.19
Stock	Calgary, Alberta
	Canada T2W 6G6
	Robyn Jackson (6)
Common	72 Prestwick Estate Way SE	6,150,000	4.23
Stock	Calgary, Alberta
	Canada T2Z 3Y9
	Richard T. Groome (7)
Common	1310 - 1155 University St	22,600,000 (8)	15.56
Stock	Montreal, Quebec
	Canada H3B 3A7
	Cesar Montilla (9)
Common	1825 Miosotis Street,"Santa Maria",	6,001,000	4.13
Stock	San Juan, Puerto Rico (USA), 00927
	All Officers and Directors as a Group	78,851,000	54.28

(1)	Based on 145,266,817 shares of our common stock issued and outstanding as of November 2, 2012.
(2)	Jacob Benne is our President, Chief Executive Officer and Director.
(3)	Includes 21,775,000 shares held by the Benne Family Trust, a trust over which Mr. Benne has sole voting and investment power, 50,000 shares held by the Meikleham Family Trust, a trust over which Daniel Meikleham, our Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director, has shared voting and investment power, and 50,000 shares held by Gerald Fitzpatrick. All of these shares are subject to a voting and lock up agreement between the Benne Family Trust, the Meikleham Family Trust and Gerald Fitzpatrick dated December 4, 2009.
(4)	Daniel Meikleham is our Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director.
(5)	Includes 21,800,000 shares held by the Meikleham Family Trust, a trust over which Mr. Meikleham has shared voting and investment power, 25,000 shares held by the Benne Family Trust, a trust over which Jacob Benne, our President, Chief Executive Officer and Director, has sole voting and investment power, and 50,000 shares held by Gerald Fitzpatrick. All of these shares are subject to a voting and lock up agreement between the Benne Family Trust, the Meikleham Family Trust and Gerald Fitzpatrick dated December 4, 2009.

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(6)	Robyn Jackson is our Vice President, Logistics and Director.
(7)	Richard T. Groome is our Director and the Chairman of our Audit Committee.
(8)	Includes 21,000,000 shares held by Notre-Dame Capital Inc., a company over which Mr. Groome has sole voting and investment power, 1,500,000 shares held by Roxy & Bear Investments, a company over which Mr. Groome has shared voting and investment power with his wife, 50,000 shares held by Alexandra Groome, Mr. Groome’s daughter, and 50,000 shares held by Ryan Groome, Mr. Groome’s son.
(9)	Cesar Montilla is our Director of Corporate Development.

Item 13. Certain Relationships and Related Transactions, and Director Independence

On June 2, 2011, we closed our reverse merger with Non Industrial Manufacture Inc., an Alberta company. Pursuant to the terms of the reverse merger, we issued 2,500,000 shares of our Class B common stock (converted to 50,000,000 shares of our Class A common stock on July 22, 2011) to the Meikleham Family Trust, the Benne Family Trust and the former shareholders of the Alberta company and our affiliates.

Our research and development is conducted by Jacob Benne, our President, Chief Executive Officer and director at a facility owned by a company that he has an interest in. Under this program, we have spent $3,287 classified as research and development, $33,211 for patent protection filings and $144,931 for R&D growing machines and systems as of July 31, 2012.

As at July 31, 2012, we owed $52,809 (2011 - $76,320) to directors and officers of the Company, $25,200 (2011 - $5,400) to the spouse of the President of the Company, and $101,513 (2011 - $41,121) to companies controlled by officers and directors of the Company. All related party amounts are unsecured, non-interest bearing and due on demand.

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Item 14. Principal Accountant Fees and Services.

Audit and Non-Audit Fees

The aggregate fees billed for the most recently completed fiscal year ended July 31, 2012 and for fiscal year ended July 31, 2011 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

	Year Ended July 31
	2012 ($)	2011 ($)
Audit Fees	25,000	21,000
Audit Related Fees	Nil	Nil
Tax Fees	Nil	Nil
All Other Fees	Nil	Nil
Total	25,000	21,000

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

PART IV

Item 15. Exhibits, Financial Statement Schedules

 (a) (1) Financial Statements

See “Index to Consolidated Financial Statements” set forth on page F-1.

(a) (2) Financial Statement Schedules

None. The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.

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Exhibits

Exhibit	Exhibit
Number	Description
2.1	Share Exchange Agreement with Non Industrial Manufacture Inc. dated May 2, 2011 (Incorporated by reference to our Current Report on Form 8-K/A filed on June 2, 2011)
3.1	Articles of Incorporation of Urban Barns Foods Inc. (formerly HL Ventures Inc.) (Incorporated by reference to our Registration Statement on Form SB-2 filed on September 6, 2007)
3.2	Certificate of Amendment filed with the Nevada Secretary of State on June 28, 2011 (Incorporated by reference to our Current Report on Form 8-K filed on July 25, 2011)
3.3	Bylaws of Urban Barns Foods Inc. (formerly HL Ventures Inc.) (Incorporated by reference to our Registration Statement on Form SB-2 filed on September 6, 2007)
4.1	Form of Share Certificate (Incorporated by reference to our Registration Statement on Form SB-2 filed on September 6, 2007)
14.1	Code of Ethics (Incorporated by reference to our Registration Statement filed on Form S-1 June 3, 2010)
21	List of Subsidiaries: Urban Barns Foods Inc., an Alberta Company, Non-Industrial Manufacture, an Alberta Company.
31.1*	Section 302 Certification of Principal Executive Officer
31.2*	Section 302 Certification of Principal Financial Officer
32.1*	Section 906 Certification of Principal Executive Officer
32.2*	Section 906 Certification Principal Financial Officer

*filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	URBAN BARNS FOODS INC.
Date: November 6, 2012	By:	/s/ Jacob Benne
		Jacob Benne
		Chief Executive Officer, President and
		Director
		(Principal Executive Officer)
Date: November 6, 2012		/s/ Dan Meikleham
		Dan Meikleham
		Chief Financial Officer, Secretary,
		Treasurer and Director
		(Principal Financial Officer and Principal
		Accounting Officer)

Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURES	TITLE	DATE
/s/ Jacob Benne		November 6, 2012
Jacob Benne	Chief Executive Officer, President
	and Director
/s/ Dan Meikleham		November 6, 2012
Dan Meikleham	Chief Financial Officer, Secretary,
	Treasurer and Director
/s/ Robyn Jackson		November 6, 2012
Robyn Jackson	Director
/s/ Richard T. Groome		November 6, 2012
Richard T. Groome	Director
/s/ Cesar Montilla, Jr.		November 6, 2012
Cesar Montilla, Jr.	Director

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jacob Benne, certify that:

1.	I have reviewed this report on Form 10-K/A of Urban Barns Foods Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant is made known to me particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
6.	The registrant's other certifying officer(s) and I have indicated in this report whether or not there were significant changes in internal controls or on other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 6, 2012

/s/ Jacob Benne
Jacob Benne
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Daniel Meikleham, certify that:

1.	I have reviewed this report on Form 10-K/A of Urban Barns Foods Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant is made known to me particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
6.	The registrant's other certifying officer(s) and I have indicated in this report whether or not there were significant changes in internal controls or on other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 6, 2012

/s/ Daniel Meikleham
Daniel Meikleham
Chief Financial Officer, Principal Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Urban Barns Foods Inc. (the “Company”) on Form 10-K/A for the period ending July 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jacob Benne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 6^th day of November, 2012.

/s/ Jacob Benne                    

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Urban Barns Foods Inc. (the “Company”) on Form 10-K/A for the period ending July 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel Meikleham, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(3)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(4)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 6^th day of November, 2012.

/s/ Daniel Meikleham                            

Chief Financial Officer, Principal Accounting Officer

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Acquisition of Non Industrial Manufacture Inc. and Recapitalization

12 Months Ended

Jul. 31, 2012

Acquisition of Non Industrial Manufacture Inc. and Recapitalization [Text Block]

3.	Acquisition of Non Industrial Manufacture Inc. and Recapitalization
	On June 2, 2011, the Company acquired 100% of the issued and outstanding shares of common stock of Non Industrial Manufacture Inc. (“NIM”) in exchange for 2,500,000 shares of Class B common stock. The acquisition was a capital transaction in substance and therefore was accounted for as a recapitalization of the business of NIM. Under recapitalization accounting, NIM is considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of the Company. These financial statements include the accounts of the Company since the effective date of the recapitalization being June 2, 2011, and the historical accounts of the business of NIM since inception being February 10, 2010.
	The assets acquired and liabilities assumed are as follows:

	$
Cash	1,774
Prepaid expenses	10,250
Property and equipment	11,859
Accounts payable	(89,718	)
Due to related parties	(69,150	)
Net liabilities assumed	(134,985	)

XML

Significant Accounting Policies

12 Months Ended

Jul. 31, 2012

Significant Accounting Policies [Text Block]

2.	Significant Accounting Policies
	(a)	Basis of Presentation and Principles of Consolidation
		The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in United States dollars. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Urban Barns Foods (Alberta) Inc., and Non-Industrial Manufacture Inc. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is July 31.
	(b)	Use of Estimates
		The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, valuation of convertible debentures, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
	(c)	Cash and Cash Equivalents
		The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
	(d)	Property and Equipment
		Property and equipment consists of production equipment and is stated at cost and amortized straight-line over five years.
	(e)	Intangible assets
		Intangible assets consist of patent development costs. Intangible assets acquired are initially recognized and measured at cost and amortized over its expected useful life once the patents are in use. Impairment tests are conducted annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized in income for the excess, if any. The amortization methods and estimated useful lives of intangible assets are reviewed annually.
	(f)	Long-Lived Assets
		In accordance with ASC 360, “ Property, Plant and Equipment” , the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
	(f)	Comprehensive Loss
		ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at July 31, 2012 and 2011, the Company had no items that affected comprehensive loss.
	(g)	Foreign Currency Translation
		The Company’s functional and reporting currency is the U.S. dollar. Monetary assets and liabilities of integrated operations and other monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.
	(h)	Income Taxes
		The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
		As of July 31, 2012 and 2011, the Company did not have any amounts recorded pertaining to uncertain tax positions.
		The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its wholly-owned subsidiary’s income tax returns for the years ended July 31, 2012 and 2011.
		The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the years ended July 31, 2012 and 2011, there were no charges for interest or penalties.
	(i)	Loss Per Share
		The Company computes net loss per share in accordance with ASC 260, “ Earnings Per Share”, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if- converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at July 31, 2012, the Company had 1,722,222 (2011 – 1,500) potentially dilutive shares.
	(j)	Financial Instruments and Fair Value Measures
		ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

	The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, convertible debentures, derivative liabilities, and amount due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(k)	Stock-based Compensation
	The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
(l)	Reclassifications
	Certain account balances have been reclassified to conform to the current year’s financial statement presentation standards.
(m)	Recent Accounting Pronouncements
	The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

XML

Statement of Financial Position (USD $)	Jul. 31, 2012	Jul. 31, 2011
Current assets
Cash	$ 24,051	$ 32,907
Prepaid expenses and deposits	12,208	13,606
Total current assets	36,259	46,513
Deferred financing costs	4,438	0
Property and equipment	117,420	66,351
Intangible assets	33,211	0
Total assets	191,328	112,864
Current liabilities
Accounts payable and accrued liabilities	175,898	95,425
Convertible debentures, net of unamortized discount of $23,522 (2011 - $nil)	117,702	0
Derivative liabilities	21,249	0
Due to related parties	81,360	85,237
Total liabilities	396,209	180,662
Stockholders' deficit
Preferred stock Authorized: 100,000,000 common shares, par value $0.001 Issued and outstanding: nil shares	0	0
Additional paid-in capital	258,394	54,919
Common stock issuable	4,200	0
Deficit accumulated during the development stage	(526,299)	(172,979)
Total stockholders' deficit	(204,881)	(67,798)
Total liabilities and stockholders' deficit	191,328	112,864
Class A Common Stock [Member]
Stockholders' deficit
Common stock	58,824	50,262
Class B Common Stock [Member]
Stockholders' deficit
Common stock	$ 0	$ 0

XML

Statement of Stockholders Equity (USD $)	Class A Common Stock [Member]	Class B Common Stock [Member]	Additional Paid-in Capital [Member]	Common Stock Issuable [Member]	Deficit Accumulated During the Development Stage [Member]	Total
Beginning Balance at Feb. 10, 2010
Shares issued for cash		$ 2,500	$ (2,186)			$ 314
Shares issued for cash (shares)		2,500,000
Net loss for the year					(3,794)	(3,794)
Ending Balance at Jul. 31, 2010		2,500	(2,186)		(3,794)	(3,480)
Ending Balance (Shares) at Jul. 31, 2010		2,500,000
Shares issued for cash	20,000		84,867			104,867
Shares issued for cash (shares)	20,000,000
Shares cancelled on acquisition	(20,000)		20,000
Shares cancelled on acquisition (shares)	(20,000,000)
Shares held by legal parent	262		(262)
Shares held by legal parent (Shares)	261,671
Net liabilities assumed upon recapitalization					(134,985)	(134,985)
Conversion of Class B common stock	50,000	(2,500)	(47,500)			50,000
Conversion of Class B common stock (shares)	50,000,000	(2,500,000)
Net loss for the year					(34,200)	(34,200)
Ending Balance at Jul. 31, 2011	50,262		54,919		(172,979)	(67,798)
Ending Balance (Shares) at Jul. 31, 2011	50,261,671
Conversion of Class B common stock						0
Shares issuance pursuant to exercise of stock options	5,100		120,362			125,462
Shares issuance pursuant to exercise of stock options (Shares)	5,100,000
Shares issued for conversion of debt	1,062		10,938			12,000
Shares issued for conversion of debt (shares)	1,061,947
Shares issued for consulting services	2,400		60,600			63,000
Shares issued for consulting services (Shares)	2,400,000
Shares issuable for consulting services				4,200		4,200
Fair value of stock options granted			11,575			11,575
Net loss for the year					(353,320)	(353,320)
Ending Balance at Jul. 31, 2012	$ 58,824		$ 258,394	$ 4,200	$ (526,299)	$ (204,881)
Ending Balance (Shares) at Jul. 31, 2012	58,823,618

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Nature of Operations and Continuance of Business

12 Months Ended

Jul. 31, 2012

Nature of Operations and Continuance of Business [Text Block]

1.	Nature of Operations and Continuance of Business
	Urban Barns Foods Inc. (the “Company”) was incorporated under the laws of the State of Nevada on May 21, 2007 as HL Ventures Inc.
	On December 4, 2009, the Company closed a reverse takeover transaction with Urban Barns Foods Inc., a privately-held company incorporated on July 3, 2009 under the laws of the province of Alberta. In accordance with the transaction, the Company issued 125,000 shares of common stock to the shareholders of Urban Barns in exchange for 100% of the issued and outstanding shares of common stock of Urban Barns. As part of the acquisition, the Company also cancelled 102,500 shares of common stock held by management.
	On June 2, 2011, the Company closed a reverse takeover transaction with Non Industrial Manufacture Inc. (“NIM”), a privately-held company incorporated on February 10, 2010, under the laws of the province of Alberta. In accordance with the transaction, the Company issued 2,500,000 shares of Class B common stock to the shareholders of Non Industrial in exchange for 100% of the issued and outstanding shares of common stock of Non Industrial.
	The Company is a development stage company and is an urban produce production company that aims to be the supplier of choice for fresh and high-quality organic and conventional fruits and vegetables for urban consumers.
	These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at July 31, 2012, the Company has not realized any revenues, has a working capital deficit of $359,950 and has an accumulated deficit of $526,299. The continued operations of the Company are dependent on its ability to generate future cash flows from operations or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Statement of Financial Position (Parenthetical) (USD $)	Jul. 31, 2012	Jul. 31, 2011
Unamortized discount	$ 23,522	$ 0
Preferred Stock, Shares Authorized	100,000,000	100,000,000
Preferred Stock, Par Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Class A Common Stock [Member]
Common Stock, Shares Authorized	500,000,000	500,000,000
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares, Issued	58,823,618	58,823,618
Common Stock, Shares, Outstanding	50,261,671	50,261,671
Class B Common Stock [Member]
Common Stock, Shares Authorized	25,000,000	25,000,000
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares, Issued	0	0
Common Stock, Shares, Outstanding	0	0

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Stock Options

12 Months Ended

Jul. 31, 2012

Stock Options [Text Block]

11.	Stock Options
	On August 8, 2011, the Company granted 1,700,000 stock options at an exercise price of $0.025 per share expiring on November 15, 2011 and granted 3,400,000 stock options at an exercise price of $0.15 per share expiring on November 15, 2011. All stock options were vested immediately. The fair value for these stock options was $11,575, and was estimated at the date of grant using the Black-Scholes option-pricing model assuming a weighted average expected life of 0.25 years, a risk-free rate of 0.03%, an expected volatility of 195%, and a 0% dividend yield. The weighted average fair value of stock options granted was $0.11 per share.
	The following table summarizes the continuity of stock options:

			Weighted
			Average
			Exercise
	Number of		Price
	options		$
Balance, July 31, 2010 and 2011	–		–
Granted	5,100,000		0.11
Exercised	(5,100,000	)	0.11
Balance, July 31, 2012	–		–

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Document and Entity Information (USD $)	12 Months Ended
	Jul. 31, 2012	Nov. 02, 2012	Jan. 31, 2012
Document Type	10-K
Amendment Flag	true
Amendment Description	On November 2, 2012, management of Urban Barns Foods Inc. (the "Company") concluded that the consolidated financial statements of the Company, filed on October 30, 2012, should no longer be relied on as the Company inadvertently filed a previous version of the Form 10K that did not have the Company’s independent registered accounting firm’s consent and approval.
Document Period End Date	Jul. 31, 2012
Trading Symbol	urbf
Entity Registrant Name	Urban Barns Foods Inc.
Entity Central Index Key	0001410253
Current Fiscal Year End Date	--07-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		145,266,817
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Entity Public Float			$ 371,920
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

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Income Taxes

12 Months Ended

Jul. 31, 2012

Income Taxes [Text Block]

12.	Income Taxes
	The Company has net operating losses carried forward of $981,019 available to offset taxable income in future years which expires in beginning in fiscal 2031.
	The Company is subject to United States federal and state income taxes and Canadian federal and provincial taxes. The reconciliation of the provision for income taxes compared to the Company’s income tax expense as reported is as follows:

	2012		2011
	$		$
Income tax recovery at statutory rate	(101,867	)	(139,708	)
Permanent differences and other	4,062		33,579
Change in enacted tax rates	1,442		2,724
Valuation allowance change	96,363		103,405
Provision for income taxes	–		–

The significant components of deferred income taxes and assets as at July 31, 2012 and 2011 are as follows:

	2012		2011
	$		$
Net operating losses carried forward	273,797		175,321
Property and equipment	(2,113	)	–
Valuation allowance	(271,684	)	(175,321	)
Net deferred income tax asset	–		–

As at July 31, 2012, the Company is in arrears on filing its statutory corporate income tax returns and the amounts presented above are based on estimates. The actual losses available could differ from these estimates.

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Statement of Operations (USD $)	12 Months Ended		30 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Jul. 31, 2012
Revenue	$ 0	$ 0	$ 0
Operating expenses
Depreciation	17,110	6,329	23,439
Foreign exchange loss (gain)	687	(17,041)	(16,354)
General and administrative	167,323	26,377	197,494
Professional fees	144,058	18,345	162,403
Research and development	3,097	190	3,287
Write-down of property and equipment	3,463	0	3,463
Total operating expenses	335,738	34,200	373,732
Loss from operations	(335,738)	(34,200)	(373,732)
Other income (expense)
Accretion of discount on convertible debentures	(12,202)	0	(12,202)
Amortization of deferred financing costs	(6,312)	0	(6,312)
Gain on change in fair value of derivative liabilities	6,251	0	6,251
Interest expense	(5,319)	0	(5,319)
Total other income (expense)	(17,582)	0	(17,582)
Net loss	$ (353,320)	$ (34,200)	$ (391,314)
Net loss per share, basic and diluted	$ (0.01)
Weighted average shares outstanding	57,096,450	15,481,000

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Convertible Debentures

12 Months Ended

Jul. 31, 2012

Convertible Debentures [Text Block]

6.	Convertible Debentures
	(a)	On January 4, 2012, the Company entered into a convertible promissory note agreement for $27,500, less deferred financing charges of $3,750 and common shares with a fair value of $1,250. Pursuant to the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on October 6, 2012. The note is also convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on July 2, 2012.
		In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $27,500. On July 16, 2012, the Company issued 1,061,947 common shares pursuant to the conversion of $12,000. During the year ended July 31, 2012, the Company recorded accretion expense of $12,202, which increased the carrying value of the convertible note to $202 as at July 31, 2012.
	(b)	On February 9, 2012, the Company entered into four convertible promissory note agreements for $85,000. Pursuant to the agreement, the loans are unsecured, bear interest at 8% per annum, and are due on November 9, 2012. The loans are convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holders, commencing on August 5, 2012.
	(c)	On March 30, 2012, the Company entered into a convertible promissory note agreement for $32,500, less deferred financing charges of $5,750. Pursuant to the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on January 4, 2013. The loan is convertible into common shares at a conversion price equal to 45% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on September 26, 2012.

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Intangible Assets

12 Months Ended

Jul. 31, 2012

Intangible Assets [Text Block]

5. Intangible Assets

			2012	2011
		Accumulated	Net Carrying	Net Carrying
	Cost	Depreciation	Value	Value
	$	$	$	$
Patent development costs	33,211	–	33,211	–

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Commitments

12 Months Ended

Jul. 31, 2012

Commitments [Text Block]

13.	Commitments
	On June 25, 2012, the Company entered into an agreement with a director of the Company. In accordance with the terms and provisions of the agreement, the director agreed to aid with introductions to management of the Company with respect to the current round of financing of a minimum of $1,000,000 on a best efforts basis through various sources of capital.
	Pursuant to the agreement, the Company agreed to the following terms and provisions:
	(a)	The Company agreed to pay a finders' fee of 5% on actual funds raised or 2% via third parties with regards to private placements.
	(b)	The Company agreed to pay a finders' fee in the amount of 3% on actual funds loaned or 1.5% via third parties with regards to debt financings.
	(c)	The Company agreed to pay a scalable finders' fee of 5% on the first $2,000,000, 4% of the next $2,000,000 and 3% on the remaining amount of $4,000,000 if the Company is merged with any other private or public entity with regards to an introduction to a third party who wishes to acquire, merger or perform a business combination; and
	(d)	The Company agreed to pay a monthly fee of $4,000 as compensation for his role as a member of the Board of Directors for a twelve-month term upon the closing of a minimum of $1,000,000 raised.

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Common Stock

12 Months Ended

Jul. 31, 2012

Common Stock [Text Block]

9.	Common Stock
	Share transactions for the year ended July 31, 2012:
	(a)	On August 8, 2011, the Company issued 3,400,000 shares of Class A common stock pursuant to the exercise of stock options for proceeds of $510,000 of which $82,962 was received and the remaining balance of $427,038 was written off as amounts are deemed to be uncollectible.
	(b)	On August 8, 2011, the Company issued 1,700,000 shares of Class A common stock pursuant to the exercise of stock options for proceeds of $42,500.
	(c)	On August 9, 2011, the Company issued 951,000 shares of Class A common stock with a fair value of $19,020 to management and directors of the Company for consulting services.
	(d)	On August 9, 2011, the Company issued 449,000 shares of Class A common stock with a fair value of $8,980 for consulting services.
	(e)	On February 22, 2012, the Company issued 1,000,000 shares of Class A common stock with a fair value of $35,000 for consulting services.
	(f)	On July 16, 2012, the Company issued 1,061,947 shares of Class A common stock pursuant to the conversion of $12,000 of the convertible debenture, as described in Note 6(a).
	(g)	As at July 31, 2012, the Company had 120,000 shares of Class A common stock issuable with a fair value of $4,200. The shares were issued on August 6, 2012. Refer to Note 14(b).
	Share transactions for the year ended July 31, 2011:
	(h)	In January 2011, NIM issued 19,800,000 shares of common stock at $0.00001 per share for proceeds of $206 (Cdn $198).
	(i)	On February 26, 2011, NIM issued 200,000 shares of common stock at $0.50 per share for proceeds of $104,661 (Cdn $100,000).
	(j)	On May 20, 2011, the Company filed an amendment to its articles of incorporation designating that of the authorized 100,000,000 shares of common stock, 97,500,000 shares would be designated as Class A common stock and 2,500,000 shares would be designated as Class B common stock (the “Designation”). In accordance with the terms of the Designation, each share of Class B common stock is entitled to 20 votes per share, and is convertible into 20 shares of Class A common stock for a period of 12 months from the issuance date.
	(k)	On May 31, 2011, the Company effected a 200:1 reverse stock split of the issued and outstanding common stock. All share amounts have been retroactively adjusted for all periods presented.
	(l)	On June 2, 2011, the Company executed a share exchange agreement whereby the Company acquired 50,000,000 of the issued and outstanding common shares of NIM. As part of the share exchange agreement, the Company issued 2,500,000 shares of Class B common stock of the Company to shareholders of NIM. The 2,500,000 shares of Class B common stock were converted into 50,000,000 shares of Class A common stock.
	Share transactions for the year ended July 31, 2011:
	(m)	On June 28, 2011, the Company filed an amendment to its articles of incorporation increasing its authorized capital stock to 525,000,000 shares consisting of 500,000,000 shares of Class A common stock and 25,000,000 shares of Class B common stock. The amendment also amended the Designation providing that the holders of the shares of Class B common stock could convert immediately upon issuance or any time thereafter at the sole option of the holder into shares of Class A common stock.

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Derivative Liabilities

12 Months Ended

Jul. 31, 2012

Derivative Liabilities [Text Block]

7. Derivative Liabilities

Derivative liabilities are comprised of the floating conversion price for the convertible debentures. The fair value of the conversion option of the convertible debenture is estimated at its fair values on each balance sheet date, with changes in fair value reflected in the statement of operations.

During the year ended July 31, 2012, the Company recorded an initial derivative liability of $27,500 (2011 - $nil). As at July 31, 2012, the fair value of the derivative liability was $21,249 (2011 - $nil) resulting in a gain on the change in fair value of the derivative liability of $6,251 (2011 - $nil).

The fair value of the derivative financial liabilities was determined using the Black-Scholes option pricing model using the following assumptions:

		Risk-
		free	Expected	Expected
	Expected	Interest	Dividend	Life (in
	Volatility	Rate	Yield	years)
At the issuance date:
January 2012 convertible debenture	213%	0.10%	0%	0.26
As at July 31, 2012:
January 2012 convertible debenture	222%	0.11%	0%	0.18

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Related Party Transactions

12 Months Ended

Jul. 31, 2012

Related Party Transactions [Text Block]

8.	Related Party Transactions
	(a)	As at July 31, 2012, the Company owed $52,809 (2011 - $76,320) to directors and officers of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(b)	As at July 31, 2012, the Company owed $3,351 (2011 - $3,517) to a company controlled by an officer of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(c)	As at July 31, 2012, the Company owed $25,200 (2011 - $5,400) for amounts owing to the spouse of the President of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(d)	As at July 31, 2012, the Company owed $98,162 (2011 - $37,604) to companies controlled by directors and officers of the Company, which has been recorded in accounts payable and accrued liabilities. The amounts owing are unsecured, non-interest bearing, and due on demand.
	(e)	During the year ended July 31, 2012, the Company incurred professional fees of $21,600 (2011 - $nil) to the spouse of the President of the Company.
	(f)	During the year ended July 31, 2012, the Company incurred travel expenses fees of $40,259 (2011 - $nil) to directors and officers of the Company.
	(g)	During the year ended July 31, 2012, the Company incurred consulting fees of $19,020 (2011 - $nil) to directors and officers of the Company.
	(h)	During the year ended July 31, 2012, the Company incurred rental fees of $15,551 (2011 - $10,080) to a company controlled by an officer of the Company.

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Share Purchase Warrants

12 Months Ended

Jul. 31, 2012

Share Purchase Warrants [Text Block]

10.	Share Purchase Warrants
	The following table summarizes the continuity of share purchase warrants:

			Weighted
			Average
			Exercise
	Number of		Price
	Warrants		$
Balance, July 31, 2010	1,858		236
Expired	(358	)	300
Balance, July 31, 2011	1,500		222
Expired	(1,500	)	222
Balance, July 31, 2012	–		–

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended		30 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Jul. 31, 2012
Operating Activities
Net loss	$ (353,320)	$ (34,200)	$ (391,314)
Adjustments to reconcile net loss to net cash used in activities:
Accretion of discount on convertible debentures	12,202	0	12,202
Amortization of deferred financing costs	6,312	0	6,312
Depreciation	17,110	6,329	23,439
Gain on change in fair value of derivative liabilities	(6,251)	0	(6,251)
Shares issued for consulting fees	67,200	0	67,200
Stock-based compensation	11,575	0	11,575
Write-down of property and equipment	3,463	0	3,463
Changes in operating assets and liabilities:
Prepaid expenses and deposits	1,398	(3,356)	(1,958)
Accounts payable and accrued liabilities	73,823	7,585	81,408
Due to related parties	1,523	10,687	15,732
Net cash used in operating activities	(164,965)	(12,955)	(178,192)
Investing Activities
Purchase of intangible assets	(33,211)	0	(33,211)
Purchase of property and equipment	(71,642)	(60,821)	(132,463)
Cash acquired on recapitalization	0	1,774	1,774
Net cash used in investing activities	(104,853)	(59,047)	(163,900)
Financing Activities
Proceeds from issuance of a convertible debenture	145,000	0	145,000
Finders' fees paid	(9,500)	0	(9,500)
Proceeds from issuance of common shares	125,462	104,867	230,643
Net cash provided by financing activities	260,962	104,867	366,143
Increase (decrease) in cash	(8,856)	32,865	24,051
Cash, beginning of period	32,907	42	0
Cash, end of period	24,051	32,907	24,051
Non-cash investing and financing activities
Share issued upon conversion of debentures	12,000	0	12,000
Conversion of Class B shares to Class A shares	0	50,000	50,000
Supplemental disclosures
Interest paid	0	0	0
Income tax paid	$ 0	$ 0	$ 0

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Property and Equipment

12 Months Ended

Jul. 31, 2012

Property and Equipment [Text Block]

4. Property and Equipment

				2012	2011
		Accumulated		Net Carrying	Net Carrying
	Cost	Depreciation	Impairment	Value	Value
	$	$	$	$	$
Production equipment	144,931	24,048	3,463	117,420	66,351

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Subsequent Events

12 Months Ended

Jul. 31, 2012

Subsequent Events [Text Block]

14.	Subsequent Events
	(a)	On August 6, 2012, the Company issued 120,000 shares of Class A common stock for consulting services, which were issuable as of July 31, 2012. Refer to Note 9(g).
	(b)	On August 28, 2012, the Company issued 18,826,134 shares of Class A common stock pursuant to the conversion of $85,000 of convertible debentures, as described in Note 6(b).
	(c)	On September 13, 2012, the Company entered into executive service agreements with three directors of the Company. In accordance with the terms and provisions of the agreements, the Company issued 5,000,000 shares of Class A common stock to each director. Furthermore, the Company issued an additional 15,000,000 share of Class A common stock to one of the directors for directly or indirectly introducing the Company to a third party who invests a minimum of $1,000,000 to the Company. In the event that the director should terminate the agreement by providing a notice of termination prior to the termination date, the director shall return to the Company an aggregate of 1,666,666 shares of Class A common stock for each twelve month period from the effective date that the agreement remains unfulfilled and unperformed.
	(d)	On October 16, 2012, the Company issued 2,804,878 shares of Class A common stock pursuant to the conversion of $44,000 of the convertible debenture, as described in Note 6(a).
	(e)	On October 16, 2012, the Company issued 6,692,158 shares of Class A common stock pursuant to the conversion of $27,438 of the convertible debenture, as described in Note 6(c).
	(f)	On October 22, 2012, the Company issued 26,000,000 shares of Class A common stock at $0.01 per share for proceeds of $260,000. The Company paid a finders’ fee of $13,000 in conjunction with the private placement.
	(g)	On October 23, 2012, the Company issued 2,000,000 shares of its Class A common stock at $0.025 per share for proceeds of $50,000.