FAIR VALUE

9 Months Ended

Feb. 29, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 11. FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date ("exit price"). To estimate fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities ("Level 1"), a middle priority to inputs based on other than quoted prices in active markets ("Level 2") and the lowest priority to unobservable inputs ("Level 3"). In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety.  The three levels of the fair value hierarchy are as follows:

Level 1 — Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

Level 2 — Other inputs that are observable, directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs for which there is little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.

The following table presents recurring financial assets and liabilities which are carried at fair value as of February 29, 2012 and May 31, 2011:

Fair Value Measurements at February 29, 2012:

	Fair Value			Level 1		Level 2		Level 3
Investment in Cross Border Resources, Inc. warrants		1,730,961			-		-		1,730,961
Warrant liability		(2,145,596	)		-		-		(2,145,596	)

Fair Value Measurements at May 31, 2011:

	Fair Value		Level 1		Level 2		Level 3
Investment in Cross Border Resources, Inc. warrants		1,236,500		-		-		1,236,500

The reconciliation of the fair value for our Level 3 assets and liabilities including net purchases and sales and changes in unrealized gains, is set out below:

	Cross Border Warrants		Warrant Liability
Balance, May 31, 2011	$	1,236,500	$	-
Award of warrants		-		(2,221,938	)
Warrants exercised		-		1,253,168
Unrealized gain / (loss) recorded in earnings		494,461		(1,176,826	)
Balance, February 29, 2012	$	1,730,961	$	(2,145,596	)

During the nine months ended February 29, 2012, management revised the industry comparable companies used to determine the historical volatility.  The new companies represent small publicly traded domestic exploration and production companies.  Management believes these companies provide a better estimation of Cross Border’s volatility.