Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended |
Aug. 31, 2013 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'Novation Holdings Inc |
Document Type | '10-K |
Document Period End Date | 31-Aug-13 |
Amendment Flag | 'false |
Entity Central Index Key | '0001080602 |
Current Fiscal Year End Date | '--08-31 |
Entity Common Stock, Shares Outstanding | 1,244,137,960 |
Entity Public Float | $292,987.27 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'No |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2013 |
Document Fiscal Period Focus | 'FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | 12 Months Ended | ||
Aug. 31, 2013 | Aug. 31, 2012 | ||
Current Assets | ' | ' | |
Cash | $4 | $1,245 | |
Prepaid expenses | 6,845 | 1,000 | |
Accounts receivable | -160,000 | 0 | |
Deferred loan costs | 6,853 | [1] | 4,811 |
Total Current Assets | 174,812 | 7,056 | |
Property, plant, and equipment | 21,475 | [2] | 1,899 |
Loans receivable, net | 848,523 | 48,000 | |
Acquisitions | 528,000 | 0 | |
Contracts | 100,000 | 0 | |
Advances to related parties | 42,350 | 42,500 | |
Total Noncurrent Assets | 1,540,348 | 92,399 | |
Total Assets | 1,715,160 | 99,455 | |
Current Liabilities | ' | ' | |
Accounts payable and accrued liabilities | 177,528 | 18,590 | |
Notes payable-current | 108,405 | [3] | 181,319 |
Advances from related parties | 30,712 | 0 | |
Advances from third parties | 5,694 | 0 | |
Accrued interest | 47,878 | 13,428 | |
Derivative liability | 165,090 | 30,815 | |
Total Current Liabilities | 535,307 | 244,152 | |
Non-current Liabilities | ' | ' | |
Notes Payable | 825,616 | [4] | 0 |
Total Liabilities | 1,360,923 | 244,152 | |
Stockholder's Equity (Deficit) | ' | ' | |
Common Stock | 510,000 | [5] | 30,094 |
Preferred Stock | 1,000 | [6] | 0 |
Additional paid in capital | 9,840,746 | 9,091,652 | |
Deficit accumulated during the development stage | -9,997,509 | -9,266,443 | |
Total Stockholders' Equity (Deficit) | 354,237 | -144,697 | |
Total Liabilities and Stockholders' Equity (Deficit) | $1,715,160 | $99,455 | |
[1] | Net of accumulated amortization of $39,148 and $15,689 | ||
[2] | Net of accumulated depreciation of $645 and $221 | ||
[3] | Net of debt discount of $48,324 and $25,861 | ||
[4] | Net of debt discount of $5,357 and $0 | ||
[5] | $0.001 par value, 2,500,000,000 shares authorized, 509,999,997 and 30,094,500 shares issued and outstanding | ||
[6] | $0.001 par value, 5,000,000 shares authorized, 1,000,000 and 0 shares issued and outstanding |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $) | Aug. 31, 2013 | Aug. 31, 2012 |
Stockholders' Equity: | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common shares authorized | 2,500,000,000 | 500,000,000 |
Common shares issued | 509,999,997 | 30,094,500 |
Common shares outstanding | 509,999,997 | 30,094,500 |
Preferred stock, par value | $0.00 | $0 |
Preferred shares authorized | 5,000,000 | 0 |
Preferred shares issued | 1,000,000 | 0 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Net Income (Loss) | ' | ' |
Revenues | $258,521 | $0 |
Cost of Goods Sold | 59,712 | 0 |
Gross Profit | 198,809 | 0 |
General & Administrative | ' | ' |
Payroll and payroll taxes | 130,000 | 4,012,477 |
Professional fees | 391,962 | 1,260,948 |
General and administrative | 110,193 | 106,835 |
Rent | 10,301 | 0 |
Total Expenses | 642,456 | 5,380,260 |
Loss from operations | -443,647 | -5,380,260 |
Other income (expense) | ' | ' |
Finance cost | -33,102 | 0 |
Sale of subsidiary | 418,876 | 0 |
Gain on extinguishment of debt | 0 | 523,667 |
Interest, net | -223,118 | -1,529,378 |
Derivative expense | -212,516 | -169,878 |
Loss from discontinued operations | -10,708 | 0 |
Change in fair value of derivatives | -226,850 | 130,452 |
Other expense | 0 | -2,221 |
Income (loss) before income taxes | -731,066 | -6,427,618 |
Income taxes | 0 | 0 |
Net income (loss) qualified | ($731,066) | ($6,427,618) |
Earnings Per Share: | ' | ' |
Net loss per common share (basic and diluted) | ($0.01) | ($0.37) |
Weighted average number of common shares outstanding | ' | ' |
Weighted average number of shares outstanding during the period - basic and diluted | 71,289,402 | 17,161,733 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Total | |
Shares issued, at Sep. 23, 1998 | ' | ' | ' | ' | ' | |
Stock issued during period, Value, founder shares | $3,478 | $0 | $0 | $0 | $3,478 | |
Stock issued during period, Shares, founder shares | 3,478,000 | 0 | 51,972 | 0 | 3,529,972 | |
Stock issued during period, Value, services | 0 | 0 | 12,600 | 0 | 12,600 | |
Stock issued during period, Shares, services | 0 | 0 | 0 | 0 | 0 | |
Adjustments to paid in capital | 0 | 0 | 138,600 | 0 | 138,600 | [1] |
Net income (loss) qualified | 0 | 0 | 0 | -363,081 | -363,081 | |
Stockholders' Equity at Aug. 31, 2010 | 3,478 | 0 | 203,172 | -363,081 | -156,431 | |
Shares issued, at Aug. 31, 2010 | 3,478,000 | 0 | 0 | 0 | 3,478,000 | |
Stock issued during period, Value, services | 544 | 0 | 1,803,094 | 0 | 1,803,638 | |
Stock issued during period, Shares, services | 544,718 | 0 | 0 | 0 | 544,718 | |
Stock issued during period, Value, conversion of notes | 99 | 0 | 734,911 | 0 | 735,010 | |
Stock issued during period, Shares, conversion of notes | 98,951 | 0 | 0 | 0 | 98,951 | |
Adjustments to paid in capital | 0 | 0 | 302,265 | 0 | 302,265 | [2] |
Net income (loss) qualified | 0 | 0 | 0 | -2,475,744 | -2,475,744 | |
Stockholders' Equity at Aug. 31, 2011 | 4,121 | 0 | 3,043,442 | -2,838,825 | 208,738 | |
Shares issued, at Aug. 31, 2011 | 4,121,669 | 0 | 0 | 0 | 4,121,669 | |
Stock issued during period, Value, services | 10,763 | 0 | 4,374,239 | 0 | 4,385,002 | |
Stock issued during period, Shares, services | 2,708,213 | 0 | 0 | 0 | 2,708,213 | |
Stock issued during period, Value, conversion of notes | 15,210 | 0 | 1,272,167 | 0 | 1,287,377 | |
Stock issued during period, Shares, conversion of notes | 23,264,618 | 0 | 0 | 0 | 23,264,618 | |
Adjustments to paid in capital | 0 | 0 | 401,804 | 0 | 401,804 | [2] |
Net income (loss) qualified | 0 | 0 | 0 | -6,427,618 | -6,427,618 | |
Stockholders' Equity at Aug. 31, 2012 | 30,094 | 0 | 9,091,652 | -9,266,443 | -144,697 | |
Shares issued, at Aug. 31, 2012 | 30,094,500 | 0 | 0 | 0 | 30,094,500 | |
Stock issued during period, Value, services | ' | ' | ' | ' | 0 | |
Stock issued during period, Value, conversion of notes | 479,906 | 0 | 325,986 | 0 | 805,892 | |
Stock issued during period, Shares, conversion of notes | 479,905,497 | 0 | 0 | 0 | 479,905,497 | |
Stock issued during period, Value, acquisition | 0 | 1,000 | 299,000 | 0 | 300,000 | |
Stock issued during period, Shares, acquisition | 0 | 1,000,000 | 0 | 0 | 1,000,000 | |
Adjustments to paid in capital | 0 | 0 | 124,107 | 0 | 124,107 | [2] |
Net income (loss) qualified | 0 | 0 | 0 | -731,066 | -731,066 | |
Stockholders' Equity at Aug. 31, 2013 | $510,000 | $1,000 | $9,840,746 | ($9,997,509) | $354,237 | |
Shares issued, at Aug. 31, 2013 | 509,999,997 | 1,000,000 | 0 | 0 | 510,999,997 | |
[1] | Expenses paid by shareholder | |||||
[2] | Derivative settlement |
STATEMENT_OF_CASH_FLOWS
STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Statement of Cash Flows | ' | ' |
Net Income (loss) | ($731,066) | ($6,427,618) |
Depreciation | 424 | 221 |
Capital contributions-noncash expenses | 0 | 0 |
Stock issued during period, Value, services | 0 | 4,385,002 |
Debt cancellation | 135,546 | -484,241 |
Amortization | 23,459 | 14,889 |
Amortization of debt discount | 117,201 | 1,484,607 |
Accrued interest payable | 34,450 | 44,771 |
Increase in prepaid expenses | -5,845 | 0 |
Accounts receivable | -160,000 | 0 |
Loans receivable | 0 | 209,653 |
Accounts payable and accrued expenses | 170,404 | 11,545 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -415,428 | -761,171 |
Purchase of property and equipment | 0 | -2,120 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 0 | -2,120 |
Additional capital contributed | 0 | 0 |
Issuance of Common Stock | 0 | 0 |
Proceeds from notes payable | 419,500 | 780,064 |
Payments on notes payable | -6,000 | 0 |
Related party advances | 687 | -37,500 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 414,187 | 742,564 |
Increase (Decrease) in cash and cash equivalents | -1,241 | -20,727 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 1,245 | 21,972 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 4 | 1,245 |
Interest | 0 | 0 |
Income taxes, net | 0 | 0 |
Conversion of notes payable to stock | $1,602,056 | $1,148,407 |
Organization_Consolidation_and
Organization, Consolidation and Presentation of Financial Statements | 12 Months Ended | |||
Aug. 31, 2013 | ||||
Organization, Consolidation and Presentation of Financial Statements: | ' | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure | ' | |||
Novation Holdings, Inc., formerly Stanford Management, Ltd. (the “Company”), was incorporated under the laws of the State of Delaware on September 24, 2008. Effective October 25, 2012, the Company amended its Articles of Incorporation to change its name to Novation Holdings, Inc., increased its authorized capital to 500 million shares of common stock, par value $0.001, and 10 million shares of preferred stock, par value $0.001, and changed its place of incorporation from Delaware to Florida. The Company completed a reverse split of its common shares in the ratio of 1 new shares for each 15 common shares previously issued. The rights and preferences of any preferred shares issued may be set by resolution of the Board of Directors. The reverse stock split has been given retroactive recognition in financial; statements. All shares and per share information has been retroactively adjusted to reflect the stock split. | ||||
The Company was organized for the purpose of acquiring and developing mineral properties. On February 18, 2011, all of the mineral properties and related development and exploration activities were disposed of as part of a series of transactions resulting in the Company moving into the medical technology industry. | ||||
On February 18, 2011, the Company acquired all of the outstanding shares of Organ Transport Systems, Inc. (“OTS”), a Nevada corporation, and simultaneously disposed of the assets relating to its former activities in mining exploration, along with all related liabilities. Consequently, OTS was considered to be the surviving entity, with the Company intending to include only the financial results of OTS in its financial statements. | ||||
Effective March 19, 2012, the Company, Healthcare of Today, Inc. and Élan Health Services, Inc. agreed to rescind the acquisition of Organ Transport Systems, Inc. (“OTS”) from Healthcare of Today, Inc. by the Company, which closed in February, 2011. Under the terms of the rescission, the Company agreed to return its stock in OTS to Healthcare of Today, Inc. in exchange for the return of the 5,217,000 shares of stock issued to Healthcare of Today. However, since Healthcare of Today, Inc. had previously transferred all of the shares of the Company received in the earlier transaction to third parties, of which 3,202,507 were transferred to Élan Health Services, Inc. for the assumption of debt, it was agreed that Élan Health Services would return the 3,202,507 shares held by it immediately, and then would credit the balance of 2,014,493 common shares against the planned acquisition of BioCube, Inc. by the Company from Élan Health. The market value of the shares to be received as a credit at March 19, 2012 was $0.2325 per share, or a total of $468,370, which was recorded as “Loan Receivable” on the balance sheet in March 2012. The net effect of the rescission transaction has been to return OTS as a subsidiary of Healthcare of Today, Inc., and to remove OTS as a subsidiary of the Company. The table below summarizes the effect of the rescission transaction in March 2012: | ||||
Shares | Price | Value | ||
Acquisition of OTS-February 18, 2011 | 5,217,000 | $ 8.2500 | N/A | |
Shares Returned by Élan in March 2012 | -3,202,507 | $ 0.2325 | ($744,583) | |
Stock still due at August 31, 2012* | 2,014,493 | $ 0.2325 | $ (468,370) | |
· The remaining shares due to be returned as of August 31, 2012 have been returned and have been retired. | ||||
As a result of the rescission of the OTS transaction, on July 11, 2012, the Company amended its prior SEC periodic filings to remove the financial results for OTS by filing an amended Form 10-K/A for the year ended August 31, 2011, and amended Forms 10-Q/A for the quarters ended November 30, 2011 and February 29, 2011. | ||||
The separate receivable recorded by the Company totaling $469,827 at February 29, 2012 represented amounts actually paid by the Company to or for OTS, primarily for salaries due to OTS officers and employees. This receivable was non-interest bearing and repayment by OTS was guaranteed by a security interest in all equity interests of OTS held by Healthcare of Today, Inc. as a result of the rescission. This receivable was offset by a corresponding note payable to officers of OTS of $755,320 at February 29, 2012 (See, Note 7). Effective May 31, 2012, the Company entered into a settlement and release agreement with OTS and the OTS officers under which all of the outstanding debt owed to the former OTS officers by the Company was assumed by OTS, the OTS loan receivable was reduced to $235,000 and OTS agreed to pay the Company $235,000. This settlement transaction was recorded at May 31, 2012 as follows: | ||||
Pre-settlement | Amounts | 31-May-12 | 31-May-12 | |
Adjustments | as adjusted | |||
Loan receivable | $ 469,827 | $ 234,827 | $ 235,000 | |
Long-term liabilities | $ 755,320 | $ 755,320 | $ 0 | |
As a result of the settlement, the Company recorded a gain on extinguishment of debt of $520,493 as Other Income for the quarter ended May 31, 2012, which represents the difference between the $755,320 in debt transferred to OTS and the $234,827 in OTS loan receivables cancelled in the settlement. | ||||
On June 8, 2012, OTS paid $235,000 to the Company in settlement of the full amount remaining due on the OTS loan receivable. | ||||
Basis of Accounting | ' | |||
Nature of Operations | ||||
In January, 2012, the Company entered into an exclusive worldwide development and distribution license, through our wholly-owned subsidiary SureScreen Medical, Inc., for the development and marketing of a patent pending ”See and Treat” system for detecting human papilloma virus., the most common sexually transmitted infection and a cause of cervical cancer, In addition to offering easy, affordable, and on-the-spot HPV diagnosis, the technology offered an important alternative to the HPV vaccine. On February 3, 2013, the Company sold the controlling interest in SureScreen Medical, Inc., to AVM Licensing Corp., the licensor of the HPV virus treatment technology being developed by SureScreen. SureScreen is the holder of the recently granted European patent rights to the technology, although the US Patent application has recently been denied. The Company received a combination of cash, stock and notes, secured by the assets of SureScreen, as consideration for the sale. The total value of the sale was estimated at $250,000. | ||||
In January, 2013, the Company acquired a controlling interest in Alternative Energy Partners, Inc., a mining and energy holding company whose common shares are traded on the OTCQB under the symbol AEGY. As a result of the acquisition, Novation acquired 40 million shares of common stock, then representing approximately 19 percent of the common shares issued and outstanding, and 1 million shares of Series A Convertible Preferred stock holding voting power equal to 51 percent of the total vote of all shares entitled to vote. AEGY had 2 wholly-owned subsidiaries, Clarrix Energy, LLC and SAC Acquisition Corp., and anticipates acquiring a third operating subsidiary shortly, all as previously announced by AEGY. Subsequently, in May 2013, the Company sold the controlling preferred stock interest to a third party. The purchase price of the Series A Preferred Stock was $250,000 and was paid by a promissory note payable in five installments over the next five months, with the first installment payment due in early June, 2013. Subsequently, that note was extended for one year, with the first installment payment now due on or before February 28, 2014. | ||||
Effective January 1, 2013, the Company acquired a portion of an administrative consulting business formerly operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between the Company and CFOs to Go, Inc. and both the Company and AEGY, and then transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose. The acquisition was accomplished by the assumption of debt. The assets acquired and the debts assumed in the acquisition are summarized below: | ||||
ASSETS | ||||
Accounts Receivable: | ||||
Alternative Energy Partners, Inc | $ | 164,546 | ||
BioCube, Inc. | 87,600 | |||
Crown City Pictures, Inc. | 178,650 | |||
Total Accounts Receivable | $ | 430.796 | ||
Computers, printers, server and related | 20,000 | |||
Consulting Contract-AEGY: | 100,000 | |||
Total assets acquired | $ | 550,796 | ||
LIABILITIES | ||||
Promissory Note to CF Consulting, LLC | $ | 55,108 | ||
Acquisition Note (partial) | 495,688 | |||
Total liabilities assumed | $ | 550,796 | ||
The assets received in the acquisition were transferred to the newly formed, wholly-owned subsidiary, Novation Consulting Services, Inc., which now provides administrative, financial and legal services to us, our subsidiaries and to Alternative Energy Partners, Inc. and will offer similar services to other companies. On May 5, 2013, the Company sold the Crown City Pictures, Inc. liability, represented by a convertible promissory note in the principal amount of $178,650, to four unrelated investors for four new convertible notes in the amount of $44,662.50 each. Subsequently a total of $164,547 in principal has been paid on the four notes, leaving a balance due of approximately $3,000 plus interest on each note still owed to the Company. | ||||
On December 6, 2012, the Company completed the acquisition of Casita de los Ninos, LLC, with an effective closing date of November 29, 2012, and Casita de los Ninos became a wholly-owned subsidiary. Casita de los Niños, LLC is a California limited liability company doing business as Immersion House™ (www.immersionhouse.com) which is devoted to helping children and their families learn new languages and gain cultural experiences in those targeted languages. Casita de los Niños is the flagship company for Immersion House. Casita was launched in 2009 in Northern California (Bay Area) and focuses on teaching children Spanish through learning centers and various after school enrichment programs. The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $300,000 at inception, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock. If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at two million dollars, based on the 5 day trailing average closing price of the stock. On June 1, 2013, the Company sold Casita de los Niños, LLC to an unrelated party, after determining that its continued inclusion in the corporate group no longer met the Company’s corporate direction. The sale was for a note receivable in the amount of $300,000 payable in two years at 8 percent interest. | ||||
Also on December 6, 2012, the Company completed the acquisition of Burgoyne Internet Services, LLC (“Burgoyne”), a Utah limited liability company, with an effective closing date of November 29, 2012. Since the effect of the change of control of the limited liability company under Utah law is a legal dissolution of the company, the acquisition has been treated as an asset acquisition by a wholly-owned subsidiary of Novation. In addition to the acquisition consideration of $200,000, the seller, ISP Holdings, LLC, a Utah limited liability company, also agreed to provide $50,000 in working capital at closing and an additional $50,000 in working capital if the median dollar value of Novation’s trading volume for its common stock for any consecutive 30 day period equals or exceeds $50,000 during the one year period after closing. The closing was completed on December 6, 2012 on the transfer of the initial $50,000 working capital funds, although the acquisition transaction has been treated as closing effective on November 30, 2012 for accounting purposes. | ||||
The Company issued a convertible promissory note to ISP Holdings, Inc. in the principal amount of $280,000, representing the $200,000 purchase price for Burgoyne, the initial $50,000 working capital. advance, a $15,000 original issue discount, and a $15,000 expense allowance to cover ISP Holding’s expenses related to the transaction. The promissory note has a term of 14 months, bears interest at 8 percent, and is convertible into common stock (subject to a maximum holding of 9.9 percent of the total common shares outstanding at any time) at $0.03 per share. The second working capital loan of $50,000, if made, will bear similar terms, except that there will be no original issue discount or expense allowance. | ||||
Burgoyne provides Internet access, emails, and related services to customers throughout the United States, primarily in areas where high speed cable and other high speed Internet access services are not readily available. Its web site is at www.burgoyne.com. As a result of this initial ISP acquisition, the Company plans to undertake acquisitions of other regional ISP companies in a national roll-up strategy. The Company has already identified 5 other regional ISP companies for sale and believes that, with the added infrastructure provided by the Company, the existing operating success can grow and add to the bottom line for the Company. As part of the transaction, the Company also executed a Transition Services Agreement with ISP Holdings, LLC. under which ISP Holdings will continue to provide administrative services in managing the ISP business of Burgoyne for a nominal fee of the greater of 2 percent of revenues or $200 per month. | ||||
Use of Estimates, Policy | ' | |||
Use of Estimates | ||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A significant estimate in 2012 and 2011 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception. | ||||
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates. | ||||
Development Stage Enterprises | ' | |||
Development Stage | ||||
The Company's financial statements were presented as those of a development stage enterprise through August 31, 2012. Activities during the development stage included company formation, equity issued for patents and technology, and fixed assets and further implementation of the business plan. The Company subsequently has acquired or agreed to acquire operating subsidiaries that are producing income and actively engaged in operating activities, and no longer reports as a development stage company for the fiscal year beginning September 1, 2012. | ||||
Going Concern Note | ' | |||
As reflected in the accompanying financial statements, the Company has a net loss of $731,066 and net cash used in operations of $395,903 for the year ended August 31, 2013; and negative working capital of $417,603 and an accumulated deficit of $9,997,509 at August 31, 2013. | ||||
The accompanying financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company is a development stage company and has suffered recurring losses and has no established source of revenue. Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows. | ||||
There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding. These factors create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty. | ||||
Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence. | ||||
Accounting_Changes_and_Error_C
Accounting Changes and Error Corrections | 12 Months Ended |
Aug. 31, 2013 | |
Accounting Changes and Error Corrections: | ' |
New Accounting Pronouncements and Changes in Accounting Principles | ' |
Recently Issued Accounting Pronouncements | |
In September 2011, the FASB issued an amendment to Topic 350, Intangibles—Goodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The Company is currently evaluating whether early adoption is necessary. | |
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. | |
Risks_and_Uncertainties
Risks and Uncertainties | 12 Months Ended |
Aug. 31, 2013 | |
Risks and Uncertainties: | ' |
Concentration Risk Disclosure | ' |
Risks and Uncertainties | |
The Company operates in an industry that is subject to rapid technological change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure. |
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Aug. 31, 2013 | |
Cash and Cash Equivalents: | ' |
Cash and Cash Equivalents Disclosure | ' |
Cash and Cash Equivalents | |
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no cash equivalents at August 31, 2012 and 2011, respectively. | |
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. There were no balances that exceeded the federally insured limit at August 31, 2012 and 2011, respectively. | |
Debt
Debt | 12 Months Ended | ||||||
Aug. 31, 2013 | |||||||
Debt: | ' | ||||||
Schedule of Short-term Debt | ' | ||||||
* The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. | |||||||
The following is a summary of notes payable at August 31, 2013 and August 31, 2012: | |||||||
Description | 31-Aug-13 | 31-Aug-12 | |||||
Asher Enterprises, Inc.* | |||||||
On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $200 and $0, respectively. | - | 37,500 | |||||
Asher Enterprises, Inc.* | |||||||
On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of August 31, 2013. | - | 35,000 | |||||
Asher Enterprises, Inc.* | |||||||
On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $0 and $8,288, respectively. The note was fully converted as of August 31, 2013. | - | 6,712 | |||||
Asher Enterprises, Inc.* | |||||||
On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of August 31, 2013. | 27,500 | - | |||||
Common Stock LLC * | |||||||
On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of August 31, 2013. | - | 5,507 | |||||
Common Stock LLC * | |||||||
On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of August 31, 2013. | - | 20,000 | |||||
Common Stock LLC | |||||||
On May 2, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $4,603 and $0, respectively. The Company converted $15,336 into shares. | 59 | 20,000 | |||||
Asher Enterprises, Inc.* | |||||||
On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of August 31, 2013. | 27,500 | - | |||||
Panache Group * | |||||||
On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $1,112 and $0, respectively. $40,320 had been converted to common stock as of August 31, 2013. | - | 6,100 | |||||
JMJ Financial * | |||||||
On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, which has been fully amortized at August 31, 2013. | - | 50,500 | |||||
JMJ Financial * | |||||||
On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued with an original issue discount of $6,000, of which $547 unamortized portion remains at August 31, 2013. The carrying amount of the debt discount was $2,057and $0, respectively. $2,551 had been converted into common stock as of August 31, 2013. | 50,846 | - | |||||
WHC Capital, LLC * | |||||||
On June 21, 2013, the Company issued its promissory note in the amount of $25,000 to an unrelated third party for additional working capital. The note is due on May 1, 2014 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 50 percent of the average of the three lowest intra-day trading prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $16,663 and $0, respectively. $8,337 had been converted to common stock as of August 31, 2013. | - | - | |||||
WHC Capital, LLC * | |||||||
On July 11, 2013, the Company issued its promissory note in the amount of $25,000 to an unrelated third party for additional working capital. The note is due on July 11, 2014 and carries interest at 5 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 50 percent of the average of the three lowest intra-day trading prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $25,000 and $0, respectively. | - | - | |||||
Indian River Financial Services, LLC* | |||||||
On March 23,2013, the Company issued its promissory note in the amount of $19,525 to an unrelated third party for additional working capital. The note is due on March 31, 2015. The note is convertible into common stock of the Company after six months, at the election of the Holder, at $0.0013. The note was fully converted as of August 31, 2013. | 19,525 | - | |||||
Indian River Financial Services, LLC* | |||||||
On July 10,2013, the Company issued its promissory note in the amount of $25,000 to an unrelated third party for additional working capital. The note is due on July 31, 2015. The note is convertible into common stock of the Company after six months, at the election of the Holder, at $0.0004. The note was fully converted as of August 31, 2013. | 25,000 | - | |||||
Moss Krusick & Associates, LLC* | |||||||
On June 1, 2013, the Company issued its promissory note in the amount of $7,000 to an unrelated third party to convert accounts payable. The note is due on June 30, 2015. The note is convertible into common stock of the Company after six months, at the election of the Holder, at $0.00075. | 7,000 | - | |||||
Dana L. Hipple | |||||||
On January 15, 2013, the Company issued its promissory note in the amount of $25,108 to an unrelated third party as part of an acquisition of notes receivable. The note is due on December 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.0007. | 25,108 | - | |||||
Dana L. Hipple | |||||||
On June 25, 2013, the Company issued its promissory note in the amount of $30,000 to an unrelated third party as part of an acquisition of notes receivable. The note is due on June 3, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.0004. The note was fully converted as of August 31, 2013. | 30,000 | - | |||||
CFOs to Go | |||||||
On December 31, 2012, the Company issued its promissory note in the amount of $495,689 as part of an acquisition of notes receivable from an unrelated third party. The note is due on December 31, 2015. $6,000 has been paid against this note as of August 31, 2013. | 489,689 | - | |||||
ISP Holdings, Inc. | |||||||
On December 6, 2012, the Company issued its promissory note in the amount of $280,000 to an unrelated third party for additional working capital. The note is due on May 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.03. The Note was issued at a discount of $15,000, of which $5,357 unamortized portion remains at May 31, 2013. $7,139 had been converted into common stock as of August 31, 2013. | 259,294 | - | |||||
Total notes payable | 934,021 | 181,319 | |||||
Current portion | 108,405 | 181,319 | |||||
Notes payable-Long-term portion | $ 825,616 | $ - | |||||
Equity
Equity | 12 Months Ended |
Aug. 31, 2013 | |
Equity: | ' |
Stockholders' Equity Note Disclosure | ' |
The Company is authorized to issue 2,500,000,000 shares of common stock, par value $0.001 per share and 5 million shares of preferred stock, par value $0.001. | |
At August 31, 2012, there were 30,094,500 shares of common stock issued and outstanding. During the year ended August 31, 2013, the Company issued Company stock as follows: | |
In September, 2012 we issued a total of 737,780 common shares converting $16,670 in principal amounts of loans and accrued interest representing 50 percent of the low price for the shares during a three day trading period. | |
In October, 2012 we issued a total of 2,284,848 common shares on conversions totaling $36,400 in principal amounts of loans and accrued interest representing 50 percent of the low price for the shares during a three day trading period. | |
In December, 2012 we issued a total of 3,011,094 common shares converting $42,378 in principal amounts of loans representing 60 percent of the low price for the shares during a three day trading period. | |
In December, 2012 we issued a total of 600,000 common shares for consulting expenses. | |
In January 2013, we issued a total of 2,564,102 common shares converting $17,991 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period. | |
In January 2013, we issued a total of 500,000 common shares for advertising expenses per contract. | |
In February 2013, we issued a total of 8,523,913 common shares converting $22,700 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period. | |
In March, 2013 we issued a total of 13,764,832 common shares on conversions totaling $16,886 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period. | |
In April, 2013 we issued a total of 19,176,623 common shares on conversions totaling $22,845 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period. | |
In May, 2013 we issued a total of 56,571,681 common shares on conversions totaling $45,304 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period. | |
In June, 2013 we issued a total of 142,647,383 common shares on conversions totaling $76,630 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period. | |
In July, 2013 we issued a total of 229,523,241 common shares on conversions totaling $94,430 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period. | |
As a result of these transactions, there were 509,999,997 common shares outstanding at August 31, 2013. | |
Compensation_Related_Costs_Sha
Compensation Related Costs, Share Based Payments | 12 Months Ended |
Aug. 31, 2013 | |
Compensation Related Costs, Share Based Payments: | ' |
Disclosure of Compensation Related Costs, Share-based Payments | ' |
Accounting for Stock-Based Compensation | |
The Company adopted the provisions of FASB ASC 718-20, Stock Compensation – Awards Classified as Equity, which require companies to expense the estimated fair value of employee stock options and similar awards based on the fair value of the award on the date of grant. The cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. There have been no grants of any stock or other equity as of August 31, 2012. | |
On July 1, 2011, the Company issued 333,333 post-split shares of common stock valued at $2,100,000 to the Company’s Chairman and CEO, with the shares originally vesting over 5 years on a proportionate basis. As of | |
August 31, 2011, one-fifth or 66,667 shares valued at $420,000 had vested. Mr. Gelmon conveyed two thirds of the original 333,333 post-split shares to two other parties for reasons unrelated to the Company, retaining a total of 111,111 shares. The non-vested balance at August 31, 2011 of 266,667 total shares valued at $1,680,000 had been issued but was being held in escrow for release on an annual basis each July 1. During the year ended August 31, 2012, the Company revised the vesting term to 3 years and released an additional 155,556 shares valued at $980,000. The non-vested balance of at August 31, 2012 was one-third of the original issuance or 111,111 shares valued at $700,000, of which Mr. Gelmon holds 37,037 shares to be received. In accordance with ASC 718, compensation cost related to shares issued is recognized over the vesting period with an off-setting credit to additional paid-in capital. Also, the deferred equity balance of $1,680,000 at August 31, 2011 was reclassified and netted against additional paid-in capital in the 2011 financial statements. | |
Non-Employee Stock Based Compensation | |
Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. | |
Income_Taxes
Income Taxes | 12 Months Ended | ||||
Aug. 31, 2013 | |||||
Income Taxes: | ' | ||||
Income Tax Disclosure | ' | ||||
Income Taxes | |||||
The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||
Management has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, management believes that no accruals for tax liabilities are necessary. Therefore, no reserves for uncertain income tax positions have been recorded. | |||||
Summary of Deferred Tax Liability Not Recognized | ' | ||||
The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. | |||||
The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. | |||||
The following is a schedule of deferred tax assets as of August 31, 2013, and August 31, 2012: | |||||
31-Aug-13 | 31-Aug-12 | ||||
Net operating loss | $ | 9,997,509 | $ | 9,266,443 | |
Future tax benefit at 34% | 3,399,153 | 3,150,591 | |||
Less: Valuation allowance | (3,399,153) | (3,150,591) | |||
Net deferred tax asset | $ | -- | $ | -- | |
The valuation allowance changed by approximately $248,562 during the year ended August 31, 2013. | |||||
Under Sections 382 and 269 of the Internal Revenue Code, following an “ownership change,” special limitations (“Section 382 Limitations”) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the ‘Applicable Tax Attributes’). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at August 31, 2011. | |||||
The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through August 31, 2013. The Company’s continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended |
Aug. 31, 2013 | |
Earnings Per Share: {1} | ' |
Earnings Per Share | ' |
Earnings per Share | |
In accordance with Financial Accounting Standards Board “FASB” Accounting Standards Codification “ASC” Topic 260, “Earnings per Share,” basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The computation of basic and diluted loss per share for the period from September 24, 1998 (inception) to August 31, 2012, is equivalent since the Company has had continuing losses. The Company also has no common stock equivalents. The calculation of earnings per share has been done by applying the 1 for 15 reverse split of common stock, effective November 7, 2012, retroactively to September 24, 1998, the date of inception. |
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 12 Months Ended | |||
Aug. 31, 2013 | ||||
Derivative Instruments and Hedging Activities: | ' | |||
Derivative Instruments and Hedging Activities Disclosure | ' | |||
Derivatives | ||||
The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk-free interest rate and the estimated life of the financial instruments being fair valued. | ||||
If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. | ||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | ' | |||
The Company has various convertible instruments outstanding more fully described in Note 5. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments. | ||||
As a result, under ASC 815-15 “Derivatives and Hedging”, all other share-settleable instruments must be classified as liabilities. | ||||
Embedded Derivative Liabilities in Convertible Notes | ||||
During the year ended August 31, 2013, the Company recognized new derivative liabilities of $555,527 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $226,850, and was recorded as a loss on derivatives for the year ended August 31, 2013. | ||||
As a result of conversion of notes payable described in Note 7, the Company reclassified $652,605 of derivative liabilities to equity and the change in fair value of derivatives was $231,353. | ||||
The following table summarizes the derivative liabilities included in the consolidated balance sheet: | ||||
Fair Value | ||||
Measurements Using Significant | ||||
Unobservable | ||||
Inputs (Level 3) | ||||
Derivative Liabilities: | ||||
Balance at August 31, 2011 | $ | 30,815 | ||
ASC 815-15 additions | 555,527 | |||
Change in fair value | 231,353 | |||
ASC 815-15 deletions | -652,605 | |||
Balance at August 31, 2012 | $ | 165,090 | ||
The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above: | ||||
Included in Other Income (Expense) on Consolidated Statement of Operations | ||||
Gain/(Loss) on Derivative Liability: | ||||
Change in fair value of derivatives | $ | -226,850 | ||
Derivative expense | (212,516) | |||
Balance at August 31, 2013 | $ | (439,366) | ||
The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions: | ||||
Convertible Debt Instruments | ||||
Risk-free rate | 0.24% - 0.30% | |||
Expected volatility | 100% - 300% | |||
Expected life | 9 months – 12 months |
Fair_Value_Measures_and_Disclo
Fair Value Measures and Disclosures | 12 Months Ended |
Aug. 31, 2013 | |
Fair Value Measures and Disclosures: | ' |
Fair Value Disclosures | ' |
Fair Value of Financial Instruments | |
All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired. | |
The carrying amounts of the Company’s other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The Company does not utilize financial derivatives or other contracts to manage commodity price risks. 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). | |
The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: | |
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. | |
Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. | |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2013 | |
Subsequent Events: | ' |
Subsequent Events | ' |
Common Stock Transactions: | |
In September, 2013, the Company issued a total of 200,837,152 common shares on conversion of principal amount of loans. | |
In October, 2013, the Company issued a total of 263,452,142 common shares on conversion of principal amount of loans. | |
In November, 2013, the Company issued a total of 609,247,920 common shares on conversion of principal amount of loans. | |
As a result of the issue of these shares, the Company had a total of 1,583,537,211 common shares issued and outstanding as of December 16, 2013. | |
The Company has acquired a controlling interest in Crown City Pictures, Inc. (OTC Pink CCPI) a non-reporting company, which owns StarPoint USA, Inc., an alternative vehicle distribution company. | |
The Company also has subscribed for a controlling preferred stock in Focus Gold Corporation (OTC QB FGLD) for $50,000, which has undertaken to establish a subsidiary to engage in a roll-up strategy for small commercial and non-commercial collection agency operations. | |