Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

Fair Value of Financial Instruments
3 Months Ended
Jan. 31, 2011
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments



FASB ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value:


Level 1 - Quoted prices in active markets for identical assets or liabilities.


Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.


Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.


To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.


Items recorded or measured at fair value on a recurring basis in the accompanying unaudited condensed consolidated financial statements consisted of the following items as of January 31, 2011:


          Quoted Prices
in Active
Markets for
    Total     Level 1     Level 2     Level 3  
Restricted cash   $ 928,909     $ 928,909     $ -     $ -  
Short term investment   $ 13,175     $ 13,175     $ -     $ -  
Total   $ 942,084     $ 942,084     $ -     $ -  
Warrant liability   $ 199,480     $ -     $ -     $ 199,480  
Loans and notes payable   $ 14,818,302     $ -     $ 14,818,302     $ -  
Totals   $ 15,017,782     $ -     $ 14,818,302     $ 199,480  


The fair value of the short term investments, at January 31, 2011 was grouped as Level 1 valuation as the market price was readily available, compared to a fair value of $14,875 for short term investments at October 31, 2010.


Loans and notes payable are recorded at their face amount which approximates fair value.


The remaining fair value of this investment is $13,175 as of January 31, 2011.