Revision of Prior Period Amounts

3 Months Ended

Oct. 31, 2013

Revision of Prior Period Amounts [Abstract]

Revision of Prior Period Amounts

Revision of Prior Period Amounts

In preparing the Company's financial statements for the quarter ended October 31, 2013, the Company discovered and corrected errors related to the accounting of stock options issued to officers and a director in prior years which were either fully vested at the date of grant or with a vesting term ranging up to 9 years. The prior year financial statements amortized these costs over the contractual term as opposed to the vesting period. This error resulted in misstatements in stock based compensation expense and additional paid in capital for the following fiscal years:

	Over (under) statement
July 31, 2011	$	(2,018,750	)
July 31, 2012		274,741
July 31, 2013		(2,181,461	)
Net understatement	$	(3,925,470	)

Additionally, 72,500,000 in warrants were issued to officers on December 31, 2012 as part of their employment agreements. These warrants vested on that date and were determined to have a fair value of $3,261,000. During the fiscal year ended July 31, 2013, the Company recognized an expense related to these warrants of $920,463. Therefore, there was a net understatement in stock-based compensation expense of $2,340,537 in the prior year.

In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99 and SAB 108"), the Company evaluated these errors and, based on an analysis of quantitative and qualitative factors, determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports with the Securities and Exchange Commission was not required. However, if the adjustments to correct the cumulative effect of the aforementioned errors had been recorded in the three months ended October 31, 2013, the Company believes the impact would have been significant to the current quarter and would impact comparisons to prior periods. Therefore, as permitted by SAB 108, the Company revised in the current filing the previously reported balance sheet as of July 31, 2013 and quarterly results during the three months ended October 31, 2012.

These errors did not impact total stockholders' deficit but impacted additional paid in capital and accumulated deficit reported on the balance sheet at July 31, 2013, as follows:

	As previously reported			Adjustments			As revised
Additional paid in capital	$	27,429,672		$	6,266,007		$	33,695,679
Accumulated deficit during the development stage		(28,584,388	)	$	(6,266,007	)		(34,850,395	)

The impact of the above errors to the statement of operations for the three months ended October 31, 2012 is as follows:

	As previously reported			Adjustments			As revised
Revenues
Operating expenses
General and administrative		922,575			(238,659	)		683,916
Research and development		49,129			-			49,129
Mineral interests		-			-			-
Total operating expenses		971,704			(238,659	)		733,045
Other income (expense)
Interest expense		(145,421	)		-			(145,421	)
Change in derivative		21,152			-			21,152
Debt forgiveness		-			-			-
Total other income (expense)		(124,269	)		-			(124,269	)
Income (loss) before provision for income taxes		(1,095,973	)		(238,659	)		(857,314	)
Provision for income taxes		-			-			-
Net loss		(1,095,973	)		(238,659	)		(857,314	)
Loss per common share:
Basic and diluted	$	(0.01	)		-		$	(0.01	)
Weighted average common shares outstanding
Basic and diluted		128,120,714			-			128,120,714

The errors impacted additional paid in capital and accumulated deficit during the development stage reported in the statements of stockholders' deficit as follows:

	As previously reported			Adjustments			As revised
Balance at July 31, 2011
Additional paid in capital	$	11,092,214		$	2,018,750		$	13,110,964
Accumulated deficit during the development stage		(11,507,707	)		(2,018,750	)		(13,526,457	)
Balance at July 31, 2012
Additional paid in capital		23,184,094			1,744,009			24,928,103
Accumulated deficit during the development stage		(23,928,895	)		(1,744,009	)		(25,672,904	)
Balance at July 31, 2013
Additional paid in capital		27,429,672			6,266,007			33,695,679
Accumulated deficit during the development stage		(28,584,388	)		(6,266,007	)		(34,850,395	)

The above errors did not impact previously reported amounts of net cash used in operating activities, investing activities and financing activities as reported in the statements of cash flows for the three months ended October 31, 2012.