CONVERTIBLE DEBENTURES

6 Months Ended

Jan. 31, 2012

CONVERTIBLE DEBENTURES [Text Block]

NOTE 14:            CONVERTIBLE DEBENTURES

On September 9, 2011, as a result of the merger with Concentric, the Company assumed liability for certain Series “A” and “B” convertible debentures that were previously issued by Concentric in the aggregate principal amount of $1,127,020.

The Series “A” convertible debentures, comprised of $628,376 in aggregate principal accruing interest at 15% annually, are convertible into shares of Concentric at $0.90 per share and mature on December 31, 2012. The Series “B” convertible debentures, comprised of $498,644 in aggregate principal accruing interest at 15% annually, are convertible into shares of Concentric at $1.22 per share and mature on April 22, 2013 and May 21, 2013. At September 9, 2011, the combined fair value of the Series “A” and “B” convertible debentures was estimated to be $1,707,938.

On September 26, 2011, the Company settled with certain Series “A” convertible debenture holders for cash payments totaling $1,051,854, resulting in a reduction of the Series “A” convertible debentures of $721,646 and the recognition of a loss on settlement of convertible debentures of $330,208.

On November 28, 2011, the Company settled partial Series “B” convertible debentures with a cash payment of $318,632, resulting the reduction of the convertible debentures of $626,919 and recognition of a gain on settlement of convertible debentures of $308,287 on the statement of operations and comprehensive loss.

On December 21, 2011, the Company settled certain Series “A” and the remaining “B” convertible debentures with an aggregate value of $75,714 through the issuance of 72,703 common shares of the Company at $3.18 per share. As a result, a loss on settlement of convertible debentures of $155,481 was recorded on the statements of operations and comprehensive loss, and the amount of the convertible debentures was reduced by $229,747 which represents the fair value on the settlement date.

During the three and six months ended January 31, 2012, the Company recognized an unrealized loss in fair value of convertible debentures of $22,484 and $48,439 respectively.

At January 31, 2012, the fair value of the remaining Series “A” convertible debentures is presented below:

		Quoted Prices in			Significant			Significant
		Active Markets for			Other Observable			Unobservable
		Identical Assets			Inputs			Inputs
		(Level 1	)		(Level 2	)		(Level 3	)
Convertible Debentures	$	-		$	-		$	178,066

Subsequent to January 31, 2012, the Company settled the remaining Series “A” convertible debentures through the issuance of 55,805 common shares of the Company with a fair value of $219,892, resulting in the reduction of the convertible debentures of $179,308, revalued at the settlement dates. The loss resulted will be recorded on the consolidated statements of operations and comprehensive loss for the period ended April 30, 2012.