| Document and Entity Information | 3 Months Ended |
| Feb. 28, 2014 | |
| Document and Entity Information: | ' |
| Entity Registrant Name | 'Mass Hysteria Entertainment Company, Inc. |
| Document Type | '10-Q |
| Document Period End Date | 28-Feb-14 |
| Amendment Flag | 'false |
| Entity Central Index Key | '0001388488 |
| Current Fiscal Year End Date | '--11-30 |
| Entity Common Stock, Shares Outstanding | 41,445,866 |
| Entity Filer Category | 'Smaller Reporting Company |
| Entity Current Reporting Status | 'Yes |
| Entity Voluntary Filers | 'Yes |
| Entity Well-known Seasoned Issuer | 'Yes |
| Document Fiscal Year Focus | '2014 |
| Document Fiscal Period Focus | 'Q1 |
| BALANCE SHEETS (USD $) | Feb. 28, 2014 | Nov. 30, 2013 | Feb. 28, 2013 | |
| Current Assets | ' | ' | ' | |
| Cash | $2,781 | $9 | ' | |
| Total Current Assets | 2,781 | 9 | ' | |
| Film costs | 2,000 | 2,000 | 0 | |
| Total Noncurrent Assets | 2,000 | 2,000 | ' | |
| Total Assets | 4,781 | 2,009 | ' | |
| Current Liabilities | ' | ' | ' | |
| Accounts payable | 172,740 | 137,740 | ' | |
| Accrued liabilities | 469,322 | [1] | 443,766 | ' |
| Accrued payroll | 832,857 | 742,857 | ' | |
| Due to related party | 2,860 | 0 | ' | |
| Short-term debt | 240,581 | 237,622 | ' | |
| Short-term convertible debt | 260,906 | 270,629 | ' | |
| Derivative liability | 1,013,834 | 324,020 | ' | |
| Deferred revenue | 1,000 | 1,000 | ' | |
| Stand ready obligation | 250,000 | 250,000 | ' | |
| Convertible debt - related party | 453,061 | 453,061 | ' | |
| Total Current Liabilities | 3,697,161 | 2,860,695 | ' | |
| Non-current Liabilities | ' | ' | ' | |
| Convertible long-term debt, net of discount of | 180,838 | [2] | 178,316 | ' |
| Total Liabilities | 3,877,999 | 3,039,011 | ' | |
| Stockholder's Deficit | ' | ' | ' | |
| Common Stock | 414 | [3] | 181 | ' |
| Preferred Stock | 0 | [4] | 0 | ' |
| Additional paid in capital | 7,673,105 | 7,399,743 | ' | |
| Deficit accumulated during the development stage | -11,546,737 | -10,436,926 | ' | |
| Total Stockholders' Deficit | -3,873,218 | -3,037,002 | ' | |
| Total Liabilities and Stockholders' Deficit | $4,781 | $2,009 | ' | |
| [1] | Net of debt discount of $14,416 and $26,151 | |||
| [2] | Net of debt discount of $19,162 and $21,684 | |||
| [3] | $0.00001 par value; 2,000,000,000 shares authorized, 41,445,866 and, 18,145,865 shares issued and outstanding | |||
| [4] | $0.00001 par value; 10,000 shares authorized; 10 issued and outstanding | |||
| BALANCE SHEETS (PARENTHETICAL) (USD $) | Feb. 28, 2014 | Nov. 30, 2013 |
| Stockholders' Equity: | ' | ' |
| Common stock, par value | $0.00 | $0.00 |
| Common shares authorized | 2,000,000,000 | 2,000,000,000 |
| Common shares issued | 41,445,866 | 18,145,865 |
| Common shares outstanding | 41,445,866 | 18,145,865 |
| Preferred stock, par value | $0.00 | $0.00 |
| Preferred shares authorized | 10,000 | 10,000 |
| Preferred shares issued | 10 | 10 |
| Preferred shares outstanding | 10 | 10 |
| STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | 55 Months Ended | |
| Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
| Net Income (Loss) | ' | ' | ' |
| Revenues | $0 | $0 | $72,500 |
| Operating expenses: | ' | ' | ' |
| General and administrative | 253,087 | 236,240 | 5,126,352 |
| Selling expense | 0 | 0 | 30,573 |
| Impairment of script costs | 0 | 0 | 93,250 |
| Total Expenses | 253,087 | 236,240 | 5,250,175 |
| Loss from operations | -253,087 | -236,240 | -5,177,675 |
| Other income (expense) | ' | ' | ' |
| Other income | 0 | 0 | 65,432 |
| Interest expense | -34,928 | -75,211 | -761,562 |
| Excess fair value of derivative | -821,796 | -26,838 | -916,054 |
| Loss on stand-ready guarantee | 0 | 74,868 | -200,000 |
| Income (loss) before income taxes | -1,109,811 | -263,421 | -6,989,859 |
| Income taxes, net | 0 | 0 | 800 |
| Net income (loss) qualified | ($1,109,811) | ($263,421) | ($6,989,859) |
| Earnings Per Share: | ' | ' | ' |
| Net loss per common share (basic and diluted) | ($0.05) | ($0.39) | ' |
| Weighted average number of common shares outstanding | ' | ' | ' |
| Weighted average number of shares outstanding during the period - basic and diluted | 22,128,087 | 669,070 | 22,128,087 |
| STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Total |
| Shares issued, at Nov. 30, 2013 | 18,145,865 | 10 | 0 | 0 | 18,145,875 |
| Stock issued during period, Value, compensation | $12,500,000 | $0 | $0 | $0 | $12,500,000 |
| Stock issued during period, Value, conversion of notes | 108 | 0 | 25,506 | 0 | 25,614 |
| Stock issued during period, Shares, conversion of notes | 10,800,001 | 0 | 0 | 0 | 10,800,001 |
| Adjustments to paid in capital | 0 | 0 | 131,980 | 0 | 131,980 |
| Net income (loss) qualified | 0 | 0 | 0 | -1,109,811 | -1,109,811 |
| Stockholders' Equity at Feb. 28, 2014 | $414 | $0 | $7,673,105 | ($11,546,737) | ($3,873,218) |
| Shares issued, at Feb. 28, 2014 | 41,445,866 | 0 | 0 | 0 | 41,445,866 |
| STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | 55 Months Ended | |
| Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
| Statement of Cash Flows | ' | ' | ' |
| Net Income (loss) | ($1,109,811) | ($263,421) | ($6,989,859) |
| Depreciation | 0 | 219 | 3,141 |
| Adjustment for bad debt | 0 | 0 | 31,616 |
| Share-based compensation | 116,000 | 60,000 | 2,151,735 |
| Loss on settlement of convertible notes | 0 | 0 | -14,000 |
| Impairment of script costs | 0 | 0 | 93,250 |
| Contributed services | 0 | 0 | 89,500 |
| Change in fair market value of derivative liability | 821,796 | -74,868 | 569,414 |
| Loss on excess fair value of derivative liability | 0 | 26,838 | 346,640 |
| Amortization of discount on convertible debt | 14,257 | 61,301 | 464,991 |
| Loss on default | 0 | 0 | 65,350 |
| Other liabilties | 0 | 0 | 200,000 |
| Accounts receivable | 0 | 0 | -12,211 |
| Prepaid expenses | 0 | 0 | -295 |
| Accounts payable | 35,000 | 9,753 | 216,916 |
| Accrued liabilities | 32,670 | 25,910 | 425,281 |
| Unearned revenue | 0 | 1,000 | 1,000 |
| Accrued payroll | 90,000 | 103,488 | 838,711 |
| Bank credit line | 0 | 0 | -1,156 |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -88 | -49,780 | -1,519,976 |
| Payment of Film costs | 0 | 0 | -32,000 |
| Acquisition of other assets | 0 | 5,261 | 1,214 |
| NET CASH PROVIDED BY INVESTING ACTIVITIES | 0 | 5,261 | -30,786 |
| Proceeds from stand ready obligation | 0 | 0 | 25,000 |
| Proceeds from issuance of convertible debt | 0 | 55,000 | 1,085,062 |
| Proceeds from related party | 2,860 | 0 | 2,860 |
| Proceeds from issuance of short-term debt | 0 | 0 | 225,622 |
| Proceeds from sale of common stock | 0 | 0 | 214,999 |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,860 | 55,000 | 1,553,543 |
| Increase (Decrease) in cash and cash equivalents | 2,772 | 10,481 | 2,781 |
| Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 9 | 278 | 0 |
| Cash and Cash Equivalents, at Carrying Value, Ending Balance | 2,781 | 10,759 | 2,781 |
| Interest | 0 | 0 | 0 |
| Income taxes, net | 0 | 0 | 800 |
| Conversion of notes payable to stock | $576,321 | $10,500 | $576,321 |
| Organization, Consolidation and Presentation of Financial Statements | 3 Months Ended |
| Feb. 28, 2014 | |
| Organization, Consolidation and Presentation of Financial Statements: | ' |
| Nature of Operations | ' |
| Michael Lambert, Inc. (“MLI”) was incorporated in Nevada on November 2, 2005. MLI was in the business of manufacturing handbags, but ceased operations in June 2009. | |
| On June 9, 2009, the Company entered into a material definitive agreement with Belmont Partners, LLC by which Belmont acquired 11,286 shares of the Company’s common stock in a private transaction. Following the transaction, Belmont Partners, LLC controlled approximately 85.41% of the Company’s outstanding capital stock. | |
| To better reflect the Company’s new business plan, on June 25, 2009, MLI changed its name to “Mass Hysteria Entertainment Company, Inc. (“Mass Hysteria” or the “Company”). The Company is an innovative motion picture production company that produces branded young adult film content for theatrical, DVD, and television distribution. The Company’s plan is to produce a minimum of three theatrical films a year that appeal specifically to the youth market. | |
| On August 5, 2009 (date of “Inception” for financial reporting purposes), Daniel Grodnik was appointed as the Company's President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board and Secretary. Mr. Grodnik has worked in the movie industry for almost thirty years. He has served as the Chairman and CEO of the National Lampoon, a publicly-traded entertainment company. On August 5, 2009, pursuant to the terms of a stock purchase agreement, an affiliate of Mr. Grodnik purchased a total of 7,985 shares of issued and outstanding common stock of The Company from Belmont Partners. At this time, Belmont Partners’ designee was the sole officer and director of the Company. In addition to the shares sold by Belmont Partners, the Company also issued 42,015 shares to Mr. Grodnik and certain affiliated parties in connection with the change of control (the “Control Group”). The total of 50,000 shares were issued to, or purchased by, Daniel Grodnik and the affiliated parties represents 74.6% of the shares of outstanding common stock of the Company at the time of transfer. For financial accounting purposes, this change in control by the Company was treated as a recapitalization with the assets contributed and liabilities assumed recorded at their historical basis. There were no assets significant acquired by the Company shareholders upon the change in control, which would have been recorded at fair value. | |
| The Company is entering a time of great change in the entertainment business. The motion picture business has had four significant revenue streams (theatrical, home video, cable and broadcast) since the early 1980's. Today, home video is in decline and new profit centers are opening up such as video-on-demand and internet portals that rely on micro-transactions. The Company is endeavoring to be a company at the forefront of creating new revenue streams as they relate to the motion picture experience. Over the next twelve months, Mass Hysteria plans to create movies that will take advantage of traditional revenue streams that are still viable, and at the same time, identifying those revenue streams that will define new media's involvement in the film business such as downloading applications to smart phones that will allow the theater-goer to "participate" with the on-screen experience (the “side-kick™” technology). Our plan is to combine these entertainment experiences into an alternative theatrical experience for young adults. Technology is evolving, too. Interactive mobile applications are in development by third parties. The Company expects to license or develop our own mobile applications in the near future, depending on our ability to raise capital and generate traditional sources of revenues. There are technology and competitive risks associated with interactive mobile devices and theatrical films. | |
| Basis of Accounting | ' |
| Basis of Presentation | |
| The financial statements of the Company are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year 2013 as reported in the Company's Form 10-K have been omitted. The results of operations for the three months ended February 28, 2014 and 2013 are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly the Company's financial position, results of operations and cash flows. These statements should be read in conjunction with the financial statements and related notes which are part of the Company's Annual Report on Form 10-K for the year ended November 30, 2013. | |
| Going Concern Note | ' |
| The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company is a development-stage company, has limited available capital, and has limited revenues from intended operations, suffered losses since inception and used cash in operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. We are seeking debt or equity capital to meet our obligations and business needs. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments that might result from these uncertainties. At February 28, 2014, the Company had an accumulated deficit of $11,546,737. |
| Payables and Accruals | 3 Months Ended | ||
| Feb. 28, 2014 | |||
| Payables and Accruals: | ' | ||
| Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current | ' | ||
| Accrued liabilities by major classification are as follows: | |||
| 28-Feb-14 | November 30, 2013 | ||
| Accrued interest | $ 195,861 | $ 182,305 | |
| Accrued consulting fees | 91,000 | 91,000 | |
| Accrued payroll taxes on CEO’s compensation | 143,461 | 134,461 | |
| Accrued auto allowances due CEO | 39,000 | 36,000 | |
| Total accrued liabilities | $ 469,322 | $ 443,766 | |
| Accrued interest represents interest on a long-term loan from a related party, and the interest on a short term notes payable to external parties. Accrued consulting fees are for scriptwriters and a film consultant. | |||
| Based on the CEO’s employment agreement, the Company accrues $30,000 per month for gross wages, while the CEO receives payments at various times only as cash becomes available. The CEO’s compensation is required to be reported on Internal Revenue Service (IRS) Form W-2; however, the Company has made no such reporting. Payroll taxes are accrued for the CEO’s salary to properly reflect the amount of expense related to his compensation, which includes the contemplation of penalties and interest. In the event the IRS audits the Company, it will likely be liable for certain taxes, penalties and interest. | |||
| The Company entered into an employment agreement as of February 3, 2012 with its former Chief Financial Officer, which provided for a base salary of $90,000 per year, payable monthly, on a month-to-month basis. The Company will pay these wages only as cash becomes available. The agreement was terminated on May 31, 2013 and no wages have been paid to date. | |||
| Accrued payroll is as follows: | |||
| 28-Feb-14 | November 30, 2013 | ||
| Accrued and unpaid compensation due CEO | $ 714,732 | $ 624,732 | |
| Accrued and unpaid compensation due CFO | 118,125 | 118,125 | |
| Total accrued payroll | $ 832,857 | $ 742,857 | |
| Debt | 3 Months Ended | |
| Feb. 28, 2014 | ||
| Debt: | ' | |
| Schedule of Short-term Debt | ' | |
| Short-Term Debt | ||
| (A) | Related Parties | |
| On February 28, 2012, the Company’s former Chief Financial Officer made an interest free demand advance of $30,000 to provide working capital, which remains outstanding at February 28, 2014. The Note was recorded at its estimated fair value of $27,778 at the acquisition date, and imputed interest was being accreted to non-cash interest expense to the maturity date, using an 8% interest rate. No demand for payment has been made and the note remains unpaid. | ||
| On July 13, 2010, March 22, 2012 and October 25, 2012, the Company borrowed $60,000, $50,000 and $10,000, respectively, from a shareholder for use as operating capital. On September 12, 2012, the Company, the shareholder and an external party entered into an Assignment Agreement whereby the external party agreed to assume $30,000 of the $60,000 July 13, 2010 debt in exchange for a 8% convertible note maturing October 24, 2013 (see Short-term Convertible Debt with Ratchet Provisions noted below). The due date on the remaining balance of $30,000 of the $60,000 advance was extended to December 31, 2013 and bears interest at the rate of 15% per annum; the due date of the $50,000 advance was March 7, 2013 and it bore interest at the rates of 15% per annum through March 7, 2013 and 18% per annum interest thereafter if the repayment date is extended; and the $10,000 advance is payable on demand at an interest rate of 15% per annum. | ||
| During the three months ended February 28, 2014, the Company incurred and accrued $3,403 in interest expense, respectively, related to this short-term debt. As of February 28, 2014, the Company has accrued a total of $43,300 of interest expense related to these notes. | ||
| (B) | Film Finance Agreement | |
| On May 11, 2012, the Company entered into an agreement with Coral Ridge Capital Partners, LLC (“CRCP”) under which CRCP agreed to provide up to $300,000 in equity financing towards the production of the motion picture currently entitled “End of the Gun” (the "Picture"). The initial $100,000 under this agreement was paid on June 12, 2012. While it was the Company’s intent to commence filming of the Picture by September 1, 2012, certain casting delays have postponed the commencement date, to a date yet to be determined. In the event that the motion picture is abandoned, the Company is required to repay CRCP all funds paid to it, plus interest of 12% per annum. On January 25, 2013 the Company received a written notice of termination of agreement from CRCP and has been negotiating a mutual settlement with CRCP. Accordingly, the Company has included the $100,000 advance within short-term debt until the status of the Picture has been better determined and has accrued interest payable of $20,581 through February 28, 2014. | ||
| Through February 28, 2014, the Company has paid cumulative expenses totaling $14,688 in connection with the Picture, which have been recorded within operating expenses. | ||
| Short-term Convertible Debt with Ratchet Provisions | ||
| (A) | Short-term Convertible Debt | |
| On January 11, 2012, March 1, 2012, May 9, 2012, July 9, 2012, September 14, 2012 and September 28, 2012 the Company borrowed $22,500, $10,000, $32,500, $30,000, $22,500 and $10,000 (for a total of $127,500), from external parties for use as operating capital. See below for additional advances made by this party during the year ended November 30, 2013. The parties entered into convertible notes payable agreements, which make the Company liable for repayment of the principal and 8% annual interest by the various agreements’ expiration dates which range between October 6, 2012 and June 28, 2013. If a default is called by the lender (which occurred as noted below) after failure to repay principal or interest when due, among other default provisions including untimely filings with the SEC, a default interest rate of 22% per annum is triggered and retrospectively applied from the notes’ inception date on the unpaid amount, as well the principal balance is increased by 50% of the face amount of the note deemed in default. | ||
| On March 18, 2013 the Company received a notice of default from one of the lenders holding a total of $127,500 of short-term convertible debt at that date. Based upon the foregoing, the Company is now in default under the Notes. Demand was made for the immediate payment of $196,050, representing 150% of the remaining outstanding principal balance together with default interest of 22% as provided for in the Notes. | ||
| During December 2012, the Company issued an 8% convertible promissory note to raise $40,000 to pay legal services owed. The Note matured on September 21, 2013, and any unpaid principal or interest at that date accrues interest at the default rate of 22% annually. The note may be converted into common stock, at 41% discount off the average of the lowest three (3) trading prices for the Company’s common stock within the ten (10) days preceding the conversion, at any time after 180 days from the issuance date until the maturity date, or, if later, until paid. | ||
| On January 14, 2013, the Company issued an 8% convertible promissory note to raise $55,000 in operating capital. The Note matured on October 17, 2013, and any unpaid principal or interest at that date accrued interest at the default rate of 22% annually. The note may be converted into common stock, at 59 percent of market price, at any time after 180 days from the issuance date until the maturity date, or, if later, until paid. If a default is called by the lender (which occurred as noted above) after failure to repay principal or interest when due, among other default provisions including untimely filings with the SEC, a default interest rate of 22% per annum is triggered and retrospectively applied from the notes’ inception date on the unpaid amount, as well the principal balance is increased by 50% of the face amount of the note deemed in default. | ||
| On June 12, 2013, the Company issued 8% convertible promissory notes to raise $21,500 in operating capital. This Note matured on March 14, 2014. The note may be converted into common stock, at 45% of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date at any time after 180 days from the issuance date until the maturity date, or, if later, until paid. . If a default is called by the lender (which occurred as noted above) after failure to repay principal or interest when due, among other default provisions including untimely filings with the SEC, a default interest rate of 22% per annum is triggered and retrospectively applied from the notes’ inception date on the unpaid amount, as well the principal balance is increased by 50% of the face amount of the note deemed in default. | ||
| On October 14, 2013, the Company issued an 8% convertible promissory note in the aggregate principal amount of $20,500 to pay payables that were owed. The note has a maturity date of July14, 2014. The note is convertible into shares of our common stock at a conversion price of forty-five percent (45%) of the average of the lowest trading price per share market values during the thirty (30) trading days immediately preceding a conversion date at any time after 180 days from the issuance date until the maturity date. If a default is called by the lender (which occurred as noted above) after failure to repay principal or interest when due, among other default provisions including untimely filings with the SEC, a default interest rate of 22% per annum is triggered and retrospectively applied from the notes’ inception date on the unpaid amount, as well the principal balance is increased by 50% of the face amount of the note deemed in default. | ||
| The Company discounts the notes by the fair market value of the derivative liability upon inception of each note. These discounts are accreted back to the face value of the notes over the note term using the effective interest method. | ||
| Long-term Debt, Description | ' | |
| Long-term Convertible Debt | ||
| On March 31, 2011, the Company borrowed $200,000 from an external party for use as operating capital. The parties entered into a long-term convertible note agreement, which makes the Company liable for repayment of the principal and 2% annual interest by the agreement’s expiration date of December 28, 2014. Beginning September 27, 2011, the note is convertible into shares of our common stock at a fixed conversion price of $16.00 per share. As a result, the Company will be liable to issue up to 12,500 shares common stock upon conversion. Based on a $22 closing price on the day of note agreement, we recorded a discount of $75,000 as a result of the beneficial conversion feature (“BCF”). As such, the Company discounted the note by the value of the BCF upon inception of the note. During the three months ended February 28, 2014, interest expense from accretion of the discount was $2,522, leaving a remaining discount of $19,162. The discount being amortized approximates the effective interest method over the term of the note. | ||
| Former Related Party | ||
| At February 28, 2014, the Company has convertible notes totaling $453,061 due to a former affiliate and former significant stockholder of the Company. The notes are convertible into common shares, based on $40 to $80 share price, most of which is at the higher price. The convertible notes bear interest at 6% per annum and are due May 31, 2015. As of February 28, 2014, the Company has accrued $116,007 of interest expense related to these notes. | ||
| Earnings Per Share | 3 Months Ended |
| Feb. 28, 2014 | |
| Earnings Per Share: {1} | ' |
| Earnings Per Share | ' |
| Loss per Share | |
| Loss per share is computed on the basis of the weighted average number of common shares outstanding. Diluted loss per share is computed on the basis of the weighted average number of common shares outstanding. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive. At February 28, 2014, the Company’s dilutive securities outstanding consisted of (1) the CEO’s options to purchase shares of common stock, for which the exercise price is above the average closing price of the Company’s common stock and thus excluded under the treasury method; (2) 6,768 shares relative to convertible notes to a related party expected to be issued (post conversion) beginning in February 2015; , (3) approximately 142,381,475 shares relative to convertible notes (post conversion), and (4) 1,000,000 warrants to purchase common stock. The preceding common equivalent was excluded from the diluted net loss per share as the effects would have been anti-dilutive. |
| Derivative Instruments and Hedging Activities | 3 Months Ended | ||||||||
| Feb. 28, 2014 | |||||||||
| Derivative Instruments and Hedging Activities: | ' | ||||||||
| General Discussion of Derivative Instruments and Hedging Activities | ' | ||||||||
| (B) | Determination of Derivative Liability | ||||||||
| The Company calculated the derivative liability using the Black-Scholes pricing model for each note upon inception and recorded the fair market value of the derivative liability as a discount to the note. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations. | |||||||||
| The derivative liabilities associated with these convertible notes were revalued during the period as principal was converted, using the Black-Scholes Model with the below range of inputs. Upon conversion of all or a portion of the convertible notes, the derivative liability associated with the principal converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal converted is recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operation, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital. | |||||||||
| As of February 28, 2014, the Company has outstanding principal amounts on convertible debt of $275,322. At the inception of these notes, they were fully discounted due to the associated derivative liabilities. Aggregate remaining discounts on convertible notes to be accreted over the life of each respective note on an effective interest method are $14,416 as of February 28, 2014. For the three months ended February 28, 2014, interest expense from accretion of the discount, including converted notes, was $11,735. | |||||||||
| Aggregate derivative liabilities associated with remaining convertible notes were $1,013,834 as of February 28, 2014. Based on this revaluation at quarter end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net loss in fair value of derivative liability of $821,796 during the three months ended February 28, 2014. | |||||||||
| As of February 28, 2014, the range of inputs used to calculate derivative liabilities noted above were as follows: | |||||||||
| 28-Feb-14 | 30-Nov-13 | ||||||||
| Annual dividend rate | 0 | % | 0 | % | |||||
| Expected life (years) | .01 - .38 years | .01 - .92 years | |||||||
| Risk-free interest rate | .03% - .10 | % | .03% - .13 | % | |||||
| Expected volatility | 439.30% - 536.5 | % | 331.50% - 479.40 | % | |||||
| Subsequent Events | 3 Months Ended |
| Feb. 28, 2014 | |
| Subsequent Events: | ' |
| Schedule of Subsequent Events | ' |
| On March 4, 2014, Coral Ridge Capital Partners, LLC filed an action against the Company in the Superior Court for Los Angeles County, Los Angeles, CA, seeking to recover the $100,000 in production funding advanced to the Company, plus interest and attorneys’ fees. The Company has retained legal counsel in connection with the action and has already reserved $120,000 in short-term liabilities for this action. | |
| On March 4, 2014, the Company entered into a series of Agreements with Iconic Holdings, LLC pursuant to which (1) Iconic agreed to invest a total of $25,000 in the Company pursuant to a convertible promissory note in that amount, subject to an original issue discount of $5,000 to cover due diligence and legal costs, resulting in a net to the Company of $20,000; and (2) to acquire a portion of an outstanding $200,000 principal amount loan from the current holder. The new note issued to Iconic is a 12 month note dated February 24, 2014, but not funded until March 4, 2014, bearing interest at 10% and convertible into common stock at any time at the election of the holder at the lower of $0.001 per share or 50% of the lowest trading price of the common stock during the 20 consecutive trading days prior to the conversion election. Iconic also acquired $50,000 in principal amount of the outstanding $200,000 note from a current debt holder with an option to acquire an additional $50,000 in principal of that same note | |
| On March 24, 2014, the Company entered into a series of Agreements with LG Capital Funding, LLC pursuant to which (1) LG Capital agreed to invest a total of $26,500 in the Company pursuant to a convertible promissory note in that amount, subject to an original issue discount of $1,500 to cover due diligence and legal costs, resulting in a net to the Company of $25,000; and (2) to acquire a portion of an outstanding $200,000 principal amount loan from a current debt holder. The new note issued to LG Capital is a 12 month note dated March 24, 2014, bearing interest at 10% and convertible into common stock at any time after six months from the date of issue, at the election of the holder, at 50% of the lowest closing bid price of the common stock during the 15 consecutive trading days prior to the conversion election. LG Capital also agreed to acquire up to $100,000 in principal and $5,000 in accrued interest on the outstanding $200,000 note, in payments of $42,500 made at closing on March 24, 2014, and two subsequent installments of $31,500 each 45 days after the prior payment. In the event that LG Capital does not make the subsequent installment payments, the original note remains in full effect in the then reduced principal amount. |
