Related Party Transactions

6 Months Ended

Jan. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions

6. Related Party Transactions

At January 31, 2014 and July 31, 2013, the Company had loans outstanding with its three officers and a director in the amount of $350,000.  During December 2012, funds were advanced as per agreements dated December 18, 2012 in the amount of  $350,000 and at an interest rate of 6.0% per annum to cover the short-term cash needs of the Company.  The agreements were amended on December 16, 2013 to extend the maturity date and since December 20, 2013 the interest rate has increased to 8.5% per annum.  In the event that at least one-third and one-sixth of the amount due plus interest is not repaid by September 30, 2014 and December 25, 2014, respectively, certain penalties will apply. The Company has evaluated the modification of the loans under FASB ASC 470-50 and determined that the modification was not substantial and therefore did not constitute a debt extinguishment.