Quarterly report pursuant to sections 13 or 15(d)

Consolidated Statements of Cash Flows

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Consolidated Statements of Cash Flows (USD $)
3 Months Ended 57 Months Ended
Oct. 31, 2012
Oct. 31, 2011
Oct. 31, 2012
Operating activities      
Net income (loss) $ (2,026,925) $ 2,712,046 $ (8,227,653)
Adjustments to reconcile net income (loss) to net cash used in operating activities:      
Depreciation and amortization 183,484 167,596 1,151,753
Write-down of supplies inventory     38,000
Write-down of web development costs     9,000
Fair value of derivative liabilities in excess of proceeds     808,590
Loss on extinguishment of debt     761,492
(Gain) loss on adjustment to fair value of derivative liabilities   (3,977,418) (3,150,985)
Non-cash interest expense 27,449 69,134 294,016
Share-based compensation 179,631 5,139 512,409
Amortization of common stock issued for services   83,000 332,000
Changes in operating assets and liabilities:      
(Increase) decrease in prepaid expenses 128,307 67,721 (214,873)
(Increase) decrease in other current assets (9,839) 7,416 (18,206)
(Decrease) increase in accounts payable and accrued liabilities 358,304 (28,878) 742,625
(Decrease) increase in accrued compensation (59,497) (38,594) 159,352
(Decrease) Increase in accrued income taxes 2,000 1,600 5,200
Net cash (used in) provided by operating activities (1,217,086) (931,238) (6,797,280)
Investing activities      
Purchases of property and equipment   (17,339) (124,797)
Investment in intangible assets     (250,000)
Net cash (used in) provided by investing activities   (17,339) (374,797)
Financing activities      
Proceeds from issuance of common stock and warrants     11,889,000
Payment of financing and offering costs     (542,500)
Payment of amounts due under acquisition obligation (500,000) (100,000) (750,000)
Proceeds from exercise of warrants 106,050   106,050
Proceeds from amounts due to stockholder     153,867
Repayment of amounts due to stockholder     (153,867)
Net cash (used in) provided by financing activities (393,950) (100,000) 10,702,550
Net increase (decrease) in cash (1,611,036) (1,048,577) 3,530,473
Cash and cash equivalents, at beginning of period 5,141,509 2,457,693  
Cash and cash equivalents, at end of period 3,530,473 1,409,116 3,530,473
Cash paid during the period for:      
Interest     1,357
Income taxes   400 800
Noncash investing and financing transaction:      
Fair value of placement agent warrants issued in the public offering     276,980
Acquisition obligation of asset purchase agreement     2,750,000
Acquisition obligation discounts - imputed interest and fair value of warrants   $ 402,355 $ 402,355