10. CONVERTIBLE NOTES	12 Months Ended
Jan. 31, 2014
Notes to Financial Statements
CONVERTIBLE NOTES	On November 15, 2013, the Company held a closing of a private placement offering (the “November 2013 Offering”) pursuant to which it sold to various accredited investors (collectively, the “Investors”) $325,000 in principal amount of its 10% convertible promissory notes (the “Notes”) and warrants (the “Warrants”). The Notes bear interest at a 10% annual interest rate and mature two (2) years from the date of issuance. The Notes contain a mandatory conversion provision providing that upon the Company’s filing of a Certificate of Designation of Series B Convertible Preferred Stock with the Secretary of State of the State of Nevada, all of the outstanding principal amount of, and accrued but unpaid interest on, the Notes will automatically, without the necessity of any action by the Investors or the Company, convert into shares of its to be authorized Series B convertible preferred stock, par value $0.001 per share (the “Series B Preferred Stock”), at a conversion price of $0.001 per share (the “Conversion Price”). The Conversion Price is subject to adjustment for a planned reverse stock split (the “Reverse Split”) at a ratio of 1,000 to 1 such that the Conversion Price, post-Reverse Split, will be $1.00 per share (subject to further adjustment upon a possible change in the Reverse Split ratio). Each share of Series B Preferred Stock will be convertible at any time into one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at the Conversion Price as adjusted for the Reverse Split, subject to a 9.99% conversion blocker. Each share of Series B Preferred Stock will participate in dividends and other distributions on an equivalent basis with the Company’s Common Stock. Holders of Series B Preferred Stock shall vote together with the holders of Common Stock as a single class, and each holder of outstanding shares of Series B Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on a particular matter. The Warrants entitle the Investors to purchase one thousand (1,000) shares of Common Stock for each $1.00 principal amount of the Notes purchased, at an exercise price (the “Exercise Price”) of $0.001 per share. The Exercise Price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment for the planned Reverse Split at a ratio of 1,000 to 1 such that the Exercise Price, post-Reverse Split, will be $1.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants will be 325,000 (subject to further adjustment upon a possible change in the Reverse Split ratio). The Warrants will be exercisable from issuance until ten (10) years after the closing of the November 2013 Offering. The fair value of the Warrants was determined using the Black-Scholes option pricing model. Assumptions used included: (1) 2.71% risk-free interest rate, (2) expected term of ten years, (3) expected volatility of 306.96%, (4) zero expected dividends, (5) exercise price of $0.001, (6) market price of $0.004, and (7) 325,000,000 shares issuable upon exercise of Warrants. The Warrants were recorded at a discount of $252,778. For the period from November 15, 2013 to January 31, 2014, the Company also amortized $9,309 of the discount with the unamortized discount being $243,469 as of January 31, 2014. As a condition to the November 2013 Offering, the Company has undertaken all steps necessary to effect the authorization of the Series B Preferred Stock and the Reverse Split.

10. CONVERTIBLE NOTES

12 Months Ended

Jan. 31, 2014

On November 15, 2013, the Company held a closing of a private placement offering (the “November 2013 Offering”) pursuant to which it sold to various accredited investors (collectively, the “Investors”) $325,000 in principal amount of its 10% convertible promissory notes (the “Notes”) and warrants (the “Warrants”).

The Notes bear interest at a 10% annual interest rate and mature two (2) years from the date of issuance. The Notes contain a mandatory conversion provision providing that upon the Company’s filing of a Certificate of Designation of Series B Convertible Preferred Stock with the Secretary of State of the State of Nevada, all of the outstanding principal amount of, and accrued but unpaid interest on, the Notes will automatically, without the necessity of any action by the Investors or the Company, convert into shares of its to be authorized Series B convertible preferred stock, par value $0.001 per share (the “Series B Preferred Stock”), at a conversion price of $0.001 per share (the “Conversion Price”). The Conversion Price is subject to adjustment for a planned reverse stock split (the “Reverse Split”) at a ratio of 1,000 to 1 such that the Conversion Price, post-Reverse Split, will be $1.00 per share (subject to further adjustment upon a possible change in the Reverse Split ratio).

Each share of Series B Preferred Stock will be convertible at any time into one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at the Conversion Price as adjusted for the Reverse Split, subject to a 9.99% conversion blocker. Each share of Series B Preferred Stock will participate in dividends and other distributions on an equivalent basis with the Company’s Common Stock. Holders of Series B Preferred Stock shall vote together with the holders of Common Stock as a single class, and each holder of outstanding shares of Series B Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on a particular matter.

The Warrants entitle the Investors to purchase one thousand (1,000) shares of Common Stock for each $1.00 principal amount of the Notes purchased, at an exercise price (the “Exercise Price”) of $0.001 per share. The Exercise Price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment for the planned Reverse Split at a ratio of 1,000 to 1 such that the Exercise Price, post-Reverse Split, will be $1.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants will be 325,000 (subject to further adjustment upon a possible change in the Reverse Split ratio). The Warrants will be exercisable from issuance until ten (10) years after the closing of the November 2013 Offering. The fair value of the Warrants was determined using the Black-Scholes option pricing model. Assumptions used included: (1) 2.71% risk-free interest rate, (2) expected term of ten years, (3) expected volatility of 306.96%, (4) zero expected dividends, (5) exercise price of $0.001, (6) market price of $0.004, and (7) 325,000,000 shares issuable upon exercise of Warrants. The Warrants were recorded at a discount of $252,778. For the period from November 15, 2013 to January 31, 2014, the Company also amortized $9,309 of the discount with the unamortized discount being $243,469 as of January 31, 2014.

As a condition to the November 2013 Offering, the Company has undertaken all steps necessary to effect the authorization of the Series B Preferred Stock and the Reverse Split.