6. Derivative Liabilities

12 Months Ended

Jan. 31, 2013

Notes

6. Derivative Liabilities

6.     Derivative Liabilities

Derivative liabilities consist of convertible debentures with variable conversion prices and share purchase warrants originally issued in private placements with conversion/exercise prices denominated in United States dollars, which differs from the Company’s functional currency.  The fair values of these derivative liabilities are as follows:

	January 31, 2013 $	January 31, 2012 $
December 2010 convertible debenture	62,086	228,914
February 2011 convertible debenture	33,431	123,261
Default penalty on convertible debenture	56,194	207,190
100,000 warrants expiring on April 6, 2012	–	17
75,000 warrants expiring on July 4, 2013	6	346
3,800,000 warrants expiring on July 30, 2015	18,388	160,796
	170,105	720,524

The fair values of derivative financial liabilities were determined using the Black-Scholes option pricing model, using the following assumptions:

	Expected Volatility	Risk-free Interest Rate	Expected Dividend Yield	Expected Life (in years)
As at issuance date:
December 2010 convertible debenture	125%	1.19%	0%	0.75
February 2011 convertible debenture	125%	1.27%	0%	0.75
Default penalty on convertible debenture	125%	0.08%	0%	0.50
100,000 warrants expiring on April 6, 2012	125%	0.29%	0%	1.00
75,000 warrants expiring on July 4, 2013	125%	0.30%	0%	2.00
3,800,000 warrants expiring on July 30, 2015	125%	1.26%	0%	4.50
As at January 31, 2013:
December 2010 convertible debenture	276%	0.12%	0%	1.00
February 2011 convertible debenture	276%	0.12%	0%	1.00
Default penalty on convertible debenture	276%	0.12%	0%	1.00
75,000 warrants expiring on July 4, 2013	276%	0.12%	0%	0.42
3,800,000 warrants expiring on July 30, 2015	275%	0.35%	0%	2.50