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EX-32 - CERTIFICATION - Alternative Energy Partners, Inc.exhibit32.htm
EX-31 - PRINCIPAL ACCOUNTING OFFICER CERTIFICATION - Alternative Energy Partners, Inc.exhibit312.htm
EX-31 - CEO CERTIFICATION - Alternative Energy Partners, Inc.exhibit311.htm
v2.4.0.6
Debt
12 Months Ended
Jul. 31, 2012
Debt:  
Debt Disclosure

Derivatives

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.

 

If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

 

Schedule of Short-term Debt

The following details the significant terms and balances of convertible notes payable, net of debt discounts:

 

July 31, 2012

July 31, 2011

Asher Enterprises:

On December 23, 2010, the Company issued its promissory note in the amount of $53,000 to an unrelated third party for additional working capital.  The note was due September 24, 2011 and carried interest at 8 percent per annum, payable at maturity.  The note was convertible into common stock of the Company after six months, at the election of the Holder, at 58 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The carrying amount of the debt discount was $0 and $6,646, respectively. The note was fully converted at July 31, 2012.

 $                             -

 $                  26,354

 

On March 4, 2011, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital.  The note was due December 7, 2011 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after six months, at the election of the Holder, at 58 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The carrying amount of the debt discount was $0 and $25,345, respectively. The note was fully converted at July 31, 2012.

                           -

                     9,655

 

On June 13, 2011, the Company issued a promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note was due March 15, 2012 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after six months, at the election of the Holder, at 58 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The carrying amount of the debt discount was $0 and $23,534, respectively. This note was fully converted at July 31, 2012.

                  -

                      8,966

 

 

On February 7, 2012, the Company issued a promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due November 9, 2012 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after six months, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert.  The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of July 31, 2012, no derivative liability or debt discount has been recorded as instrument is not yet convertible.

                            32,500

                        -

 

On March 8, 2012, the Company issued a promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due December 12, 2012 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after six months, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert.  The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of July 31, 2012, no derivative liability or debt discount has been recorded as instrument is not yet convertible.

                  32,500

                        -

 

On April 26, 2012, the Company issued a promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due January 30, 2013 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after six months, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of July 31, 2012, no derivative liability or debt discount has been recorded as instrument is not yet convertible.

                         32,500

                           -

 

Crystal Falls Investments:

On June 30, 2011, the Company issued a promissory note in the amount of $50,000 to an unrelated third party for additional working capital.  The note is due December 31, 2012 and carries interest at 2 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.013 per share. The carrying amount of the debt discount was $7,361 and $45,695, respectively.

42,639

                        4,305

On July 31, 2011, the Company issued six (6) promissory notes totaling $60,000 to an unrelated third party for additional working capital.  The notes are due December 31, 2012 and carries interest at 2 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.013 per share.  The carrying amount of the debt discount was $3,280 and $59,782, respectively.

                      -

                                218

 

On February 21, 2012, the Company issued a promissory note in the amount of $27,500. The note is due February 21, 2015 and carries interest at 9 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.0015 (or 80% of the closing price on the date of the debenture which was $0.0019). The carrying amount of the debt discount was $10,450 and $0, respectively.

                17,050

                                -

On May 1, 2012, the Company converted accounts payable into a promissory note totaling $40,000. The note is due April 30, 2013 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.001 per share. The carrying amount of the debt discount was $14,944 and $0, respectively. The Company converted $4,000 of this note in July 2012.

21,056

                        -

Tangiers:

On March 15, 2011, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital.  The note is due March 14, 2012 and carries interest at 10 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time before the due date, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The carrying amount of the debt discount was $0 and $22,492, respectively. The note was fully converted at July 31, 2012.

-

                                27,508

Lin-Han:

On December 1, 2011, the Company converted accounts payable into a promissory note totaling $30,000. The note is due December 1, 2012 and carries interest at 5 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.006 per share. The carrying amount of the debt discount was $1,405 and $0, respectively.

28,594

                        -

 $             206,839

 $             77,006