On December 5, 2008 the Chapter 11 Bankruptcy Plan of Reorganization became effective. The following changes and additions to debt took place that day.

Hidden Splendor assumed a loan originally in the name of Mid-States Services, Inc. for $346,041. The bank loan bears interest at 7% per annum and has an aggregate monthly principal and interest payment of $6,090. The loan matures in November 2014. The outstanding principal balance at December 31, 2011 and 2010 was $184,517 and $242,260, respectively. As of December 31, 2009, the Company defaulted on this loan. Consequently, the loan is due on demand and the outstanding principal balance is reflected as part of current liabilities in the consolidated balance sheets.

Hidden Splendor obtained new terms on existing bank loan of $1,541,176. The loan bears interest at 7% per annum fixed, per the Plan, a decrease from the original rate of 11.25%. This loan has an aggregate monthly principal and interest payment of $27,125 and matures in November 2014. The outstanding principal balance at December 31, 2011 and 2010 was $821,783 and $1,078,962, respectively. As of December 31, 2009, the Company defaulted on this loan. Consequently, the loan is due on demand and the outstanding principal balance is reflected as part of current liabilities in the consolidated balance sheets.

Hidden Splendor obtained new terms on its existing bank loan of $1,499,187. The loan bears interest at 7% per annum. This loan has an aggregate monthly principal and interest payment of $23,961 and matures in August 2015. The outstanding principal balance at December 31, 2011 and 2010 was $896,196 and $1,111,846, respectively. As of December 31, 2009, the Company defaulted on this loan. Consequently, the loan is due on demand and the outstanding principal balance is reflected as part of current liabilities in the consolidated balance sheets.

Hidden Splendor obtained an arrearage bank loan of $2,358,952. The loan bears interest at 7% per annum and matures in August 2015. The loan has an aggregate monthly principal and interest payment of $37,703. The outstanding principal balance at December 31, 2011 and 2010 was $1,410,156 and $1,749,476, respectively. As of December 31, 2009, the Company defaulted on this loan. Consequently, the loan is due on demand and the outstanding principal balance is reflected as part of current liabilities in the consolidated balance sheets.

America West reclassified pre-petition trade accounts payable amounts owed to general unsecured creditors to a long-term debt owed to the general unsecured creditors. The loan was payable in quarterly installments of $190,000 through September 2011 and was secured by Hidden Splendor’s assets. Interest was imputed on this loan using America West’s standard borrowing rate of 7% per annum. A discount of $180,452 was recorded on the loan and was amortized using the effective interest method over the life of the loan. The effective interest rate on the note was 6.82%. During the year ended December 31, 2009, the balance of the discount of $177,450 was fully amortized and recorded as interest expense. The outstanding principal balance at December 31, 2011 and 2010 was $0 and $825,374, respectively. America West defaulted on this loan in the first quarter of 2010. Consequently, the loan was due on demand and the outstanding principal balance was reflected as part of current liabilities in the consolidated balance at December 31, 2010.

Hidden Splendor obtained new payment terms on unpaid payroll and coal excise taxes. The loan is secured by Hidden Splendor’s assets and is payable in quarterly payments of $162,156. The loan bears interest at 7% per annum and matured in September 2011. The outstanding principal balance at December 31, 2011 and 2010 was $878,964. The Company defaulted on this loan in the first quarter of 2010. Consequently, the loan is due on demand and the outstanding principal balance is reflected as part of current liabilities in the consolidated balance sheets.

Hidden Splendor obtained new payment terms on a 2007 $800,000 loan from an unrelated profit sharing plan. The loans bear interest at 8.1% per annum and is due October 2012.The loan terms call for monthly interest-only payments the first 24 months, then monthly principal and interest payments the following 24 months. The outstanding principal balance on the loan was $358,357 and $475,000 as of December 31, 2011 and 2010, respectively.

On May 24, 2011, debt owed to an unrelated profit sharing plan was modified. The original debt terms required monthly payments of $21,360 from February 5, 2011 through January 5, 2013. The monthly payments under the note were modified to be payable as follows:

In connection with this loan modification, America West issued the note holder 25,000 shares of common stock. America West evaluated the modification under FASB ASC 470-50 and determined that the modification was not substantial and therefore did not constitute a debt extinguishment. The fair value of the common shares issued was determined to be $31,250 and was recorded as a debt discount. The discount will be amortized to interest expense over the term of the debt using the effective interest method. Amortization for the yearendedDecember 31, 2011 was $10,881 and the unamortized discount on this note was $20,369 as of December 31, 2011.

In January 2009, America West entered into a non-interest bearing promissory note to purchase land for $134,520. The note required monthly installments of $22,420 and matured on August 1, 2009. On September 18, 2010, the Company entered into an agreement to modify the terms. The modified note bore interest at 8% per annum on the unpaid balance and matured on January 18, 2011. America West evaluated the modification under FASB ASC 470-50 and determined that the modification was not substantial and therefore did not constitute a debt extinguishment. The outstanding principal balance at December 31, 2011 and 2010 was $0 and $84,112, respectively.

In September 2010, America West and its subsidiaries signed various notes to borrow a total of $1,000,000. The notes bear interest of 10% per annum and mature in September 2011. A total of 833,333 common shares were issued in connection with the debt. The relative fair value of these shares was $411,764 and was recorded as a debt discount. The debt discount is being amortized and recorded as interest expense over the term of the debt using the effective interest method. Amortization of these discounts for the year ended December 31, 2011 was $246,496. On July 14, 2011, these loans and $85,274 of accrued interest were converted into 1,100,000 shares of common stock valued at $1.01 per share, although this debt was not originally issued as convertible. The fair value of the common stock issued was determined to be $1,111,000. The $51,705 unamortized discount and $25,726 excess fair value of the common stock were recorded as loss on extinguishment of debt. This transaction is also included in the July 14, 2011 conversion totaling $4,465,000 discussed below.

In September 2010, the Company entered into an installment plan with the Internal Revenue Service to repay past due payroll and excise taxes of $1,419,450. The required payment is $50,000 per month. Total payments made during the years ended December 31, 2011 and 2010 amounted to $600,000 and $180,000, respectively. This agreement bears zero interest rate and matures March 2013 if all payments are made on a timely basis. Interest and penalties continue to accrue on the unpaid taxes. The outstanding principal balance at December 31, 2011 and 2010 was $639,450 and $1,239,450.

Between October and December 2010, America West entered into multiple notes to borrow an aggregate of $3,780,000. The notes bear interest at 10% per annum and matured one year after they were signed, which is between October 5, 2011 and December 21, 2011. A total of 3,149,999 common shares were issued in connection with the debt. The relative fair value of these shares was $1,953,537 and was recorded as a debt discount. The debt discount was amortized and recorded as interest expense over the term of the debt using the effective interest method. Amortization of these discounts for the year ended December 31, 2011 was $885,109. During July 2011, $3,180,000 of these loans and $219,418 of accrued interest were converted to common stock. These loans were not originally issued as convertible notes but were converted into 3,498,000 shares of common stock valued at $1.01 per share. The fair value of the common stock issued was determined to be $3,532,980. The $727,247 unamortized discount and $133,562 excess fair value of the common stock were recorded as loss on extinguishment of debt. This transaction is also included in the July 14, 2011 conversion totaling $4,465,000 discussed below.

On April 20, 2011, $500,000 of the $3,780,000 debt that was not originally issued as a convertible promissory note and $21,875 of accrued interest was converted into 550,000 shares of common stock valued at $1.10 per share. The fair value of the common stock issued was determined to be $605,000. As a result, $151,226 of unamortized debt discount and the $83,125 excess fair value of the common stock were recorded as loss on extinguishment of debt. Of the $3,780,000 debt issued between October and December 2010, a $100,000 note remains at December 31, 2011 after the April and July conversions.The $100,000 note matured on December 7, 2011 and is in default at December 31, 2011. America West confessed judgement in a court ruling relating to the default of this loan. America West has agreed to make $5,000 payments on or before January 17, 2012 and February 15, 2012; $10,000 payments on or before March 15, 2012, April 16, 2012and May 15, 2012: and a $79,253 payment on or before June 15, 2012 as full payment of the principal and accrued interest on this loan.

During June and October 2011, America West and its subsidiaries borrowed an aggregate of $281,410. The loan proceeds were used to pay for business insurance. The notes bear interest between 3.25% and 4.95% per annum and mature on March 4, 2012 and April 20, 2012. The outstanding principal balance at December 31, 2011 was $88,443.

During the year ended December 31, 2011, America West borrowed an aggregate of $285,000 from third parties. The notes bear interest at 10% per annum and mature between March 15, 2011 and January 9, 2012. A total of 237,499 common shares were issued in connection with the debt. The relative fair value of these shares was $177,016 and was recorded as a debt discount. The debt discount is amortized and recorded as interest expense over the term of the debt using the effective interest method. Amortization of these discounts for the year ended December 31, 2011 was $69,708. Although these loans were not originally issued as convertible notes, these loans and $14,842 of accrued interest were converted to 313,500 shares of common stock valued at $1.01 per share during July 2011. The fair value of the common stock issued was determined to be $316,635. The $107,308 unamortized discount and $16,793 excess fair value of the common stock were recorded as loss on extinguishment of debt. This transaction is also included in the July 14, 2011 conversion totaling $4,465,000 discussed below.

On July 14, 2011, $4,465,000 of debt that was not originally issued as convertible promissory notes and $319,534 of accrued interest were converted into 4,911,500 shares of common stock valued at $1.01 per share. This includes the $1,000,000, $3,180,000, and $285,000 conversions discussed above. The original debt was issued between September 2010 and January 2011. The fair value of the common stock issued was determined to be $4,960,615. As a result, $886,260 of unamortized debt discount and the $176,081 excess fair value of the common stock were recorded as loss on extinguishment of debt.

In connection with the third party and related party loans issued during the year ended December 31, 2011 and 2010, America West incurred an aggregate of $302,300 and $1,083,550 of commissions, respectively. These commissions were recorded as deferred financing costs and are being amortized over the lives of the related loans using the effective interest rate method. Amortization expense for the year ended December 31, 2011 and 2010 amounted to $568,396 and $540,259. The total unamortized deferred financing costs were $0 and $543,291 as of December 31, 2011 and 2010, respectively.

A summary of the outstanding third party debt at December 31, 2011 and 2010 is as follows:


	Interest		December 31,
	Rate		2011		2010

Mid State bank loan assumed	7%		$184,517		$242,260
Third party profit sharing plan loan	8.1%		358,357		475,000
Bank loan	7%		821,783		1,078,962
Bank loan	7%		1,410,156		1,749,476
Bank loan	7%		896,196		1,111,846
General unsecured creditors loan	-		-		825,374
Accrued payroll and coal excise tax loan	7%		878,964		878,964
Property loan	8%		-		84,112
Insurance loans	3.25% to 4.95%		88,443		68,527
Operating loans	10%		100,000		4,780,000
IRS – payroll and coal excise tax	-		639,450		1,239,450
Unamortized discounts	-		(20,369)		(2,061,783)
Total debt			5,357,497		10,472,188

Current portion of debt, net of unamortized discounts			5,192,956		9,357,738

Long-term portion of debt		$	164,541	$	1,114,450

Minimum principal payments on the above loans for each of the five years subsequent to December 31, 2011 are as follows:


2012	$	5,192,956
2013		164,541
2014		-
2015		-
2016		-
Thereafter		-
	$	5,357,497