Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Nov. 30, 2014 | 31-May-14 | |
Document and Entity Information: | ||
Entity Registrant Name | Mass Hysteria Entertainment Company, Inc. | |
Document Type | 10-K | |
Document Period End Date | 30-Nov-14 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 1388488 | |
Current Fiscal Year End Date | -19 | |
Entity Common Stock, Shares Outstanding | 1,879,895,992 | |
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 | FY | |
Entity Public Float | $635,912 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Nov. 30, 2014 | Nov. 30, 2013 | |
Current Assets | |||
Cash | $16,480 | $9 | |
Total Current Assets | 16,480 | 9 | |
Film costs | 505,150 | 2,000 | |
Deposits | 1,200 | 0 | |
Prepaid expenses | 5,000 | 0 | |
Total Noncurrent Assets | 511,350 | 2,000 | |
Total Assets | 527,830 | 2,009 | |
Current Liabilities | |||
Accounts payable | 217,970 | 137,740 | |
Accrued liabilities | 427,562 | [1] | 443,766 |
Accrued payroll | 639,529 | 742,857 | |
Short-term debt | 249,523 | 237,622 | |
Short-term convertible debt | 515,025 | 270,629 | |
Derivative liability | 4,263,200 | 324,020 | |
Deferred revenue | 1,000 | 1,000 | |
Stand ready obligation | 250,000 | 250,000 | |
Convertible debt - related party | 0 | 453,061 | |
Total Current Liabilities | 6,563,809 | 2,860,695 | |
Non-current Liabilities | |||
Convertible long-term debt, net of discount of | 105,913 | [2] | 178,316 |
Total Liabilities | 6,669,722 | 3,039,011 | |
Stockholder's Deficit | |||
Common Stock | 18,799 | [3] | 181 |
Preferred Stock | 0 | [4] | 0 |
Additional paid in capital | 9,355,188 | 7,399,743 | |
Accumulated deficit | -15,515,879 | -10,436,926 | |
Total Stockholders' Deficit | -6,141,892 | -3,037,002 | |
Total Liabilities and Stockholders' Deficit | $527,830 | $2,009 | |
[1] | Net of debt discount of $859,483 and $26,151 | ||
[2] | Net of debt discount of $2,087 and $21,684 | ||
[3] | $0.00001 par value; 10,000,000,000 shares authorized, 1,879,895,992 and, 18,145,865 shares issued and outstanding | ||
[4] | $0.00001 par value; 10,000 shares authorized; 10 issued and outstanding |
BALANCE_SHEETS_PARENTHETICAL
BALANCE SHEETS (PARENTHETICAL) (USD $) | Nov. 30, 2014 | Nov. 30, 2013 |
Stockholders' Equity: | ||
Common stock, par value | $0.00 | $0.00 |
Common shares authorized | 10,000,000,000 | 2,000,000,000 |
Common shares issued | 1,879,895,992 | 18,145,865 |
Common shares outstanding | 1,879,895,992 | 18,145,865 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred shares authorized | 10,000,000 | 10,000 |
Preferred shares issued | 10,000 | 10 |
Preferred shares outstanding | 10,000 | 10 |
STATEMENT_OF_OPERATIONS
STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Net Income (Loss) | ||
Revenues | $37,500 | $0 |
Operating expenses: | ||
General and administrative | 991,714 | 1,461,526 |
Total Expenses | 991,714 | 1,461,526 |
Loss from operations | -954,214 | -1,461,526 |
Other income (expense) | ||
Interest expense | -695,968 | -342,811 |
Excess fair value of derivative | -3,618,680 | -69,071 |
Gain on fair value of derivative liability | 189,909 | 66,982 |
Gain on extinguishment of convertible note | 0 | 0 |
Gain (loss) on stand-ready guarantee | 0 | 0 |
Income (loss) before income taxes | -5,078,953 | -1,806,425 |
Income taxes, net | 0 | 0 |
Net income (loss) | ($5,078,953) | ($1,806,426) |
Earnings Per Share: | ||
Net loss per common share (basic and diluted) | ($0.01) | ($0.59) |
Weighted average number of common shares outstanding | ||
Weighted average number of shares outstanding during the period - basic and diluted | 464,870,662 | 3,062,690 |
STATEMENT_OF_STOCKHOLDERS_EQUI
STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Total |
Stockholders' Equity at Nov. 30, 2013 | $181 | $0 | $7,399,743 | ($10,436,926) | ($3,037,002) |
Shares issued, at Nov. 30, 2013 | 18,145,865 | 10 | 0 | 0 | 18,145,875 |
Stock issued during period, Value, compensation | 198,214,250 | 0 | 0 | 0 | 198,214,250 |
Stock issued during period, Value, conversion of notes | 16,635 | 0 | 271,347 | 0 | 287,982 |
Stock issued during period, Shares, conversion of notes | 1,663,535,877 | 0 | 0 | 0 | 1,663,535,877 |
Adjustments to paid in capital | 0 | 0 | 1,018,651 | 0 | 1,018,651 |
Net income (loss) | 0 | 0 | 0 | -5,078,953 | -5,078,953 |
Stockholders' Equity at Nov. 30, 2014 | $18,799 | $0 | $9,355,188 | ($15,515,879) | ($6,141,892) |
Shares issued, at Nov. 30, 2014 | 1,879,895,992 | 0 | 0 | 0 | 1,879,895,992 |
STATEMENT_OF_CASH_FLOWS
STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Statement of Cash Flows | ||
Net Income (loss) | ($5,078,953) | ($1,806,426) |
Depreciation | 0 | 519 |
Share-based compensation | 296,000 | 840,000 |
Change in fair market value of derivative liability | -189,909 | -66,982 |
Loss on excess fair value of derivative liability | 3,618,680 | 69,071 |
Gain on extinguishment of convertible note | 0 | 0 |
Amortization of discount on convertible debt | 559,280 | 200,041 |
Loss on default | 0 | 65,350 |
Accounts receivable | -1,200 | 0 |
Prepaid expenses | -5,000 | 0 |
Accounts payable | 170,232 | 56,831 |
Accrued liabilities | 177,391 | 112,110 |
Unearned revenue | 0 | 1,000 |
Accrued payroll | 268,100 | 388,884 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -185,379 | -139,602 |
Payment of Film costs | -3,150 | 0 |
Acquisition of other assets | 0 | 2,333 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | -3,150 | 2,333 |
Proceeds from issuance of convertible debt | 205,000 | 137,000 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 205,000 | 137,000 |
Increase (Decrease) in cash and cash equivalents | 16,471 | -269 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 9 | 278 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 16,480 | 9 |
Interest | 0 | 0 |
Income taxes, net | 0 | 0 |
Other material noncash items | $823,706 | $44,375 |
Note_1_Organization_and_Busine
Note 1 - Organization and Business | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 1 - Organization and Business | NOTE 1 – ORGANIZATION AND BUSINESS |
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. | |
The Company is now a film entertainment company whose mandate is to finance and produce feature films for theatrical, DVD, video on demand (VOD) and television distribution. During the formative years of the Company, from 2009 until 2014, it was engaged in trying to change the paradigm for filmed entertainment by changing the viewing experience from passive to engaged by creating a software application that would allow the user to interact with the content in live time for commercial, documentary and educational film markets. The Company has achieved "proof of concept" with the application and is exploring options to bring it to market if and when funds are available to exploit the technology. The hope is to eventually produce an original interactive theatrical film. | |
The Company has been involved in the production of two film projects in 2014, “Daughter of God”, starring Keanu Reeves, and “Bus 657”, starring Robert De Niro. The latter is in filming now and “Daughter of God” is in post-production with release expected in 2015. Mass Hysteria arranged for an investment in Daughter of God of $500,000 from an independent funding source, which advanced the funds to the Company in exchange for a convertible promissory note in the principal amount of $505,000, bearing 8% interest and maturing on July 30, 2015. In addition to the convertible promissory note, the holder received warrants to acquire 1,262,500,000 shares of our common stock at a warrant exercise price of $0.0003, exercisable for a five year term. For this investment the Company will receive 6.65% of the profits from the film and the funding source, operating as Remark Pictures will also receive 6.65% of the profits. . | |
Subsequently, we have partnered with Sony Pictures “Affinity Studios” to produce another feature film in 2015. See Note 10 Subsequent Events. |
Note_2_Summary_of_Significant_
Note 2 - Summary of Significant Accounting Policies | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 2 - Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Use of Estimates | |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require the Company's most significant, difficult and subjective judgments include the valuation and recognition of share-based compensation, evaluation of the Company’s stand-ready obligation and values of derivative instruments. We use the Black-Scholes valuation model for simplicity purposes. Various valuation techniques render varying amounts. We consistently use this model and use inputs that are appropriate. | |
We base our estimates and judgments on historical experience and on various other factors that are considered reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources. Actual results could differ materially from these estimates. | |
Fair Value of Financial Instruments | |
The Company accounts for financial instruments under the guidance of ASC 820-10 – “Fair Value Measurements”. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: | |
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
Level 2 - Other inputs that are directly or indirectly observable in the marketplace. | |
Level 3 - Unobservable inputs which are supported by little or no market activity. | |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. | |
As of November 30, 2014 and 2013, the Company’s derivatives which include the embedded conversion feature on the convertible note payable were considered level 2 financial instruments. See Note 5 for valuation technique and assumptions used. | |
The Company's financial instruments consisted primarily of (level 1) accounts payable, accrued liabilities, and short-term debt. The carrying amounts of the Company's financial instruments generally approximate their fair values as of November 30, 2014 and 2013 due to the short term nature of these instruments. | |
The Company did not have any level 3 instruments at November 30, 2014 and 2013. | |
Cash and Cash Equivalents | |
For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. | |
The Company may maintain cash and cash equivalent balances at financial institutions that are insured by the Federal Deposit Insurance Corporation. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk. The Company did not have any cash equivalents at November 30, 2014 and 2013. | |
Film Costs | |
The Company capitalizes film production costs in accordance with ASC 926 – “Entertainment”. Film costs include costs to develop and produce films, which primarily consist of consulting fees, equipment and overhead costs, as well as the cost to acquire rights to films. Film costs include amounts for films still in development. | |
Website Development Costs | |
Website development costs are for the development of the Company's Internet website. These costs have been capitalized when acquired and installed, and are being amortized over its estimated useful life of three years on a straight line basis. The Company accounts for these costs in accordance with ASC 340, “Other Assets and Deferred Costs”, which specifies the appropriate accounting for costs incurred in connection with the development and maintenance of websites. At November 30, 2014, the Company owned a website costing $3,140 which had an estimated useful life of three (3) years. Amortization expenses related to website development costs during each of the years ended November 30, 2014 and 2013 were $0 and $519, respectively. | |
Software Development Costs | |
For software to be sold, leased or marketed, the Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”). ASC 985-20 requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has not capitalized any software development costs to date. | |
Derivative Financial Instruments | |
The provisions of ASC 815 - “Derivatives and Hedging” applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by ASC 815 and to any freestanding financial instruments that are potentially settled in an entity's own common stock. The guidance impacts the Company's financial statements and position due to certain warrants and embedded conversion features in which the exercise or conversion price resets upon certain events. See Note 5 for the impact of such transactions on the financial statements. | |
Our issued and outstanding common stock purchase warrants and embedded conversion features are recorded at their fair value upon issuance and at each reporting period. The common stock purchase warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The warrants do not qualify for hedge accounting, and as such, all future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model. The value of the embedded conversion feature also determined using the Black-Scholes option pricing model. All future changes in the fair value of the embedded conversion feature will be recognized currently in earnings until the note is converted or redeemed. | |
Debt | |
If a conversion feature of conventional convertible debt is not accounted for as a derivative instrument and provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount. In those circumstances, the convertible debt will be recorded net of the discount related to the BCF. The Company amortizes the discount to interest expense over the life of the debt using the effective interest method. | |
Guarantees | |
During the year ended November 30, 2011, the Company entered into an agreement to provide for a guarantee of indebtedness. The Company’s exposure to credit loss, in the event of nonperformance of the related film financed by the indebtedness, is represented by the amounts stipulated in the agreement, and is limited to a maximum of $250,000. The total guarantee accruals do not necessarily represent future cash requirements or cash reserves. As of November 30, 2014, management has evaluated the guarantee liability under ASC 460-10 – “Guarantees” and ASC 450-20 – “Loss Contingencies” by reviewing the ability to repay the obligation under contract to determine if there is a probable chance of a default, and if so, provide a reasonable estimate for losses. At November 30, 2014 management determined that the full guarantee will be called. See Note 6 for Management’s determination. | |
Deferred Producer Liabilities | |
Deferred producer liabilities represent outstanding amounts due to the producer or to be retained by the Company upon the collection of license fee amounts related to the sale of content represented by the Film Production segment. In accordance with the Sales Agency Agreements entered into by the Company and represented content producers, when license fees associated with the Company's sale of represented content are collected, the amounts are paid to the producer and/or retained by the Company. Amounts are paid to the Company for its sales agency commission, recoupment of outstanding film costs and producer advances ("Recoupable Costs") or as market fee revenue. The terms of the Sales Agency Agreements provide that collected license fees will be distributed to the producer and/or retained by the Company based on a specific allocation order as defined by each agreement. The allocation order is dependent on certain criteria including total license fee collections, outstanding Recoupable Cost balances and certain other criteria as specified by the Sales Agency Agreements. Because these criteria cannot be reasonably determined until the license fees are collected, the appropriate allocation order of uncollected license fees cannot be established. Accordingly, the uncollected license fee amounts are recorded as deferred producer liabilities until such time as they are collected | |
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 November 30, 2014, the Company’s dilutive securities outstanding consisted of (1) the CEO’s options to purchase shares of common stock (see Note 8), 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) 7,751,709,330 shares relative to convertible notes (post conversion); and (3) 1,170,034,580 shares related to warrants issued with the two convertible notes. At November 30, 2013, the Company’s dilutive securities outstanding consisted of (i) the CEO’s options to purchase shares of common stock (See Note 8) 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) 131,643 shares relative to convertible notes (post conversion) and (4) 944 shares related to warrants issued with the $37,500 convertible note. The preceding common equivalent was excluded from the diluted net loss per share as the effects would have been anti-dilutive. | |
Impairment of Long-Lived Assets | |
The Company has adopted ASC 360-10, - "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment, annually, or more often, if events and circumstances warrant such. At November 30, 2014 management considered that there were no such impairments. | |
Recoupable Costs and Producer Advances | |
Recoupable costs and producer advances represent amounts paid by the Company that will be expected to be subsequently recouped through the collection of fees associated with the Company's licensing of content represented by third parties. In connection with the film production segment's content operations which may be represented by others, the Company will enter into sales agency agreements whereby the Company will act as a sales agent for a producer's film ("Sales Agency Agreements"). These Sales Agency Agreements typically include provisions whereby certain costs that are incurred for promotion related activities will be paid by the Company on behalf of the producer (such as movie trailer and ad material costs). The Company may also pay the producer an advance for the related film prior to the distribution of such film. As the Company subsequently licenses the producer's film and license fees are collected, the recoupable costs and producer advances will be recovered by the Company through these license fee collections. License fees typically are not paid to the producer of the related film until such recoupable costs and producer advances have been fully recovered by the Company. | |
Producers’ Fees | |
Producer fees will be recognized upon receipt of the fees and delivery of the related services. If upon receipt of the fees all services have not been provided, the fees will be deferred and recognized as the services are performed. | |
Royalties | |
Royalty and profit participation will be recognized when the amounts are known and the receipt of the royalties is reasonably assured. Accordingly, recognition generally occurs upon receipt (usually quarterly or semi-annually). | |
Distribution Revenues | |
Distribution revenues will be recognized when earned and appropriately reported by third (3rd) party distribution companies and recorded gross along with any distribution expenses charged by the Distributor and upon receipt of such revenues. | |
Producer Development, Production Service Fees and Film Distribution Fees | |
As these services are provided, these fees will be invoiced to the third party financiers and producers and recognized when the amount has been determined and receipt is reasonably assured. | |
Stock Options | |
In accordance with the provisions of ASC 718 “Compensation-Stock Compensation,” the Company accounts for employee and non-employee director stock issuances and stock options under the fair value method which requires the use of an option pricing model for estimating fair value. Accordingly, share-based compensation is measured at grant date based on the estimated fair value of the award. The Company uses the straight-line attribution method to recognize share-based compensation costs over the requisite service period of the award. | |
Accounting for Non-Employee Stock-Based Compensation | |
The Company measures compensation expense for its non-employee stock-based compensation under ASC 505 - “Equity”. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to stock-based compensation expense and credited to additional paid-in capital. | |
Income Taxes | |
The Company makes certain estimates and judgments in determining its income tax provision expense. These estimates and judgments are used in the determination of tax credits, benefits and deductions, and the calculation of certain tax assets and liabilities which are a result of differences in the timing of the recognition of revenue and expense for tax and financial statement purposes. The Company also uses estimates and judgments in determining interest and penalties on uncertain tax positions. Significant changes to these estimates could result in a material change to the Company's tax provision in subsequent periods. | |
The Company is required to evaluate the likelihood that it will be able to recover its deferred tax assets. If the Company's evaluation determines that the recovery is unlikely, it would be required to increase the provision for taxes by recording a valuation allowance against the deferred tax assets equal to the amount that is not expected to be recoverable. The Company currently estimates that its deferred tax assets will not be recoverable. If these estimates were to change and the Company's assessment indicated it would be able to recover the deferred tax assets, the Company would be required to change its estimate in the period in which the change occurred. | |
The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of tax regulations. The Company adopted the provisions of ASC 740 “Income Taxes”. ASC 740 contains a two-step approach to recognizing and measuring uncertain tax position liabilities. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. This process is based on various factors including, but not limited to, changes in facts and circumstances, changes in tax law, settlement of issues under audit, and new audit activity. Changes to these factors and the Company's estimates regarding these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. | |
Risks and Uncertainties | |
The Company has a limited operating history and has generated only limited revenues from our planned principal operations. | |
The Company's business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse developments in these general business and economic conditions, including recession, downturn or otherwise, and could have a material adverse effect on the Company's financial condition and the results of its operations. | |
The Company currently has limited capabilities in sales, marketing, and distribution due to lack of working and human capital. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations as well as extensive human capital. Our company may be unable to compete successfully against these companies. | |
The Company's industry is characterized by rapid changes in technology and customer demands. As a result, the Company's services and/or expertise may become obsolete and/or unmarketable. The Company's future success will depend on its ability to adapt to technological advances, anticipate customer demands, and enhance our current services. Further, the Company's services must remain competitive with those of other companies with substantially greater resources. | |
Changes in Presentation | |
During the Company’s second and third fiscal quarter during the year ended November 30, 2014, the Company disclosed gain on extinguishment of convertible note of $665,983. Such amount was the amount of promissory notes that were modified and required extinguishment accounting. Such amounts should have, and are now included in excess fair value of derivative liabilities in the statement of operations. There is no effect on net loss during any of the periods presented during the interim periods within the 2014 fiscal year, nor does it change the earnings per share in any period presented during the 2014 fiscal year. | |
Recent Accounting Pronouncements | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. generally accepted accounting principles. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage that in prior years it had been in the development stage. These amendments are effective for annual reporting periods beginning after December 15, 2014, however the Company chose to adopt these pronouncements early during the quarter ended May 31, 2014. | |
The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. | |
Note_3_Going_Concern
Note 3 - Going Concern | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 3 - Going Concern | NOTE 3 - GOING CONCERN |
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 has limited available capital, 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 for the immediate future. The Company is also trying to develop revenue streams that will support operations. 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. |
Note_4_Accrued_Liabilities
Note 4 - Accrued Liabilities | 12 Months Ended | ||
Nov. 30, 2014 | |||
Notes | |||
Note 4 - Accrued Liabilities | NOTE 4 – ACCRUED LIABILITIES | ||
Accrued liabilities by major classification are as follows: | |||
November 30, 2014 | November 30, 2013 | ||
Accrued interest | $ 125,395 | $ 182,305 | |
Accrued consulting fees | 91,000 | 91,000 | |
Accrued payroll taxes on CEO’s compensation | 170,461 | 134,461 | |
Accrued auto allowances due CEO | 40,706 | 36,000 | |
Total accrued liabilities | $ 427,562 | $ 443,766 | |
Accrued interest represents interest on both short and long-term debt. Accrued consulting fees are for scriptwriters and a film consultant as well as regulatory and financial consultants. | |||
Based on the CEO’s employment agreement, the Company accrues $30,000 per month for gross wages; however, the CEO receives payments only as capital becomes available. The CEO’s paid 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. See Note 6 for details of the CEO’s employment agreement. During the year ended November 30, 2014, the Company converted approximately $371,000 in accrued salary into 185,714,250 shares of common stock. | |||
The Company entered into an employment agreement as of February 3, 2012 with our former Chief Financial Officer which provided for a base salary of $90,000 per year, payable monthly, on a month-to-month basis, prior to his termination in 2013. The Company pays these wages only as capital becomes available. No wages have been paid to date. | |||
Accrued payroll is as follows: | |||
November 30, 2014 | November 30, 2013 | ||
Accrued and unpaid compensation due CEO | $ 521,404 | $ 624,732 | |
Accrued and unpaid compensation due CFO | 118,125 | 118,125 | |
Total accrued payroll | $ 639,529 | $ 742,857 |
Note_6_Commitments_and_Conting
Note 6 - Commitments and Contingencies | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 6 - Commitments and Contingencies | NOTE 6 - COMMITMENTS AND CONTINGENCIES |
Office Leases | |
Office lease expense for the years ended November 30, 2014 and 2013 was $5,128 and $2,927, respectively. | |
Employment Agreement | |
On December 17, 2009, the Company entered into an employment agreement with our CEO which provides for a base salary of $360,000 per year, payable semi-monthly for a period of five years, expiring December 17, 2014. Among other things, the employment agreement calls for periodic increases in the base salary and bonuses based upon performance. The agreement also allows for the Company, at the discretion of the Board of Directors, to provide for medical insurance and a contribution to a retirement benefit plan. Our CEO was also awarded options to purchase common stock. See Note 8. In fiscal 2014, a total of $371,429 in accrued salary was converted into185,714,250 shares of common stock. A total of $639,529 in accrued salary is reflected on the Company’s financial statements under this agreement as of November 30, 2014. | |
Stand-Ready Obligation | |
During the production of the film Carjacked, the production company Carjacked Entertainment, LLC and Carjacked Investments, LLC (collectively “Carjacked LLC’s”) obtained financing from Wet Rose Productions, LLC (“Wet Rose”) in the amount of $850,000. Grodfilm Corp, owned by the Company's CEO, is the managing member of the LLCs and acts on behalf of 9207-8856 Quebec Inc., a Quebec company and owner of the copyright to the motion picture "Carjacked". | |
On October 5, 2010, the Company entered into an indirect guarantee of the indebtedness in which the Company guaranteed any shortfalls in repayment of the $850,000 of debt related to the investment provided by Wet Rose up to an amount not to exceed $250,000. The financing from Wet Rose becomes due and payable at a date which was 30 months after first release of the film Carjacked. The film was released on November 22, 2011 and accordingly management evaluated the guarantee liability under ASC 460-10 – “Guarantees” and ASC 450-20 – “Loss Contingencies” by reviewing the projected ability of the Carjacked film to repay the obligation under contract to determine if there was a probable chance of a default, and if so, provide a reasonable estimate for losses. Management believed that past performance and then current projections indicated that full repayment by the Company to Wet Rose was probable. Accordingly, management recorded a provision for loss of $200,000 related to the stand-ready obligation during the year ended November 30, 2012, together with the $50,000 “guarantor fee” previously recorded as a stand-ready obligation, a total of $250,000 is reflected as a stand-ready obligation as of November 30, 2014. Results to date confirm Management’s original estimates. | |
Film Costs and Movie Rights Option Contract | |
On November 1, 2010, the Company entered in to an “option/purchase” agreement with Richard Taylor (the “Writer”) in which the Company would be granted the exclusive right and option (“Option”) to acquire all motion picture, television and allied and ancillary rights to the Writer’s screenplay – “Bad Monday”. The initial term of this option agreement was for one year; however, the Company subsequently obtained an extension through October 31, | |
2013. As consideration, the Company paid the Writer $2,000 which is included in Film Costs. It is the intention of the Company to produce the motion picture and has renewed the option for which the Writer will be paid a purchase price of $150,000 when production commences. Additionally, the Writer would be entitled to 5% of the net proceeds of the picture, and an additional 2.5% of net proceeds if the Writer received shared writing credit on the picture. |
Note_7_Stockholders_Deficit
Note 7 - Stockholders' Deficit | 12 Months Ended | |
Nov. 30, 2014 | ||
Notes | ||
Note 7 - Stockholders' Deficit | NOTE 7 - STOCKHOLDERS’ DEFICIT | |
Capital Stock | ||
The Company has two classes of stock: | ||
Series A Preferred stock, $0.00001; 10,000,000 shares authorized; 1,000 issued and outstanding; and, | ||
Common stock, $0.00001 par value; 10,000,000,000 shares authorized; 1,879,895,992 and 18,145,865 shares issued and outstanding as of November 30, 2014 and 2013, respectively. | ||
During fiscal 2014, the Company increased common shares authorized from 2,000,000,000 to 10,000,000,000 shares. | ||
Stock Incentive Plans | ||
2011 Stock Incentive Plan | ||
On February 16, 2011, our board of directors adopted the 2011 Stock Incentive Plan. The purpose of our 2011 Stock Incentive Plan is to advance the best interests of the Company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either stock options or compensation stock under the plan is 23,000 shares, subject to adjustment. As of November 30, 2014, the Company had no shares remaining to be issued under the plan. | ||
2012 Stock Incentive Plan | ||
On March 13, 2012, our Board of Directors adopted the 2012 Stock Incentive. Plan The purpose of our 2012 Stock Incentive Plan is to advance the best interests of the Company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either common stock or stock options under the plan is 56,000 shares, subject to adjustment. As of November 30, 2014, all shares had been granted under the plan. | ||
Our Board of Directors administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. Any decision made, or action taken, by our board of directors arising out of or in connection with the interpretation and administration of the plan is final. | ||
The Board of Directors, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the Company, and such other persons as the board of directors or compensation committee may select, and permit holders of common stock options to exercise such options and hold the common stock issued. Stock options may also be granted by our board of directors or compensation committee to non-employee directors of the Company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the Company. | ||
In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the plan. | ||
Our Board of Directors may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our Board of Directors may deem appropriate and in our best interest. | ||
2012 Stock Incentive Plan #2 | ||
On August 21, 2012, our Board of Directors adopted the 2012 Stock Incentive Plan #2. The purpose of our 2012 Stock Incentive Plan #2 is to advance the best interests of the Company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. | ||
Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either common stock or stock options under the plan is 132,800 shares, subject to adjustment. As of November 30, 2013, 17,000 shares have been granted under the plan. No additional grants were made in the year ended November 30, 2014. | ||
Our Board of Directors administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. Any decision made, or action taken, by our board of directors arising out of or in connection with the interpretation and administration of the plan is final and conclusive. | ||
The Board of Directors, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the Company, and such other persons as the board of directors or compensation committee may select, and permit holders of common stock options to exercise such options and hold the common stock issued. Stock options may also be granted by our board of directors or compensation committee to non-employee directors of the Company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the Company. | ||
In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the plan. | ||
Our Board of Directors may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our Board of Directors may deem appropriate and in our best interest. | ||
Common Stock | ||
During the year ended November 30, 2014, a total of 1,879,895,992 shares of common stock were issued, including 1,663,535,877 shares issued on conversion of approximately $356,000 in principal and interest on convertible notes, 185,714,250 shares issued on $371,429 on conversion of accrued salary, and 12,500,000 shares for services. | ||
The shares issued for conversion of accrued salary of our CEO and the shares issued for services, 7,500,000 of which were to our CEO, were valued based on the fair market value on the date of issuance. | ||
Series A Preferred Shares | ||
On April 5, 2011, our Board approved the issuance of 1,000 shares of Series A Preferred Stock to our CEO, Dan Grodnik, in consideration of $10,000 of accrued compensation due Mr. Grodnik. The Series A Preferred Stock is not convertible. Holders of the Series A Preferred Stock do not have any preferential dividend or liquidation rights. The shares of Series A Preferred Stock are not redeemable. Pursuant to the certificate of designation establishing the Series A Preferred Stock, on all matters submitted to a vote of the holders of the common stock, including, without limitation, the election of directors, a holder of shares of the Series A Preferred Stock shall be entitled to the number of votes on such matters equal to the product of (a) the number of shares of the Series A Preferred Stock held by such holder, (b) the number of issued and outstanding shares of our common stock, as of the record date for the vote, or, if no such record date is established, as of the date such vote is taken or any written consent of stockholders is solicited, and (c) 0.0002. | ||
The issuance of the Series A Preferred Stock effectively transferred voting control of the Company to Mr. Grodnik. |
Note_8_Employee_Stock_Options
Note 8 - Employee Stock Options | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 8 - Employee Stock Options | NOTE 8 – EMPLOYEE STOCK OPTIONS |
In addition to his annual salary, the President and CEO’s Employment Agreement grants employee stock options to purchase common stock in an amount equal to 20,000 shares at an exercise price of $70 per share. The options shall vest equally over a five-year period (4,000 shares per year), commencing on December 17, 2009. Each series of options shall survive for 24 months following vesting, and may be exercised all or in part, and each series of options shall include a “cashless feature.” | |
The weighted average options outstanding as of November 30, 2014 and 2013 equaled the options issued to the CEO above, 20,000, there were no other options issued, exercised or forfeited during the years then ended. The weighted average exercise price was $70 for both the years ended November 30, 2014 and 2013. The weighted average remaining contractual life of the options for the years ended November 30, 2014 and 2013 was approximately one (1) and two (2) years, respectively. There is no intrinsic value for options outstanding as all exercise prices are above the year end closing Company stock price. As of November 30, 2014, 11,382 options are fully vested and exercisable. Remaining unrecognized expense of approximately $10,000 will be recognized in the first quarter of fiscal 2015. |
Note_9_Income_Taxes
Note 9 - Income Taxes | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 9 - Income Taxes | NOTE 9 – INCOME TAXES |
We have identified our U.S. Federal tax returns as our “major” tax jurisdiction, and our corporate offices are located in California. The United States Federal return years 2009 through 2013 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by various State agencies for the years ended 2007 through 2013 and currently does not have any ongoing tax examinations. The Company has had losses to date, and therefore has paid no income taxes. The Company has not filed tax returns for the fiscal year 2011, 2012, 2013 and 2014. | |
Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company elected to capitalize all start-up costs for income tax reporting purposes under Section 195 and 248 of the Internal Revenue Code. The Company's deferred tax assets consist entirely of start-up costs. Effective August 5, 2009 (Inception), prior net operating loss carry forwards are no longer available to the Company, due to the Company’s abandonment of the related handbag manufacturing business. | |
Aggregate start-up costs capitalized through November 30, 2014, is approximately $4.7 million; the deferred tax asset is approximately $2.0 million. The amount of benefits the Company may receive from the start-up costs for income tax purposes is further dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Accordingly, management recorded a valuation allowance for 100% of the deferred tax assets of approximately $2.0 million, an increase from the prior year of $0.4 million. In fiscal 2013, management increased the valuation allowance approximately $0.3 million. | |
The difference between the federal rate of approximately 34% and the actual rate is due to non-deductible stock and accrued compensation, changes in derivative liabilities aggregating approximately $0.4 million and the valuation allowance described above. | |
Note_10_Subsequent_Events
Note 10 - Subsequent Events | 12 Months Ended |
Nov. 30, 2014 | |
Notes | |
Note 10 - Subsequent Events | NOTE 10 - SUBSEQUENT EVENTS |
Subsequent to November 30, 2014, the Company issued 3,031,093,097 shares of common stock to a holder of short-term convertible debt for the conversions of principal. | |
As a result of the post-November 30, 2014 issuances, there were 4,910,989,089 common shares issued and outstanding at March 12, 2015. | |
On January 21, 2015, the Company increased its authorized common shares from 10,000,000,000 to 14,999,990,000. |
Note_5_Debt
Note 5 - Debt | 12 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
Notes | |||||||||
Note 5 - Debt | NOTE 5 – DEBT | ||||||||
Short-Term Debt | |||||||||
(A) | Related Parties | ||||||||
On November 30, 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 November 30, 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 bears 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 year ended November 30, 2014, the Company incurred and accrued $13,703 in interest expense, respectively, related to this short-term debt. As of November 30, 2014, the Company has accrued a total of $53,600 of interest expense related to these notes. | |||||||||
(B) | Film Finance Agreements | ||||||||
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 entitled “End of the Gun” (the "Picture"). The initial $100,000 under this agreement was paid to the Company on June 12, 2012. While it was the Company’s intent to commence filming of the Picture by September 1, 2012, certain casting and other delays postponed the commencement date, to a date yet to be determined. In the event that the motion picture is abandoned, we are required to repay CRCP all funds paid to us, plus interest of 12% per annum. We are in active discussions for production of the movie and hope to commence production during the Summer, 2015.. On January 25, 2013, we received a written notice of termination of agreement from CRCP and we are currently negotiating a mutual settlement. Accordingly, we have included the $100,000 advance within short-term debt until the matter has been resolved and we have accrued interest payable of $29,523 through November 30, 2014. Through November 30, 2014, we have incurred cumulative expenses, both directly and indirectly, in excess of the initial funding in connection with the Picture, which have been recorded previously within operating expenses. | |||||||||
In October, 2014, the Company entered into a film finance agreement under which a lender loaned the Company $505,000 for co-production of the film “Daughter of God”. The promissory note was in the original principal amount of $505,000, including a $5,000 legal fee to the lender’s legal counsel, and is due July 30, 2015 with interest at 8 percent per year due at maturity. The Note is convertible after 180 days at the lender’s election into shares of the Company’s common stock at a price equal to 50 percent of the average of the three lowest trading prices for the stock during the 30 day trading period prior to any conversion, with a limit of 4.99% of the total outstanding shares of common stock held by the lender at the time of any conversion. In addition, the lender was granted a warrant to purchase up to 1,262,500,000 shares of common stock at a conversion price of $0.0003 per share for a period of five years, subject to appropriate adjustment for certain capital changes. As of November 30, 2014, the remaining principal balance and interest is $511,752. | |||||||||
With the funds from the above note, the Company invested in the film “Daughter of God” which is included as a cost investment within other assets in the accompanying balance sheet. For this investment we are to receive our money back, plus a 20% fee, prior to any profits, if any, being distributed. We will receive 6.65% of the profits thereafter from the film and the funding source, operating as Remark Pictures; will receive 6.65 percent of the profits. | |||||||||
Short-term Convertible Debt with Ratchet Provisions | |||||||||
(A) Short-term Convertible Debt | |||||||||
On March 1, 2012, May 9, 2012, July 9, 2012, September 14, 2012 and September 28, 2012 the Company borrowed $10,000, $32,500, $30,000, $22,500 and $10,000 (for a total of $105,000), from external parties for use as operating capital. See below for additional advances made by this party during the year ended November 30, 2014 and 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. A majority of these notes have been converted and, as of November 30, 2014, approximately $506 in principal and interest remain outstanding. | |||||||||
On March 18, 2013 the Company received a notice of default from one of the lenders holding a then total of $130,700 of short-term convertible debt. 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 then remaining outstanding principal balance together with default interest of 22% as provided for in the notes as of November 30, 2014. All principal and interest on these notes have been converted or forgiven by the lender as of November 30, 2014. | |||||||||
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. A portion of the notes has been converted and, as of November 30, 2014, approximately $42,193 in principal and interest remain outstanding. | |||||||||
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 50% 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |||||||||
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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |||||||||
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 July 14, 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |||||||||
On February 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $25,000. The note has a maturity date of February 24, 2015. The note is convertible into shares of our common stock at a conversion price of the lesser of $0.001 or fifty percent (50%) of the lowest trading day price during the twenty (20) trading days immediately preceding a conversion date at any time 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 20% 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. During the year ended | |||||||||
November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal and interest outstanding of $19,261 as of November 30, 2014. | |||||||||
On February 24, 2014, the holder of the $200,000 note agreed to sell up to $100,000 in principal of the convertible note to an unrelated third party, with $50,000 of principal to be acquired at that time, and an additional $50,000 in principal to be acquired on or before August 14, 2014. The Company agreed to restate that portion of the original note party in a new convertible note due February 25, 2015 with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at the lower of $0.01 or fifty percent of the lowest trading price of the stock for the previous 20 consecutive trading days. The same third party also invested an additional $25,000 in a new promissory note, on the same terms and both transactions closed in March 2014. Due to the change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as the payment of that portion of the old note and the issuance of a new note for the new principal amount. The second installment purchase of an additional $50,000 in principal of the original note was not exercised. During the year ended November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $46,703 as of November 30, 2014. | |||||||||
On March 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of March 31, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $32,079 in principal and interest remain outstanding. | |||||||||
On March 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $26,500. The note has a maturity date of March 24, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the fifteen (15) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $28,337 in principal and interest remain. | |||||||||
On March 24, 2014, a second unrelated party agreed with the original note holder of the $200,000 note to purchase up to $100,000 in note principal and $5,000 in accrued interest and also agreed to invest an additional $26,500 in the Company. Under the terms of the agreement, the third party agreed to purchase the $105,000 in principal and accrued interest in three installments, with $42,000 due at signing, $31,500 due 45 days thereafter, and a final $31,500 due 45 days after the second installment payment. The Company agreed to restate the portion of the original note acquired by the third party and to issue a new convertible note in the amounts of $42,000, due March 24, 2015, with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at fifty percent of the lowest closing bid price of the stock for the previous 15 consecutive trading days. Due to the substantial change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as an extinguishment of that portion of the old note and the issuance of a new note for the new principal amount. The actual closing and funding of the initial transaction occurred on May 4, 2014. The second and third installments were not made. The note was partially converted into shares of common stock leaving a remaining principal balance of 33,148 as of November 30, 2014. | |||||||||
On May 16, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $50,000. The note has a maturity date of August 16, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $52,726 in principal and interest remain outstanding. | |||||||||
On June 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of June 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $31,323 in principal and interest remain outstanding. | |||||||||
On August 11, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $103,500. The note has a maturity date of August 13, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest three (3) trading prices during the thirty (30) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $106,477 in principal and interest remain outstanding. | |||||||||
On September 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of September 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $30,748 in principal and interest remain outstanding. | |||||||||
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. | |||||||||
Former Related Party | |||||||||
At November 30, 2013, the Company had convertible notes totaling $453,061 due to a former affiliate and significant stockholder of the Company. The notes were convertible into common shares, based on $40 to $80 share price, most of which were at the higher price. The convertible notes bore interest at 6% per annum and were due May 31, 2015. As of November 30, 2013, the Company had accrued $109,304 of interest expense related to these notes. In May 2014, these notes were sold to an unrelated party and restated in a single note dated May 16, 2014 in the amount of $573,982, due May 16, 2015 with interest at 10 percent due at maturity, and convertible into common stock at 50 percent of the lowest closing bid price for the stock for any of the ten prior trading days. During the year ended November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $492,928 as of November 30, 2014. | |||||||||
(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. | |||||||||
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. | |||||||||
As of November 30, 2014 and 2013, the Company has outstanding principal amounts on convertible debt of $1,374,508 and $296,780, respectively. 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 $859,483 and $26,151 as of November 30, 2014 and 2013, respectively. For the year ended November 30, 2014, interest expense from accretion of the discount, including converted notes, was $641,449. | |||||||||
During the year ended November 30, 2014, lenders of convertible notes converted $356,061 of principal and interest thereon through the issuance of 1,663,535,877 shares. | |||||||||
Aggregate derivative liabilities associated with remaining convertible notes were $4,263,200 as of November 30, 2014 and $324,020 as of November 30, 2013. Based on this revaluation at year end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net gain in fair value of derivative liability of $189,909 and $66,982 during the years ended November 30, 2014 and 2013, respectively. | |||||||||
During the years ended November 30, 2014 and 2013, the range of inputs used to calculate derivative liabilities noted above were as follows: | |||||||||
30-Nov-14 | 30-Nov-13 | ||||||||
Annual dividend rate | 0 | % | 0 | % | |||||
Conversion price | $0.00009 - $0.0074 | $0.0089-$0.18 | |||||||
Expected life (years) | .01 – 1.1 years | .01 - 1 years | |||||||
Risk-free interest rate | .01% - .10 | % | .03% - .13 | % | |||||
Expected volatility | 431.3% - 537 | % | 331.50% - 479.40 | % | |||||
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 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 year ended November 30, 2014, interest expense from accretion of the discount was $14,890, leaving a remaining discount of $2,899. The discount being amortized approximates the effective interest method over the term of the note. As discussed above, $92,000 of this note was purchased by two unrelated third parties, leaving a remaining principal balance of $108,000 as of November 30, 2014 |
Note_2_Summary_of_Significant_1
Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require the Company's most significant, difficult and subjective judgments include the valuation and recognition of share-based compensation, evaluation of the Company’s stand-ready obligation and values of derivative instruments. We use the Black-Scholes valuation model for simplicity purposes. Various valuation techniques render varying amounts. We consistently use this model and use inputs that are appropriate. | |
We base our estimates and judgments on historical experience and on various other factors that are considered reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources. Actual results could differ materially from these estimates. | |
Note_2_Summary_of_Significant_2
Note 2 - Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company accounts for financial instruments under the guidance of ASC 820-10 – “Fair Value Measurements”. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: | |
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
Level 2 - Other inputs that are directly or indirectly observable in the marketplace. | |
Level 3 - Unobservable inputs which are supported by little or no market activity. | |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. | |
As of November 30, 2014 and 2013, the Company’s derivatives which include the embedded conversion feature on the convertible note payable were considered level 2 financial instruments. See Note 5 for valuation technique and assumptions used. | |
The Company's financial instruments consisted primarily of (level 1) accounts payable, accrued liabilities, and short-term debt. The carrying amounts of the Company's financial instruments generally approximate their fair values as of November 30, 2014 and 2013 due to the short term nature of these instruments. | |
The Company did not have any level 3 instruments at November 30, 2014 and 2013. |
Note_2_Summary_of_Significant_3
Note 2 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. | |
The Company may maintain cash and cash equivalent balances at financial institutions that are insured by the Federal Deposit Insurance Corporation. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk. The Company did not have any cash equivalents at November 30, 2014 and 2013. | |
Film Costs | |
The Company capitalizes film production costs in accordance with ASC 926 – “Entertainment”. Film costs include costs to develop and produce films, which primarily consist of consulting fees, equipment and overhead costs, as well as the cost to acquire rights to films. Film costs include amounts for films still in development. |
Note_2_Summary_of_Significant_4
Note 2 - Summary of Significant Accounting Policies: Derivative Financial Instruments (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Derivative Financial Instruments | Derivative Financial Instruments |
The provisions of ASC 815 - “Derivatives and Hedging” applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by ASC 815 and to any freestanding financial instruments that are potentially settled in an entity's own common stock. The guidance impacts the Company's financial statements and position due to certain warrants and embedded conversion features in which the exercise or conversion price resets upon certain events. See Note 5 for the impact of such transactions on the financial statements. | |
Our issued and outstanding common stock purchase warrants and embedded conversion features are recorded at their fair value upon issuance and at each reporting period. The common stock purchase warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The warrants do not qualify for hedge accounting, and as such, all future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model. The value of the embedded conversion feature also determined using the Black-Scholes option pricing model. All future changes in the fair value of the embedded conversion feature will be recognized currently in earnings until the note is converted or redeemed. |
Note_2_Summary_of_Significant_5
Note 2 - Summary of Significant Accounting Policies: Loss Per Share (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Loss 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 November 30, 2014, the Company’s dilutive securities outstanding consisted of (1) the CEO’s options to purchase shares of common stock (see Note 8), 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) 7,751,709,330 shares relative to convertible notes (post conversion); and (3) 1,170,034,580 shares related to warrants issued with the two convertible notes. At November 30, 2013, the Company’s dilutive securities outstanding consisted of (i) the CEO’s options to purchase shares of common stock (See Note 8) 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) 131,643 shares relative to convertible notes (post conversion) and (4) 944 shares related to warrants issued with the $37,500 convertible note. The preceding common equivalent was excluded from the diluted net loss per share as the effects would have been anti-dilutive. | |
Note_2_Summary_of_Significant_6
Note 2 - Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets |
The Company has adopted ASC 360-10, - "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment, annually, or more often, if events and circumstances warrant such. At November 30, 2014 management considered that there were no such impairments. |
Note_2_Summary_of_Significant_7
Note 2 - Summary of Significant Accounting Policies: Accounting For Non-employee Stock-based Compensation (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Accounting For Non-employee Stock-based Compensation | Accounting for Non-Employee Stock-Based Compensation |
The Company measures compensation expense for its non-employee stock-based compensation under ASC 505 - “Equity”. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to stock-based compensation expense and credited to additional paid-in capital. | |
Income Taxes | |
The Company makes certain estimates and judgments in determining its income tax provision expense. These estimates and judgments are used in the determination of tax credits, benefits and deductions, and the calculation of certain tax assets and liabilities which are a result of differences in the timing of the recognition of revenue and expense for tax and financial statement purposes. The Company also uses estimates and judgments in determining interest and penalties on uncertain tax positions. Significant changes to these estimates could result in a material change to the Company's tax provision in subsequent periods. | |
The Company is required to evaluate the likelihood that it will be able to recover its deferred tax assets. If the Company's evaluation determines that the recovery is unlikely, it would be required to increase the provision for taxes by recording a valuation allowance against the deferred tax assets equal to the amount that is not expected to be recoverable. The Company currently estimates that its deferred tax assets will not be recoverable. If these estimates were to change and the Company's assessment indicated it would be able to recover the deferred tax assets, the Company would be required to change its estimate in the period in which the change occurred. | |
The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of tax regulations. The Company adopted the provisions of ASC 740 “Income Taxes”. ASC 740 contains a two-step approach to recognizing and measuring uncertain tax position liabilities. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. This process is based on various factors including, but not limited to, changes in facts and circumstances, changes in tax law, settlement of issues under audit, and new audit activity. Changes to these factors and the Company's estimates regarding these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. |
Note_2_Summary_of_Significant_8
Note 2 - Summary of Significant Accounting Policies: Risks and Uncertainties (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Risks and Uncertainties | Risks and Uncertainties |
The Company has a limited operating history and has generated only limited revenues from our planned principal operations. | |
The Company's business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse developments in these general business and economic conditions, including recession, downturn or otherwise, and could have a material adverse effect on the Company's financial condition and the results of its operations. | |
The Company currently has limited capabilities in sales, marketing, and distribution due to lack of working and human capital. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations as well as extensive human capital. Our company may be unable to compete successfully against these companies. | |
The Company's industry is characterized by rapid changes in technology and customer demands. As a result, the Company's services and/or expertise may become obsolete and/or unmarketable. The Company's future success will depend on its ability to adapt to technological advances, anticipate customer demands, and enhance our current services. Further, the Company's services must remain competitive with those of other companies with substantially greater resources. |
Note_2_Summary_of_Significant_9
Note 2 - Summary of Significant Accounting Policies: Changes in Presentation (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Changes in Presentation | Changes in Presentation |
During the Company’s second and third fiscal quarter during the year ended November 30, 2014, the Company disclosed gain on extinguishment of convertible note of $665,983. Such amount was the amount of promissory notes that were modified and required extinguishment accounting. Such amounts should have, and are now included in excess fair value of derivative liabilities in the statement of operations. There is no effect on net loss during any of the periods presented during the interim periods within the 2014 fiscal year, nor does it change the earnings per share in any period presented during the 2014 fiscal year. |
Recovered_Sheet1
Note 2 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. generally accepted accounting principles. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage that in prior years it had been in the development stage. These amendments are effective for annual reporting periods beginning after December 15, 2014, however the Company chose to adopt these pronouncements early during the quarter ended May 31, 2014. | |
The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
Shortterm_Convertible_Debt_Wit
Short-term Convertible Debt With Ratchet Provisions (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Short-term Convertible Debt With Ratchet Provisions | Short-term Convertible Debt with Ratchet Provisions |
(A) Short-term Convertible Debt | |
On March 1, 2012, May 9, 2012, July 9, 2012, September 14, 2012 and September 28, 2012 the Company borrowed $10,000, $32,500, $30,000, $22,500 and $10,000 (for a total of $105,000), from external parties for use as operating capital. See below for additional advances made by this party during the year ended November 30, 2014 and 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. A majority of these notes have been converted and, as of November 30, 2014, approximately $506 in principal and interest remain outstanding. | |
On March 18, 2013 the Company received a notice of default from one of the lenders holding a then total of $130,700 of short-term convertible debt. 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 then remaining outstanding principal balance together with default interest of 22% as provided for in the notes as of November 30, 2014. All principal and interest on these notes have been converted or forgiven by the lender as of November 30, 2014. | |
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. A portion of the notes has been converted and, as of November 30, 2014, approximately $42,193 in principal and interest remain outstanding. | |
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 50% 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
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 July 14, 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
On February 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $25,000. The note has a maturity date of February 24, 2015. The note is convertible into shares of our common stock at a conversion price of the lesser of $0.001 or fifty percent (50%) of the lowest trading day price during the twenty (20) trading days immediately preceding a conversion date at any time 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 20% 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. During the year ended | |
November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal and interest outstanding of $19,261 as of November 30, 2014. | |
On February 24, 2014, the holder of the $200,000 note agreed to sell up to $100,000 in principal of the convertible note to an unrelated third party, with $50,000 of principal to be acquired at that time, and an additional $50,000 in principal to be acquired on or before August 14, 2014. The Company agreed to restate that portion of the original note party in a new convertible note due February 25, 2015 with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at the lower of $0.01 or fifty percent of the lowest trading price of the stock for the previous 20 consecutive trading days. The same third party also invested an additional $25,000 in a new promissory note, on the same terms and both transactions closed in March 2014. Due to the change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as the payment of that portion of the old note and the issuance of a new note for the new principal amount. The second installment purchase of an additional $50,000 in principal of the original note was not exercised. During the year ended November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $46,703 as of November 30, 2014. | |
On March 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of March 31, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $32,079 in principal and interest remain outstanding. | |
On March 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $26,500. The note has a maturity date of March 24, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the fifteen (15) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $28,337 in principal and interest remain. | |
On March 24, 2014, a second unrelated party agreed with the original note holder of the $200,000 note to purchase up to $100,000 in note principal and $5,000 in accrued interest and also agreed to invest an additional $26,500 in the Company. Under the terms of the agreement, the third party agreed to purchase the $105,000 in principal and accrued interest in three installments, with $42,000 due at signing, $31,500 due 45 days thereafter, and a final $31,500 due 45 days after the second installment payment. The Company agreed to restate the portion of the original note acquired by the third party and to issue a new convertible note in the amounts of $42,000, due March 24, 2015, with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at fifty percent of the lowest closing bid price of the stock for the previous 15 consecutive trading days. Due to the substantial change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as an extinguishment of that portion of the old note and the issuance of a new note for the new principal amount. The actual closing and funding of the initial transaction occurred on May 4, 2014. The second and third installments were not made. The note was partially converted into shares of common stock leaving a remaining principal balance of 33,148 as of November 30, 2014. | |
On May 16, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $50,000. The note has a maturity date of August 16, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $52,726 in principal and interest remain outstanding. | |
On June 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of June 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $31,323 in principal and interest remain outstanding. | |
On August 11, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $103,500. The note has a maturity date of August 13, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest three (3) trading prices during the thirty (30) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $106,477 in principal and interest remain outstanding. | |
On September 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of September 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $30,748 in principal and interest remain outstanding. | |
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. |
b_Determination_of_Derivative_
(b) Determination of Derivative Liability (Policies) | 12 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
Policies | |||||||||
(b) Determination of Derivative Liability | (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. | |||||||||
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. | |||||||||
As of November 30, 2014 and 2013, the Company has outstanding principal amounts on convertible debt of $1,374,508 and $296,780, respectively. 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 $859,483 and $26,151 as of November 30, 2014 and 2013, respectively. For the year ended November 30, 2014, interest expense from accretion of the discount, including converted notes, was $641,449. | |||||||||
During the year ended November 30, 2014, lenders of convertible notes converted $356,061 of principal and interest thereon through the issuance of 1,663,535,877 shares. | |||||||||
Aggregate derivative liabilities associated with remaining convertible notes were $4,263,200 as of November 30, 2014 and $324,020 as of November 30, 2013. Based on this revaluation at year end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net gain in fair value of derivative liability of $189,909 and $66,982 during the years ended November 30, 2014 and 2013, respectively. | |||||||||
During the years ended November 30, 2014 and 2013, the range of inputs used to calculate derivative liabilities noted above were as follows: | |||||||||
30-Nov-14 | 30-Nov-13 | ||||||||
Annual dividend rate | 0 | % | 0 | % | |||||
Conversion price | $0.00009 - $0.0074 | $0.0089-$0.18 | |||||||
Expected life (years) | .01 – 1.1 years | .01 - 1 years | |||||||
Risk-free interest rate | .01% - .10 | % | .03% - .13 | % | |||||
Expected volatility | 431.3% - 537 | % | 331.50% - 479.40 | % | |||||
Note_6_Commitments_and_Conting1
Note 6 - Commitments and Contingencies: Leases of Lessee Disclosure (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Leases of Lessee Disclosure | |
Office Leases | |
Office lease expense for the years ended November 30, 2014 and 2013 was $5,128 and $2,927, respectively. |
Note_5_Debt_Shortterm_Converti
Note 5 - Debt: Short-term Convertible Debt With Ratchet Provisions (Policies) | 12 Months Ended |
Nov. 30, 2014 | |
Policies | |
Short-term Convertible Debt With Ratchet Provisions | Short-term Convertible Debt with Ratchet Provisions |
(A) Short-term Convertible Debt | |
On March 1, 2012, May 9, 2012, July 9, 2012, September 14, 2012 and September 28, 2012 the Company borrowed $10,000, $32,500, $30,000, $22,500 and $10,000 (for a total of $105,000), from external parties for use as operating capital. See below for additional advances made by this party during the year ended November 30, 2014 and 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. A majority of these notes have been converted and, as of November 30, 2014, approximately $506 in principal and interest remain outstanding. | |
On March 18, 2013 the Company received a notice of default from one of the lenders holding a then total of $130,700 of short-term convertible debt. 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 then remaining outstanding principal balance together with default interest of 22% as provided for in the notes as of November 30, 2014. All principal and interest on these notes have been converted or forgiven by the lender as of November 30, 2014. | |
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. A portion of the notes has been converted and, as of November 30, 2014, approximately $42,193 in principal and interest remain outstanding. | |
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 50% 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
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 July 14, 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. As of November 30, 2014, this note was fully converted through the issuance of common stock. | |
On February 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $25,000. The note has a maturity date of February 24, 2015. The note is convertible into shares of our common stock at a conversion price of the lesser of $0.001 or fifty percent (50%) of the lowest trading day price during the twenty (20) trading days immediately preceding a conversion date at any time 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 20% 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. During the year ended | |
November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal and interest outstanding of $19,261 as of November 30, 2014. | |
On February 24, 2014, the holder of the $200,000 note agreed to sell up to $100,000 in principal of the convertible note to an unrelated third party, with $50,000 of principal to be acquired at that time, and an additional $50,000 in principal to be acquired on or before August 14, 2014. The Company agreed to restate that portion of the original note party in a new convertible note due February 25, 2015 with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at the lower of $0.01 or fifty percent of the lowest trading price of the stock for the previous 20 consecutive trading days. The same third party also invested an additional $25,000 in a new promissory note, on the same terms and both transactions closed in March 2014. Due to the change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as the payment of that portion of the old note and the issuance of a new note for the new principal amount. The second installment purchase of an additional $50,000 in principal of the original note was not exercised. During the year ended November 30, 2014, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $46,703 as of November 30, 2014. | |
On March 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of March 31, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $32,079 in principal and interest remain outstanding. | |
On March 24, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $26,500. The note has a maturity date of March 24, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the fifteen (15) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $28,337 in principal and interest remain. | |
On March 24, 2014, a second unrelated party agreed with the original note holder of the $200,000 note to purchase up to $100,000 in note principal and $5,000 in accrued interest and also agreed to invest an additional $26,500 in the Company. Under the terms of the agreement, the third party agreed to purchase the $105,000 in principal and accrued interest in three installments, with $42,000 due at signing, $31,500 due 45 days thereafter, and a final $31,500 due 45 days after the second installment payment. The Company agreed to restate the portion of the original note acquired by the third party and to issue a new convertible note in the amounts of $42,000, due March 24, 2015, with interest due at maturity at 10 percent, and convertible at the election of the holder into common stock at fifty percent of the lowest closing bid price of the stock for the previous 15 consecutive trading days. Due to the substantial change in the terms of the replacement note, for accounting purposes only, the partial purchase of the note has been treated as an extinguishment of that portion of the old note and the issuance of a new note for the new principal amount. The actual closing and funding of the initial transaction occurred on May 4, 2014. The second and third installments were not made. The note was partially converted into shares of common stock leaving a remaining principal balance of 33,148 as of November 30, 2014. | |
On May 16, 2014, the Company issued a 10% convertible promissory note in the aggregate principal amount of $50,000. The note has a maturity date of August 16, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest closing bid during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $52,726 in principal and interest remain outstanding. | |
On June 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of June 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $31,323 in principal and interest remain outstanding. | |
On August 11, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $103,500. The note has a maturity date of August 13, 2015. The note is convertible into shares of our common stock at a conversion price of fifty percent (50%) of the average of the lowest three (3) trading prices during the thirty (30) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. If a default is called by the lender 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. As of November 30, 2014, approximately $106,477 in principal and interest remain outstanding. | |
On September 1, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $30,000 to pay payables that were owed. The note has a maturity date of September 30, 2015. The note is convertible into shares of our common stock at a conversion price of sixty percent (60%) of the average of the lowest closing price per share during the ten (10) trading days immediately preceding a conversion date at any time from the issuance date until the maturity date. As of November 30, 2014, approximately $30,748 in principal and interest remain outstanding. | |
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. |
Note_5_Debt_b_Determination_of
Note 5 - Debt: (b) Determination of Derivative Liability (Policies) | 12 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
Policies | |||||||||
(b) Determination of Derivative Liability | (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. | |||||||||
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. | |||||||||
As of November 30, 2014 and 2013, the Company has outstanding principal amounts on convertible debt of $1,374,508 and $296,780, respectively. 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 $859,483 and $26,151 as of November 30, 2014 and 2013, respectively. For the year ended November 30, 2014, interest expense from accretion of the discount, including converted notes, was $641,449. | |||||||||
During the year ended November 30, 2014, lenders of convertible notes converted $356,061 of principal and interest thereon through the issuance of 1,663,535,877 shares. | |||||||||
Aggregate derivative liabilities associated with remaining convertible notes were $4,263,200 as of November 30, 2014 and $324,020 as of November 30, 2013. Based on this revaluation at year end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net gain in fair value of derivative liability of $189,909 and $66,982 during the years ended November 30, 2014 and 2013, respectively. | |||||||||
During the years ended November 30, 2014 and 2013, the range of inputs used to calculate derivative liabilities noted above were as follows: | |||||||||
30-Nov-14 | 30-Nov-13 | ||||||||
Annual dividend rate | 0 | % | 0 | % | |||||
Conversion price | $0.00009 - $0.0074 | $0.0089-$0.18 | |||||||
Expected life (years) | .01 – 1.1 years | .01 - 1 years | |||||||
Risk-free interest rate | .01% - .10 | % | .03% - .13 | % | |||||
Expected volatility | 431.3% - 537 | % | 331.50% - 479.40 | % | |||||