Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jul. 31, 2013 | Nov. 01, 2013 | Jan. 31, 2012 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Li-ion Motors Corp. | ' | ' |
Entity Central Index Key | '0001141263 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Jul-13 | ' | ' |
Amendment Flag | 'true | ' | ' |
Current Fiscal Year End Date | '--07-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $3,191,191 |
Entity Common Stock, Shares Outstanding | ' | 39,945,517 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2012 | ' | ' |
Amendment Description | ' | ' | ' |
The purpose of this Amendment No. 1 to the Annual Report on Form 10-K for the year ended July 31, 2013 of Terra Inventions Corp. (the “Companyâ€), filed with the Securities and Exchange Commission on November 14, 2013 (the “Form 10-Kâ€), is (1) to amend the Company’s Consolidated Financial Statements (the “2013 Financial Statementsâ€) to correct errors, and (2) to furnish Exhibit 101 to the Form 10-K pursuant to Regulation S-T. | |||
The Form 10-K was inadvertently filed prior to the issuance of the Independent Registered Public Accounting Firm’s report on the 2013 Financial Statements. We are filing this Amendment to correct errors, including the omission of certain statements and changes in the 2013 Financial Statements and accompanying Footnotes to the 2013 Financial Statements. This Amendment No. 1 to the Form 10-K speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not, except as stated above, modify or update in any way disclosures made in the original Form 10-K. | |||
 | |||
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections. |
Balance_Sheets
Balance Sheets (USD $) | Jul. 31, 2013 | Jul. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $76 | $64 |
Accounts receivable, net of allowance for doubtful accounts of $0 and $561,237, respectively | ' | ' |
Notes receivable, net of allowance for doubtful accounts of $0 and $2,458,602, respectively | ' | ' |
Inventories | ' | 1,500 |
Building and building improvements, net | ' | 1,049,146 |
Other current assets | ' | 3,190 |
Total current assets | 76 | 1,053,900 |
Property and equipment, net | 3,267 | 5,785 |
Deferred patent and trademark costs | 38,213 | 37,413 |
Total assets | 41,556 | 1,097,098 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 1,712,910 | 1,538,060 |
Current portion of long-term debt (including related party deb of $250,000) | 717,294 | 1,460,189 |
Customer deposits | 102,188 | 102,188 |
Total current liabilities | 2,532,392 | 3,100,437 |
Long-term liabilities: | ' | ' |
Long-term debt, less current portion | ' | 250,879 |
Total liabilities | 2,532,392 | 3,351,316 |
Commitments and contingencies | ' | ' |
Stockholders' deficiency | ' | ' |
Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding | ' | ' |
Common stock, $.001 par value, 40,000,000 shares authorized, 39,945,517 and 2,650,517 issued and outstanding at July 31, 2013 and July 31, 2012, respectively. | 39,946 | 2,651 |
Additional paid-in capital | 63,470,061 | 62,643,216 |
Accumulated deficit | -65,991,996 | -64,892,123 |
Accumulated other comprehensive loss | -8,847 | -7,962 |
Stockholders' deficiency attributable to Terra Inventions Corp. | -2,490,836 | -2,254,218 |
Non-controlling interests | ' | ' |
Total stockholders' deficiency | -2,490,836 | -2,254,218 |
Total liabilities and stockholders' deficiency | $41,556 | $1,097,098 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jul. 31, 2013 | Jul. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Accounts Receivable, Allowance for Doubtful Accounts | $0 | $561,237 |
Notes Receivable, Allowance for Doubtful Accounts | 0 | 2,458,602 |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Shares Authorized | 40,000,000 | 40,000,000 |
Common Stock, Shares Issued | 39,945,517 | 2,650,517 |
Common Stock, Shares Outstanding | 39,945,517 | 2,650,517 |
Related Party Debt | $250,000 | $250,000 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
Revenue: | ' | ' |
Sales | ' | $262,795 |
License agreement revenue | ' | 149,333 |
Total revenue | ' | 412,128 |
Costs and expenses: | ' | ' |
Cost of sales | ' | 464,623 |
General and administrative | 534,726 | 1,054,901 |
(Gain) loss on disposal of property and equipment | 5,552 | 70,786 |
Impairment Charge | 1,500 | 740,000 |
Research and development | 1,297 | 483,599 |
Total costs and expenses | 543,075 | 2,813,909 |
Loss from operations | -543,075 | -2,401,781 |
Other (expenses) income: | ' | ' |
Interest (expense) | -84,438 | -145,088 |
Loss on extinguishment of debt | -483,480 | ' |
Other income | 11,118 | 234,854 |
Loss before provision for (benefit from) income taxes | -1,099,873 | -2,312,015 |
Provision for (benefit from) income taxes | ' | ' |
Net loss | -1,099,873 | -2,312,015 |
Less: net loss attributable to non-controlling interest | ' | ' |
Net loss attributable to Terra Inventions Corp. | ($1,099,873) | ($2,312,015) |
Loss per share - basic and diluted: | ' | ' |
Loss per common share attributable to Terra Inventions Corp. common shareholders | ($0.05) | ($0.88) |
Weighted average number of shares outstanding - basic and diluted | 21,246,928 | 2,624,347 |
Consolidated_Statement_of_Comp
Consolidated Statement of Comprehensive Loss (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
Statement Of Comprehensive Loss | ' | ' |
Net loss | ($1,099,873) | ($2,312,015) |
Other comprehensive income | ' | ' |
Currency translation adjustment | -885 | 1,235 |
Comprehensive loss | -1,100,758 | -2,310,780 |
Comprehensive loss attributable to noncontrolling interest | ' | ' |
Comprehensive loss attributable to Terra Inventions Corp | ($1,100,758) | ($2,310,780) |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($1,099,873) | ($2,312,015) |
Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities | ' | ' |
Depreciation | 2,518 | 51,003 |
Loss on disposal of property and equipment, net | ' | 35,825 |
Loss on impairment | ' | 740,000 |
Loss on disposal of inventory due to facility closure | ' | 209,947 |
Loss on finished goods write down | ' | 31,527 |
Loss on deposit | ' | 50,000 |
Provision for doubtful accounts | ' | 2,139,079 |
Licensing fees | ' | -1,638,166 |
Non-cash sale of inventories | ' | -255,000 |
Default fees on debt | 200,000 | ' |
Loss on extinguishment of debt | 483,480 | ' |
Increase (decrease) in cash flows from changes in operating assets and liabilities | ' | ' |
Inventories | 1,500 | ' |
Prepaid expenses and other current assets | 3,190 | 22,278 |
Deferred patent and trademark costs | -800 | -1,555 |
Accounts payable and accrued expenses | 246,107 | 390,759 |
Customer deposits | ' | -99 |
Deferred revenue | ' | -241,000 |
Net cash used in operating activities | -158,326 | -742,456 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Sale of property and equipment | 18,850 | ' |
Additions to property and equipment | ' | ' |
Net cash provided by investing activities | ' | 35,825 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Advances on notes receivable | ' | -81,758 |
Payments received on notes receivable | ' | 22,984 |
Proceeds from issuance of debt | 168,228 | 838,814 |
Payments on debt | -9,005 | -79,698 |
Net cash provided by financing activities | 159,223 | 700,342 |
Effect of exchange rate changes on cash and cash equivalents | -885 | 1,235 |
CHANGE IN CASH AND CASH EQUIVALENTS | ' | ' |
Net increase (decrease) in cash and cash equivalents | 12 | -5,054 |
Cash and cash equivalents at beginning of period | 64 | ' |
Cash and cash equivalents at end of period | 76 | 64 |
Cash paid during the period for: | ' | ' |
Interest | ' | 20,470 |
Income taxes | ' | ' |
Assignment of note receivable with Clean Enviro Tech Corp. to Frontline Asset Management debt | 70,860 | 112,500 |
Shares issued for debt | 180,660 | ' |
Fixed assets foreclosed on | 1,246,724 | ' |
Property and equipment, inventories and electric vehicles exchanged for payment on debt | ' | 255,000 |
Assignment of debt from Frontline Asset Management to Cameo Properties, LLC | ' | $250,000 |
Note_1_Financial_Statement_Pre
Note 1. Financial Statement Presentation | 12 Months Ended |
Jul. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Note 1. Financial Statement Presentation | ' |
Note 1. Financial Statement Presentation | |
History and Nature of Business | |
Li-ion Motors Corp. was incorporated under the laws of the State of Nevada on April 12, 2000. On November 30, 2012, Li-ion Motors merged with its wholly owned subsidiary, Terra Inventions, Corp. (the “Company” or “Terra”) and as a result of the merger the name of the Company was changed. The name Terra was effective for trading purposes on December 21, 2012. The Company is currently pursuing the development and marketing of electric powered vehicles and products based on the advanced lithium battery technology it has developed. | |
Effective April 15, 2008, the Company entered into a License Agreement (“License Agreement”) with Sky Power Solutions, now Clean Enviro Tech Corp. (“CET”), CET providing for their license to CET of their patent applications and technologies for rechargeable lithium ion batteries for electric vehicles and other applications (“Licensed Products”). Under the License Agreement, the Company has the right to purchase their requirements of lithium ion batteries from CET, and their requirements of lithium ion batteries shall be supplied by CET in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of CET. The Company’s cost for lithium ion batteries purchased from CET shall be CET’s actual manufacturing costs for such batteries for the fiscal quarter of CET in which the Company’s purchase takes place. On May 25, 2010, the license agreement was amended to reflect Clean Enviro Tech’s territory would only be the United States and US possessions and territories and we can license to other companies in other parts of the world. The Company issued a license to a firm for the rights in Canada in 2010. | |
Under the terms of the license agreement, CET had agreed to invest a minimum of $1,500,000 in each of the following two years(2009 and 2010)in development of the technology for the Licensed Products. To date, CET has not met the minimum requirements in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement. The Company has advised CET that it will not give notice of default against them for their failure to comply with this covenant over the term of the License Agreement. | |
The Company entered into a ten year license agreement with Lithium Electric Vehicle Corp. (“LEVC”) on May 28, 2010, providing for the Company to license to LEVC certain of the Company’s patent applications and technologies for electric vehicles and other applications. The purpose of the license was to expand sales of the Company’s current line of products by the manufacture and sale of such products in Canada, which is LEVC’s exclusive territory under the license agreement. | |
The license agreement consisted of an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC was required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company had received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012. The Company reflected the delinquent amount due from LEVC in its accounts receivable and had established a reserve for doubtful accounts for the entire amount. In addition, the note of $1,750,000 had been reflected on the books of the Company. Due to LEVC having no assets to secure the note, the Company recorded a reserve for doubtful accounts for the entire note amount of $1,750,000. | |
On February 19, 2013, the Company and LEVC amended the License Agreement and both parties have agreed that; (1) Terra Inventions will own 49% of LEVC in exchange for the balance of any funds due to Terra in connection with the license agreement; (2) LEVC intends to further develop Terra’s technology in Canada. In exchange for this agreement Terra will have full access to these developments made by LEVC for Terra’s use, including further development in the United States; (3) LEVC will retain ownership of further developments only; (4) Terra and LEVC also agree that LEVC will be doing R&D and develop free energy technology and wind turbine technology to achieve higher efficiency for electric vehicles. By Terra providing the platform, technology and BMS system for electric vehicles to LEVC, LEVC will also allow Terra to further develop these technologies in the United States; and (5) both parties understand that LEVC will own these technologies accept for rights hereby granted to Terra for the USA. | |
During the first quarter of the fiscal year ending July 31, 2013, the Company reversed the receivable for the license fees of $267,334 and the note receivable of $1,750,000 by offsetting the reserve for doubtful accounts. These transactions did not have an effect on the Company’s financials. See Note 3. | |
Basis of Presentation | |
Going Concern | |
The Company’s financial statements for the year ended July 31, 2013, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company did not have any cash revenue from vehicle sales in 2013. Management recognized that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses, as the Company continues to incur losses from operations. | |
Since its incorporation, the Company financed its operations through advances and loans from its controlling shareholders. The Company expects to finance operations through the sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company does not expect to receive significant revenue from vehicle sales until the required certifications have been received. There is no guarantee that the Company will be successful in arranging financing on acceptable terms. | |
The Company’s facility in Mooresville, North Carolina was financed through Bayview Loan Servicing, LLC (“Bayview”). Frontline Asset Management, Inc. (“Frontline”), had a second lien on the property. Li-ion became delinquent with the mortgage payments, and, following a prior foreclosure filing and new agreement as to payments under the mortgage, on July 12, 2012, Bayview refiled a notice of hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279. A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, the amended notice of default in the amount of $660,546 having been given on July 23, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012. The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust. On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., a related holding company, subject to the rights of Bayview, as the holder of the first mortgage on the property. | |
As of the filing of this Report, the Company does not have any substantive plan on where its facilities will be or how it will continue the manufacturing process of its electric vehicles. | |
The Company’s ability to raise additional capital is affected by trends and uncertainties beyond its control. The Company does not currently have any arrangements for financing and it may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable to it. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include adjustments that might result from the outcome of these uncertainties. The Company has reduced the workforce to a few consultants, even if financing is obtained qualified engineers and technicians that would need to be hired may not be readily available. | |
Common Stock | |
On December 13, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to decrease the authorized number of shares of common stock from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011. Effective January 26, 2012, the Financial Industry Regulatory Authority (“FINRA”) approved a one-for-five reverse split of the common stock. | |
Our Board of Directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares, par value $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date. | |
Our Board of Directors unanimously approved an amendment to our Articles of Incorporation to decrease the authorized number of shares of common stock from 400,000,000 shares, par value $.001 per share, to 40,000,000 shares, par value $.001 per share, on November 29, 2012. On the same date we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date. | |
Effective December 31, 2012, FINRA approved a one-for-ten reverse split of the common stock. All share and per share amounts have been restated to reflect the one-for-ten reverse stock split. | |
All shares and per share information has been revised to give retroactive effect to the reverse stock splits. |
Note_2_Summary_of_Significant_
Note 2. Summary of Significant Accounting Policies | 12 Months Ended | ||||||
Jul. 31, 2013 | |||||||
Accounting Policies [Abstract] | ' | ||||||
Note 2. Summary of Significant Accounting Policies | ' | ||||||
Note 2. Summary of Significant Accounting Policies | |||||||
Basis of Consolidation | |||||||
The consolidated financial statements included the accounts and records of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company does not have any special purpose entities. For those consolidated subsidiaries in which the company's ownership is less than 100 percent (100%), the outside stockholders' interests are shown as non-controlling interest. The non-controlling interest of the company's earnings or loss is classified as net income (loss) attributable to non-controlling interest in the consolidated statement of operations. | |||||||
The following is a listing of the Company's subsidiaries and its ownership interests: | |||||||
Global Hybrid Corp. | 67.57 | % | |||||
R Electric Car, Co. | 67.57 | % | |||||
Solium Power, Corp. | 67.57 | % | |||||
Hybrid Technologies USA Distributing Inc. | 100 | % | |||||
Hybrid Electric Vehicles India Pvt. Ltd. | 100 | % | |||||
Li-ion Motors of Canada | 100 | % | |||||
Reclassifications | |||||||
Certain prior period amounts have been reclassified to conform with current period other income presentations. | |||||||
Use of Estimates | |||||||
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets and goodwill, income taxes, litigation and warranties. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. | |||||||
The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates. | |||||||
Fair Value Measurements | |||||||
The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: | |||||||
Level 1 - Observable inputs such as quoted market prices in active markets | |||||||
Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable | |||||||
Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions | |||||||
The Company has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of July 31, 2013. | |||||||
Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment on the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. The Company's annual test on its long-lived assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the testing date. | |||||||
Cash and Cash Equivalents | |||||||
Cash and cash equivalents consist of highly liquid investments, which are readily convertible into cash with original maturities of three months or less. | |||||||
Accounts Receivable | |||||||
The Company provides credit to customers in the normal course of business. An allowance for accounts receivable is estimated by management based in part on the aging of receivables and historical transactions. Periodically management reviews accounts receivable for accounts that appear to be uncollectible and writes off these uncollectible balances against the allowance accordingly. | |||||||
Inventories | |||||||
Inventories are stated at the lower of cost or market using the first-in, first-out (“FIFO”) method. The Company may write down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. | |||||||
Property and Equipment | |||||||
Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment are accounted for by methods over the following estimated useful lives: | |||||||
Lives | Methods | ||||||
Building Improvements | 39 Years | Straight Line | |||||
Furniture and Fixtures | 10 years | Accelerated | |||||
Software | 3-5 years | Straight Line | |||||
Computers | 5 years | Straight Line | |||||
Significant improvements are capitalized, while maintenance and repairs are charged to operations as incurred. | |||||||
Evaluation of Long-Lived Assets | |||||||
The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with the guidance in ASC 360-15-35 “Impairment or Disposal of Long-Lived Assets”. An impairment exists when the carrying amount of the long-lived assets is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value. | |||||||
Deferred Patent Costs | |||||||
The Company capitalizes costs directly incurred in pursuing patent applications as deferred patent costs. When such applications result in an issued patent, the related costs are amortized over the remaining legal life of the patents, which is assumed to be 17 years, using the straight-line method. On a quarterly basis, the Company reviews the issued patents and pending patent applications and if the Company determines to abandon a patent application, or an issued patent no longer has economic value, the unamortized balance in deferred patent costs relating to that patent is immediately expensed. As of July 31, 2013, the Company’s patents were in the approval processing phase. | |||||||
Revenue Recognition | |||||||
The Company recognizes revenue in accordance with the guidance contained in Financial Accounting Standards Board Accounting Standards Codification 605, “Revenue Recognition”, (“ASC 605”) and other relevant accounting literature. Revenue is recognized when the product has been delivered and title and risk of loss have passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sale price is fixed and determinable. | |||||||
Revenue received from the sale of license agreements is earned over the life of the agreement. Revenue received but not earned is classified as deferred revenue on the Company's consolidated balance sheet. The Company has changed its accounting policy of recognizing revenue from licensing agreements. The Company’s licensee is in default in making timely payments to the Company. The Company’s revenue recognition policy is to recognize license revenue only to the extent the amount of payments received. | |||||||
The Company typically has a twenty-four month warranty policy for workmanship defects. The Company establishes an accrual for warranty work and expenses the amount over a two year period. | |||||||
Customer Deposits | |||||||
The Company receives advances from customers for automobiles to be manufactured in the future. The Company applies these advances against future billings. As of July 31, 2013 and 2012, customer deposits amounted to $102,188 and $102,188, respectively. | |||||||
Shipping and Handling | |||||||
Shipping and handling costs related to services and product sales are expensed as incurred. | |||||||
Advertising | |||||||
Advertising costs are expensed as incurred and are included in general and administrative expenses. Total advertising expenditures for the year ended July 31, 2013 and 2012, amounted to $1,340 and $5,019, respectively. | |||||||
Research and Development | |||||||
No set amount has been set aside for research and development (“R&D”), however, all projects and purchases require approval prior to initiation. Salaries, payroll taxes, and benefits expensed to R&D for the year ending July 31, 2013 and 2012, were $0 and $471,300, respectively. Parts and supplies; battery and motor management systems; and shipping charges were $1,297 and $12,299, for the year ending July 31, 2013 and July 31, 2012, respectively. The Company expects the research and development expenses will continue to remain substantial and grow as the Company aggressively moves to bring products to market. | |||||||
Concentration of Risk | |||||||
The Company maintains cash deposit accounts and may have certificates of deposits which at times may exceed federally insured limits. These accounts have not experienced any losses and the Company believes it is not exposed to any significant credit risk related to cash. | |||||||
Income taxes | |||||||
Deferred income tax assets or liabilities are computed based on the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory marginal income tax rate in effect for the years in which the differences are expected to reverse. Deferred income tax expenses or credits are based on the changes in the deferred income tax assets or liabilities from period to period. A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. | |||||||
Foreign Currency Translation | |||||||
The functional currency for some foreign operations is the local currency. The reporting currency is the US Dollar. Assets and liabilities of foreign operations are translated at balance sheet date rates of exchange and income, expense and cash flow items are translated at the average exchange rate for the period. Translation adjustments in future periods will be recorded in Other Comprehensive Income (Loss). The translation loss for the year ended July 31, 2013, was $885 and the translation gain for the year ended July 31, 2012, was $1,235. | |||||||
Comprehensive Loss | |||||||
The Company reports comprehensive loss in accordance with the requirements of FASB ASC 220-10-15, “Comprehensive Income”, and (“ASC 220-10-15”). For the years ended July 31, 2013 and 2012, the difference between net loss and comprehensive loss was foreign currency translation. | |||||||
Net Loss Per Common Share | |||||||
Basic loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and potential common shares during the specified period. All potentially dilutive securities have been excluded from the computations for the year ending July 31, 2013, as their effect is anti-dilutive. | |||||||
Recently Issued Pronouncements | |||||||
FASB has codified a single source of U.S. Generally Accepted Accounting Principles, the Accounting Standards Codification™. Unless needed to clarify a point to readers, we will refrain from citing specific section references when discussing application of accounting principles or addressing new or pending accounting rule changes. There are no recently issued accounting standards that are expected to have a material effect on our financial condition, results of operations or cash flows. |
Note_3_Notes_Receivable
Note 3. Notes Receivable | 12 Months Ended |
Jul. 31, 2013 | |
Receivables [Abstract] | ' |
Note 3. Notes Receivable | ' |
Note 3. Notes Receivable | |
As of July 31, 2012, the Company had a note receivable balance with CET of $708,602. On October 2, 2012 the Company sold its interest in the receivable to Frontline Asset Management (“Frontline”) for $0.10 on the dollar which reduced the Company’s debt with Frontline to $70,786. The entire note receivable had previously been reserved for in its entirety; therefore, we had a $70,786 credit in our bad debt expense which is included in the general and administrative expenses on the Company’s consolidated statement of operations for the year ending July 31, 2013. | |
During the year ending July 31, 2013, the Company advanced $0 and $0 was repaid by CET. During year ending July 31, 2012, the Company advanced CET $81,758 of which $22,984 was repaid in payments through a reimbursement for a leased employee and $112,500 through an assignment of debt to Frontline. As of July 31, 2013 and July 31, 2012, an allowance for doubtful accounts in the amount of $0 and $708,602, respectively was recorded against the note receivable, reducing the amount to $0. | |
On November 26, 2010, LEVC issued the Company a Secured Promissory Note (“LEVC Note”) in the amount of $1,750,000 in accordance with the license agreement. The LEVC Note bore an interest of ten (10%) percent per annum on the outstanding amount of the loan and accrued for the first 12 months during which the outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all subsequent months during which any portion of the amount is outstanding, LEVC would monthly interest payments in arrears on the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note, including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon would be repaid in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC would have the right to repay the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC’s (1) inventory; (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper, documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note included a conversion right in which the Company could convert the LEVC Note if LEVC began trading on the TSX Venture Exchange. The conversion clause stipulated that the LEVC Note would be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average ten (10) day trading price and if the conversion of the LEVC Note resulted in a fractional share, LEVC would, in lieu of issuing such fractional share, pay to the Company an amount equal to the conversion value of the fractional share. The Company had recorded a reserve for doubtful accounts for the entire note amount of $1,750,000. | |
The Company recognized interest income of $0 and $175,479, none of which has been received, in accordance to the terms of the LEVC Note for the year ending July 31, 2013 and 2012, respectively. The Company had reflected the amount due from LEVC in its accounts receivable and had established a reserve for doubtful accounts for the entire amount and is included in general and administrative expenses on the Company’s consolidated statement of operations. | |
Due to the execution of the amended License Agreement on February 19, 2013 with LEVC, the Company reversed the accounts and note receivables of $382,123 and $1,750,000, respectively, by offsetting it with the established reserve for doubtful accounts. This had a zero effect on the Company’s Consolidated Balance Sheet. |
Note_4_Property_and_Equipment
Note 4. Property and Equipment | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Note 4. Property and Equipment | ' | ||||||||
Note 4. Property and Equipment | |||||||||
Property and equipment consist of: | |||||||||
July 31, | July 31, | ||||||||
2013 | 2012 | ||||||||
Building and Improvements | $ | — | $ | 552,276 | |||||
Equipment and Furniture and Fixtures | 4,827 | 4,827 | |||||||
Vehicles | 66,429 | 66,429 | |||||||
Land | — | 700,000 | |||||||
71,256 | 1,323,532 | ||||||||
Less Accumulated Depreciation | (67,989 | ) | (268,601 | ) | |||||
Less Current Portion | — | (1,049,146 | ) | ||||||
Net Property and Equipment | $ | 3,267 | $ | 5,785 | |||||
Depreciation expense for the year ended July 31, 2013 and 2012 was $2,518 and $51,003, respectively and is included in general and administrative expenses on the Company’s consolidated statement of operations. | |||||||||
On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed. Due to the foreclosure of the property and the loss of rights to the facility, the Company wrote-off the building and its improvements, which caused a loss of $5,552 and is reflected on the Company’s consolidated statement of operations. | |||||||||
During the fiscal year ended July 31, 2012, and in accordance with the guidance in ASC 360-15-35 “Impairment or Disposal of Long-Lived Assets”, The Company reviewed its building in North Carolina at July 31, 2012, for impairment and determined the amount carried on the books exceeded current fair market value by $740,000. Therefore, the company reduced the carrying amount and recorded the impairment under operating costs on the consolidated statement of operations. The building was sold subsequent to the balance sheet date and accordingly, the Company has reclassified the building and improvements to current assets. | |||||||||
During the year ended July 31, 2012, the Company closed its office in Las Vegas, subsequent to year end, and its facility in North Carolina has been foreclosed upon. All employees were laid off and minimal consultants are working on projects in North Carolina. The Company evaluated its remaining fixed asset inventory of equipment, furniture and fixtures, and software and wrote off $99,304 due to obsolescence. This was offset by a net effect of $3,693 for the surrender of equipment to Treger Financial (See Note 8); $5,975 from the seizure of assets (See below) and cash from individuals in the amount of $18,850 for various equipment. | |||||||||
During the year ended July 31, 2012, the Company signed a confession of judgment on November 7, 2011, which was filed with the Iredell Country, North Carolina Superior Court Division. The plaintiff enforced the judgment and the Company’s assets at our North Carolina facility were seized and auctioned off. The Sherriff’s office received $5,975 which was applied to the Company’s accrued expense account and partially offset the write off of obsolete assets. |
Note_5_Accounts_Payable_and_Ac
Note 5. Accounts Payable and Accrued Expenses | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Note 5. Accounts Payable and Accrued Expenses | ' | ||||||||
Note 5. Accounts Payable and Accrued Expenses | |||||||||
Accounts payable and accrued expenses and other current liabilities at July 31, 2013 and 2012 consisted of: | |||||||||
Years Ended | |||||||||
July 31, | |||||||||
2013 | 2012 | ||||||||
Accounts Payable | $ | 321,243 | $ | 291,156 | |||||
Accounts Payable - Related Parties | 16,177 | 4,682 | |||||||
Wages, Paid Leave and Payroll Related Taxes | 1,149,438 | 948,410 | |||||||
Accrued Interest | 73,076 | 120,067 | |||||||
Legal Settlements | 152,976 | 152,976 | |||||||
Other | — | 20,769 | |||||||
Total | $ | 1,712,910 | $ | 1,538,060 | |||||
Accounts payable due to related parties are reimbursable general and administrative expenses paid by the Company’s President. |
Note_6_LongTerm_DebtRelated_Pa
Note 6. Long-Term Debt/Related Party Debt | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Note 6. Long-Term Debt/Related Party Debt | ' | ||||||||
Note 6. Long-Term Debt/Related Party Debt | |||||||||
Long-term debt consists of: | |||||||||
July 31, | July 31, | ||||||||
2013 | 2012 | ||||||||
5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1) | $ | — | $ | 946,279 | |||||
12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2014 (2) | 460,997 | 508,492 | |||||||
48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3) | 6,297 | 6,297 | |||||||
10% Note payable to Cameo Properties, LLC a related party payable in monthly installments of interest only, due in full on December 27, 2011 (4) | 250,000 | 250,000 | |||||||
717,294 | 1,711,068 | ||||||||
Less Current Portion | — | (1,460,189 | ) | ||||||
$ | 717,294 | $ | 250,879 | ||||||
Principal maturities for long-term debt are as follows for the years ended July 31: | |||||||||
2014 | $ | 717,294 | |||||||
2015 | — | ||||||||
2016 | — | ||||||||
2017 | — | ||||||||
2018 | — | ||||||||
Thereafter | — | ||||||||
$ | 717,294 | ||||||||
(1) In November 2007, the Company refinanced the first mortgage loan on its Mooresville, North Carolina building (the “property”) with Bayview. On July 25, 2012, Frontline, the junior lien holder noticed a foreclosure hearing and sale to take place on August 22, 2012, and the sale of the property to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012. The Company debt to Bayview was reduced to zero upon the completion of the sale. | |||||||||
(2) On February 26, 2010, the Company entered into a loan agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%. On March 1, 2013, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 1, 2014, when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Windsor Capital, Inc. (“Windsor”). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common fStock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share. On December 27, 2011, Frontline purchased two electric vehicles for $255,000. On the same day Frontline assigned $250,000 to Cameo Properties, LLC. On April 26, 2012, the Company assigned $112,500 of its note receivable with CET to Frontline which reduced the balance due to Frontline by $112,500. On September 13, 2012, Frontline converted $39,000 of accrued interest for 1,300,000 shares of Common Stock at a discounted value price of $0.30 per share. On October 2, 2012, Frontline purchased our receivable with CET at $0.10 on the dollar for $70,786, which reduced the Company’s accrued interest by $43,726 and debt by $27,060. On October 2, 2012, Frontline converted $12,180 for 1,450,000 shares of Common Stock at a discounted value price of $0.0084 per share. On November 13, 2012, Frontline partially assigned $17,280 to Kisumu and Kisumu immediately converted the assigned note for 3,200,000 shares of Common Stock at a discounted value price of $0.0054 per share. On December 26, 2012, Frontline partially assigned $112,200 to Kisumu and Kisumu converted the assigned note for 18,700,000 shares of Common Stock at a discounted price of $0.006 per share. | |||||||||
Loans under the Frontline loan agreement are secured by a junior deed of trust on the Company’s property located at 158 Rolling Hill Road, Mooresville, North Carolina. On August 22, 2012, the foreclosure by Frontline of the property took place, pursuant to a notice of foreclosure and sale dated July 25, 2012, and the foreclosure sale to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012. Frontline received $50,000 upon the sale of the foreclosed property and this amount reduced the debt to Frontline. | |||||||||
During the year ended July 31, 2013 and 2012, the Company received advances totaling $159,222 and $838,814, respectively; and made payments of $0 and $62,288, respectively. Interest expense for the year ended July 31, 2013 and 2012, was $53,127 and $65,071, respectively. | |||||||||
(3) On March 11, 2011, the Company financed $7,992 for office equipment with Amicus Funding Group, LLC (“Amicus”) and monthly payments including interest of 48.956% are approximately $477. During the year ended July 31, 2013 and 2012, the Company repaid $0 and $1,097, respectively. The Company is in default on this note. | |||||||||
Interest expense for the year ended July 31, 2013 and 2012, was $1,575 and $3,109, respectively. | |||||||||
(4) The Company entered into a Loan Agreement, dated as of July 14, 2011, with Cameo Properties LLC (“Cameo”), a related party, and was amended on October 14, 2011 (the “Amended Loan Agreement”). Each Note issued under the Amended Loan Agreement is due one year from the date of its issuance. The Amended Loan Agreement provides for loans to the Company of up to $750,000 (the “Loan”), with a minimum initial loan of $250,000 within 60 days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender’s consent, prepay all or part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10% per annum, and mature and are due and payable three years from the date of issuance. On December 27, 2011, Frontline assigned $250,000 of its receivable to Cameo. | |||||||||
Interest expense for the year ended July 31, 2013 and 2012, was $25,000 and $14,863, respectively. |
Note_7_Stockholders_Deficiency
Note 7. Stockholders Deficiency | 12 Months Ended |
Jul. 31, 2013 | |
Equity [Abstract] | ' |
Note 7. Stockholders Deficiency | ' |
Note 7. Stockholders’ Deficiency | |
On July 14, 2011, the Company entered into a Loan Agreement with Cameo Properties LLC (“Cameo”). The loans under the Loan Agreement are secured, over the life of the loan, by 20 million shares of our common stock. If the Company should default on the loan, Cameo will retain all of the 20 million shares of common stock. In the event of a reverse stock split or combination of shares, the number of shares of common stock constituting the Share Collateral will, immediately following such reverse stock split or combination of shares, be increased by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to such reverse stock split or combination of shares. The certificates representing any share dividends that the Company pays during the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by the Lender pursuant to the terms of the Loan Agreement. | |
Effective January 26, 2012, the Securities and Exchange Commission approved a one-for-five reverse split of the common stock. Pursuant to the anti-dilution provisions in the Cameo Properties loan agreement the Company issued 16,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse stock split shares. | |
Effective December 31, 2012, the Securities and Exchange Commission approved a one-for-ten reverse split of the common stock. Pursuant to the anti-dilution provisions in the Cameo Properties loan agreement the Company issued 18,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse stock split shares. Upon default of the Note with | |
Cameo, the Company recognized a default fee expense, for the 20,000,000 shares issued to Cameo, in the amount | |
of $200,000. | |
On September 13, 2012, Frontline converted $39,000 of accrued interest for 130,000 shares of Common Stock at a discounted value price of $0.30 per share. The Company recorded a loss on extinguishment of debt in the amount of $13,000 in connection with the conversion. | |
On October 2, 2012, Frontline converted $12,180 for 145,000 shares of Common Stock at a discounted value price of $0.0084 per share. The Company recorded a loss on extinguishment of debt in the amount of $6,960 in connection with the conversion. | |
On November 13, 2012, Frontline partially assigned $17,280 to Kisumu and Kisumu immediately converted the assigned note for 320,000 shares of Common Stock at a discounted value price of $0.0054 per share. The Company recorded a loss on extinguishment of debt in the amount of $14,720 in connection with the conversion. | |
On December 26, 2012, Frontline partially assigned $561,000 to various entities that converted the assigned notes for 18,700,000 shares of Common Stock at a discounted price of $0.006 per share. The Company recorded a loss on extinguishment of debt in the amount of $448,800 in connection with the conversion. | |
Changes to Authorized Common Stock | |
On June 24, 2011, the Board of Directors unanimously approved an amendment to the Articles of Incorporation to increase the authorized number of shares of common stock from 100 million shares, par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company’s stockholders and the amendment was effective August 10, 2011. | |
On December 13, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to change the authorized number of shares of common stock from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share, and to effect a reverse split in the outstanding common stock in the same ratio. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011. | |
Our Board of Directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares, par value $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date. | |
On November 29, 2012, our Board of Directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 400,000,000 shares, par value $.001 per share, to 40,000,000 shares, par value $.001 per share. On the same day we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date. |
Note_8_Net_Loss_Per_Common_Sha
Note 8. Net Loss Per Common Share | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Note 8. Net Loss Per Common Share | ' | ||||||||
Note 8. Net Loss Per Common Share | |||||||||
The following table sets forth the reconciliation of the basic and diluted net loss per common share computations for the years ended July 31, 2013 and 2012. | |||||||||
Years Ended | |||||||||
July 31, | |||||||||
2013 | 2012 | ||||||||
Basic and Diluted Earnings (Loss) Per Share | |||||||||
Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted | $ | (1,099,878 | ) | $ | (2,312,015 | ) | |||
Weighted Average Shares Outstanding - Basic and Diluted | 21,246,928 | 2,642,347 | |||||||
Basic and Diluted Net Earnings (Loss) Per Common Share | $ | (0.05 | ) | $ | (0.88 | ) | |||
Note_9_Commitments_and_Conting
Note 9. Commitments and Contingencies | 12 Months Ended |
Jul. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Note 9. Commitments and Contingencies | ' |
Note 9. Commitments and Contingencies | |
Legal Proceedings | |
The Company is currently involved in various claims and legal proceedings. Quarterly, the Company reviews the status of each significant matter and assesses its potential financial exposure and if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. | |
Caudle & Spears has obtained a default judgment against the Company in Meckenberg County, North Carolina, General Court, in the amount of $17,686. This law firm represented us in our litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other damages. The Company is in settlement negotiations with Caudle & Spears, since its judgment against Martin Koebler is still in the collection process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid. The Company is not current with its payment arrangements and has a balance of $4,263 still due. | |
Internal Revenue Service (“IRS”) served the Company with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately $117,000, which are included in total due. The Company has been served with an additional tax lien dated January 19, 2011, in the amount of $2,925. The Company had a payment plan in place with IRS; however, the Company is arrears in payments as of July 31, 2013. Management is working with the local IRS office to try and revise the payment agreement. The balance due on the most recent statement from the IRS is $601,506. | |
Tallman Hudders & Sorrentino has obtained a judgment in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual. Mr. Hajihadian had ordered and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage when it was ordered. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010. Payments were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was issued in his favor for $51,750. | |
The Company’s facility in Mooresville, North Carolina was financed through Bayview and Frontline, which had a second lien on the property. Li-ion became delinquent with the mortgage payments, and, following a prior foreclosure filing and new agreement as to payments under the mortgage, on July 12, 2012, Bayview refiled a notice of hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279. A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, with an amended notice of default, the amount of $508,492 being outstanding under the loan as of July 31, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012. The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust. On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., subject to the rights of Bayview, as the holder of the first mortgage on the property. | |
Fine Mobile and Li-ion Motors entered into a confession of judgment in relation to X-Prize winnings. The parties agreed to a payment arrangement of $10,000 per month for a period of eight (8) months. If a default were to occur, the debtor would then be entitled to exercise confession of judgment in the amount of $120,000 without further delay. The initial payment was wired on December 15, 2011; however, the Company was unable to make any additional payments. On June 18, 2012 Fine Mobile executed the judgment with the Iredell County Sheriff’s Office and on July 2, 2012, the Sherriff took possession of the building located at 158 Rolling Hill Road, Mooresville, NC, seizing all remaining assets. |
Note_2_Summary_of_Significant_1
Note 2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||
Jul. 31, 2013 | |||||||
Accounting Policies [Abstract] | ' | ||||||
Basis of Consolidation | ' | ||||||
Basis of Consolidation | |||||||
The consolidated financial statements included the accounts and records of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company does not have any special purpose entities. For those consolidated subsidiaries in which the company's ownership is less than 100 percent (100%), the outside stockholders' interests are shown as non-controlling interest. The non-controlling interest of the company's earnings or loss is classified as net income (loss) attributable to non-controlling interest in the consolidated statement of operations. | |||||||
The following is a listing of the Company's subsidiaries and its ownership interests: | |||||||
Global Hybrid Corp. | 67.57 | % | |||||
R Electric Car, Co. | 67.57 | % | |||||
Solium Power, Corp. | 67.57 | % | |||||
Hybrid Technologies USA Distributing Inc. | 100 | % | |||||
Hybrid Electric Vehicles India Pvt. Ltd. | 100 | % | |||||
Li-ion Motors of Canada | 100 | % | |||||
Reclassifications | ' | ||||||
Reclassifications | |||||||
Certain prior period amounts have been reclassified to conform with current period other income presentations. | |||||||
Use of Estimates | ' | ||||||
Use of Estimates | |||||||
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets and goodwill, income taxes, litigation and warranties. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. | |||||||
The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates. | |||||||
Fair Value Measurements | ' | ||||||
Fair Value Measurements | |||||||
The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: | |||||||
Level 1 - Observable inputs such as quoted market prices in active markets | |||||||
Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable | |||||||
Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions | |||||||
The Company has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of July 31, 2013. | |||||||
Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment on the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. The Company's annual test on its long-lived assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the testing date. | |||||||
Cash and Cash Equivalents | ' | ||||||
Cash and Cash Equivalents | |||||||
Cash and cash equivalents consist of highly liquid investments, which are readily convertible into cash with original maturities of three months or less. | |||||||
Accounts Receivable | ' | ||||||
Accounts Receivable | |||||||
The Company provides credit to customers in the normal course of business. An allowance for accounts receivable is estimated by management based in part on the aging of receivables and historical transactions. Periodically management reviews accounts receivable for accounts that appear to be uncollectible and writes off these uncollectible balances against the allowance accordingly. | |||||||
Inventories | ' | ||||||
Inventories | |||||||
Inventories are stated at the lower of cost or market using the first-in, first-out (“FIFO”) method. The Company may write down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. | |||||||
Property and Equipment | ' | ||||||
Property and Equipment | |||||||
Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment are accounted for by methods over the following estimated useful lives: | |||||||
Lives | Methods | ||||||
Building Improvements | 39 Years | Straight Line | |||||
Furniture and Fixtures | 10 years | Accelerated | |||||
Software | 3-5 years | Straight Line | |||||
Computers | 5 years | Straight Line | |||||
Significant improvements are capitalized, while maintenance and repairs are charged to operations as incurred. | |||||||
Evaluation of Long-Lived Assets | ' | ||||||
Evaluation of Long-Lived Assets | |||||||
The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with the guidance in ASC 360-15-35 “Impairment or Disposal of Long-Lived Assets”. An impairment exists when the carrying amount of the long-lived assets is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value. | |||||||
Deferred Patent Costs | ' | ||||||
Deferred Patent Costs | |||||||
The Company capitalizes costs directly incurred in pursuing patent applications as deferred patent costs. When such applications result in an issued patent, the related costs are amortized over the remaining legal life of the patents, which is assumed to be 17 years, using the straight-line method. On a quarterly basis, the Company reviews the issued patents and pending patent applications and if the Company determines to abandon a patent application, or an issued patent no longer has economic value, the unamortized balance in deferred patent costs relating to that patent is immediately expensed. As of July 31, 2013, the Company’s patents were in the approval processing phase. | |||||||
Revenue Recognition | ' | ||||||
Revenue Recognition | |||||||
The Company recognizes revenue in accordance with the guidance contained in Financial Accounting Standards Board Accounting Standards Codification 605, “Revenue Recognition”, (“ASC 605”) and other relevant accounting literature. Revenue is recognized when the product has been delivered and title and risk of loss have passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sale price is fixed and determinable. | |||||||
Revenue received from the sale of license agreements is earned over the life of the agreement. Revenue received but not earned is classified as deferred revenue on the Company's consolidated balance sheet. The Company has changed its accounting policy of recognizing revenue from licensing agreements. The Company’s licensee is in default in making timely payments to the Company. The Company’s revenue recognition policy is to recognize license revenue only to the extent the amount of payments received. | |||||||
The Company typically has a twenty-four month warranty policy for workmanship defects. The Company establishes an accrual for warranty work and expenses the amount over a two year period. | |||||||
Customer Deposits | ' | ||||||
Customer Deposits | |||||||
The Company receives advances from customers for automobiles to be manufactured in the future. The Company applies these advances against future billings. As of July 31, 2013 and 2012, customer deposits amounted to $102,188 and $102,188, respectively. | |||||||
Shipping and Handling | ' | ||||||
Shipping and Handling | |||||||
Shipping and handling costs related to services and product sales are expensed as incurred. | |||||||
Advertising | ' | ||||||
Advertising | |||||||
Advertising costs are expensed as incurred and are included in general and administrative expenses. Total advertising expenditures for the year ended July 31, 2013 and 2012, amounted to $1,340 and $5,019, respectively. | |||||||
Research and Development | ' | ||||||
Research and Development | |||||||
No set amount has been set aside for research and development (“R&D”), however, all projects and purchases require approval prior to initiation. Salaries, payroll taxes, and benefits expensed to R&D for the year ending July 31, 2013 and 2012, were $0 and $471,300, respectively. Parts and supplies; battery and motor management systems; and shipping charges were $1,297 and $12,299, for the year ending July 31, 2013 and July 31, 2012, respectively. The Company expects the research and development expenses will continue to remain substantial and grow as the Company aggressively moves to bring products to market. | |||||||
Concentration of Risk | ' | ||||||
Concentration of Risk | |||||||
The Company maintains cash deposit accounts and may have certificates of deposits which at times may exceed federally insured limits. These accounts have not experienced any losses and the Company believes it is not exposed to any significant credit risk related to cash. | |||||||
Income taxes | ' | ||||||
Income taxes | |||||||
Deferred income tax assets or liabilities are computed based on the temporary differences between the financial statement and income tax bases of assets and liabilities using the statutory marginal income tax rate in effect for the years in which the differences are expected to reverse. Deferred income tax expenses or credits are based on the changes in the deferred income tax assets or liabilities from period to period. A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. | |||||||
Foreign Currency Translation | ' | ||||||
Foreign Currency Translation | |||||||
The functional currency for some foreign operations is the local currency. The reporting currency is the US Dollar. Assets and liabilities of foreign operations are translated at balance sheet date rates of exchange and income, expense and cash flow items are translated at the average exchange rate for the period. Translation adjustments in future periods will be recorded in Other Comprehensive Income (Loss). The translation loss for the year ended July 31, 2013, was $885 and the translation gain for the year ended July 31, 2012, was $1,235. | |||||||
Comprehensive Loss | ' | ||||||
Comprehensive Loss | |||||||
The Company reports comprehensive loss in accordance with the requirements of FASB ASC 220-10-15, “Comprehensive Income”, and (“ASC 220-10-15”). For the years ended July 31, 2013 and 2012, the difference between net loss and comprehensive loss was foreign currency translation. | |||||||
Net Loss Per Common Share | ' | ||||||
Net Loss Per Common Share | |||||||
Basic loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and potential common shares during the specified period. All potentially dilutive securities have been excluded from the computations for the year ending July 31, 2013, as their effect is anti-dilutive. | |||||||
Recently Issued Pronouncements | ' | ||||||
Recently Issued Pronouncements | |||||||
FASB has codified a single source of U.S. Generally Accepted Accounting Principles, the Accounting Standards Codification™. Unless needed to clarify a point to readers, we will refrain from citing specific section references when discussing application of accounting principles or addressing new or pending accounting rule changes. There are no recently issued accounting standards that are expected to have a material effect on our financial condition, results of operations or cash flows. |
Note_2_Summary_of_Significant_2
Note 2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||
Jul. 31, 2013 | |||||||
Accounting Policies [Abstract] | ' | ||||||
Listing of Subsidiaries and Ownership Interests | ' | ||||||
Global Hybrid Corp. | 67.57 | % | |||||
R Electric Car, Co. | 67.57 | % | |||||
Solium Power, Corp. | 67.57 | % | |||||
Hybrid Technologies USA Distributing Inc. | 100 | % | |||||
Hybrid Electric Vehicles India Pvt. Ltd. | 100 | % | |||||
Li-ion Motors of Canada | 100 | % | |||||
Estimated Useful Lives | ' | ||||||
Lives | Methods | ||||||
Building Improvements | 39 Years | Straight Line | |||||
Furniture and Fixtures | 10 years | Accelerated | |||||
Software | 3-5 years | Straight Line | |||||
Computers | 5 years | Straight Line |
Note_4_Property_and_Equipment_
Note 4. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
July 31, | July 31, | ||||||||
2013 | 2012 | ||||||||
Building and Improvements | $ | — | $ | 552,276 | |||||
Equipment and Furniture and Fixtures | 4,827 | 4,827 | |||||||
Vehicles | 66,429 | 66,429 | |||||||
Land | — | 700,000 | |||||||
71,256 | 1,323,532 | ||||||||
Less Accumulated Depreciation | (67,989 | ) | (268,601 | ) | |||||
Less Current Portion | — | (1,049,146 | ) | ||||||
Net Property and Equipment | $ | 3,267 | $ | 5,785 |
Note_5_Accounts_Payable_and_Ac1
Note 5. Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accounts Payable and Accrued Expenses | ' | ||||||||
Years Ended | |||||||||
July 31, | |||||||||
2013 | 2012 | ||||||||
Accounts Payable | $ | 321,243 | $ | 291,156 | |||||
Accounts Payable - Related Parties | 16,177 | 4,682 | |||||||
Wages, Paid Leave and Payroll Related Taxes | 1,149,438 | 948,410 | |||||||
Accrued Interest | 73,076 | 120,067 | |||||||
Legal Settlements | 152,976 | 152,976 | |||||||
Other | — | 20,769 | |||||||
Total | $ | 1,712,910 | $ | 1,538,060 |
Note_6_LongTerm_DebtRelated_Pa1
Note 6. Long-Term Debt/Related Party Debt (Tables) | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long-Term Debt | ' | ||||||||
July 31, | July 31, | ||||||||
2013 | 2012 | ||||||||
5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1) | $ | — | $ | 946,279 | |||||
12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2014 (2) | 460,997 | 508,492 | |||||||
48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3) | 6,297 | 6,297 | |||||||
10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2011 (4) | 250,000 | 250,000 | |||||||
717,294 | 1,711,068 | ||||||||
Less Current Portion | — | (1,460,189 | ) | ||||||
$ | 717,294 | $ | 250,879 | ||||||
Maturities of Long-Term Debt | ' | ||||||||
2014 | $ | 717,294 | |||||||
2015 | — | ||||||||
2016 | — | ||||||||
2017 | — | ||||||||
2018 | — | ||||||||
Thereafter | — | ||||||||
$ | 717,294 |
Note_8_Net_Loss_Per_Common_Sha1
Note 8. Net Loss Per Common Share (Tables) | 12 Months Ended | ||||||||
Jul. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Earnings Per Share | ' | ||||||||
Years Ended | |||||||||
July 31, | |||||||||
2013 | 2012 | ||||||||
Basic and Diluted Earnings (Loss) Per Share | |||||||||
Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted | $ | (1,099,878 | ) | $ | (2,312,015 | ) | |||
Weighted Average Shares Outstanding - Basic and Diluted | 21,246,928 | 2,642,347 | |||||||
Basic and Diluted Net Earnings (Loss) Per Common Share | $ | (0.05 | ) | $ | (0.88 | ) |
Note_1_Financial_Statement_Pre1
Note 1. Financial Statement Presentation (Details Narrative) (USD $) | 1 Months Ended | ||||||||||||
Jul. 31, 2013 | Nov. 30, 2012 | Feb. 19, 2013 | Jan. 31, 2013 | Nov. 29, 2012 | Nov. 28, 2012 | Aug. 30, 2012 | Jul. 31, 2012 | Jul. 23, 2012 | Jul. 20, 2012 | Dec. 14, 2011 | Dec. 13, 2011 | Apr. 15, 2008 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
License Agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,500,000 |
License Agreement, Annual Fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 |
License Agreement, Other Fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,750,000 |
License Agreement, Due in First Two Years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 |
License Agreement, Fees After Year Two | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 |
License Agreement, Fees Received | ' | ' | ' | ' | ' | ' | ' | 732,666 | ' | ' | ' | ' | ' |
License Agreement, Fees Receivable | 267,334 | ' | ' | ' | ' | ' | ' | 267,334 | ' | ' | ' | ' | ' |
License Agreement, Fees Note Receivable | 1,750,000 | ' | ' | ' | ' | ' | ' | 1,750,000 | ' | ' | ' | ' | ' |
License Agreement, Fees Doubtful Accounts | ' | ' | ' | ' | ' | ' | ' | 1,750,000 | ' | ' | ' | ' | ' |
Ownership in Subsidiary | ' | ' | 49.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Default | ' | ' | ' | ' | ' | ' | ' | $946,279 | $660,546 | ' | ' | ' | ' |
Common Stock, Shares Authorized | 40,000,000 | ' | ' | 40,000,000 | 40,000,000 | 400,000,000 | 400,000,000 | 40,000,000 | ' | 400,000,000 | 60,000,000 | 60,000,000 | ' |
Common Stock, Par Value | $0.00 | ' | ' | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | ' | $0.00 | $0.00 | $0.00 | ' |
Majority Ownership Percentage | -7569.00% | -7569.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Note_2_Summary_of_Significant_3
Note 2. Summary of Significant Accounting Policies - Listing of Subsidiaries and Ownership Interests (Details) | 12 Months Ended |
Jul. 31, 2013 | |
Global Hybrid | ' |
Subsidiary Ownership Interest | 67.57% |
R Electric Car | ' |
Subsidiary Ownership Interest | 67.57% |
Solium Power | ' |
Subsidiary Ownership Interest | 67.57% |
Hybrid Technologies USA | ' |
Subsidiary Ownership Interest | 100.00% |
Hybrid Electric Vehicles India | ' |
Subsidiary Ownership Interest | 100.00% |
LiIon Motors of Canada | ' |
Subsidiary Ownership Interest | 100.00% |
Note_2_Summary_of_Significant_4
Note 2. Summary of Significant Accounting Policies - Estimated Useful Lives (Details) | 12 Months Ended |
Jul. 31, 2013 | |
Building Improvements | ' |
Lives | '39 years |
Methods | 'Straight Line |
Furniture and Fixtures | ' |
Lives | '10 years |
Methods | 'Accelerated |
Software | ' |
Lives | '5000 years |
Methods | 'Straight Line |
Computers | ' |
Lives | '5 years |
Methods | 'Straight Line |
Note_2_Summary_of_Significant_5
Note 2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' |
Customer Deposits | $102,188 | $102,188 |
Advertising Expenses | 1,340 | 5,019 |
Compensation Expenses | 0 | 471,300 |
Shipping and Handling | 1,297 | 12,299 |
Foreign Currency Translation | $885 | $1,235 |
Note_3_Notes_Receivable_Detail
Note 3. Notes Receivable (Details Narrative) (USD $) | 12 Months Ended | ||||
Jul. 31, 2013 | Jul. 31, 2012 | Feb. 19, 2013 | Oct. 02, 2012 | Nov. 26, 2010 | |
Debt Instrument, Fair Value | ' | ' | ' | $70,786 | $1,750,000 |
Gain on Sale of Debt Instruments | 70,786 | ' | ' | ' | ' |
Advances to Affiliate | 0 | 81,758 | ' | ' | ' |
Repayment of Related Party Debt | 0 | ' | ' | ' | ' |
Allowance for Doubtful Accounts | 0 | 561,237 | ' | ' | 1,750,000 |
Debt Instrument Interest Rate | ' | ' | ' | ' | -1000.00% |
Debt Instrument Conversion Price | ' | ' | ' | ' | ($0.15) |
Interest Income | 0 | 175,479 | ' | ' | ' |
Accounts Receivable | ' | ' | 382,123 | ' | ' |
Notes Receivable | ' | ' | 1,750,000 | ' | ' |
LeasedEmployeeMember | ' | ' | ' | ' | ' |
Repayment of Related Party Debt | ' | 22,984 | ' | ' | ' |
FrontlineMember | ' | ' | ' | ' | ' |
Repayment of Related Party Debt | ' | 112,500 | ' | ' | ' |
12% Note Payable to Frontline Asset Management | ' | ' | ' | ' | ' |
Debt Instrument, Fair Value | ' | 708,602 | ' | ' | ' |
Allowance for Doubtful Accounts | ' | $708,602 | ' | ' | ' |
Note_4_Property_and_Equipment_1
Note 4. Property and Equipment - Property and Equipment (Details) (USD $) | Jul. 31, 2013 | Jul. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Building and Improvements | ' | $552,276 |
Equipment and Furniture and Fixtures | 4,827 | 4,827 |
Vehicles | 66,429 | 66,429 |
Land | ' | 700,000 |
Gross Property and Equipment | 71,256 | 1,323,532 |
Less Accumulated Depreciation | -67,989 | -268,601 |
Less Current Portion | ' | -1,049,146 |
Net Property and Equipment | $3,267 | $5,785 |
Note_4_Property_and_Equipment_2
Note 4. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
Depreciation Expense | $2,518 | $51,003 |
Asset Write Off | 5,552 | ' |
Amount Carried on Books Exceeding Current Market Value | 740,000 | ' |
Surrender of Equipment | 3,693 | ' |
Seizure of Assets | 5,975 | ' |
Sale of Equipment | 18,850 | ' |
Property, Plant and Equipment [Member] | ' | ' |
Asset Write Off | $99,304 | ' |
Note_5_Accounts_Payable_and_Ac2
Note 5. Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) (USD $) | Jul. 31, 2013 | Jul. 31, 2012 |
Payables and Accruals [Abstract] | ' | ' |
Accounts Payable | $321,243 | $291,156 |
Accounts Payable - Related Parties | 16,177 | 4,682 |
Wages, Paid Leave and Payroll Related Taxes | 1,149,438 | 948,410 |
Accrued Interest | 73,076 | 120,067 |
Legal Settlements | 152,976 | 152,976 |
Other | ' | 20,769 |
Total | $1,712,910 | $1,538,060 |
Note_6_LongTerm_DebtRelated_Pa2
Note 6. Long-Term Debt/Related Party Debt - Long-Term Debt (Details) (USD $) | 12 Months Ended | ||
Jul. 31, 2013 | Jul. 31, 2012 | ||
Long Term Debt | $717,294 | $1,711,068 | |
Less Current Portion | ' | -1,460,189 | |
Long Term Debt Net | 717,294 | 250,879 | |
Bayview Loan Servicing | ' | ' | |
Long Term Debt | ' | 946,279 | |
Payment Terms | '5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1) | [1] | ' |
Frontline Asset Management | ' | ' | |
Long Term Debt | 460,997 | 508,492 | |
Payment Terms | '12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2014 (2) | [2] | ' |
Amicus Funding Group Member | ' | ' | |
Long Term Debt | 6,297 | 6,297 | |
Payment Terms | '48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3) | [3] | ' |
Cameo Properties | ' | ' | |
Long Term Debt | $250,000 | $250,000 | |
Payment Terms | '10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2011 (4) | [4] | ' |
[1] | (1) In November 2007, the Company refinanced the first mortgage loan on its Mooresville, North Carolina building (the property) with Bayview. On July 25, 2012, Frontline, the junior lien holder noticed a foreclosure hearing and sale to take place on August 22, 2012, and the sale of the property to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012. The Company debt to Bayview was reduced to zero upon the completion of the sale. | ||
[2] | (2) On February 26, 2010, the Company entered into a loan agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%. On March 1, 2013, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 1, 2014, when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Windsor Capital, Inc. (Windsor). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (Kisumu) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (Eurolink) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 | ||
[3] | (3) On March 11, 2011, the Company financed $7,992 for office equipment with Amicus Funding Group, LLC (Amicus) and monthly payments including interest of 48.956% are approximately $477. During the year ended July 31, 2013 and 2012, the Company repaid $0 and $1,097, respectively. The Company is in default on this note. Interest expense for the year ended July 31, 2013 and 2012, was $1,575 and $3,109, respectively. | ||
[4] | (4) The Company entered into a Loan Agreement, dated as of July 14, 2011, with Cameo Properties LLC (Cameo), a related party, and was amended on October 14, 2011 (the Amended Loan Agreement). Each Note issued under the Amended Loan Agreement is due one year from the date of its issuance. The Amended Loan Agreement provides for loans to the Company of up to $750,000 (the Loan), with a minimum initial loan of $250,000 within 60 days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lenders consent, prepay all or part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10% per annum, and mature and are due and payable three years from the date of issuance. |
Note_6_LongTerm_DebtRelated_Pa3
Note 6. Long-Term Debt/Related Party Debt - Maturities of Long-Term Debt (Details) (USD $) | Jul. 31, 2013 | Jul. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
2014 | $717,294 | ' |
2015 | ' | ' |
2016 | ' | ' |
2017 | ' | ' |
2018 | ' | ' |
Thereafter | ' | ' |
Total | $717,294 | $1,711,068 |
Note_7_Stockholders_Equity_Def
Note 7. Stockholders Equity (Deficiency) (Details Narrative) (USD $) | Jul. 31, 2013 | Jan. 31, 2013 | Nov. 29, 2012 | Nov. 28, 2012 | Aug. 30, 2012 | Jul. 31, 2012 | Jul. 30, 2012 | Jul. 20, 2012 | Dec. 14, 2011 | Dec. 13, 2011 | Jul. 31, 2011 |
Equity [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateral Promised for Loan, Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 |
Common Stock Shares Authorized | 40,000,000 | 40,000,000 | 40,000,000 | 400,000,000 | 400,000,000 | 40,000,000 | ' | 400,000,000 | 60,000,000 | 60,000,000 | ' |
Common Stock Par Value | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | ' | $0.00 | $0.00 | $0.00 | ' |
Shareholders holding Majority | ' | ' | ' | ' | ' | ' | 75.69% | ' | ' | ' | ' |
Note_8_Net_Loss_Per_Common_Sha2
Note 8. Net Loss Per Common Share - Earnings Per Share (Details) (USD $) | 12 Months Ended | |
Jul. 31, 2013 | Jul. 31, 2012 | |
Earnings Per Share [Abstract] | ' | ' |
Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted | ($1,099,878) | ($2,312,015) |
Weighted Average Shares Outstanding - Basic and Diluted | 21,246,928 | 2,624,347 |
Basic and Diluted Net Earnings (Loss) Per Common Share | ($0.05) | ($0.88) |
Note_9_Commitments_and_Conting1
Note 9. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | ||||||||
Jul. 31, 2013 | Jun. 18, 2012 | Feb. 04, 2011 | Jan. 19, 2011 | Nov. 01, 2010 | Jul. 01, 2010 | Mar. 03, 2010 | Jul. 31, 2012 | Jul. 31, 2012 | |
5% Note Payable to Bayview Loan Servicing, LLC | FrontlineMember | ||||||||
Contingency Consideration | $17,686 | $120,000 | $51,750 | ' | $51,250 | $102,500 | ' | ' | ' |
Accrued Professional Fees | 2,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued Professional Fees | 4,263 | ' | ' | ' | ' | ' | ' | ' | ' |
Accured Income Taxes Noncurrent | 590,634 | ' | ' | 2,925 | ' | ' | 251,928 | ' | ' |
Accrued Income Taxes Addition | 117,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Contingency Payments | ' | ' | ' | ' | 51,250 | 10,250 | ' | ' | ' |
Accounts Payable Non Current | ' | ' | ' | ' | ' | ' | ' | $946,279 | $508,492 |