DERIVATIVE LIABILITY	12 Months Ended
Feb. 29, 2012
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY	6. DERIVATIVE LIABILITY In January of 2012 the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest is due on the maturity date of October 19, 2012. The conversion option price associated with the note has a 45 percent discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a fifteen day period prior to conversion. The note is convertible at any time after 180 days. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the Black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of approximately$42,500 and $108,979, respectively. The debt discount will be amortized over the life of the note, and the Company recognized approximately $6,467 of interest expense related to amortization of the debt discount during the year ended February 29, 2012. As of February 29, 2012 the unamortized discount related to the note was $36,033. The derivative liability will be adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense. The unrealized gain associated with the derivative liability was approximately $47,945 at February 29, 2012. Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of February 29, 2012 and February 28, 2011 related to the above derivative liability are as follows: Fair Value Fair Value Measurements at Measurements at February 29, 2012 (1) February 28, 2011 (1) --------------------- --------------------- Using Using Level 2 Total Level 2 Total -------- -------- -------- -------- Liabilities: Derivative liabilities $(61,034) $(61,034) $ 0 $ 0 -------- -------- -------- -------- Total liabilities $(61,034) $(61,034) $ 0 $ 0 ======== ======== ======== ======== ---------- (1) The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of February 29, 2012 or February 28, 2011. The Company's derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes Option Pricing Model to value the derivative liabilities utilizing observable inputs such as the Company's common stock price, the exercise price of the warrants, and expected volatility, which is based on historical volatility. The Black-Scholes model employs the market approach in determining fair value.

DERIVATIVE LIABILITY

12 Months Ended

Feb. 29, 2012

6. DERIVATIVE LIABILITY

In January of 2012 the Company issued a convertible promissory note for $42,500.

The note pays interest at 8% per annum,  and  principal and accrued  interest is

due on the  maturity  date of October 19,  2012.  The  conversion  option  price

associated  with the note has a 45 percent  discount to the market  price of the

stock. The market price is based on the average of the two lowest trading prices

during a fifteen day period prior to conversion.  The note is convertible at any

time after 180 days.  As a result of the variable  feature  associated  with the

conversion  option,  pursuant  to ASC Topic  815,  the  Company  bifurcated  the

conversion  option,  and utilized the Black  Scholes model to determine the fair

value of the conversion  option.  At the issuance  date, the Company  recorded a

debt discount and  derivative  liability of  approximately$42,500  and $108,979,

respectively. The debt discount will be amortized over the life of the note, and

the  Company  recognized  approximately  $6,467 of interest  expense  related to

amortization of the debt discount during the year ended February 29, 2012. As of

February 29, 2012 the unamortized  discount related to the note was $36,033. The

derivative  liability will be adjusted to fair value each reporting  period with

unrealized  gain (loss)  reflected in other income and expense.  The  unrealized

gain  associated  with the  derivative  liability was  approximately  $47,945 at

February 29, 2012.

Liabilities measured at fair value on a recurring basis by level within the fair

value  hierarchy  as of February  29, 2012 and  February 28, 2011 related to the

above derivative liability are as follows:

                                  Fair Value                    Fair Value

                                Measurements at               Measurements at

                             February 29, 2012 (1)         February 28, 2011 (1)

                             ---------------------         ---------------------

                                            Using                         Using

                             Level 2        Total          Level 2        Total

                            --------      --------        --------      --------

Liabilities:

  Derivative liabilities    $(61,034)     $(61,034)       $      0      $      0

                            --------      --------        --------      --------

Total liabilities           $(61,034)     $(61,034)       $      0      $      0

                            ========      ========        ========      ========

----------

(1)  The Company did not have any assets or  liabilities  measured at fair value

     using Level 1 or Level 3 of the fair value  hierarchy  as of  February  29,

     2012 or February 28, 2011.

The Company's  derivative  liabilities are classified within Level 2 of the fair

value hierarchy.  The Company utilizes the Black-Scholes Option Pricing Model to

value  the  derivative  liabilities  utilizing  observable  inputs  such  as the

Company's common stock price,  the exercise price of the warrants,  and expected

volatility,  which is based on historical  volatility.  The Black-Scholes  model

employs the market approach in determining fair value.

Amwest Imaging Inc 10-K