Document and Entity Information
Document and Entity Information - Feb. 28, 2015 - shares | Total |
Document and Entity Information: | |
Entity Registrant Name | Mass Hysteria Entertainment Company, Inc. |
Document Type | 10-Q |
Document Period End Date | Feb. 28, 2015 |
Amendment Flag | false |
Entity Central Index Key | 1,388,488 |
Current Fiscal Year End Date | --11-30 |
Entity Common Stock, Shares Outstanding | 3,762,589,289 |
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 | 2,015 |
Document Fiscal Period Focus | Q1 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Feb. 28, 2015 | Nov. 30, 2014 | |
Current Assets | |||
Cash | $ 29,122 | $ 16,480 | |
Total Current Assets | 29,122 | 16,480 | |
Film costs | 505,150 | 505,150 | |
Deposits | 1,200 | 1,200 | |
Prepaid expenses | 5,000 | 5,000 | |
Total Noncurrent Assets | 511,350 | 511,350 | |
Total Assets | 540,472 | 527,830 | |
Current Liabilities | |||
Accounts payable | 217,970 | 217,970 | |
Accrued liabilities | 472,262 | [1] | 427,562 |
Accrued payroll | 676,063 | 639,529 | |
Short-term debt | 297,449 | 249,523 | |
Short-term convertible debt | 906,033 | 515,025 | |
Derivative liability | 4,752,082 | 4,263,200 | |
Deferred revenue | 1,000 | 1,000 | |
Stand ready obligation | 250,000 | 250,000 | |
Total Current Liabilities | 7,572,859 | 6,563,808 | |
Non-current Liabilities | |||
Convertible long-term debt | 108,000 | [2] | 105,913 |
Total Liabilities | 7,680,859 | 6,669,721 | |
Stockholder's Deficit | |||
Common Stock | 37,626 | [3] | 18,799 |
Preferred Stock | 0 | [4] | 0 |
Additional paid in capital | 9,693,513 | 9,355,188 | |
Accumulated deficit | (16,871,526) | (15,515,879) | |
Total Stockholders' Deficit | (7,140,387) | (6,141,891) | |
Total Liabilities and Stockholders' Deficit | $ 540,472 | $ 527,830 | |
[1] | Net of debt discount of $446,134 and $859,483 | ||
[2] | Net of debt discount of $0 and $2,087 | ||
[3] | $0.00001 par value; 10,000,000,000 shares authorized, 3,762,589,289 and, 1,879,895,992 shares issued and outstanding | ||
[4] | $0.00001 par value; 10,000 shares authorized; 10 issued and outstanding |
CONDENSED BALANCE SHEETS (PAREN
CONDENSED BALANCE SHEETS (PARENTHETICAL) - $ / shares | Feb. 28, 2015 | Nov. 30, 2014 |
Stockholders' Equity: | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common shares authorized | 10,000,000,000 | 10,000,000,000 |
Common shares issued | 3,762,589,289 | 1,879,895,992 |
Common shares outstanding | 3,762,589,289 | 1,879,895,992 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred shares authorized | 10,000,000 | 10,000,000 |
Preferred shares issued | 10,000 | 10,000 |
Preferred shares outstanding | 10,000 | 10,000 |
CONDENSED STATEMENT OF OPERATIO
CONDENSED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Income (Loss) from Continuing Operations before Taxes | ||
Revenues | $ 0 | $ 0 |
Operating expenses: | ||
General and administrative | 157,391 | 253,087 |
Total Expenses | 157,391 | 253,087 |
Loss from operations | (157,391) | (253,087) |
Other income (expense) | ||
Interest expense | (442,744) | (34,928) |
Excess fair value of derivative | (81,555) | 0 |
Gain on fair value of derivative liability | (673,957) | (821,796) |
Income (loss) before income taxes | (1,355,647) | (1,109,811) |
Income taxes, net | 0 | 0 |
Net income (loss) | $ (1,355,647) | $ (1,109,811) |
Earnings Per Share: | ||
Net loss per common share (basic and diluted) | $ 0 | $ (0.05) |
Weighted average number of common shares outstanding | ||
Weighted average number of shares outstanding during the period - basic and diluted | 2,106,232,569 | 22,128,087 |
CONDENSED STATEMENT OF CASH FLO
CONDENSED STATEMENT OF CASH FLOWS | 3 Months Ended | |
Feb. 28, 2015USD ($) | Feb. 28, 2014USD ($) | |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | ||
Net Income (loss) | $ (1,355,647) | $ (1,109,811) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operations: | ||
Share-based compensation | 0 | 116,000 |
Change in fair market value of derivative liability | 673,957 | 821,796 |
Loss on excess fair value of derivative liability | $ 81,555 | $ 0 |
Amortization of discount on convertible debt | 402,751 | 14,257 |
Accounts payable | $ 30,000 | $ 35,000 |
Accrued liabilities | 51,992 | 32,670 |
Accrued payroll | 36,534 | 90,000 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (78,858) | (88) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES: | ||
Proceeds from short term debt | 45,000 | 0 |
Proceeds from issuance of convertible debt | 46,500 | 2,860 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 91,500 | 2,860 |
Increase (Decrease) in cash and cash equivalents | 12,642 | 2,772 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 16,480 | 9 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 29,122 | 2,781 |
Supplemental disclosures of cash flow information: | ||
Interest | 0 | 0 |
Income taxes, net | 0 | 0 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Other material noncash items | $ 133,208 | $ 21,458 |
Note 1 - Organization and Busin
Note 1 - Organization and Business | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 1 - Organization and Business | NOTE 1 ORGANIZATION AND BUSINESS The Company was incorporated as Michael Lambert, Inc. (MLI) in Nevada on November 2, 2005. MLI was in the business of manufacturing handbags, but ceased operations in June 2009. To better reflect the Companys new business plan, on June 25, 2009, MLI changed its name to Mass Hysteria Entertainment Company, Inc. (Mass Hysteria or the Company). The Company is an innovative motion picture production company that produces branded young adult film content for theatrical, DVD, and television distribution. On August 5, 2009, Daniel Grodnik was appointed as the Company's President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board and Secretary. Mr. Grodnik has worked in the movie industry for more than thirty years. He has served as the Chairman and CEO of the National Lampoon, a publicly-traded entertainment company. On August 5, 2009, pursuant to the terms of a stock purchase agreement, an affiliate of Mr. Grodnik purchased a total of 7,985 shares of issued and outstanding common stock of The Company from Belmont Partners. At this time, Belmont Partners designee was the sole officer and director of the Company. In addition to the shares sold by Belmont Partners, the Company also issued 42,015 shares to Mr. Grodnik and certain affiliated parties in connection with the change of control (the Control Group). The total of 50,000 shares were issued to, or purchased by, Daniel Grodnik and the affiliated parties represents 74.6% of the shares of outstanding common stock of the Company at the time of transfer. For financial accounting purposes, this change in control by the Company was treated as a recapitalization with the assets contributed and liabilities assumed recorded at their historical basis. There were no significant assets acquired by the Company shareholders upon the change in control, which would have been recorded at fair value. The Company is entering a time of great change in the entertainment business. The motion picture business has had four significant revenue streams (theatrical, home video, cable and broadcast) since the early 1980's. Today, home video is in decline and new profit centers are opening up such as video-on-demand and internet portals that rely on micro-transactions. Mass Hysteria plans to create movies that will take advantage of traditional revenue streams that are still viable, and at the same time, avail itself of those revenue streams that will define new media's involvement in the film business. The Company has developed a mobile application that allows the user to interact with the film in live time. This could be a revenue source for the Company depending on our ability to raise capital and generate interest in the experience. There are technology and competitive risks associated with interactive mobile devices and theatrical films. |
Note 2 - Summary of Significant
Note 2 - Summary of Significant Accounting Policies | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 2 - Summary of Significant Accounting Policies | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of the Company are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year 2014 as reported in the Company's Form 10-K have been omitted. The results of operations for the three months ended February 28, 2015 and 2014 are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly the Company's financial position, results of operations and cash flows. These statements should be read in conjunction with the financial statements and related notes which are part of the Company's Annual Report on Form 10-K for the year ended November 30, 2014. 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 Companys 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 February 28, 2015 and November 30, 2014, the Companys 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 February 28, 2015 and November 30, 2014 due to the short term nature of these instruments. The Company did not have any level 3 instruments at February 28, 2015 and November 30, 2014. Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured. We had $0 in revenue for the three months ended February 28, 2015 and for the three months ended February 28, 2014 relating to continuing operations. Deferred Revenue Deferred revenue is recognized when a fee is collected but services have not been completed by the Company. We had $1,000 in deferred revenue for the three months ended February 28, 2015 and for the three months ended February 28, 2014 related to advanced fees collected. 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 February 28, 2015 and November 30, 2014. 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. 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 fixed and 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. 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. 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. Loss per Share Loss per share is computed on the basis of the weighted average number of common shares outstanding. Diluted loss per share is computed on the basis of the weighted average number of common shares outstanding. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive. At February 28, 2015, the Companys dilutive securities outstanding consisted of (1) the CEOs options to purchase shares of common stock, for which the exercise price is above the average closing price of the Companys 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 February 28, 2014, the Companys dilutive securities outstanding consisted of (i) the CEOs options to purchase shares of common stock (See Note 8) for which the exercise price is above the average closing price of the Companys 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. 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 be recoverable. If these estimates were to change and the Company's assessment indicated it would be unable to recover the deferred tax assets, the Company would be required to increase its income tax provision expense in the period of the change in estimate. 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. Recent Accounting Pronouncements In May 2014, ASU No. 2014-09, Revenue from Contracts with Customers was issued. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance will also require that certain contract costs incurred to obtain or fulfill a contract, such as sales commissions, be capitalized as an asset and amortized as revenue is recognized. Adoption of the new rules could affect the timing of both revenue recognition and the incurrence of contract costs for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The Company is currently evaluating the impact of adoption and the implementation approach to be used. 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. In June 2014, ASU 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU No. 2014-15) was issued. Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Companys consolidated financial statements. We have evaluated the other recent accounting pronouncements through ASU 2015-08 and believe that none of them will have a material effect on our financial statements. |
Note 3 - Going Concern
Note 3 - Going Concern | 3 Months Ended |
Feb. 28, 2015 | |
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, and has historically had limited revenues from intended operations, suffered significant losses and used cash in operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. We are seeking debt or equity capital to meet our obligations and business needs. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments that might result from these uncertainties. At February 28, 2015, the Company had an accumulated deficit of $16,871,526. |
Note 4- Investment in Movie
Note 4- Investment in Movie | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 4- Investment in Movie | NOTE 4- INVESTMENT IN MOVIE 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 proceeds from the promissory note (see Note 6) were 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, our financiers are to receive their money back plus 20% interest 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% of the profits. |
Note 5 - Accrued Liabilities
Note 5 - Accrued Liabilities | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 5 - Accrued Liabilities | NOTE 5 ACCRUED LIABILITIES Accrued liabilities by major classification are as follows: February 28, 2015 November 30, 2014 Accrued interest $ 158,096 $ 125,395 Accrued consulting fees 91,000 91,000 Accrued payroll taxes on CEOs compensation 179,461 170,461 Accrued auto allowances due CEO 43,705 40,706 Total accrued liabilities $ 472,262 $ 427,562 Accrued interest represents interest on a long-term loan from a related party, and the interest on a short term notes payable to external parties. Accrued consulting fees are for scriptwriters and a film consultant. Based on the CEOs employment agreement, the Company accrues $30,000 per month for gross wages, while the CEO receives payments at various times only as cash becomes available. During the quarter ended February 28, 2015, the Company paid $53,650 in cash to the CEO, charging the payment to accrued salary. The CEOs compensation is required to be reported on Internal Revenue Service (IRS) Form W-2; however, the Company has made no such reporting and has not withheld any amounts from cash payments made. Payroll taxes are accrued for the CEOs salary to properly reflect the amount of expense related to his compensation, which includes the contemplation of penalties and interest. In the event the IRS audits the Company, it will likely be liable for certain taxes, penalties and interest. The Company entered into an employment agreement as of February 3, 2012 with its former Chief Financial Officer, which provided for a base salary of $90,000 per year, payable monthly, on a month-to-month basis. The Company will pay these wages only as cash becomes available. The agreement was terminated on August 31, 2013 and no wages have been paid to date. On August 8, 2014, the CEO converted $371,429 in accrued salaries into 185,714,250 shares at a price of $0.002 per share. Accrued payroll is as follows: February 28, 2015 November 30, 2014 Accrued and unpaid compensation due CEO $ 557,938 $ 521,404 Accrued and unpaid compensation due CFO 118,125 118,125 Total accrued payroll $ 676,063 $ 639,529 |
Note 6 - Debt
Note 6 - Debt | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 6 - Debt | NOTE 6 DEBT Short-Term Debt (A) Related Parties On August 31, 2012, the Companys former Chief Financial Officer made an interest free demand advance of $30,000 to provide working capital, which remains outstanding at February 28, 2015. 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 three months ended February 28, 2015, the Company incurred and accrued $3,370 in interest expense, respectively, related to this short-term debt. As of February 28, 2015, the Company has accrued a total of $56,970 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 $300,000 in equity financing towards the production of the motion picture currently entitled End of the Gun (the "Picture"). The initial $100,000 under this agreement was paid on June 12, 2012. While it was the Companys intent to commence filming of the Picture by September 1, 2012, certain casting delays postponed the commencement date. On January 25, 2013 the Company received a written notice of termination of agreement from CRCP. The termination was detrimental to the funding process. Accordingly, the Company has included the $100,000 advance within short-term debt and has accrued interest payable of $32,449 through February 28, 2015. Subsequently, the Company hired a new director, made new distribution deals for North America and international and hired Steven Seagal to star. The picture is currently in pre- production at the Castel Studios in Romania and has a start date of late August 2015. The Company is proceeding to arbitration regarding any amounts due and the arbitration proceeding originally scheduled for August 2014, has been rescheduled for late summer 2105. Through February 28, 2015, 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 lenders 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 lenders election into shares of the Companys 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 February 28, 2015, the remaining principal balance and interest is $521,935. 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, our financiers are to receive their money back plus 20% interest 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% 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, respectively (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, 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 portion of the notes has been converted and, as of February 28, 2015, approximately $569 in principal and interest remain outstanding. 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 Companys 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 February 28, 2015, approximately $42,934 in principal and interest remain outstanding. 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. On February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal and interest outstanding of $19,775 as of February 28, 2015. 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 three months ended February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $35,476 as of February 28, 2015. 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 February 28, 2015, approximately $32,691 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. The remaining principal and interest balance on this note is $29,012 as of February 28, 2015. 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 $15,177 as of February 28, 2015. 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. The remaining principal and interest balance on this note is $53,959 as of February 28, 2015. 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. The remaining principal and interest balance on this note is $31,928 as of February 28, 2015. 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. The remaining principal balance on this note is $81,014 as of February 28, 2015. 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 February 28, 2015, approximately $31,340 in principal and interest remain outstanding. On December 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 December 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 February 28, 2015, approximately $30,598 in principal and interest remain outstanding. On January 19, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $31,500. The note has a maturity date of January 9, 2016. 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. The remaining principal and interest balance on this note is $32,026 as of February 28, 2015. On February 26, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $15,000. The note has a maturity date of February 26, 2016. 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. The remaining principal and interest balance on this note is $15,123 as of February 28, 2015. 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 three months ended February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $462,243 as of February 28, 2015. (B) Determination of Derivative Liability The Company calculated the derivative liabilities using the Black-Scholes pricing model for each note upon inception and recorded the fair market value of the derivative liability as a discount to the note. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations. The derivative liabilities associated with these convertible notes were revalued during the period as principal was converted, using the Black-Scholes Model with the below range of inputs. Upon conversion of all or a portion of the convertible notes, the derivative liability associated with the principal converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal converted is recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operation, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital. As of February 28, 2015 and November 30, 2014, the Company has outstanding principal amounts on short term convertible debt, excluding unamortized discount, of $1,352,167 and $1,374,508, 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 $446,134 and $859,483 as of February 28, 2015 and November 30, 2014, respectively. For the three months ending February 28, 2015 and 2014, interest expense from accretion of the discount, including converted notes, was $402,751 and $641,449, respectively. Aggregate derivative liabilities associated with remaining convertible notes were $4,752,082 as of February 28, 2015 and $4,263,200 as of November 30, 2014. Based on this revaluation at quarter end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net loss in fair value of derivative liability of $673,957 during the three months ended February 28, 2015 and a net loss in fair value of derivative liability of $821,796 for the three months ended February 28, 2014. February 28, 2015 November 30, 2014 Annual dividend rate 0.0 % 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 431.20% - 536.5 .01% - .10 % Expected volatility 0.0 431.3% - 537 % 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 agreements expiration date of December 28, 2014. Beginning September 27, 2011, the note is convertible into shares of our common stock at a fixed conversion price of $16.00 per share. As a result, the Company will be liable to issue up to 12,500 shares common stock upon conversion. Based on a $22 closing price on the day of note agreement, we recorded a discount of $75,000 as a result of the beneficial conversion feature (BCF). As such, the Company discounted the note by the value of the BCF upon inception of the note. During the three months ended February 28, 2015, interest expense from accretion of the discount was $2,068, leaving a remaining discount of $0. The discount being amortized approximates the effective interest method over the term of the note. |
Note 7 - Commitments and Contin
Note 7 - Commitments and Contingencies | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 7 - Commitments and Contingencies | NOTE 7 - COMMITMENTS AND CONTINGENCIES Stand-Ready Obligation Stand-Ready Obligation During the production of the film 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 is 30 months after first release of the film Carjacked Carjacked |
Note 8 - Stockholders' Deficit
Note 8 - Stockholders' Deficit | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 8 - Stockholders' Deficit | NOTE 8 - STOCKHOLDERS DEFICIT During the three months ended February 28, 2015, approximately $103,210 of convertible debt and related accrued interest thereon was converted into 1,882,693,300 shares common of stock. In connection with those conversions, approximately $253,943 was recorded to additional paid-in capital for extinguishment of derivative liabilities related to these conversions. See Note 5 relating to outstanding debt and derivative liabilities. |
Note 9 - Income Taxes
Note 9 - Income Taxes | 3 Months Ended |
Feb. 28, 2015 | |
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 2011 through 2014 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 2010 through 2014 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 2013 and 2014. The difference between the federal rate of approximately 34% and the actual rate is due to nondeductible stock and accrued compensation, changes in derivative liabilities. |
Note 10 - Subsequent Events
Note 10 - Subsequent Events | 3 Months Ended |
Feb. 28, 2015 | |
Notes | |
Note 10 - Subsequent Events | NOTE 10 - SUBSEQUENT EVENTS Location filming on End Of The Gun starring Steven Seagal, begins August 24, 2015 at the Castel Studios in Bucharest, Romania. The Company has signed an Executive Producer agreement on 55 Steps, to be directed by Bille August who has won the Cannes Film Festival's prestige's Palme d' Or Award twice. The Company has signed a producer agreement on Tiger, to be directed by Alister Grierson who directed Sanctum that grossed $108,000,000 dollars at the box office. The Company is in negotiations with Mickey Rourke to star. The Company has picked up an option on The Timothy Hill Ranch, to be directed by Cole Claassen. The Company converted $237,218 of principal and interest into 4,743,097,272 common shares. As a result of the post-February 28, 2015 issuances, there were 8,505,686,562 common shares issued and outstanding at August 12, 2015. |
Note 2 - Summary of Significa16
Note 2 - Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Basis of Presentation | Basis of Presentation The financial statements of the Company are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year 2014 as reported in the Company's Form 10-K have been omitted. The results of operations for the three months ended February 28, 2015 and 2014 are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly the Company's financial position, results of operations and cash flows. These statements should be read in conjunction with the financial statements and related notes which are part of the Company's Annual Report on Form 10-K for the year ended November 30, 2014. |
Note 2 - Summary of Significa17
Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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 Companys 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 Significa18
Note 2 - Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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 February 28, 2015 and November 30, 2014, the Companys 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 February 28, 2015 and November 30, 2014 due to the short term nature of these instruments. The Company did not have any level 3 instruments at February 28, 2015 and November 30, 2014. |
Note 2 - Summary of Significa19
Note 2 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Revenue Recognition | Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured. We had $0 in revenue for the three months ended February 28, 2015 and for the three months ended February 28, 2014 relating to continuing operations. |
Note 2 - Summary of Significa20
Note 2 - Summary of Significant Accounting Policies: Deferred Revenue (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Deferred Revenue | Deferred Revenue Deferred revenue is recognized when a fee is collected but services have not been completed by the Company. We had $1,000 in deferred revenue for the three months ended February 28, 2015 and for the three months ended February 28, 2014 related to advanced fees collected. |
Note 2 - Summary of Significa21
Note 2 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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 February 28, 2015 and November 30, 2014. |
Note 2 - Summary of Significa22
Note 2 - Summary of Significant Accounting Policies: Derivative Financial Instruments (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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 Significa23
Note 2 - Summary of Significant Accounting Policies: Debt (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Debt | 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 fixed and 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. |
Note 2 - Summary of Significa24
Note 2 - Summary of Significant Accounting Policies: Loss Per Share (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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 February 28, 2015, the Companys dilutive securities outstanding consisted of (1) the CEOs options to purchase shares of common stock, for which the exercise price is above the average closing price of the Companys 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 February 28, 2014, the Companys dilutive securities outstanding consisted of (i) the CEOs options to purchase shares of common stock (See Note 8) for which the exercise price is above the average closing price of the Companys 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 Significa25
Note 2 - Summary of Significant Accounting Policies: Income Taxes (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Income Taxes | 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 be recoverable. If these estimates were to change and the Company's assessment indicated it would be unable to recover the deferred tax assets, the Company would be required to increase its income tax provision expense in the period of the change in estimate. 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 Significa26
Note 2 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, ASU No. 2014-09, Revenue from Contracts with Customers was issued. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance will also require that certain contract costs incurred to obtain or fulfill a contract, such as sales commissions, be capitalized as an asset and amortized as revenue is recognized. Adoption of the new rules could affect the timing of both revenue recognition and the incurrence of contract costs for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The Company is currently evaluating the impact of adoption and the implementation approach to be used. 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. In June 2014, ASU 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU No. 2014-15) was issued. Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Companys consolidated financial statements. We have evaluated the other recent accounting pronouncements through ASU 2015-08 and believe that none of them will have a material effect on our financial statements. |
Note 6 - Debt_ Short-term Debt
Note 6 - Debt: Short-term Debt (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Short-term Debt | Short-Term Debt (A) Related Parties On August 31, 2012, the Companys former Chief Financial Officer made an interest free demand advance of $30,000 to provide working capital, which remains outstanding at February 28, 2015. 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 three months ended February 28, 2015, the Company incurred and accrued $3,370 in interest expense, respectively, related to this short-term debt. As of February 28, 2015, the Company has accrued a total of $56,970 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 $300,000 in equity financing towards the production of the motion picture currently entitled End of the Gun (the "Picture"). The initial $100,000 under this agreement was paid on June 12, 2012. While it was the Companys intent to commence filming of the Picture by September 1, 2012, certain casting delays postponed the commencement date. On January 25, 2013 the Company received a written notice of termination of agreement from CRCP. The termination was detrimental to the funding process. Accordingly, the Company has included the $100,000 advance within short-term debt and has accrued interest payable of $32,449 through February 28, 2015. Subsequently, the Company hired a new director, made new distribution deals for North America and international and hired Steven Seagal to star. The picture is currently in pre- production at the Castel Studios in Romania and has a start date of late August 2015. The Company is proceeding to arbitration regarding any amounts due and the arbitration proceeding originally scheduled for August 2014, has been rescheduled for late summer 2105. Through February 28, 2015, 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 lenders 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 lenders election into shares of the Companys 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 February 28, 2015, the remaining principal balance and interest is $521,935. 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, our financiers are to receive their money back plus 20% interest 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% of the profits. |
Note 6 - Debt_ Short-term Conve
Note 6 - Debt: Short-term Convertible Debt With Ratchet Provisions (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
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, respectively (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, 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 portion of the notes has been converted and, as of February 28, 2015, approximately $569 in principal and interest remain outstanding. 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 Companys 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 February 28, 2015, approximately $42,934 in principal and interest remain outstanding. 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. On February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal and interest outstanding of $19,775 as of February 28, 2015. 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 three months ended February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $35,476 as of February 28, 2015. 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 February 28, 2015, approximately $32,691 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. The remaining principal and interest balance on this note is $29,012 as of February 28, 2015. 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 $15,177 as of February 28, 2015. 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. The remaining principal and interest balance on this note is $53,959 as of February 28, 2015. 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. The remaining principal and interest balance on this note is $31,928 as of February 28, 2015. 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. The remaining principal balance on this note is $81,014 as of February 28, 2015. 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 February 28, 2015, approximately $31,340 in principal and interest remain outstanding. On December 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 December 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 February 28, 2015, approximately $30,598 in principal and interest remain outstanding. On January 19, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $31,500. The note has a maturity date of January 9, 2016. 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. The remaining principal and interest balance on this note is $32,026 as of February 28, 2015. On February 26, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $15,000. The note has a maturity date of February 26, 2016. 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. The remaining principal and interest balance on this note is $15,123 as of February 28, 2015. 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 three months ended February 28, 2015, the note was partially converted through the issuance of shares of common stock leaving a remaining principal balance of $462,243 as of February 28, 2015. |
Note 6 - Debt_ (b) Determinatio
Note 6 - Debt: (b) Determination of Derivative Liability (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
(b) Determination of Derivative Liability | (B) Determination of Derivative Liability The Company calculated the derivative liabilities using the Black-Scholes pricing model for each note upon inception and recorded the fair market value of the derivative liability as a discount to the note. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations. The derivative liabilities associated with these convertible notes were revalued during the period as principal was converted, using the Black-Scholes Model with the below range of inputs. Upon conversion of all or a portion of the convertible notes, the derivative liability associated with the principal converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal converted is recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operation, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital. As of February 28, 2015 and November 30, 2014, the Company has outstanding principal amounts on short term convertible debt, excluding unamortized discount, of $1,352,167 and $1,374,508, 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 $446,134 and $859,483 as of February 28, 2015 and November 30, 2014, respectively. For the three months ending February 28, 2015 and 2014, interest expense from accretion of the discount, including converted notes, was $402,751 and $641,449, respectively. Aggregate derivative liabilities associated with remaining convertible notes were $4,752,082 as of February 28, 2015 and $4,263,200 as of November 30, 2014. Based on this revaluation at quarter end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a net loss in fair value of derivative liability of $673,957 during the three months ended February 28, 2015 and a net loss in fair value of derivative liability of $821,796 for the three months ended February 28, 2014. February 28, 2015 November 30, 2014 Annual dividend rate 0.0 % 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 431.20% - 536.5 .01% - .10 % Expected volatility 0.0 431.3% - 537 % |
Note 6 - Debt_ Long-term Conver
Note 6 - Debt: Long-term Convertible Debt (Policies) | 3 Months Ended |
Feb. 28, 2015 | |
Policies | |
Long-term Convertible Debt | 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 agreements expiration date of December 28, 2014. Beginning September 27, 2011, the note is convertible into shares of our common stock at a fixed conversion price of $16.00 per share. As a result, the Company will be liable to issue up to 12,500 shares common stock upon conversion. Based on a $22 closing price on the day of note agreement, we recorded a discount of $75,000 as a result of the beneficial conversion feature (BCF). As such, the Company discounted the note by the value of the BCF upon inception of the note. During the three months ended February 28, 2015, interest expense from accretion of the discount was $2,068, leaving a remaining discount of $0. The discount being amortized approximates the effective interest method over the term of the note. |