Note 8 - Capital Lease Obligations

12 Months Ended

Jun. 30, 2013

NOTE 8 – CAPITAL LEASE OBLIGATIONS

In December 2012 the Company acquired approximately 8,000 acres of agricultural land in the Shai Hills area of Ghana, West Africa. The lease requires total payments over nine (9) years of $1,954,840. The Company paid the first year payment of $129,032, which included a payment at the acquisition date of $119,000 and a credit for $10,032 of costs and expenses advanced to the lessee by the Company during lease negotiations, which were expensed in prior periods. The lease has been accounted for as a capital lease. On the lease acquisition date, the present value of the minimum lease payments, calculated at a discount rate of 18%, was $1,055,575, which was booked as Land under capital lease at June 30, 2013. The following is a schedule by year of future minimum lease payments under the capital lease, together with the present value of the minimum lease payments as of June 30, 2013:

June 30	Amount
2014	$200,000
2015	256,452
2016	248,387
2017	240,323
2018	232,258
Thereafter	648,388
Total minimum lease payments	1,825,808
Less: amount representing interest	(889,233)
Present value of lease payments	936,575
Less: current portion	(31,416)
Long-term portion	$905,159

For the Quarters ended December 31, 2012 and March 31, 2013, the Company used a discount rate of 8% to calculate the present value of lease payments and interest. Management determined that a rate of 18% was more reflective of the cost of our capital and therefore made the appropriate change for the year ended June 30, 2013. The following is a schedule showing the effect of this change for the two reporting periods ended December 31, 2012 and March 31, 2013 on a pro forma basis had the 18% discount rate been used:

	Corrected Amount			Amount Recorded
	at 18% Discount Rate			at 8% Discount Rate			Difference
For Quarter ended December 31, 2012
Balance Sheet
Land Under Capital Lease	$	1,055,575		$	1,435,025		$	(379,450	)
Capital Lease Obligation		(936,575	)		(1,316,025	)		379,450
Statement of Operations
Net loss for the 3 months ended December 31, 2012		246,401			238,087			8,314
Net loss for the 9 months ended December 31, 2013	$	480,239		$	471,925		$	8,314

For Quarter ended March 31, 2013
Balance Sheet
Land Under Capital Lease	$	1,055,575		$	1,435,025		$	(379,450	)
Capital Lease Obligation		(936,575	)		(1,316,025	)		379,450
Statement of Operations
Net loss for the 3 months ended March 31, 2013		297,774			256,205			41,569
Net loss for the 9 months ended March 31, 2013	$	778,013		$	728,130		$	49,883