STOCKHOLDERS' EQUITY

9 Months Ended

Oct. 31, 2013

Stockholders Equity

Note 5. STOCKHOLDERS' EQUITY

Preferred stock

Preferred stock consists of 50,000,000 shares authorized at a par value of $0.001, of which none are issued or outstanding.

Common stock

Common stock consists of 100,000,000 shares authorized at a par value of $0.001, of which 33,570,000 are issued and outstanding.

On February 2, 2005, common stock includes 100,000,000 shares authorized at a par value of $0.001, of which 100,000 have been issued for the amount of $100 in acceptance of the incorporation expenses for the Company.

On July 30, 2006, the Company issued 275,000 shares of common stock at $0.01 for a value of $2,750.  The shares were issued to a related party in acceptance of expenses paid on behalf of the Company. (note 2)

On August 15, 2006, the Company issued 1,250,000 shares of common stock at $0.01 for a value of $12,500.  The shares were issued to a related party in acceptance of expenses paid on behalf of the Company. (note 2)

On November 1, 2007, the Company issued 3,700,000 shares of common stock at $0.01 for a value of $37,000. The shares were issued to related parties for compensation or third party contract services. (note 2)

On November 13, 2007, the Company undertook a Section 4(2) registration under the Securities Act of 1933 to raise $25,000 in the issuance of 1,000,000 shares of common stock at $0.025 per share.  The Company’s management considers this offering to be exempt under the Securities Act of 1933.

On November 23, 2007, the Company undertook a Section 4(2) registration under the Securities Act of 1933 to raise $15,000 in the issuance of 600,000 shares of common stock at $0.025 per share.  The Company’s management considers this offering to be exempt under the Securities Act of 1933.

On November 29, 2007, the Company undertook a Section 4(2) registration under the Securities Act of 1933 to raise $4,500 in the issuance of 180,000 shares of common stock at $0.025 per share.  The Company’s management considers this offering to be exempt under the Securities Act of 1933.

On January 22, 2007, the Company undertook a Section 4(2) registration under the Securities Act of 1933 to raise $1,000 in the issuance of 40,000 shares of common stock at $0.025 per share.  The Company’s management considers this offering to be exempt under the Securities Act of 1933.

On January 2, 2009, the Company issued 1,125,000 shares of common stock as compensation to an officer of the Company for a value of $180,000 or $0.16 per share.

On February 5, 2010, the Company issued 4,000,000 shares of common stock as compensation to an officer of the Company for a value of $640,000 or $0.16 per share.

On June 30, 2011, the Company issued 5,000,000 shares of common stock as compensation to an officer of the Company for a valued at fair market value of $500,000 or $0.10 per share.

Stock options

On July 30, 2011, the Company issued an option to purchase 8,000,000 common shares to an officer of the Company in consideration for services at $0.10 per share valued at nil on the date of grant.

The fair value of the option grant estimated on the date of grant uses the Black-Scholes option-pricing model with the following weighted-average assumptions:

	July 30, 2011
Expected option life (year)		8
Expected volatility		58.62	%*
Expected dividends		0.00	%
Risk-free rate(s)		2.32	%

* As a thinly traded public entity, it is not practicable for it to estimate the expected volatility of its share price. The Company selected two (2) comparable companies to calculate the expected volatility.  The Company calculated two (2) comparable companies’ historical volatility over the expect life of the share options of eight (8) years and averaged the two (2) comparable companies’ historical volatility as its expected volatility.

The fair value of the stock options issued on July 30, 2011 using the Black-Scholes Option Pricing Model was $504,024 at the date of grant. For the nine months ended October 31, 2013 and 2012, $46,809 and $47,274, respectively, was recognized as compensation cost for stock options issued. From inception to October 31, 2013, $141,874 was recognized as compensation cost for stock options issued.

The table below summarizes the Company’s stock option activities through October 31, 2013:

	Number of Option Shares		Exercise Price Range Per Share		Weighted  Average Exercise Price		Fair Value at Date of Grant		Aggregate Intrinsic Value
Balance, January 31, 2013		8,000,000	$	0.10	$	0.10	$	504,024	$	-
Granted		-		-		-				-
Canceled		-		-		-				-
Exercised		-		-		-				-
Expired		-		-		-				-
Balance, October 31, 2013		8,000,000	$	0.10	$	0.10	$	504,024	$	-
Vested and exercisable, October 31, 2013		2,000,000	$	0.10	$	0.10		-	$	-
Unvested, October 31, 2013		6,000,000	$	0.10	$	0.10		-	$	-