NOTE 8. NOTES PAYABLE

Notes Payable

As of August 31, 2011, the Company had the following notes outstanding, which were not due to shareholders or related parties:

First State Bank of Lonoke, issued June 29, 2011, interest rate at 6.009% per annum, due June 29, 2014. Note is personally guaranteed by Alan Barksdale and related party to management.	$	2,648,732

Robert Hersov, $50,000 Promissory Note issued February 15, 2011; interest rate at 10.0% per annum, due July 30, 2011. On September 28, 2011 the Company amended the maturity date to November 30, 2011.		50,000

Robert Hersov, $150,000 Promissory Note issued March 4, 2011; interest rate at 3.25% per annum, due the earlier of July 31, 2011 or the closing of the acquisition of the Company by Red Mountain Resources, Inc. On September 28, 2011 the Company amended the maturity date to November 30, 2011.		150,000

Total notes payable	$	2,848,732

On June 15, 2010, FSB issued a $200,060 Secured Promissory Note to Black Rock which carried an interest rate at 6% per annum and was due June 15, 2011. The note was secured by a first security lien against the Frost Bank property (see Note 3) and repaid on June 27, 2011.

During July 2011, the Company issued unsecured promissory notes in the principal amount of $850,000 to RMS Advisors, Inc. and TSS Investment, Inc., each an unaffiliated lender. The notes accrued interest at 10%. In July and August 2011, the Company repaid the amounts due under the notes held by RMS Advisors, Inc. and TSS Investment, Inc. and such notes were retired.

Notes Payable - Related Party

Upon closing of the reverse merger on June 22, 2011, Red Mountain extinguished its $850,000 non-interest bearing Commercial Promissory Note issued by Black Rock on May 24, 2011 and its $4,900,000 non-interest bearing Secured Commercial Promissory Note issued by Black Rock on April 29, 2011.

Notes Payable to Shareholders

As of August 31, 2011, the Company had the following notes outstanding to shareholders:

Fiordaliso Limited, $62,500 Promissory Note issued February 15, 2011; interest rate at 10.0% per annum, due June 30, 2011. On September 28, 2011, the Company issued a replacement note which has a maturity date of November 30, 2011 and carries a similar interest rate to the original note.	$	62,500

Capital Growth Investment Trust, $100,000 Promissory Note issued February 15, 2011; interest rate at 10.0% per annum, due June 30, 2011. On September 28, 2011, the Company issued a replacement note which has a maturity date of November 30, 2011 and carries a similar interest rate to the original note.		100,000

William F. Miller III, $250,000 Promissory Note issued May 24, 2011; interest rate at 10% per annum, due the earlier of September 30, 2011 or after the closing of the reverse merger between and an additional equity raise of $2,500,000. In addition, the holder received 50,000 shares of Red Mountain common stock. On August 12, 2011, the Company repaid $50,000 of the Promissory Note. On September 28, 2011, the Company issued a replacement note which has a maturity date of November 30, 2011 and carries a similar interest rate to the original note		200,000

Michael J. Garnick, $700,000 Promissory Note issued May 24, 2011; interest rate at 10% per annum, due the earlier of September 30, 2011 or after the closing of the reverse merger and an additional equity raise of $2,500,000. In addition, the holder received 175,000 shares of Red Mountain Resources common stock. On July 26, 2011, the Company repaid $200,000 of the Promissory Note. On August 12, 2011, the Company repaid $300,000 of the Promissory Note. On September 28, 2011, the Company issued a replacement note which has a maturity date of November 30, 2011 and carries a similar interest rate to the original note		200,000

Bel-Cal Properties, $1,500,000 Promissory Note issued May 24, 2011; interest rate at 10% per annum, due the earlier of September 30, 2011 or after the closing of the reverse merger and an additional equity raise of $2,500,000. In addition, the holder received 375,000 shares of Red Mountain Resources common stock. On July 26, 2011, the Company repaid $200,000 of the Promissory Note. On August 12, 2011, the Company repaid $550,000 of the Promissory Note. On September 28, 2011, the Company issued a replacement note which has a maturity date of November 30, 2011 and carries a similar interest rate to the original note		750,000

	$	1,312,500
Less: unamortized discount		(129,236	)
Less: note payable issuance costs		(24,500	)
Total notes payable	$	1,158,764