Related Party Disclosures

3 Months Ended

Oct. 31, 2012

Related Party Disclosures:

Related Party Transactions Disclosure

Due to Related Parties – current portion includes the following:

	October 31, 2012	January 31, 2012
Notes payable - net of discount(1)	$        -	$              17,000
Notes payable – BioCube acquisition	-	11,500
Financing fees(2)	-	6,000
	$        -	$              34,500

⁽¹⁾During the year ended January 31, 2010, the Company borrowed an aggregate of $17,000 from LeadDog Capital LP through the issuance of notes payable for periods of 1 year each with interest payable at 16% per year.  In connection with the issuance of these notes the Company granted the lender warrants for the purchase of 90,000 shares of the Company’s common stock at $.001.  In addition, the Company issued warrants to purchase 45,000 shares of the Company’s common stock at $.001 to LeadDog Capital Markets LLC (the general partner) for due diligence services. LeadDog Capital LP and its affiliates are shareholders and warrant holders; however the group is restricted from becoming a beneficial owner (as such term is defined under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (the 1934 Act)), of the Company’s common stock which would exceed 4.9% of the number of shares of common stock outstanding.

The proceeds from issuance of the promissory notes were allocated to the notes and the warrants based upon their relative fair values. This allocation resulted in allocating $9,500 to the notes and $7,500 to the warrants. The warrants issued for services were recorded as prepaid financing fees of $6,750 and will be amortized to interest expense over the related loan periods.  During the year ended January 31, 2011, the Company recorded expense of $4,800 for the amortization of the debt discount and prepaid financing fees.  The fair value of the warrants was determined using the Black-Scholes option pricing model using the following weighted-average assumptions: volatility of 452 % and 457 %; risk-free interest rate of .87% and .94%; expected life of 3 years and estimated dividend yield of 0%.

⁽²⁾LeadDog Capital Markets LLC, the general partner of LeadDog Capital LP, was due a fee for due diligence related to the convertible debenture arrangement discussed below.  The total fee was $10,000 and would have been owed based on a formula related to the amount of the borrowings incurred.

All of the notes payable to Leaddog Capital were consolidated into a single convertible note payable in the amount of $204,601 during the quarter ended April 30, 2012, that consolidated note was sold to Crystal Falls Investments, LLC, an unrelated third party during the current quarter, and the note is now reported as Notes payable-non-current.  The financing fee related to the former notes also has been terminated with the sale of the notes.

Previously  Due to Related Party – non-current

Previously Due to Related Parties – non-current consisted of borrowings under a convertible debenture arrangement.  In November 2009, the Company entered into an arrangement with LeadDog Capital LP in which the Company may borrow an aggregate of $500,000 with interest payable at 14% per annum three years from the date of any borrowings.  The indebtedness including interest was convertible into common stock at the lesser of $.10 or 75% of the lowest closing bid price during the 15 day period prior to the conversion date but in no event can the conversion price be less than $0.005 The Company accounted for the borrowings under this arrangement in accordance with ASC 480 - “Distinguishing Liabilities from Equity”, as the conversion feature embedded in the debentures could result in the principal being converted to a variable number of the Company's common shares.   The fair value of the conversion feature is calculated at the time of issuance and the Company records a conversion liability for the calculated value. The conversion liability is revalued at the end of each reporting period which results in a gain or loss for the change in fair value.

Effective June 1, 2011, the Company and the LeadDog group agreed to restate and consolidate all of the outstanding debentures notes and interest accrued to that date, a total of $ 142,554, into a Consolidated and A The new Debenture was for a three year term ending June 1, 2014 and allowed the holder to convert all or part of the amount due at $0.03 per share, which was the closing market price of the common shares at June 1, 2011.  In addition, the Company agreed to issue a warrant to the holder to purchase 1,500,000 shares of common stock for a three year period at $0.03 per share.  The warrant was issued as of September 2, 2011.  Accordingly, the Company recorded a gain on the previous conversion liability of $344,549 as the terms of convertibility changed to a fixed price. A debt discount in the amount of $101,475 was recorded and amortized fully to finance cost during the year ended January 31, 2012.

On both June 20, 2011 and September 20, 2011, the Company received $5,000 of additional funding from LeadDog Group which increased the total due to LeadDog Group (non-current) to $152,554 at January 31, 2012. The Company also accrued additional interest to LeadDog Group of $6,807 during the quarter ended October 31, 2011 which increased accrued interest due to LeadDog Group to $20,699 at January 31, 2012. The new debentures have three year terms ending June 20, 2014 and September 20, 2014 and allow the holder to convert all or part of the amount due at closing market price of the common shares at the issue dates, $0.02 and $0.03 per share respectively. No conversion liability or debt discount was recorded on new debt as features were not in the money on issuance.

On February 17, 2012, LeadDog Capital, LP consolidated all of the debts due from the Company into a fourteen percent (14%) convertible note for $204,601 due February 1, 2013.

On March 9, 2012, LeadDog Capital, LP sold the $204,601 convertible note to Crystal Falls Investments, LLC, an unrelated party, for $206,170 representing the original principal plus accrued interest through March 8, 2012.  During the quarter ended October 31, 2012, Crystal Falls transferred $20,000 of the principal of the note to Lotus Capital Investments, an unrelated party.  Interest of $6,514 was accrued on the Crystal Falls note during the quarter ended October 31, 2012 and total interest on the note accrued at October 31, 2012 was $14,597.    Interest on the portion of the note sold to Lotus Capital accrued at October 31, 2012 was $1,412