Attached files
Other Liabilities

12 Months Ended  

Jul. 31, 2012


Other Liabilities:  
Schedule of Forward Contracts Indexed to Issuer's Equity  The Company has various convertible instruments outstanding more fully described in Note 8. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its sharesettleable instruments. As a result, under ASC 81515 “Derivatives and Hedging”, all other sharesettleable instruments must be classified as liabilities.
Embedded Derivative Liabilities in Convertible Notes
During the year ended July 31, 2012, the Company recognized new derivative liabilities of $105,977 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $43,969, and was recorded as a loss on derivatives for the year ended July 31, 2012.
As a result of conversion of notes payable described in Note 8, the Company reclassified $164,399 of derivative liabilities to equity and the change in fair value of derivatives was $58,422.
As all of the convertible debt with embedded conversion options had been fully converted as of July 31, 2012, the fair value of the Company’s derivative liabilities was $0 and $58,422 was recognized as a gain on derivatives due to change in fair value of the liability during the year ended July 31, 2012.
The following table summarizes the derivative liabilities included in the consolidated balance sheet:
The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:
The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weightedaverage assumptions:
