Commitments

9 Months Ended

Oct. 31, 2012

Commitments

15. Commitments

On August 16, 2012, the Company entered into a consulting agreement with Kaneohe Advisors LLC, an entity wholly-owned and controlled by Mr. Kyle Francis, to serve as the Company’s Executive Vice President, Business Development and Chief Financial Officer. The term of the agreement is on a month-to-month basis, and provides for Mr. Francis to receive $11,900 per month and the right to purchase 700,000 shares of the Company’s common stock at $0.001 (see Note 14), and can be terminated by either party at any time.

On October 8, 2012 the Company entered into a consulting agreement with Mr. Mark Meyers (“Meyers Agreement”) to perform services as the Company’s Chief of Strategy and Business Development, in which Mr. Meyers will receive $10,000 per month, options to acquire 50,000 shares of the Company’s common stock per month at an exercise price of $0.21 per share, and be eligible for performance-based compensation as determined by the Company’s Board of Directors. The Meyers Agreement may be terminated by either party without cause by providing 90 days notice.

In December, 2012 the Company initiated a private placement offering for up to $1,500,000 par value 9% Senior Subordinated Callable Convertible Promissory Notes maturing February 15, 2016 to be convertible at a conversion price of $0.40 per share, and warrants expiring June 30, 2018 to purchase a total of up to 1,125,000 shares of the Company’s common stock for $0.45 per share, and warrants issuable to the placement agent expiring June 30, 2018 to purchase up to 250,000 shares of the Company’s common stock for $0.45 per share. The 9% Notes will be callable at a price of 105% of par value unless the average daily trading volume (as defined) is less than $100,000, then 110% of par value.