Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Aug. 31, 2013 | Dec. 10, 2013 | Feb. 28, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'Infinity Augmented Reality, Inc. | ' | ' |
Entity Central Index Key | '0001421538 | ' | ' |
Current Fiscal Year End Date | '--08-31 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Trading Symbol | 'also | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 93,628,551 | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Aug-13 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'Yes | ' | ' |
Entity Current Reporting Status | 'No | ' | ' |
Entity Public Float | ' | ' | $19,126,236 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2013 | Aug. 31, 2012 |
ASSETS | ' | ' |
Cash and cash equivalents | $431,760 | $4,885 |
Convertible note receivable | 50,000 | ' |
Prepaid expenses | 21,355 | 15,192 |
Current assets of discontinued operations | ' | 4,562,177 |
Total current assets | 503,115 | 4,582,254 |
Leasehold improvements and equipment, net | 126,108 | 66,129 |
Security deposit | 86,272 | 56,688 |
Deferred taxes | ' | 190,652 |
Noncurrent assets of discontinued operations | 145,781 | 64,667,124 |
TOTAL ASSETS | 861,276 | 69,562,847 |
LIABILITIES | ' | ' |
Accounts payable and accrued expenses | 371,598 | 441,297 |
Interest payable | 3,906 | ' |
Current liabilities of discontinued operations | 775,000 | 60,076,710 |
Total current liabilities | 1,150,504 | 60,518,007 |
Deferred rent | ' | 49,335 |
Convertible debentures, net of debt discount | 128,327 | ' |
Long-term liabilities of discontinued operations | ' | 4,433,696 |
TOTAL LIABILITIES | 1,278,831 | 65,001,038 |
Contingencies | ' | ' |
STOCKHOLDERS' (DEFICIT) EQUITY | ' | ' |
Common stock ($0.00001 par value; 500,000,000 authorized; 93,584,759 issued and 93,229,291 outstanding) ( August 31, 2012 - 92,544,747 issued and 92,229,599 outstanding) | 936 | 925 |
Additional paid in capital | 57,938,675 | 51,486,890 |
Treasury stock, at cost (355,468 shares of common stock) (August 31, 2012 - 315,148 shares of common stock) | -49,766 | -44,121 |
Accumulated deficit | -58,305,978 | -46,881,885 |
Accumulated other comprehensive loss | -1,422 | ' |
Total Stockholders' (Deficit) Equity | -417,555 | 4,561,809 |
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | 861,276 | 69,562,847 |
Series A Convertible Preferred Stock [Member] | ' | ' |
STOCKHOLDERS' (DEFICIT) EQUITY | ' | ' |
Preferred stock,value | ' | ' |
Series B Convertible Preferred Stock [Member] | ' | ' |
STOCKHOLDERS' (DEFICIT) EQUITY | ' | ' |
Preferred stock,value | ' | ' |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Preferred stock, par value (in dollars per share) | 0.00001 | 0.00001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | 0.00001 | 0.00001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 93,584,759 | 92,544,747 |
Common stock, shares outstanding | 93,229,291 | 92,229,599 |
Treasury stock | 355,468 | 315,148 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, shares designated | 60,000 | 60,000 |
Preferred stock, dividend rate, percentage | 12.50% | 0.00% |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, shares designated | 25,000 | 25,000 |
Preferred stock, dividend rate, percentage | 12.50% | 0.00% |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ' | ' | ' |
General and administrative expenses | ($6,527,215) | ($6,706,494) | ($143,753) |
Research and development | -133,704 | -133,704 | ' |
Total operating expenses | -6,660,919 | -6,840,198 | -143,753 |
Other expense | ' | ' | ' |
Foreign exchange loss | -7,136 | -7,136 | ' |
Interest expense | -67,667 | -67,667 | ' |
Loss from continuing operations before income tax | -6,735,722 | -6,915,001 | -143,753 |
Income tax (provision) benefit | -78,637 | -190,652 | 64,689 |
Loss from continuing operations | -6,814,359 | -7,105,653 | -79,064 |
Loss from discontinued operations (including loss on disposal of life settlement contracts of $8,438,584 for the year ended August 31, 2013, respectively), net of tax | ' | -4,318,440 | -22,367,220 |
Net loss | -6,814,359 | -11,424,093 | -22,446,284 |
Deemed dividend on issuance of Series A and Series B Preferred Stock | ' | ' | -932,643 |
Dividend on Convertible Preferred Stock | ' | ' | -4,580,642 |
Net loss applicable to common shareholders | -6,814,359 | -11,424,093 | -27,959,569 |
Basic and diluted loss per common share | ' | ' | ' |
Continuing operations | ' | ($0.07) | ' |
Discontinued operations | ' | ($0.04) | ($0.30) |
Net loss per common share | ' | ($0.11) | ($0.30) |
Basic weighted average shares outstanding | ' | 98,413,541 | 93,997,860 |
Diluted weighted average shares outstanding | ' | 98,413,541 | 93,997,860 |
Net loss | -6,814,359 | -11,424,093 | -27,959,569 |
Foreign currency translation adjustments | ' | -1,422 | ' |
Comprehensive loss | ' | ($11,425,515) | ($27,959,569) |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 12 Months Ended |
Aug. 31, 2013 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ' |
Loss on disposal of life settlement contracts | $8,438,584 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | |
OPERATING ACTIVITIES | ' | ' | ' |
Net loss | ($6,814,359) | ($11,424,093) | ($22,446,284) |
Loss from discontinued operations | ' | 4,318,440 | 22,367,220 |
Adjustments to reconcile net loss to net cash (used in) provided by operations | ' | ' | ' |
Amortization of debt discount | 61,218 | 61,218 | ' |
Foreign exchange gain on investment in subsidiary | 1,157 | 1,157 | ' |
Stock-based compensation | 4,511,362 | 4,511,362 | ' |
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders | -5,645 | -5,645 | ' |
Payment-in-kind interest on shareholder loan | 2,543 | 2,543 | ' |
Loss on disposition of equipment | 13,161 | 13,161 | ' |
Amortization of leasehold improvements | 3,790 | 3,790 | ' |
Depreciation | 18,128 | 23,118 | 23,953 |
Deferred rent | -63,638 | -49,335 | 7,187 |
Deferred income taxes | 78,637 | 190,652 | 79,064 |
Changes in operating assets and liabilities | ' | ' | ' |
Prepaid expenses | -2,791 | -6,141 | 29,852 |
Security deposit | -29,222 | -29,222 | ' |
Accounts payable and accrued expenses | 19,338 | -70,090 | 396,690 |
Interest payable | 3,906 | 3,906 | ' |
Net cash (used in) provided by operating activities- continuing operations | -2,202,415 | -2,455,179 | 457,682 |
Net cash (used in) provided by operating activities- discontinued operations | 5,858,675 | -6,427,044 | -10,097,013 |
Net cash (used in) provided by operating activities | 3,656,260 | -8,882,223 | -9,639,331 |
INVESTING ACTIVITIES | ' | ' | ' |
Purchase of convertible note | -50,000 | -50,000 | ' |
Proceeds received from sale of equipment | 5,200 | 5,200 | ' |
Purchase of leasehold improvements and equipment | -104,825 | -104,825 | ' |
Net cash used in investing activities- continuing operations | -149,625 | -149,625 | ' |
Net cash provided by investing activities- discontinued operations | ' | 9,756,718 | 994,216 |
Net cash provided by (used in) investing activities | -149,625 | 9,607,093 | 994,216 |
FINANCING ACTIVITIES | ' | ' | ' |
Proceeds from convertible debentures | 1,725,000 | 1,725,000 | ' |
Proceeds from exercise of stock options | 80,000 | 80,000 | ' |
Proceeds from shareholder loan | 200,000 | 200,000 | ' |
Net cash provided by financing activities- continuing operations | 2,005,000 | 2,005,000 | ' |
Net cash (used in) provided by financing activities- discontinued operations | -5,135,000 | -2,300,000 | 8,650,000 |
Net cash (used in) provided by financing activities | -3,130,000 | -295,000 | 8,650,000 |
Effect of exchange rate on cash and cash equivalents | -2,995 | -2,995 | ' |
Change in cash and cash equivalents | 373,640 | 426,875 | 4,885 |
Cash and cash equivalents, beginning | 58,120 | 4,885 | ' |
Cash and cash equivalents, ending | 431,760 | 431,760 | 4,885 |
Non-cash financing activities: | ' | ' | ' |
Conversion of shareholder loan into convertible debentures | 202,543 | 202,543 | ' |
Warrants issued in connection with convertible debentures | 818,712 | 818,712 | ' |
Fair value of conversion option | 1,041,722 | 1,041,722 | ' |
Term loan issued for repurchase of preferred stock which is included in discontinued operations | ' | ' | $57,150,000 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Total | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Loss [Member] |
Balance at Aug. 31, 2011 | $77,852,214 | ' | ' | $854 | $96,773,677 | ' | ($18,922,317) | ' |
Balance, shares at Aug. 31, 2011 | ' | 41,950 | 8,850 | 85,424,597 | ' | ' | ' | ' |
Preferred stock and warrants issued for cash at $1,000 per share | 6,350,000 | ' | ' | ' | 6,350,000 | ' | ' | ' |
Preferred stock and warrants issued for cash at $1,000 per share, shares | ' | 6,350 | ' | ' | ' | ' | ' | ' |
Stock dividends paid on preferred stock | ' | ' | ' | 71 | 4,580,570 | ' | -4,580,641 | ' |
Stock dividends paid on preferred stock, Shares | ' | ' | ' | 7,120,150 | ' | ' | ' | ' |
Deemed dividends on preferred stock | ' | ' | ' | ' | 932,643 | ' | -932,643 | ' |
Repurchase of preferred stock | -57,150,000 | ' | ' | ' | -57,150,000 | ' | ' | ' |
Repurchase of preferred stock, shares | ' | -48,300 | -8,850 | ' | ' | ' | ' | ' |
Purchase of treasury stock | -44,121 | ' | ' | ' | ' | -44,121 | ' | ' |
Purchase of treasury stock, shares | ' | ' | ' | -315,148 | ' | ' | ' | ' |
Foreign currency translation adjustments | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | -22,446,284 | ' | ' | ' | ' | ' | -22,446,284 | ' |
Balance at Aug. 31, 2012 | 4,561,809 | ' | ' | 925 | 51,486,890 | -44,121 | -46,881,885 | ' |
Balance, shares at Aug. 31, 2012 | ' | ' | ' | 92,229,599 | ' | ' | ' | ' |
Common stock issued for consulting services at $0.29 per share in May 2013 | 69,604 | ' | ' | 3 | 69,601 | ' | ' | ' |
Common stock issued for consulting services at $0.29 per share in May 2013, shares | ' | ' | ' | 240,012 | ' | ' | ' | ' |
Exercise of stock options by consultants | 80,000 | ' | ' | 8 | 79,992 | ' | ' | ' |
Exercise of stock options by consultants, shares | ' | ' | ' | 800,000 | ' | ' | ' | ' |
Fair value of stock options granted to officer, directors and consultants | 4,441,758 | ' | ' | ' | 4,441,758 | ' | ' | ' |
Fair value of warrants issued with convertible debentures | 818,712 | ' | ' | ' | 818,712 | ' | ' | ' |
Beneficial conversion feature of convertible debentures | 1,041,722 | ' | ' | ' | 1,041,722 | ' | ' | ' |
Purchase of treasury stock | -5,645 | ' | ' | ' | ' | -5,645 | ' | ' |
Purchase of treasury stock, shares | ' | ' | ' | -40,320 | ' | ' | ' | ' |
Foreign currency translation adjustments | -1,422 | ' | ' | ' | ' | ' | ' | -1,422 |
Net loss | -11,424,093 | ' | ' | ' | ' | ' | -11,424,093 | ' |
Balance at Aug. 31, 2013 | ($417,555) | ' | ' | $936 | $57,938,675 | ($49,766) | ($58,305,978) | ($1,422) |
Balance, shares at Aug. 31, 2013 | ' | ' | ' | 93,229,291 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENT_OF_STOC1
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (Paranthetical) (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) [Abstract] | ' | ' |
Per share value of equity issued | $0.29 | $1,000 |
NATURE_AND_CONTINUANCE_OF_OPER
NATURE AND CONTINUANCE OF OPERATIONS | 12 Months Ended |
Aug. 31, 2013 | |
NATURE AND CONTINUANCE OF OPERATIONS [Abstract] | ' |
NATURE AND CONTINUANCE OF OPERATIONS | ' |
1. NATURE AND CONTINUANCE OF OPERATIONS | |
Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.) (the "Company") was originally incorporated as Shimmer Gold, Inc. in the State of Nevada on September 7, 2006. The Company was an Exploration Stage company as defined by Accounting Standards Codification ("ASC") 915, Development Stage Entities, and was in the business of the acquisition and exploration of mineral resources during the period from September 7, 2006 to May 21, 2010. Subsequently, a majority of our shareholders approved an amendment to our Articles of Incorporation changing our name to Absolute Life Solutions, Inc. During the fiscal year ended August 31, 2010, the Company commenced operations as a specialty financial services company engaged in the business of purchasing life settlement contracts for long-term investment purposes and was no longer classified as a development stage company. | |
Effective November 15, 2012, the Company is no longer engaged in its prior primary activity as a specialty financial services company primarily engaged in the purchase of life settlement contracts. As a result of the foregoing, the Company is currently classified as a development stage company. All of the operations related to the Company's life settlements business are reported as discontinued operations in the consolidated financial statements. As discussed in Note 3, the prior period operations related to this business have also been reclassified as discontinued operations retrospectively for all periods presented. | |
During the year ended August 31, 2012, the Company formed a wholly-owned subsidiary Infinity Augmented Reality, LLC ("IAR Subsidiary") and commenced activities to enable it to be actively engaged in the development of software applications which will utilize augmented reality. Effective March 7, 2013, the Company changed its name from Absolute Life Solutions, Inc. to Infinity Augmented Reality, Inc. On that same date, the IAR Subsidiary was merged into the Company. Effective June 30, 2013, the Company formed a wholly owned Israeli subsidiary, Infinity Augmented Reality Israel Ltd. ("Infinity Israel"). The Company is actively engaged in the development of software applications which will utilize augmented reality. The Company intends to develop a comprehensive augmented reality platform for consumers. The Company's objective is to establish itself firmly as a preeminent source for state-of-the-art augmented reality experiences, forging a strong association, early on, between the Infinity brand and the burgeoning medium. | |
The continued existence of the Company is dependent upon its ability to generate profit from its augmented reality business and to meet its obligations as they become due. If additional cash is needed, the Company intends to finance the future capital required for continued operations from a combination of traditional debt and equity markets. However, there is no assurance that (a) traditional debt and equity markets may be accessible as required, or if so, on acceptable terms and, or (b) the demand for and selling prices of the Company's augmented reality products, may not be sufficient to meet cash flow expectations. The outcome of these matters cannot be predicted with certainty and therefore the Company may not be able to continue or expand operations as planned. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These audited financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. | |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Aug. 31, 2013 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' |
SIGNIFICANT ACCOUNTING POLICIES | ' |
2. SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
The consolidated financial statements of the Company as of August 31, 2013 and 2012 and for the years then ended have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions are eliminated in the consolidation process. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the value of warrants and options and deferred income tax amounts and rates and timing of the reversal of income tax differences. | |
Development Stage Company | |
Effective November 15, 2012, the Company is considered a development stage company, having no operating revenues during the period from November 15, 2012 ("Inception") to August 31, 2013, as defined by ASC 915-205, Development-Stage Entities. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows upon entering the development stage through the date that revenues are generated. From November 15, 2012 through August 31, 2013, all operating expenses of the Company related to its augmented reality business and is included in the Consolidated Statements of Operations. The Company had operating expenses of $179,279 and $143,753 respectively for the period from September 1, 2012 to November 15, 2012 and the period from June 1, 2012 to August 31, 2012 respectively, relating to its augmented reality business. | |
Cash and Cash Equivalents | |
The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions. | |
Reclassifications | |
During the year ended August 31, 2013, the Company disposed of all its life settlement contracts. As of August 31, 2013, all of the operations related to the life settlement business, as well as any resulting gain or loss recognized from the disposal, have been reported as discontinued operations in the consolidated financial statements. The Company has also reported the prior period operations related to this business as discontinued operations retrospectively for all periods presented. Additionally, the assets and liabilities related to the life settlements business have been classified as discontinued operations in the consolidated balance sheets for all periods presented. See Note 3 - Discontinued Operations for more information. | |
Financial Instruments | |
The fair value of certain of the Company's financial instruments, consisting of cash, accounts payable and accrued expenses are estimated to be equal to their carrying value due to the short-term nature of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency and credit risks arising from these financial instruments. | |
Leasehold Improvements and Equipment | |
Equipment consists of computer hardware and furniture and is recorded at cost. Computer hardware and furniture are depreciated on a straight-line basis over their estimated lives of five years. Leasehold improvements are amortized on a straight-line basis over the lease life of two years. | |
Deferred Rent | |
The Company's prior operating lease provided for minimum annual payments that adjusted over the life of the lease. The aggregate minimum annual payments were expensed on the straight-line basis over the minimum lease term. The Company recognized a deferred rent liability for rent escalations when the amount of straight-line rent exceeded the lease payments, and reduced the deferred rent liability when the lease payments exceed the straight-line rent expense. As of August 31, 2013, the Company has no deferred rent liability. | |
Software Development Costs | |
The Company applies the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until the Company has produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. The Company has expensed all software development costs when incurred since none of the Company's products have reached technological feasibility. | |
Foreign Currency Translation | |
The financial statements are presented in United States dollars. In accordance with ASC 830, Foreign Currency Matters, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented. Related translation adjustments are reported as a separate component of stockholders' equity (deficit), whereas gains or losses resulting from foreign currency remeasurement and transactions are included in results of operations. | |
Income Taxes | |
Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized. | |
Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. | |
The Company's policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. | |
Loss per Share | |
Basic loss per share is calculated using the weighted average number of shares of common stock outstanding during the period. Included in basic loss per share calculations are the effects of 6,000,000 warrants exercisable at $0.01. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the "if converted" method. For the year ended August 31, 2013, 30,450,344 shares of common stock, comprised of 7,710,172 convertible debentures with a conversion price of $0.25, 7,710,172 warrants with an exercise price of $0.50, and stock options exercisable into 22,430,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. For the year ended August 31, 2012, 27,700,000 and 28,142,500 warrants with an exercise price of $2.00 and $4.00 respectively, and 55,400 Series A and Series B preferred shares, convertible into 55,400,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. | |
Stock-Based Compensation | |
The Company records stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation. The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. | |
Recent Accounting Pronouncements | |
In March 2013, the FASB issued ASU 2013-07, "Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting." The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity's governing documents from the entity's inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity's inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity's expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial position and results of operations. | |
In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU 2013-11 provides guidance on the presentation of unrecognized tax benefits related to any disallowed portion of net operating loss carryforwards, similar tax losses, or tax credit carryforwards, if they exist. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013. The adoption of this standard is not expected to have a material impact on the Company's financial position and results of operations. | |
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company. | |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
DISCONTINUED OPERATIONS [Abstract] | ' | ||||||||
DISCONTINUED OPERATIONS | ' | ||||||||
3. DISCONTINUED OPERATIONS | |||||||||
Effective November 15, 2012, the Company reached an agreement with the agent of the Lenders regarding the satisfaction of the outstanding balance of the Loans, under the terms of a Loan Satisfaction Agreement. Such agreement resulted in the disposition of all of the life settlement contracts that were held by the Company to the Lender or an affiliate of the Lender. All of the operations related to the Company's life settlements business are reported as discontinued operations in the consolidated financial statements. The prior period operations related to this business have also been reported as discontinued operations retrospectively for all periods presented. The assets and liabilities related to the Company's life settlements business are reported as assets and liabilities of discontinued operations in the consolidated balance sheets as of August 31, 2013. The Company presented the prior year assets and liabilities related to the Company's life settlements business as discontinued operations to provide comparability between the periods presented. | |||||||||
Discontinued operations on the consolidated statement of operations for the year ended August 31, 2013 and 2012 are as follows: | |||||||||
Year ended | Year ended | ||||||||
August 31, | August 31, | ||||||||
2013 | 2012 | ||||||||
Sales, general and administrative expenses | $ | (204,200 | ) | $ | (2,175,602 | ) | |||
Other income (expense) | |||||||||
Realized gain on life settlement contracts held under investment method | - | 319,843 | |||||||
Realized loss on extinguishment of debt | (8,438,584 | ) | - | ||||||
Change in fair value of life settlement contracts net of premiums paid | 2,055,438 | (36,460,974 | ) | ||||||
Interest expense | (1,610,571 | ) | (626,710 | ) | |||||
Loss from discontinued operations before income tax | (8,197,917 | ) | (38,943,443 | ) | |||||
Income tax benefit | 3,879,477 | 16,576,223 | |||||||
Net loss from discontinued operations | $ | (4,318,440 | ) | $ | (22,367,220 | ) | |||
Assets and liabilities of discontinued operations for the Company's life settlements business on the consolidated balance sheets consist of the following: | |||||||||
August 31, | August 31, 2012 | ||||||||
2013 | |||||||||
ASSETS | |||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | - | $ | 228,165 | |||||
Investment in life settlement contracts at investment method | - | 4,334,012 | |||||||
Total current assets of discontinued operations | - | 4,562,177 | |||||||
Investment in life settlement contracts at fair value | - | 64,667,124 | |||||||
Deferred income taxes | 145,781 | - | |||||||
Total noncurrent assets of discontinued operations | $ | 145,781 | $ | 64,667,124 | |||||
LIABILITIES | |||||||||
Current Liabilities | |||||||||
Interest payable | $ | - | $ | 626,710 | |||||
Loans payable | - | 59,450,000 | |||||||
Income and other taxes payable | 775,000 | - | |||||||
Total current liabilities of discontinued operations | 775,000 | 60,076,710 | |||||||
Deferred income taxes | - | 4,433,696 | |||||||
Total long-term liabilities of discontinued operations | $ | - | $ | 4,433,696 | |||||
During the year ended August 31, 2013, a life settlement contract matured resulting in cash proceeds of $10,000,000, these proceeds were used to satisfy the Company's outstanding obligations of $9,378,807 in discontinued operations, including (i) interest on Term Loan of $2,123,281, (ii) $5,971,000 outstanding under the Revolving Loan, plus $114,000 in interest under the Revolving Loan, or a total of $6,085,000 due under the Revolving Loan and (iii) $1,170,526 premiums payable on behalf of ALS Capital Ventures LLC. | |||||||||
As of August 31, 2013, the Company had a deferred income tax asset of $145,781 from an NOL from discontinued operations and income tax payable of $775,000, which includes $75,000 for interest and penalties, as a result of a realized gain from maturity of a life settlement contract which could not be offset by the capital loss generated by the disposition of life settlement contracts. | |||||||||
CONVERTIBLE_NOTE_RECEIVABLE
CONVERTIBLE NOTE RECEIVABLE | 12 Months Ended |
Aug. 31, 2013 | |
CONVERTIBLE NOTE RECEIVABLE [Abstract] | ' |
CONVERTIBLE NOTE RECEIVABLE | ' |
4. CONVERTIBLE NOTE RECEIVABLE | |
On July 10, 2013, the Company was issued a $50,000 par value Convertible Promissory Note from Meta Company, a Delaware company. The Note bears a 5% annual coupon and matures on July 31, 2014. The Note is convertible into common shares of Meta Company at conversion price of 80% of the price of common equity sold in a Qualified Offering of at least $1,000,000. The note is carried at cost which approximates fair value. | |
CONVERTIBLE_DEBENTURES
CONVERTIBLE DEBENTURES | 12 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
CONVERTIBLE DEBENTURES [Abstract] | ' | ||||||||||||||||
CONVERTIBLE DEBENTURES | ' | ||||||||||||||||
5. CONVERTIBLE DEBENTURES | |||||||||||||||||
During the year ended August 31, 2013, the Company completed a private placement of (i) five-year Convertible Debentures (the "Debentures") for an aggregate principal amount of $1,927,543,bearing interest at 1.2% per annum, convertible into shares (the "Conversion Shares") of common stock, at a conversion price of $0.25, and (ii) a five-year Warrant (the "Warrants") to purchase 7,710,172 shares of common stock (the "Warrant Shares"), to certain accredited investors (the "Purchasers") pursuant to Securities Purchase Agreements dated April 23, May 17, May 22, May 29, July 2, July 29 and August 27, 2013. | |||||||||||||||||
The Debentures bear interest at 1.2% per annum payable semi-annually in arrears in either cash or common stock (at the discretion of the Company). There are no provisions for early redemption by the Company. | |||||||||||||||||
The Purchasers were issued Warrants to purchase the Company's common stock, exercisable for a period of five years at an initial exercise price of $0.50, subject to adjustment. The Warrants provide for customary adjustments to the exercise price in the event of stock splits, stock dividends and other similar corporate events and may be exercised on a cashless basis. The Warrants do not confer any voting rights or any other rights as a shareholder. | |||||||||||||||||
The Company accounts for the beneficial conversion feature ("BCF") and warrant valuation in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company records a BCF related to the issuance of convertible debt that has conversion features at fixed rates that are "in-the-money" when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. The discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the terms of the convertible notes. The Company recorded an aggregate of $1,860,434 for the calculated fair value of the warrants and BCF, in conjunction with the convertible notes issued on April 23, May 17, May 22 and May 29, July 2, July 29 and August 27, 2013. | |||||||||||||||||
The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions: | |||||||||||||||||
April 23, 2013 | May 17, 2013 | May 22, 2013 | May 29, 2013 | ||||||||||||||
Contractual term (Years) | 5 | 5 | 5 | 5 | |||||||||||||
Volatility | 71 | % | 71.9 | % | 71.7 | % | 72 | % | |||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||
Risk-free interest rate | 0.7 | % | 0.79 | % | 0.84 | % | 1.02 | % | |||||||||
2-Jul-13 | 29-Jul-13 | 27-Aug-13 | |||||||||||||||
Contractual term (Years) | 5 | 5 | 5 | ||||||||||||||
Volatility | 72 | % | 74.4 | % | 74.6 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | |||||||||||
Risk-free interest rate | 1.39 | % | 1.36 | % | 1.61 | % | |||||||||||
Senior convertible notes consist of the following at August 31, 2013: | |||||||||||||||||
1.2% convertible debentures (issued April 23, 2013) | $ | 200,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 185,761 | ||||||||||||||||
Balance | 14,239 | ||||||||||||||||
Accrued interest payable | $ | 855 | |||||||||||||||
1.2% convertible debentures (issued May 17, 2013) | $ | 200,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 139,066 | ||||||||||||||||
Balance | 60,934 | ||||||||||||||||
Accrued interest payable | $ | 697 | |||||||||||||||
1.2% convertible debentures (issued May 22, 2013) | $ | 202,543 | |||||||||||||||
Debt discount/ beneficial conversion feature | 177,410 | ||||||||||||||||
Balance | 25,133 | ||||||||||||||||
Accrued interest payable | $ | 673 | |||||||||||||||
1.2% convertible debentures (issued May 29, 2013) | $ | 225,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 213,417 | ||||||||||||||||
Balance | 11,583 | ||||||||||||||||
Accrued interest payable | $ | 695 | |||||||||||||||
1.2% convertible debentures (issued July 2, 2013) | $ | 250,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 241,781 | ||||||||||||||||
Balance | 8,219 | ||||||||||||||||
Accrued interest payable | $ | 493 | |||||||||||||||
1.2% convertible debentures (issued July 29, 2013) | $ | 400,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 392,767 | ||||||||||||||||
Balance | 7,233 | ||||||||||||||||
Accrued interest payable | $ | 434 | |||||||||||||||
1.2% convertible debentures (issued August 27, 2013) | $ | 450,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 449,014 | ||||||||||||||||
Balance | 986 | ||||||||||||||||
Accrued interest payable | $ | 59 | |||||||||||||||
PREFERRED_STOCK
PREFERRED STOCK | 12 Months Ended |
Aug. 31, 2013 | |
PREFERRED STOCK [Abstract] | ' |
PREFERRED STOCK | ' |
6. PREFERRED STOCK | |
The total number of preferred shares authorized and that may be issued by the Company is 100,000,000 preferred shares with a par value of $0.00001. These preferred shares have no rights to voting, profit sharing or liquidation. As of August 31, 2013, there are no outstanding Series A Preferred Stock or Series B Preferred Stock. | |
On July 25, 2012, the Company paid dividends due December 31, 2011with the issuance of 3,201,093 shares of common stock valued at $3,233,104. | |
On July 25, 2012, the Company paid dividends due June 30, 2012 with the issuance of 3,315,754 shares of common stock valued at $1,160,514. | |
On July 31, 2012, the Company paid dividends due July 31, 2012 with the issuance of 603,303 shares of common stock valued at $187,024. | |
During the year ended August 31, 2012, the issuance of the Series A and Series B Preferred Stock with a contractual conversion price of $1.00 resulted in an effective conversion price lower than the fair market value of the Company's Common Stock at each issuance after allocating the proceeds received to the preferred shares and the detachable warrants included with the preferred shares. Accordingly, pursuant to GAAP, the Company recorded deemed dividends in the aggregate amount of $932,643 attributable to the beneficial conversion feature in connection with the private placement of the 2,500 Series A preferred shares issued in the quarter ending February 29, 2012. | |
On July 31, 2012, the Company entered into an agreement (the "Preferred Shares Agreement") with the Lenders, as holders of the Company's preferred stock, for the Company's purchase from the Lenders of an aggregate of 48,300 shares of the Series A and 8,850 shares of Series B Preferred Stock, which represent all of the issued and outstanding shares of preferred stock and which have an aggregate stated value of $57,150,000, for a purchase price of $57,150,000. (The payment will be made by the Company applying all of the proceeds of the Term Loan for such purpose.) As part of the purchase, the Lenders, who also held warrants to purchase 57,592,500 shares of the Company's stock at exercise prices from $2 and $4 a share, agreed to cancel those warrants. | |
The Series A Preferred Stock and Series B Preferred Stock held by the Lenders included provisions allowing for the conversion of the preferred shares into shares of Common Stock of the Company. After the purchase of the Series A Preferred Stock and Series B Preferred Stock held by the Lenders, there are no shares of Preferred Stock currently outstanding and all of the warrants held by the Lenders have been canceled. | |
COMMON_STOCK_WARRANTS_AND_OPTI
COMMON STOCK, WARRANTS AND OPTIONS | 12 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
COMMON STOCK, WARRANTS AND OPTIONS [Abstract] | ' | ||||||||||||||||
COMMON STOCK, WARRANTS AND OPTIONS | ' | ||||||||||||||||
7. COMMON STOCK, WARRANTS AND OPTIONS | |||||||||||||||||
Common Stock | |||||||||||||||||
During the year ended August 31, 2013, the Company issued 240,012 shares of restricted stock to consultants for consulting services. The fair value of the restricted stock was estimated at $69,604. | |||||||||||||||||
During the year ended August 31, 2013, the Company received 40,320 shares of common stock from the Company's CFO as reimbursement for $5,645 of taxes paid on his behalf. Those shares were returned to the Company's treasury. As of August 31, 2013, there are 355,468 shares of common stock in the Company's treasury. | |||||||||||||||||
Warrants | |||||||||||||||||
Warrant transactions are summarized as follows: | |||||||||||||||||
Number of | Weighted | Weighted average | |||||||||||||||
warrants | average | life remaining | |||||||||||||||
exercise | (in years) | ||||||||||||||||
price | |||||||||||||||||
Balance as at August 31, 2012 | |||||||||||||||||
Issued | 6,000,000 | 0.01 | 1.79 years | ||||||||||||||
Additions as of August 31, 2013 | |||||||||||||||||
Issued | 7,710,172 | 0.5 | 4.85 years | ||||||||||||||
Balance as at August 31, 2013 | 13,710,172 | 0.28 | 3.51 years | ||||||||||||||
As of August 31, 2013, there were 13,710,172 warrants outstanding and exercisable with expiration dates commencing June 2015 through August 2018. | |||||||||||||||||
Except as set forth under limited circumstances, the warrants do not permit net cash settlement. | |||||||||||||||||
Stock Options | |||||||||||||||||
During the year ended August 31, 2013, the Board of Directors of the Company, through unanimous written consent, resolved to adopt the Company's 2013 Equity Incentive Plan (the "2013 Plan"), pursuant to which the Company may issue up to 30,000,000 shares or options to purchase shares of the Company's Common Stock to employees, officers, directors, consultants and advisors of the Company. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. There are 40,000,000 shares of common stock reserved for issuance under the 2013 Plan and the 2010 Plan (the "Plans"), of which 24,570,012 were granted, net of cancellations as of August 31, 2013. | |||||||||||||||||
The purpose of the Plans is to provide the Company with the flexibility to use shares, options or other awards based on the Company's common stock as part of an overall compensation package to provide performance-based rewards to attract and retain qualified personnel. Such awards include, without limitation, options, stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may consist of one such security or benefit, or two or more of them in any combination or alternative. Vesting of awards may be based upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions. | |||||||||||||||||
During the year ended August 31, 2013, the Company entered into separate agreements with five independent consultants, pursuant to which each of the respective consultants agreed to provide augmented reality consulting services for the Company's augmented reality activities. In consideration of the consulting services, the Company granted these consultants a total of 22,600,000 Non-Qualified Stock Options (the "Options"), of which 8,050,000 Options were issued under the 2010 Equity Incentive Plan (the "2010 Plan") and 14,550,000 Options were issued under the 2013 Plan. The Options have an exercise price of $0.10, vesting on March 4, 2013 and expiring on March 5, 2018. As of August 31, 2013, 800,000 of these Options have been exercised and 300,000 have been forfeited and cancelled. | |||||||||||||||||
During the year ended August 31, 2013, the Company granted an officer a total of 230,000 Options issued under the 2010 Plan with an exercise price of $0.25, which Options vest on March 6, 2013 and expire on March 7, 2018. | |||||||||||||||||
During the year ended August 31, 2013, the Company entered into an At-Will Employment Agreement with Helen Papagiannis pursuant to which she will serve as the Chief Innovation Officer of the Company. Ms. Papagiannis will receive an annual base compensation of $200,000. Additionally, Ms. Papagiannis was granted 500,000 Options under the Company's 2010 Plan, with an exercise price of $0.25. 100,000 of such Options vest on March 6, 2013 and expire on March 7, 2018. 400,000 of such Options vest quarterly over the next 2 years (in equal amounts of 50,000 Options at the beginning of the Company's quarterly reporting periods, i.e. December 1, March 1, June 1 and September 1), and expire on March 7, 2018. | |||||||||||||||||
During the year ended August 31, 2013, the Company agreed in principle to appoint Enon Landenberg as President and Chief Executive Officer, through May 31, 2014 with an initial base compensation of $250,000 per year. Mr. Landenberg will also receive a total of 300,000 Options with an exercise price of $0.405, which Options vest on May 30, 2013 and expire on May 29, 2018. On July 31, 2013, Mr. Landenberg waived his rights to these Options, and they were summarily cancelled by the Company. In accordance with ASC 718-20-35-9, the cancellation of these options was unaccompanied by a concurrent grant and were accounted for as a repurchase for no consideration. | |||||||||||||||||
During the year ended August 31, 2013, the Company granted its former CEO a total of 100,000 Options issued under the 2013 Plan with an exercise price of $0.405, which Options vest on December 1, 2013 and expire on May 29, 2018. | |||||||||||||||||
During the year ended August 31, 2013, the Company granted 100,000 Options at an exercise price of $0.31 vesting on October 24, 2013 and expiring on October 23, 2017 to a director. | |||||||||||||||||
For the year ended August 31, 2013, the compensation expense of these options was $4,441,758 and is included in the Consolidated Statements of Operations. | |||||||||||||||||
Valuation Assumptions | |||||||||||||||||
The Company estimates the fair value of stock option grants using a Black-Scholes option pricing. In applying this model, the Company uses the following assumptions: | |||||||||||||||||
· | Risk-Free Interest Rate: The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate. | ||||||||||||||||
· | Expected Volatility: The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies. | ||||||||||||||||
· | Expected Term: Due to the limited exercise history of the Company's stock options, the Company determined the expected term based on the stratification of employee groups and the expected effect of events that have indications on future exercise activity. Expected life for options granted to employees uses the Simplified Method, while options granted to non-employees uses an expected term equal to the life of the contract. | ||||||||||||||||
· | Expected Dividend Rate: The Company has not paid and does not anticipate paying any cash dividends in the near future. | ||||||||||||||||
The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the straight line method. The following assumptions were used: | |||||||||||||||||
Year ended August | Year ended August 31, | ||||||||||||||||
31, 2013 | 2012 | ||||||||||||||||
Exercise price | $0.100 - $0.405 | n/a | |||||||||||||||
Expected stock price volatility | 71.5% - 72.0% | n/a | |||||||||||||||
Risk-free rate of interest | 0.76% - 1.01% | n/a | |||||||||||||||
Expected life of options | 4.15 - 4.75 Years | n/a | |||||||||||||||
The aggregate fair value of the options at grant date was approximately $4,466,434. | |||||||||||||||||
The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the years ended August 31, 2013 and 2012: | |||||||||||||||||
Year ended | Year ended | ||||||||||||||||
August 31, | August 31, 2012 | ||||||||||||||||
2013 | |||||||||||||||||
Employee awards | $ | 155,714 | $ | - | |||||||||||||
Non- employee awards, net of forfeitures | 4,355,648 | - | |||||||||||||||
Total stock compensation expense | $ | 4,511,362 | $ | - | |||||||||||||
The following table summarizes stock option activity: | |||||||||||||||||
Number of | Weighted | Total | Weighted | ||||||||||||||
Shares | Average | Weighted | Average | ||||||||||||||
Exercise | Average | Remaining | |||||||||||||||
Price | Intrinsic | Contractual | |||||||||||||||
Value | Life | ||||||||||||||||
(in years) | |||||||||||||||||
Outstanding at August 31, 2012 | - | $ | - | $ | - | - | |||||||||||
Options granted | 23,830,000 | 0.11 | - | - | |||||||||||||
Options exercised | (800,000 | ) | - | - | - | ||||||||||||
Options forfeited | - | - | - | - | |||||||||||||
Options cancelled | (600,000 | ) | - | - | - | ||||||||||||
Outstanding at August 31, 2013 | 22,430,000 | 0.11 | 0.19 | 4.51 | |||||||||||||
Options vested and expected to vest | 22,430,000 | 0.11 | 0.19 | 4.51 | |||||||||||||
Options vested and exercisable | 21,980,000 | $ | 0.1 | $ | 0.2 | 4.52 | |||||||||||
As of August 31, 2013, the unamortized stock compensation expense is $24,676 which will be amortized over the period ended May 31, 2015. | |||||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
8. INCOME TAXES | |||||||||
Income tax expense consists of the following components at August 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Current tax expense | $ | - | $ | - | |||||
Deferred tax expense (benefit) | 190,652 | (64,689 | ) | ||||||
Total income tax expense (benefit) | $ | 190,652 | $ | (64,689 | ) | ||||
Income tax expense differed from amounts computed by applying the Federal income tax rate to pre-tax earnings for the years ended August 31, 2013 and 2012, as a result of the following: | |||||||||
2013 | 2012 | ||||||||
United States statutory rate | (35 | )% | (35 | )% | |||||
State income taxes | (10 | )% | (10 | )% | |||||
Foreign earnings taxed at different rates | 1 | % | |||||||
Increase in valuation allowance and other | 41 | % | |||||||
Combined effective tax rate | (3 | )% | (45 | )% | |||||
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: | |||||||||
August 31, | August 31, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Equipment | $ | 6,648 | $ | 6,648 | |||||
Deferred rent | - | 22,201 | |||||||
Stock issuances to officers, directors and consultant | 2,134,062 | 103,950 | |||||||
Start-up expenses | 993,636 | 64,689 | |||||||
Fair value of beneficial conversion feature and warrants | 27,548 | - | |||||||
Net operating loss carryforward | 438,254 | 438,254 | |||||||
Net operating loss carryforward - Israel | 84,531 | - | |||||||
Gross deferred tax assets | 3,684,679 | 635,742 | |||||||
Valuation allowance | (3,675,438 | ) | (438,254 | ) | |||||
Net deferred tax assets | 9,241 | 197,488 | |||||||
Deferred tax liabilities: | |||||||||
Prepaid insurance | (9,241 | ) | (6,836 | ) | |||||
Gross deferred tax liabilities | (9,241 | ) | (6,836 | ) | |||||
Valuation allowance | - | - | |||||||
Net deferred tax liabilities | (9,241 | ) | (6,836 | ) | |||||
Total deferred tax assets, net | $ | - | $ | 190,652 | |||||
Summary of net deferred tax assets: | |||||||||
Current | $ | - | $ | - | |||||
Non-current | - | 190,652 | |||||||
Total deferred tax assets, net | $ | - | $ | 190,652 | |||||
Accounting for Uncertainty in Income Taxes. In June 2006, the FASB issued guidance contained in ASC 740, Income Taxes (formerly FIN 48). The guidance is intended to clarify the accounting for uncertainty in income taxes recognized in a company's financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. | |||||||||
Under ASC 740, evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. | |||||||||
As of August 31, 2013 and 2012, the Company had approximately $1,974,000 and $1,298,000 of federal, state, local and Israel net operating losses ("NOL"), respectively. The federal NOL carryforward expires in the fiscal year ending August 31, 2032. As of August 31, 2013 and 2012 the Company had approximately $340,000 and -0-, respectively of NOLs in Israel which is available to be carried forward indefinitely. The Company recorded a valuation allowance of approximately $523,000 against its deferred tax asset resulting from its NOL since management concluded that it was more likely than not that the Company would not realize the benefit of this portion of its deferred tax assets by generating sufficient taxable income in future years. In addition, approximately $3,150,000 of non-deductible capital losses were generated from discontinued operations. This capital loss is available to offset future capital gains and expires in the fiscal year ending August 31, 2018. The Company recorded a full valuation allowance of approximately $1,420,000 against the deferred tax asset resulting from the capital loss forward, since management concluded that it is more likely than not that Company will not realize the benefit by generating sufficient capital gains in future years. | |||||||||
As of August 31, 2013, the Company has filed income tax returns through the fiscal 2012 tax year. For fiscal year 2013, the Company is required to file income tax returns in the United States (federal), New York State and City, and Israel. Based on the Company's evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company's financial statements. The evaluation was performed for the August 31, 2007 - August 31, 2012 tax years, which remain subject to examination. At this time, the fiscal year 2011 tax return has been selected for examination by the Internal Revenue Service. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. | |||||||||
The Company's policy for recording interest and penalties associated with audits is to record such expense as a component of general and administrative expense. There are no significant amounts accrued for penalties or interest as of or during the years ended August 31, 2013 and 2012. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. | |||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2013 | |
RELATED PARTY TRANSACTIONS [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
9. RELATED PARTY TRANSACTIONS | |
During the year ended August 31, 2013, the Company received a short-term loan from a principal shareholder of $200,000 (the "Note"). The Note was at a rate of 8% per annum with a maturity date ending on or before May 31, 2013. On May 7, 2013, the shareholder assigned all rights, title and interest in the Note to an affiliate of the principal shareholder. On May 22, 2013, the holder exchanged a total of $202,543 (loan principal of $200,000 and accrued interest of $2,543) for a Convertible Debenture pursuant to a Securities Purchase Agreement as discussed in Note 5. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Aug. 31, 2013 | |
SUBSEQUENT EVENTS [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
10. SUBSEQUENT EVENTS | |
Subsequent to year end, the Company terminated the At-Will Employment Agreement with Helen Papagiannis and entered into a consulting agreement with Helen Papagiannis pursuant to which she will continue to serve as the Chief Innovation Officer of the Company. The essential terms of the consulting agreement are similar to the prior At-Will Employment Agreement except for minor amended terms. | |
On September 11, 2013, the Board of Directors (the "Board") of Infinity Augmented Reality, Inc. (the "Company") elected Ori Inbar as a director. In connection with his election to the Company's Board, Mr. Inbar will receive a monthly retainer fee of $2,000 and was granted 100,000 Non-Qualified Stock Options with an exercise price of $0.29 (the "Options"), vesting semiannually over the next 2 years (at the beginning of the Company's quarterly reporting date, i.e. March 1 and September 1), and expire 5 years from each vesting date. 25,000 (or 25%) Options shall initially vest on March 1, 2014 and expire on February 28, 2019. These Options shall be subject to the terms and conditions of the Company's 2013 Equity Incentive Plan and a written stock option agreement. | |
On September 17, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $350,000. | |
On October 9, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $325,000. | |
On November 7, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $325,000. | |
On November 18, 2013, a consultant exercised 399,260 options at an exercise price of $0.10 per share. The Company received cash proceeds of $39,926 on exercise of those options. | |
On December 5, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $325,000. | |
On December 19, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $375,000. | |
Effective November 1, 2013, Infinity Israel entered into an Employment Agreement with Ortal Zanzuri pursuant to which she will serve as the Chief Financial Officer of Infinity Israel. On November 11, 2013, the Board of the Company unanimously resolved to approve Ortal's employment agreement and resolved to appoint Ortal as the Chief Financial Officer of the Company, effective on January 1, 2014. The Board also accepted the resignation of Mr. Joshua Yifat, effective on December 31, 2013. In connection with her appointment as Chief Financial Officer, Ms. Zanzuri will receive annual compensation of 480,000 New Israeli Shekel (approximately $136,000 based on foreign exchange rate as of November 1, 2013) and will be granted 200,000 Non-Qualified Stock Options with an exercise price, vesting and expiration dates as determined by the Board (the "Options"). These Options shall be subject to the terms and conditions of the Company's adoption of an Israeli Employee Sub-Plan under the Company's 2013 Equity Incentive Plan and a written stock option agreement. | |
On November 27, 2013, Infinity Israel received a pre lawsuit claim letter from the legal representative of its former employee. Infinity Israel intends to contest the lawsuit and has instructed its legal counsel to prepare a response letter. The compensation amount sought by the former employee as per his pre lawsuit claim letter is approximately 202,000 NIS (approximately $57,000 based on foreign exchange rate as of November 27, 2013). Due to the early stage of the lawsuit, an evaluation of the likelihood of an unfavorable outcome cannot be made at this time. | |
The Company evaluates events that have occurred after the balance sheet date through the date the financial statements were publicly available. Based upon the evaluation, the Company did not identify any other recognized or non-recognized subsequent events that would have required adjustment to or disclosure in the financial statements. | |
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Aug. 31, 2013 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The consolidated financial statements of the Company as of August 31, 2013 and 2012 and for the years then ended have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions are eliminated in the consolidation process. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the value of warrants and options and deferred income tax amounts and rates and timing of the reversal of income tax differences. | |
Development Stage Company | ' |
Development Stage Company | |
Effective November 15, 2012, the Company is considered a development stage company, having no operating revenues during the period from November 15, 2012 ("Inception") to August 31, 2013, as defined by ASC 915-205, Development-Stage Entities. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows upon entering the development stage through the date that revenues are generated. From November 15, 2012 through August 31, 2013, all operating expenses of the Company related to its augmented reality business and is included in the Consolidated Statements of Operations. The Company had operating expenses of $179,279 and $143,753 respectively for the period from September 1, 2012 to November 15, 2012 and the period from June 1, 2012 to August 31, 2012 respectively, relating to its augmented reality business. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions. | |
Reclassifications | ' |
Reclassifications | |
During the year ended August 31, 2013, the Company disposed of all its life settlement contracts. As of August 31, 2013, all of the operations related to the life settlement business, as well as any resulting gain or loss recognized from the disposal, have been reported as discontinued operations in the consolidated financial statements. The Company has also reported the prior period operations related to this business as discontinued operations retrospectively for all periods presented. Additionally, the assets and liabilities related to the life settlements business have been classified as discontinued operations in the consolidated balance sheets for all periods presented. See Note 3 - Discontinued Operations for more information. | |
Financial Instruments | ' |
Financial Instruments | |
The fair value of certain of the Company's financial instruments, consisting of cash, accounts payable and accrued expenses are estimated to be equal to their carrying value due to the short-term nature of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency and credit risks arising from these financial instruments. | |
Leasehold Improvements and Equipment | ' |
Leasehold Improvements and Equipment | |
Equipment consists of computer hardware and furniture and is recorded at cost. Computer hardware and furniture are depreciated on a straight-line basis over their estimated lives of five years. Leasehold improvements are amortized on a straight-line basis over the lease life of two years. | |
Deferred Rent | ' |
Deferred Rent | |
The Company's prior operating lease provided for minimum annual payments that adjusted over the life of the lease. The aggregate minimum annual payments were expensed on the straight-line basis over the minimum lease term. The Company recognized a deferred rent liability for rent escalations when the amount of straight-line rent exceeded the lease payments, and reduced the deferred rent liability when the lease payments exceed the straight-line rent expense. As of August 31, 2013, the Company has no deferred rent liability. | |
Software Development Costs | ' |
Software Development Costs | |
The Company applies the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until the Company has produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. The Company has expensed all software development costs when incurred since none of the Company's products have reached technological feasibility. | |
Foreign Currency Translation | ' |
Foreign Currency Translation | |
The financial statements are presented in United States dollars. In accordance with ASC 830, Foreign Currency Matters, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented. Related translation adjustments are reported as a separate component of stockholders' equity (deficit), whereas gains or losses resulting from foreign currency remeasurement and transactions are included in results of operations. | |
Income Taxes | ' |
Income Taxes | |
Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized. | |
Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. | |
The Company's policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. | |
Loss per Share | ' |
Loss per Share | |
Basic loss per share is calculated using the weighted average number of shares of common stock outstanding during the period. Included in basic loss per share calculations are the effects of 6,000,000 warrants exercisable at $0.01. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the "if converted" method. For the year ended August 31, 2013, 30,450,344 shares of common stock, comprised of 7,710,172 convertible debentures with a conversion price of $0.25, 7,710,172 warrants with an exercise price of $0.50, and stock options exercisable into 22,430,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. For the year ended August 31, 2012, 27,700,000 and 28,142,500 warrants with an exercise price of $2.00 and $4.00 respectively, and 55,400 Series A and Series B preferred shares, convertible into 55,400,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. | |
Stock-Based Compensation | ' |
Stock-Based Compensation | |
The Company records stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation. The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In March 2013, the FASB issued ASU 2013-07, "Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting." The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity's governing documents from the entity's inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity's inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity's expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial position and results of operations. | |
In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU 2013-11 provides guidance on the presentation of unrecognized tax benefits related to any disallowed portion of net operating loss carryforwards, similar tax losses, or tax credit carryforwards, if they exist. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013. The adoption of this standard is not expected to have a material impact on the Company's financial position and results of operations. | |
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company. | |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
DISCONTINUED OPERATIONS [Abstract] | ' | ||||||||
Schedule of Discontinued Operations, Income Statement and Balance Sheet | ' | ||||||||
Discontinued operations on the consolidated statement of operations for the year ended August 31, 2013 and 2012 are as follows: | |||||||||
Year ended | Year ended | ||||||||
August 31, | August 31, | ||||||||
2013 | 2012 | ||||||||
Sales, general and administrative expenses | $ | (204,200 | ) | $ | (2,175,602 | ) | |||
Other income (expense) | |||||||||
Realized gain on life settlement contracts held under investment method | - | 319,843 | |||||||
Realized loss on extinguishment of debt | (8,438,584 | ) | - | ||||||
Change in fair value of life settlement contracts net of premiums paid | 2,055,438 | (36,460,974 | ) | ||||||
Interest expense | (1,610,571 | ) | (626,710 | ) | |||||
Loss from discontinued operations before income tax | (8,197,917 | ) | (38,943,443 | ) | |||||
Income tax benefit | 3,879,477 | 16,576,223 | |||||||
Net loss from discontinued operations | $ | (4,318,440 | ) | $ | (22,367,220 | ) | |||
Assets and liabilities of discontinued operations for the Company's life settlements business on the consolidated balance sheets consist of the following: | |||||||||
August 31, | August 31, 2012 | ||||||||
2013 | |||||||||
ASSETS | |||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | - | $ | 228,165 | |||||
Investment in life settlement contracts at investment method | - | 4,334,012 | |||||||
Total current assets of discontinued operations | - | 4,562,177 | |||||||
Investment in life settlement contracts at fair value | - | 64,667,124 | |||||||
Deferred income taxes | 145,781 | - | |||||||
Total noncurrent assets of discontinued operations | $ | 145,781 | $ | 64,667,124 | |||||
LIABILITIES | |||||||||
Current Liabilities | |||||||||
Interest payable | $ | - | $ | 626,710 | |||||
Loans payable | - | 59,450,000 | |||||||
Income and other taxes payable | 775,000 | - | |||||||
Total current liabilities of discontinued operations | 775,000 | 60,076,710 | |||||||
Deferred income taxes | - | 4,433,696 | |||||||
Total long-term liabilities of discontinued operations | $ | - | $ | 4,433,696 | |||||
CONVERTIBLE_DEBENTURES_Tables
CONVERTIBLE DEBENTURES (Tables) | 12 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
CONVERTIBLE DEBENTURES [Abstract] | ' | ||||||||||||||||
Schedule of Warrant Valuation Assumptions | ' | ||||||||||||||||
The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions: | |||||||||||||||||
April 23, 2013 | May 17, 2013 | May 22, 2013 | May 29, 2013 | ||||||||||||||
Contractual term (Years) | 5 | 5 | 5 | 5 | |||||||||||||
Volatility | 71 | % | 71.9 | % | 71.7 | % | 72 | % | |||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||
Risk-free interest rate | 0.7 | % | 0.79 | % | 0.84 | % | 1.02 | % | |||||||||
2-Jul-13 | 29-Jul-13 | 27-Aug-13 | |||||||||||||||
Contractual term (Years) | 5 | 5 | 5 | ||||||||||||||
Volatility | 72 | % | 74.4 | % | 74.6 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | |||||||||||
Risk-free interest rate | 1.39 | % | 1.36 | % | 1.61 | % | |||||||||||
Schedule of Senior Convertible Notes | ' | ||||||||||||||||
Senior convertible notes consist of the following at August 31, 2013: | |||||||||||||||||
1.2% convertible debentures (issued April 23, 2013) | $ | 200,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 185,761 | ||||||||||||||||
Balance | 14,239 | ||||||||||||||||
Accrued interest payable | $ | 855 | |||||||||||||||
1.2% convertible debentures (issued May 17, 2013) | $ | 200,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 139,066 | ||||||||||||||||
Balance | 60,934 | ||||||||||||||||
Accrued interest payable | $ | 697 | |||||||||||||||
1.2% convertible debentures (issued May 22, 2013) | $ | 202,543 | |||||||||||||||
Debt discount/ beneficial conversion feature | 177,410 | ||||||||||||||||
Balance | 25,133 | ||||||||||||||||
Accrued interest payable | $ | 673 | |||||||||||||||
1.2% convertible debentures (issued May 29, 2013) | $ | 225,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 213,417 | ||||||||||||||||
Balance | 11,583 | ||||||||||||||||
Accrued interest payable | $ | 695 | |||||||||||||||
1.2% convertible debentures (issued July 2, 2013) | $ | 250,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 241,781 | ||||||||||||||||
Balance | 8,219 | ||||||||||||||||
Accrued interest payable | $ | 493 | |||||||||||||||
1.2% convertible debentures (issued July 29, 2013) | $ | 400,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 392,767 | ||||||||||||||||
Balance | 7,233 | ||||||||||||||||
Accrued interest payable | $ | 434 | |||||||||||||||
1.2% convertible debentures (issued August 27, 2013) | $ | 450,000 | |||||||||||||||
Debt discount/ beneficial conversion feature | 449,014 | ||||||||||||||||
Balance | 986 | ||||||||||||||||
Accrued interest payable | $ | 59 | |||||||||||||||
COMMON_STOCK_WARRANTS_AND_OPTI1
COMMON STOCK, WARRANTS AND OPTIONS (Tables) | 12 Months Ended | ||||||||||||||||
Aug. 31, 2013 | |||||||||||||||||
COMMON STOCK, WARRANTS AND OPTIONS [Abstract] | ' | ||||||||||||||||
Schedule of Warrant Transactions | ' | ||||||||||||||||
Warrant transactions are summarized as follows: | |||||||||||||||||
Number of | Weighted | Weighted average | |||||||||||||||
warrants | average | life remaining | |||||||||||||||
exercise | (in years) | ||||||||||||||||
price | |||||||||||||||||
Balance as at August 31, 2012 | |||||||||||||||||
Issued | 6,000,000 | 0.01 | 1.79 years | ||||||||||||||
Additions as of August 31, 2013 | |||||||||||||||||
Issued | 7,710,172 | 0.5 | 4.85 years | ||||||||||||||
Balance as at August 31, 2013 | 13,710,172 | 0.28 | 3.51 years | ||||||||||||||
Schedule of Stock Option Fair Value Assumptions | ' | ||||||||||||||||
The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the straight line method. The following assumptions were used: | |||||||||||||||||
Year ended August | Year ended August 31, | ||||||||||||||||
31, 2013 | 2012 | ||||||||||||||||
Exercise price | $0.100 - $0.405 | n/a | |||||||||||||||
Expected stock price volatility | 71.5% - 72.0% | n/a | |||||||||||||||
Risk-free rate of interest | 0.76% - 1.01% | n/a | |||||||||||||||
Expected life of options | 4.15 - 4.75 Years | n/a | |||||||||||||||
Schedule of Stock-Based Compensation Expense | ' | ||||||||||||||||
The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the years ended August 31, 2013 and 2012: | |||||||||||||||||
Year ended | Year ended | ||||||||||||||||
August 31, | August 31, 2012 | ||||||||||||||||
2013 | |||||||||||||||||
Employee awards | $ | 155,714 | $ | - | |||||||||||||
Non- employee awards, net of forfeitures | 4,355,648 | - | |||||||||||||||
Total stock compensation expense | $ | 4,511,362 | $ | - | |||||||||||||
Schedule of Stock Option Activity | ' | ||||||||||||||||
The following table summarizes stock option activity: | |||||||||||||||||
Number of | Weighted | Total | Weighted | ||||||||||||||
Shares | Average | Weighted | Average | ||||||||||||||
Exercise | Average | Remaining | |||||||||||||||
Price | Intrinsic | Contractual | |||||||||||||||
Value | Life | ||||||||||||||||
(in years) | |||||||||||||||||
Outstanding at August 31, 2012 | - | $ | - | $ | - | - | |||||||||||
Options granted | 23,830,000 | 0.11 | - | - | |||||||||||||
Options exercised | (800,000 | ) | - | - | - | ||||||||||||
Options forfeited | - | - | - | - | |||||||||||||
Options cancelled | (600,000 | ) | - | - | - | ||||||||||||
Outstanding at August 31, 2013 | 22,430,000 | 0.11 | 0.19 | 4.51 | |||||||||||||
Options vested and expected to vest | 22,430,000 | 0.11 | 0.19 | 4.51 | |||||||||||||
Options vested and exercisable | 21,980,000 | $ | 0.1 | $ | 0.2 | 4.52 | |||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
Schedule of Income Tax Expense (Benefit) | ' | ||||||||
Income tax expense consists of the following components at August 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Current tax expense | $ | - | $ | - | |||||
Deferred tax expense (benefit) | 190,652 | (64,689 | ) | ||||||
Total income tax expense (benefit) | $ | 190,652 | $ | (64,689 | ) | ||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||
Income tax expense differed from amounts computed by applying the Federal income tax rate to pre-tax earnings for the years ended August 31, 2013 and 2012, as a result of the following: | |||||||||
2013 | 2012 | ||||||||
United States statutory rate | (35 | )% | (35 | )% | |||||
State income taxes | (10 | )% | (10 | )% | |||||
Foreign earnings taxed at different rates | 1 | % | |||||||
Increase in valuation allowance and other | 41 | % | |||||||
Combined effective tax rate | (3 | )% | (45 | )% | |||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: | |||||||||
August 31, | August 31, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Equipment | $ | 6,648 | $ | 6,648 | |||||
Deferred rent | - | 22,201 | |||||||
Stock issuances to officers, directors and consultant | 2,134,062 | 103,950 | |||||||
Start-up expenses | 993,636 | 64,689 | |||||||
Fair value of beneficial conversion feature and warrants | 27,548 | - | |||||||
Net operating loss carryforward | 438,254 | 438,254 | |||||||
Net operating loss carryforward - Israel | 84,531 | - | |||||||
Gross deferred tax assets | 3,684,679 | 635,742 | |||||||
Valuation allowance | (3,675,438 | ) | (438,254 | ) | |||||
Net deferred tax assets | 9,241 | 197,488 | |||||||
Deferred tax liabilities: | |||||||||
Prepaid insurance | (9,241 | ) | (6,836 | ) | |||||
Gross deferred tax liabilities | (9,241 | ) | (6,836 | ) | |||||
Valuation allowance | - | - | |||||||
Net deferred tax liabilities | (9,241 | ) | (6,836 | ) | |||||
Total deferred tax assets, net | $ | - | $ | 190,652 | |||||
Summary of net deferred tax assets: | |||||||||
Current | $ | - | $ | - | |||||
Non-current | - | 190,652 | |||||||
Total deferred tax assets, net | $ | - | $ | 190,652 | |||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||
Nov. 15, 2012 | Aug. 31, 2012 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | Jul. 31, 2012 | Jul. 31, 2012 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | |
Exercise Price One [Member] | Exercise Price Two [Member] | Common Stock [Member] | Convertible Debentures [Member] | Warrants [Member] | Stock Options [Member] | Warrants with Exercise Prices of $2.00 and $4.00 [Member] | Warrants with Exercise Prices of $2.00 and $4.00 [Member] | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | ||||||
Exercise Price One [Member] | Exercise Price Two [Member] | ||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating expenses | $179,279 | $143,753 | $6,660,919 | $6,840,198 | $143,753 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding | ' | ' | 6,000,000 | 6,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants | ' | ' | $0.01 | $0.01 | ' | $2 | $4 | ' | ' | $0.50 | ' | $2 | $4 | ' | ' |
Antidilutive securities not included in computation of earnings per common share | ' | ' | ' | ' | ' | ' | ' | 30,450,344 | 7,710,172 | 7,710,172 | 22,430,000 | 27,700,000 | 28,142,500 | 55,400 | 55,400 |
Conversion price | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | ' | ' | ' | ' | ' | ' |
Convertible Preferred Stock, Shares Issued upon Conversion | ' | 55,400,000 | ' | ' | 55,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DISCONTINUED_OPERATIONS_Conden
DISCONTINUED OPERATIONS (Condensed Statement of Operations and Condensed Balance Sheets) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
DISCONTINUED OPERATIONS [Abstract] | ' | ' |
Sales, general and administrative expenses | ($204,200) | ($2,175,602) |
Other income (expense) | ' | ' |
Realized gain on life settlement contracts held under investment method | ' | 319,843 |
Realized loss on extinguishment of debt | -8,438,584 | ' |
Change in fair value of life settlement contracts net of premiums paid | 2,055,438 | -36,460,974 |
Interest expense | -1,610,571 | -626,710 |
Loss from discontinued operations before income tax | -8,197,917 | -38,943,443 |
Income tax benefit | 3,879,477 | 16,576,223 |
Net loss from discontinued operations | -4,318,440 | -22,367,220 |
ASSETS | ' | ' |
Cash and cash equivalents | ' | 228,165 |
Investment in life settlement contracts at investment method | ' | 4,334,012 |
Total current assets of discontinued operations | ' | 4,562,177 |
Investment in life settlement contracts at fair value | ' | 64,667,124 |
Deferred income taxes | 145,781 | ' |
Total noncurrent assets of discontinued operations | 145,781 | 64,667,124 |
LIABILITIES | ' | ' |
Interest payable | ' | 626,710 |
Loans payable | ' | 59,450,000 |
Income and other taxes payable | 775,000 | ' |
Total current liabilities of discontinued operations | 775,000 | 60,076,710 |
Deferred income taxes | ' | 4,433,696 |
Total long-term liabilities of discontinued operations | ' | $4,433,696 |
DISCONTINUED_OPERATIONS_Narrat
DISCONTINUED OPERATIONS (Narrative) (Details) (USD $) | 12 Months Ended |
Aug. 31, 2013 | |
DISCONTINUED OPERATIONS [Abstract] | ' |
Proceeds from life settlement contract maturity | $10,000,000 |
Discontinued operations, outstanding obligations | 9,378,807 |
Deferred income tax asset, NOL from discontinued operations | 145,781 |
Income taxes payable | 775,000 |
Interest and penalties | 75,000 |
ALS Capital Ventures LLC [Member] | ' |
Debt Instrument [Line Items] | ' |
Premiums payable | 1,170,526 |
Term Loan [Member] | ' |
Debt Instrument [Line Items] | ' |
Interest payable | 2,123,281 |
Revolving Loan [Member] | ' |
Debt Instrument [Line Items] | ' |
Interest payable | 114,000 |
Debt, net amount | 5,971,000 |
Debt, gross amount | $6,085,000 |
CONVERTIBLE_NOTE_RECEIVABLE_De
CONVERTIBLE NOTE RECEIVABLE (Details) (Convertible Note Receivable [Member], Meta Company [Member], USD $) | 0 Months Ended |
Jul. 10, 2013 | |
Convertible Note Receivable [Member] | Meta Company [Member] | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' |
Amount | $50,000 |
Interest rate | 5.00% |
Maturity | 31-Jul-14 |
Terms of conversion | 'The Note is convertible into common shares of Meta Company at conversion price of 80% of the price of common equity sold in a Qualified Offering of at least $1,000,000. The note is carried at cost which approximates fair value. |
CONVERTIBLE_DEBENTURES_Fair_Va
CONVERTIBLE DEBENTURES (Fair Value Assumptions of Warrants) (Details) (Warrant [Member]) | 12 Months Ended |
Aug. 31, 2013 | |
Issued on April 23, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 71.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 0.70% |
Issued on May 17, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 71.90% |
Dividend yield | 0.00% |
Risk-free interest rate | 0.79% |
Issued on May 22, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 71.70% |
Dividend yield | 0.00% |
Risk-free interest rate | 0.84% |
Issued on May 29, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 72.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.02% |
Issued on July 2, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 72.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.39% |
Issued on July 29, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 74.40% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.36% |
Issued on August 27, 2013 [Member] | ' |
Class of Warrant or Right [Line Items] | ' |
Contractual term (Years) | '5 years |
Volatility | 74.60% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.61% |
CONVERTIBLE_DEBENTURES_Schedul
CONVERTIBLE DEBENTURES (Schedule for Senior Convertible Notes) (Details) (USD $) | Aug. 31, 2013 | Aug. 31, 2012 |
Debt Instrument [Line Items] | ' | ' |
Balance | $128,327 | ' |
Senior convertible notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 1,927,543 | ' |
Interest rate | 1.20% | ' |
Senior convertible notes [Member] | Issued on April 23, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 200,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 185,761 | ' |
Balance | 14,239 | ' |
Accrued interest payable | 855 | ' |
Senior convertible notes [Member] | Issued on May 17, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 200,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 139,066 | ' |
Balance | 60,934 | ' |
Accrued interest payable | 697 | ' |
Senior convertible notes [Member] | Issued on May 22, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 202,543 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 177,410 | ' |
Balance | 25,133 | ' |
Accrued interest payable | 673 | ' |
Senior convertible notes [Member] | Issued on May 29, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 225,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 213,417 | ' |
Balance | 11,583 | ' |
Accrued interest payable | 695 | ' |
Senior convertible notes [Member] | Issued on July 2, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 250,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 241,781 | ' |
Balance | 8,219 | ' |
Accrued interest payable | 493 | ' |
Senior convertible notes [Member] | Issued on July 29, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 400,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 392,767 | ' |
Balance | 7,233 | ' |
Accrued interest payable | 434 | ' |
Senior convertible notes [Member] | Issued on August 27, 2013 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Amount | 450,000 | ' |
Interest rate | 1.20% | ' |
Debt discount/ beneficial conversion feature | 449,014 | ' |
Balance | 986 | ' |
Accrued interest payable | $59 | ' |
CONVERTIBLE_DEBENTURES_Narrati
CONVERTIBLE DEBENTURES (Narrative) (Details) (USD $) | Aug. 31, 2013 | Jul. 31, 2012 | Aug. 31, 2013 |
Convertible Debentures [Member] | |||
Debt Instrument [Line Items] | ' | ' | ' |
Term | ' | ' | '5 years |
Amount | ' | ' | $1,927,543 |
Interest rate | ' | ' | 1.20% |
Conversion price | ' | ' | $0.25 |
Warrant Term | ' | ' | '5 years |
Warrants issued to purchase shares of common stock | ' | 57,592,500 | 7,710,172 |
Exercise price of warrants | $0.01 | ' | $0.50 |
Aggregate fair value of warrants and beneficial conversion feature | ' | ' | $1,860,434 |
PREFERRED_STOCK_Details
PREFERRED STOCK (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||
Jul. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2013 | Jul. 25, 2012 | Jul. 25, 2012 | Jul. 31, 2012 | Jul. 31, 2012 | Jul. 31, 2012 | Jul. 31, 2012 | Feb. 29, 2012 | Aug. 31, 2012 | Jul. 31, 2012 | Aug. 31, 2012 | |
Dividends Due Date One [Member] | Dividends Due Date Two [Member] | Dividends Due Date Three [Member] | Exercise Price One [Member] | Exercise Price Two [Member] | Series A Convertible Preferred Stock [Member] | Series A Convertible Preferred Stock [Member] | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | ||||
Preferred Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | ' | 100,000,000 | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, par value (in dollars per share) | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend due date | ' | ' | ' | 31-Dec-11 | 30-Jun-12 | 31-Jul-12 | ' | ' | ' | ' | ' | ' | ' |
Stock dividends paid on preferred stock, Shares | ' | ' | ' | 3,201,093 | 3,315,754 | 603,303 | ' | ' | ' | ' | ' | ' | ' |
Stock dividends paid on preferred stock | ' | ' | ' | $3,233,104 | $1,160,514 | $187,024 | ' | ' | ' | ' | ' | ' | ' |
Conversion price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1 | ' | $1 |
Deemed dividends on preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | 932,643 | ' | ' | ' |
Private placement of shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,500 | 6,350 | ' | ' |
Repurchase of preferred stock, shares | ' | ' | ' | ' | ' | ' | ' | ' | 48,300 | ' | 48,300 | 8,850 | 8,850 |
Repurchase of preferred stock | 57,150,000 | 57,150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price for repurchased preferred stock | $57,150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares available for warrants exercised | 57,592,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants | ' | ' | $0.01 | ' | ' | ' | $2 | $4 | ' | ' | ' | ' | ' |
COMMON_STOCK_WARRANTS_AND_OPTI2
COMMON STOCK, WARRANTS AND OPTIONS (Schedule of Warrant Transactions) (Details) (Warrant [Member], USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Warrant [Member] | ' | ' |
Number of warrants | ' | ' |
Balance | 6,000,000 | ' |
Issued | 7,710,172 | ' |
Balance | 13,710,172 | 6,000,000 |
Weighted average exercise price | ' | ' |
Balance | $0.01 | ' |
Issued | $0.50 | ' |
Balance | $0.28 | $0.01 |
Weighted average life remaining (in years) | ' | ' |
Balance | '3 years 6 months 4 days | '1 year 9 months 15 days |
Issued | '4 years 10 months 6 days | ' |
COMMON_STOCK_WARRANTS_AND_OPTI3
COMMON STOCK, WARRANTS AND OPTIONS (Fair Value Assumptions for Options) (Details) (Stock Options [Member], USD $) | 12 Months Ended |
Aug. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Expected stock price volatility, minimum | 71.50% |
Expected stock price volatility, maximum | 72.00% |
Risk-free rate of interest, minimum | 0.76% |
Risk-free rate of interest, maximum | 1.01% |
Aggregate fair value of the options at grant date | $4,466,434 |
Maximum [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price | $0.10 |
Expected life of options | '4 years 1 month 24 days |
Minimum [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price | $0.41 |
Expected life of options | '4 years 9 months |
COMMON_STOCK_WARRANTS_AND_OPTI4
COMMON STOCK, WARRANTS AND OPTIONS (Schedule of Stock-Based Compensation Expense) (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Stock compensation expense | $4,511,362 | $4,511,362 | ' |
Employee Stock Option [Member] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Stock compensation expense | ' | 155,714 | ' |
Non-Employee Award [Member] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Stock compensation expense | ' | $4,355,648 | ' |
COMMON_STOCK_WARRANTS_AND_OPTI5
COMMON STOCK, WARRANTS AND OPTIONS (Schedule of Stock Option Activity) (Details) (Stock Options [Member], USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Stock Options [Member] | ' | ' |
Number of Shares | ' | ' |
Outstanding at August 31, 2012 | ' | ' |
Options granted | 23,830,000 | ' |
Options exercised | -800,000 | ' |
Options forfeited | ' | ' |
Options cancelled | -600,000 | ' |
Outstanding at August 31, 2013 | 22,430,000 | ' |
Options vested and expected to vest | 22,430,000 | ' |
Options vested and exercisable | 21,980,000 | ' |
Weighted Average Exercise Price | ' | ' |
Outstanding at August 31, 2012 | ' | ' |
Options granted | $0.11 | ' |
Options exercised | ' | ' |
Options forfeited | ' | ' |
Options cancelled | ' | ' |
Outstanding at August 31, 2013 | $0.11 | ' |
Options vested and expected to vest | $0.11 | ' |
Options vested and exercisable | $0.10 | ' |
Total Weighted Average Intrinsic Value | ' | ' |
Outstanding at August 31, 2012 | ' | ' |
Options granted | ' | ' |
Options exercised | ' | ' |
Options forfeited | ' | ' |
Options cancelled | ' | ' |
Outstanding at August 31, 2013 | $0.19 | ' |
Options vested and expected to vest | $0.19 | ' |
Options vested and exercisable | $0.20 | ' |
Weighted Average Remaining Contactual Life (in years) | ' | ' |
Outstanding | '4 years 6 months 4 days | ' |
Options granted | ' | ' |
Options exercised | ' | ' |
Options forfeited | ' | ' |
Options cancelled | ' | ' |
Options vested and expected to vest | '4 years 6 months 4 days | ' |
Options vested and exercisable | '4 years 6 months 7 days | ' |
COMMON_STOCK_WARRANTS_AND_OPTI6
COMMON STOCK, WARRANTS AND OPTIONS (Narrative) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock issued for services, value | $69,604 | ' |
Treasury stock | 355,468 | 315,148 |
Warrants outstanding and exercisable | 13,710,172 | ' |
Stock options compensation expense | 4,441,758 | ' |
Unamortized stock compensation expense | 24,676 | ' |
2013 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Equity Incentive Plan, shares of common stock reserved for issuance | 30,000,000 | ' |
2013 and 2010 Plans [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Equity Incentive Plan, shares of common stock reserved for issuance | 40,000,000 | ' |
Stock options outstanding | 24,570,012 | ' |
CFO [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock returned to treasury, shares | 40,320 | ' |
Taxes paid | 5,645 | ' |
Officer [Member] | 2010 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 230,000 | ' |
Options granted, exercise price | $0.25 | ' |
Stock option, vesting date | 6-Mar-13 | ' |
Stock option, expiration date | 7-Mar-18 | ' |
Helen Papagiannis [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Annual base compensation | 200,000 | ' |
Helen Papagiannis [Member] | 2010 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 500,000 | ' |
Options granted, exercise price | $0.25 | ' |
Stock option, vesting date | 6-Mar-13 | ' |
Stock option, expiration date | 7-Mar-18 | ' |
Option vesting terms | '100,000 of such Options vest on March 6, 2013 and expire on March 7, 2018. 400,000 of such Options vest quarterly over the next 2 years (in equal amounts of 50,000 Options at the beginning of the Company's quarterly reporting periods, i.e. December 1, March 1, June 1 and September 1), and expire on March 7, 2018. | ' |
Enon Landenberg [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Annual base compensation | 250,000 | ' |
Former CEO [Member] | 2013 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 300,000 | ' |
Options granted, exercise price | $0.41 | ' |
Stock option, vesting date | 1-Dec-13 | ' |
Stock option, expiration date | 29-May-18 | ' |
Director [Member] | 2010 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 100,000 | ' |
Options granted, exercise price | $0.31 | ' |
Stock option, vesting date | 24-Oct-13 | ' |
Stock option, expiration date | 23-Oct-17 | ' |
Minimum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Warrant expiration date | 1-Jun-15 | ' |
Maximum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Warrant expiration date | 31-Aug-18 | ' |
Consultants [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Stock issued for services, shares | 240,012 | ' |
Stock issued for services, value | $69,604 | ' |
Consultants [Member] | 2013 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 14,550,000 | ' |
Consultants [Member] | 2013 and 2010 Plans [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 22,600,000 | ' |
Options granted, exercise price | $0.10 | ' |
Stock option, vesting date | 4-Mar-13 | ' |
Stock option, expiration date | 5-Mar-18 | ' |
Options exercised | 800,000 | ' |
Options forfeited and cancelled | 300,000 | ' |
Consultants [Member] | 2010 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options granted | 8,050,000 | ' |
INCOME_TAXES_Schedule_of_Incom
INCOME TAXES (Schedule of Income Tax Expense (Benefit)) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
INCOME TAXES [Abstract] | ' | ' |
Current tax expense | ' | ' |
Deferred tax expense (benefit) | 190,652 | -64,689 |
Total income tax expense (benefit) | $190,652 | ($64,689) |
INCOME_TAXES_Schedule_of_Effec
INCOME TAXES (Schedule of Effective Tax Rate Reconciliation) (Details) | 12 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | |
INCOME TAXES [Abstract] | ' | ' |
United States statutory rate | -35.00% | -35.00% |
State income taxes | -10.00% | -10.00% |
Foreign earnings taxed at different rates | 1.00% | ' |
Increase in valuation allowance and other | 41.00% | ' |
Combined effective tax rate | -3.00% | -45.00% |
INCOME_TAXES_Schedule_of_Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) | Aug. 31, 2013 | Aug. 31, 2012 |
Deferred tax assets: | ' | ' |
Equipment | $6,648 | $6,648 |
Deferred rent | ' | 22,201 |
Stock issuances to officers, directors and consultant | 2,134,062 | 103,950 |
Start-up expenses | 993,636 | 64,689 |
Fair value of beneficial conversion feature and warrants | 27,548 | ' |
Net operating loss carryforward | 438,254 | 438,254 |
Net operating loss carryforward - Israel | 84,531 | ' |
Gross deferred tax assets | 3,684,679 | 635,742 |
Valuation allowance | -3,675,438 | -438,254 |
Net deferred tax assets | 9,241 | 197,488 |
Deferred tax liabilities: | ' | ' |
Prepaid insurance | -9,241 | -6,836 |
Gross deferred tax liabilities | -9,241 | -6,836 |
Valuation allowance | ' | ' |
Net deferred tax liabilities | -9,241 | -6,836 |
Total deferred tax assets, net | ' | 190,652 |
Summary of net deferred tax assets: | ' | ' |
Current | ' | ' |
Non-current | ' | 190,652 |
Total deferred tax assets, net | ' | ($190,652) |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) (USD $) | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 |
Capital Loss Carryforward [Member] | Federal, State, and Local [Member] | Israel [Member] | Israel [Member] | Israel [Member] | ||
Available To Be Carried Forward Indefinitely [Member] | Available To Be Carried Forward Indefinitely [Member] | |||||
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' | ' |
Net operating losses | ' | ' | $1,974,000 | $1,298,000 | $340,000 | $0 |
Net operating losses carried forward, expiration date | ' | ' | ' | 31-Aug-32 | ' | ' |
Valuation allowance | 523,000 | ' | ' | ' | ' | ' |
Capital losses | ' | 3,150,000 | ' | ' | ' | ' |
Capital loss carryforward, expiration date | ' | 31-Aug-18 | ' | ' | ' | ' |
Capital loss carryforward, valuation allowance | ' | $1,420,000 | ' | ' | ' | ' |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2013 | 22-May-13 |
"Note" [Member] | "Note" [Member] | |||
Principal Shareholder [Member] | ||||
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Amount | ' | ' | $200,000 | $200,000 |
Interest rate | ' | ' | 8.00% | ' |
Maturity | ' | ' | 31-May-13 | ' |
Exchange of Note for a Convertible Debenture | ' | ' | ' | 202,543 |
Accrued interest | $3,906 | ' | ' | $2,543 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) | 0 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||
Dec. 19, 2013 | Dec. 05, 2013 | Nov. 27, 2013 | Nov. 27, 2013 | Nov. 07, 2013 | Oct. 09, 2013 | Sep. 17, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2012 | Sep. 11, 2013 | Nov. 01, 2013 | Nov. 18, 2013 | |
USD ($) | USD ($) | USD ($) | ILS | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Ori Inbar [Member] | Ortal Zanzuri [Member] | Consultant [Member] | |
USD ($) | USD ($) | USD ($) | |||||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly retainer fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,000 | ' | ' |
Annual base compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | ' |
Options granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | 200,000 | ' |
Options granted, exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.29 | ' | ' |
Option vesting terms | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'The options vest semiannually over the next 2 years (at the beginning of the Company's quarterly reporting date, i.e. March 1 and September 1), and expire 5 years from each vesting date. 25,000 (or 25%) Options shall initially vest on March 1, 2014 and expire on February 28, 2019. | ' | ' |
Stock option, vesting date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1-Mar-14 | ' | ' |
Stock option, expiration date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28-Feb-19 | ' | ' |
Proceeds from convertible debentures | 350,000 | 325,000 | ' | ' | 325,000 | 325,000 | 350,000 | 1,725,000 | 1,725,000 | ' | ' | ' | ' |
Options exercised | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 399,260 |
Options exercised, exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.10 |
Proceeds from exercise of stock options | ' | ' | ' | ' | ' | ' | ' | 80,000 | 80,000 | ' | ' | ' | 39,926 |
Compensation amount sought | ' | ' | $57,000 | 202,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |