Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Feb. 28, 2015 | Apr. 14, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Infinity Augmented Reality, Inc. | |
Entity Central Index Key | 1421538 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -23 | |
Document Type | 10-Q | |
Document Period End Date | 28-Feb-15 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 110,123,545 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $726,926 | $875,438 |
Prepaid expenses and other receivables | 44,674 | 178,394 |
Total current assets | 771,600 | 1,053,832 |
Property and equipment, net | 68,724 | 84,885 |
Investment in Meta Company | 50,000 | 50,000 |
TOTAL ASSETS | 890,324 | 1,188,717 |
Current Liabilities | ||
Accounts payable and accrued expenses | 95,971 | 191,046 |
Interest payable | 90,106 | 54,871 |
Current liabilities of discontinued operations | 27,835 | |
Total current liabilities | 186,077 | 273,752 |
Convertible debentures, net of debt discount | 3,191,433 | 3,291,930 |
TOTAL LIABILITES | 3,377,510 | 3,565,682 |
COMMITMENTS AND CONTINGENT LIABILITIES | ||
STOCKHOLDERS' DEFICIT | ||
Common stock ($ 0.00001 par value; 500,000,000 authorized; 105,235,038 issued and 104,879,570 outstanding at February 28, 2015; 95,316,155 issued and 94,960,687 outstanding at August 31, 2014) | 1,052 | 953 |
Additional paid in capital | 66,156,982 | 63,866,965 |
Treasury stock, at cost 355,468 shares of common stock February 28, 2015 and August 31, 2014 | -49,766 | -49,766 |
Accumulated deficit | -68,531,679 | -66,180,566 |
Accumulated other comprehensive loss | -63,775 | -14,551 |
Total Stockholders' Deficit | -2,487,186 | -2,376,965 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $890,324 | $1,188,717 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Consolidated Balance Sheets [Abstract] | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 105,235,038 | 95,316,155 |
Common stock, shares outstanding | 104,879,570 | 94,960,687 |
Treasury stock | 355,468 | 355,468 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Income Statement [Abstract] | ||||
Research and Development expenses | ($237,285) | ($484,692) | ($419,360) | ($829,491) |
Marketing, General and administrative expenses | -834,477 | -1,150,593 | -1,868,540 | -1,881,026 |
Total Operating expenses | -1,071,762 | -1,635,285 | -2,287,900 | -2,710,517 |
Interest and other finance income (expense) | 188,567 | -183,127 | -63,213 | -302,864 |
Loss from continuing operations before income tax | -883,195 | -1,818,412 | -2,351,113 | -3,013,381 |
Provision for income tax | ||||
Loss from continuing operations | -883,195 | -1,818,412 | -2,351,113 | -3,013,381 |
Loss from discontinued operations | -114,966 | -114,966 | ||
Net loss | -883,195 | -1,933,378 | -2,351,113 | -3,128,347 |
Basic and diluted loss per common share | ||||
Continuing operations | ($0.01) | ($0.02) | ($0.02) | ($0.03) |
Discontinued operations | ||||
Net loss per common share | ($0.01) | ($0.02) | ($0.02) | ($0.03) |
Basic weighted average shares outstanding | 103,715,932 | 99,855,165 | 102,330,698 | 99,566,969 |
Diluted weighted average shares outstanding | 103,715,932 | 99,855,165 | 102,330,698 | 99,566,969 |
Net loss | -883,195 | -1,933,378 | -2,351,113 | -3,128,347 |
Foreign currency translation adjustments | -10,077 | -11,431 | -49,224 | -17,232 |
Comprehensive loss | ($893,272) | ($1,944,809) | ($2,400,337) | ($3,145,579) |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
OPERATING ACTIVITIES | ||
Net loss | ($2,351,113) | ($3,128,347) |
Loss from discontinued operations | 114,966 | |
Adjustments to reconcile net loss to net cash (used in) provided by operations | ||
Amortization of debt discount | 460,243 | 287,703 |
Stock-based compensation | 1,412,213 | 294,622 |
Finance income from conversion of convertible debt and warrants | -442,956 | |
Foreign exchange gain on investment in subsidiary | -19,884 | |
Loss on disposition of equipment | 25,385 | |
Issuance of stock for in-process research and development | 26,110 | |
Depreciation | 17,081 | 24,818 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other receivables and long-term receivables | 122,408 | 3,223 |
Accounts payable and accrued expenses | -89,916 | 376,447 |
Interest payable | 45,354 | 18,077 |
Net cash used in operating activities- continuing operations | -826,686 | -1,976,880 |
Net cash (used in) provided by operating activities- discontinued operations | -22,987 | -197,023 |
Net cash (used in) provided by operating activities | -849,673 | -2,173,903 |
INVESTING ACTIVITIES | ||
Purchase of leasehold improvements and equipment | -9,169 | -70,803 |
Net cash used in investing activities | -9,169 | -70,803 |
FINANCING ACTIVITIES | ||
Proceeds from convertible debentures | 750,000 | 2,030,000 |
Proceeds from exercise of stock options | 69,926 | |
Net cash provided by financing activities | 750,000 | 2,099,926 |
Effect of exchange rate on cash and cash equivalents | -39,670 | 944 |
Change in cash and cash equivalents | -148,512 | -143,836 |
Cash and cash equivalents, beginning | 875,438 | 431,760 |
Cash and cash equivalents of continuing operations, ending | 726,926 | 287,924 |
Supplemental disclosure of cash flow information: | ||
Tax paid in cash | 22,987 | 197,023 |
Non-cash Investing and Financing activities: | ||
Warrants issued in connection with convertible debentures | 249,145 | 834,272 |
Beneficial conversion feature | 1,110,285 | |
Conversion of convertible note receivables to preferred shares of Meta Company | 50,000 | |
Conversion of convertible note | $1,061,595 |
Nature_and_Continuance_of_Oper
Nature and Continuance of Operations | 6 Months Ended | |
Feb. 28, 2015 | ||
Nature and Continuance of Operations [Abstract] | ||
NATURE AND CONTINUANCE OF OPERATIONS | NOTE 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 in the business of 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. 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. | ||
In May 2012, we 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 is intended to 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, 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 an augmented reality software platform which will provide end users with a fully three dimensional (3D) interactive augmented reality experience with full hand controls and a completely natural user interface. Augmented reality (”AR”), is a technology which allows the projection of visual content that the viewer perceives as a real life experience and allows the viewer to intuitively interact with augmented content in his or her physical surroundings. The Company’s technology platform is made up of computer vision algorithms which will interface with any hardware including mobile or wearable devices that have two dimensional (2D) stereoscopic cameras. The Company’s technology will turn such hardware into a powerful content augmentation platform, will be usable both outdoors and indoors and will feature a lower power consumption. | ||
The Company is developing three software development kits (“SDKs”), which will serve as the core platform for augmented reality software developers and wearable device manufacturers. Our solution is designed to assist application developers in easily and efficiently developing advanced augmented reality applications, in a shorter time-to-market, while still providing a rich augmented reality experience. | ||
On February 2, 2015, the Company and certain of its debenture holders and stockholders and their affiliates holding a majority of the Company’s outstanding voting equity securities (the “Security Holders”) entered into a definitive agreement to restructure a portion of the Company’s existing debt, provide for the assumption by certain of the stockholders of liabilities arising from the Company’s former business and serving as a first step in efforts to effect a recapitalization of the Company (the “Master Agreement”). Under the terms of the Master Agreement, Credit Strategies LLC, Platinum Partners Value Arbitrage Fund L.P. (“Platinum”) and ALS Capital Ventures LLC for itself and as agent for each of its affiliates on behalf of whom it holds the assets relating to our former business, the Life Settlement Business ( “ALS” and collectively, the “Indemnitors”) have assumed all liabilities relating to the Company’s former activities in the life settlement business and have agreed to indemnify the Company and its directors and officers from and against any losses related to such former business. In connection therewith, the Indemnitors have agreed to indemnify the Company for all legal fees and expenses and to assume all liability relating to the legal suit currently proceeding in State Court in New York which was commenced by CMS Life Insurance Opportunity Fund, L.P., and have agreed to reimburse the Company for all legal fees that have already been paid to the Company’s attorneys in respect of said proceeding. | ||
The Company has issued debentures in an aggregate principal amount of $7,793,543 convertible into shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), at a rate of $0.25 per share (the “Debentures”). In connection with the issuance of the Debentures, the Company also issued warrants to purchase up to 31,174,172 additional shares of Common Stock at an exercise price of $0.50 per share (the “Warrants”). Under the Master Agreement, the Security Holders, with the exception of ALS, have agreed to exchange these Debentures, accrued interest and Warrants for 52,767,193 shares of newly designated Preferred A Convertible Stock par value $0.00001 per share (the “Series A Preferred Stock”). ALS has agreed to convert all of its Debentures, accrued interest and Warrants into 9,918,883 shares of our Common Stock. | ||
The Series A Preferred Stock will be authorized in accordance with an amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock to be filed with the Nevada Secretary of State once the Authorized Capital Increase described below has been implemented. A total of 52,767,193 shares of Series A Preferred Stock will be so authorized. | ||
The holders of Series A Preferred Stock will be entitled to a liquidation preference of an aggregate of $6,634,256, plus interest of 1.2% per annum commencing from January 1, 2015 (“Liquidation Preference”) payable upon the liquidation, consolidation or merger of the Company or upon the sale of all of substantially all of the assets or outstanding share capital of the Company (each, a “Deemed Liquidation”). Upon the occurrence of a Deemed Liquidation and after receipt of the Liquidation Preference, the holders of the Series A Preferred Stock shall not be entitled to share in the remainder of the proceeds of such Deemed Liquidation transaction with the remaining stockholders of the Company. Notwithstanding the foregoing, the holders of Series A Preferred Stock shall not be entitled to receive the Liquidation Preference if such Series A Preferred Stock holders would have received an amount exceeding the Liquidation Preference pursuant to any Deemed Liquidation. | ||
The Series A Preferred Stock shall vote together with the Common Stock as a single class, and shall not confer upon the holders thereof any rights senior to, or otherwise different from, the rights conferred upon the holders of Common Stock, other than the Liquidation Preference. At the option of the Series A Preferred Stock holder(s), the shares of Series A Preferred Stock shall be convertible into shares of Common Stock on a one-for-one basis, as adjusted for subdivision, combination or consolidation of Common Stock, stock dividends and other distributions. The Series A Preferred Stock shall automatically be converted into Common Stock upon the closing of a public offering of the Company’s Common Stock with net proceeds to the Company of at least $20,000,000 or upon the consent of the holders of a majority of the outstanding Series A Preferred Stock at such time, to so convert. | ||
In addition, it was agreed under the Master Agreement that the Company should take all steps necessary in order to reduce the number of record holders of the Company’s Common Stock to below 300 holders of record, which would cause the Company’s reporting obligations under The Exchange Act of 1934, as amended (the “Exchange Act”) to become eligible for suspension under Rule12h-3 or Section 15(d) thereunder, and cause the Company’s Common Stock to become eligible for termination of registration under Rule 12g-4 and Section 12(g) of the Exchange Act. The purpose of these efforts is to reduce the administrative burden and costs associated with the Company’s reporting obligations under the Exchange Act. In addition, the prospect of additional financing (discussed further below) is premised on the Company successfully suspending its reporting obligation under the Exchange Act. | ||
In furtherance of the Company’s efforts to suspend its reporting obligation under the Act, the Master Agreement contemplates that the Company will implement a 101-for-1 reverse stock split of the Company’s outstanding Common Stock (the “Reverse Stock Split”) immediately followed by a 1-for-101 forward stock split of the Company’s outstanding Common Stock (the “Forward Stock Split”, and collectively with the Reverse Stock Split, the “Reverse/Forward Stock Split”). Holders of record of less than one share of Common Stock after the Reverse Stock Split would be cashed out at the rate of $0.15 per pre-split share. Holders of record of more than one share of Common Stock after the Reverse Stock Split will participate in the Forward Stock Split. Such amendments would not change the par value per share or the number of authorized shares of Common Stock. The Company has received the consent of the holders of the requisite number of its outstanding Common Stock under Nevada law to implement the Reverse/Forward Stock Split. | ||
If the Reverse/Forward Stock Split is implemented as contemplated, the number of record holders of the Company’s Common Stock would fall below 300 holders of record and the Company would no longer be required to file periodic reports with the Securities Exchange Commission (the “SEC”). The Company believes that the deregistration of its Common Stock under the Exchange Act should reduce significant outlays currently expended in complying with the Company’s reporting obligations and allow management to expend its time and resources to otherwise managing the growth of its business and maximizing long-term shareholder value. | ||
Subject to the successful completion of all of the transactions contemplated under the Master Agreement, including the suspension of the Company’s reporting obligations under the Exchange Act, and approval by the Company’s board of directors, the Security Holders comprising the holders of a majority of the Company’s outstanding Common Stock have agreed that the Company seek investment in the Company for an aggregate purchase price of up to $5,000,000 at a Company pre-money valuation of no less than $6,000,000. Any such investment would be on terms and conditions approved by the Company’s board of directors. | ||
On April 6, 2015, the Company entered into a definitive agreement (the “Agreement”) with Singulariteam Fund II L.P. (“Singulariteam II”), Platinum Partners Value Arbitrage Fund, LP, both existing stockholders of the Company, and SUNCORPORATION of Japan (collectively, the “Investors”), for the purpose of raising funds for the Company’s operation and activities. According to the Agreement, the Investors will invest $1.25 million at the initial closing and receive convertible notes (the “Notes”) which will be convertible into Series B Preferred Stock upon the creation thereof. The Agreement also provides that if the Company shall have an effective certificate of designation of Series B Preferred Stock of the Company, par value $0.00001 each filed with the Secretary of State of Nevada, the Investors have agreed to invest an additional $3.75 million. | ||
The Master Agreement contemplates an increase of the authorized share capital (the “Authorized Capital Increase”) of Common Stock from 500,000,000 shares of Common Stock, to 1,000,000,000 shares of Common Stock, and an increase of the Company’s authorized shares of preferred stock from 100,000,000 shares of preferred stock, par value $0.00001 per share (the “Preferred Stock”) to 500,000,000 shares of Preferred Stock. | ||
The Authorized Capital Increase is intended, among other things, to provide for the issuance of the Series A Preferred Stock, issuance of additional series of Preferred Stock to prospective investors and for the issuance of up to 155,000,000 shares of Common Stock to our directors and employees pursuant to the Company’s new incentive plan and to enhance corporate flexibility to finance and develop the operations of our business. Increasing the Company’s authorized shares of Common Stock will provide the Company with greater flexibility and allow for the issuance of additional shares of Common Stock at such times that the Company’s board may deem such issuance to be in the service of the Company’s interest, without the expense or delay of seeking approval from the stockholders. The Company has received the consent of the holders of the requisite number of its outstanding Common Stock under Nevada law to the Authorized Share Increase. | ||
The Master Agreement contemplates that the Company approve an equity incentive plan in order to facilitate the grant of Restricted Stock Units and/or options to purchase Common Stock of the Company to such executive officers, employees and consultants of the Company and its subsidiary, as the Board of Directors deems fit, from time to time (the “2015 Incentive Plan”) | ||
The intended purpose of the 2015 Incentive Plan is to attract and retain highly qualified and experienced directors, employees and consultants and to give such directors, employees and consultants a continued proprietary interest in the success of the Company. The 2015 Incentive Plan provides for the issuance of options (including incentive stock options for employees only), restricted or unrestricted common stock and other awards under the 2015 Incentive Plan. | ||
It is anticipated that the Company will issue 60 million Restricted Stock Units to each of Motti Kushnir, our Chief Executive Officer and Matan Protter, the Chief Technology Officer of our Infinity Israel and 12.6 million Restricted Stock Units to Ortal Zanzuri, our Chief Financial Officer. | ||
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. 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 unaudited 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 | 6 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Significant Accounting Policies [Abstract] | ||||||||||
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Basis of Presentation | ||||||||||
The accompanying unaudited condensed consolidated financial statements as of February 28, 2015 and for the three months and six months ended February 28, 2015 and 2014, have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the EC and on the same basis as the annual audited financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All significant intercompany accounts and transactions are eliminated in the consolidation process. The unaudited Balance Sheet as of February 28, 2015, Statements of Operations and comprehensive loss for the three months and six months ended February 28, 2015 and February 28, 2014, and Statements of Cash Flows for the six months ended February 28, 2015 and February 28, 2014, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The results for the three months and six months ended February 28, 2015 are not necessarily indicative of results to be expected for the year ending August 31, 2015 or for any future interim period. In addition, the balance sheet data at August 31, 2014 was derived from the audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on November 26, 2014. | ||||||||||
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 deferred income tax amounts and rates and timing of the reversal of income tax differences. | ||||||||||
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 for each period presented 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. As of February 28, 2015, 78,310,344 shares of common stock, comprised of 26,230,172 convertible debentures with a conversion price of $0.25, 26,230,172 warrants with an exercise price of $0.50, and stock options exercisable into 25,850,000 common shares are not included in diluted loss per share since their effect would be anti-dilutive. As of February 28, 2014, 59,709,834 shares of common stock, comprised of 15,830,172 convertible debentures with a conversion price of $0.25, 15,830,172 warrants with an exercise price of $0.50, and stock options exercisable into 28,049,490 common shares are not included in diluted loss 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. | ||||||||||
Valuation Assumptions | ||||||||||
The Company estimates the fair value of stock option grants using a Black-Scholes option pricing model. 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: | ||||||||||
Three Months ended | Six Months ended | |||||||||
February 28, | February 28, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Exercise price | $0.07 | $0.10 - $0.40 | $0.07 | $0.10 - $0.40 | ||||||
Expected stock price volatility | 94.29% - 105.62% | 87.9% - 92.4% | 94.29% -105.62% | 66.3% - 92.4% | ||||||
Risk-free rate of interest | 0.98% - 1.39% | 0.04% - 1.65% | 0.98% - 1.39% | 0.04% - 1.72% | ||||||
Expected life of options | 2.75-4 Years | 1-4 Years | 2.75-4 Years | 1-4 Years | ||||||
Recent Accounting Pronouncements | ||||||||||
In November 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-17, Pushdown Accounting. This ASU provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The election to apply pushdown accounting can be made either in the period in which the change of control occurred, or in a subsequent period. This ASU is effective as of November 18, 2014. The adoption will not have a material impact on the Company’s results of operations, cash flows or financial position. | ||||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (ASC) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual periods beginning after December 15, 2016 (fiscal 2018) and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s results of operations, cash flows or financial position. | ||||||||||
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU raises the threshold for a disposal to qualify as discontinued operations and requires new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. Under the new standard, companies report discontinued operations when they have a disposal that represents a strategic shift that has or will have a major impact on operations or financial results. This update will be applied prospectively and is effective for annual periods, and interim periods within those years, beginning after December 15, 2014 (fiscal 2016). Early adoption is permitted provided the disposal was not previously disclosed. This update will not have a material impact on the Company's reported results of operations and financial position. The impact is non-cash in nature and will not affect the Company's cash position. | ||||||||||
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 condensed financial statements of the Company. |
Convertible_Debentures
Convertible Debentures | 6 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Convertible Debentures [Abstract] | ||||||||||
CONVERTIBLE DEBENTURES | NOTE 3: | CONVERTIBLE DEBENTURES | ||||||||
During the six months ended February 28, 2015, the Company issued a (i) five-year Convertible Series A-14 Debentures (the “A-14 Debentures”) for an aggregate principal amount of $750,000, bearing interest at 1.2% per annum, convertible into shares of Common Stock, at a conversion price of $0.25, and (ii) a five-year Warrant (the “2014 Warrants”) to purchase 3,000,000 shares of Common Stock, to Credit Strategies, LLC, pursuant to Securities Purchase Agreements dated March 26, 2014. | ||||||||||
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. | ||||||||||
During the six months ended February 28, 2015, the Company recorded an aggregate of $249,145 for the calculated fair value of 2014 Warrants and BCF, in conjunction with A-14 Debentures issued on September 15 and November 7, 2014. | ||||||||||
The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions: | ||||||||||
September 15, 2014 | November 7, 2014 | |||||||||
Contractual term (Years) | 5 | 5 | ||||||||
Volatility | 139.6 | % | 162.5 | % | ||||||
Dividend yield | 0 | % | 0 | % | ||||||
Risk-free interest rate | 1.8 | % | 1.6 | % | ||||||
The Company has issued Debentures in an aggregate principal amount of $7,793,543 convertible into shares of the Company’s Common Stock, at a rate of $0.25 per share. In connection with the issuance of the Debentures, the Company also issued Warrants to purchase up to 31,174,172 additional shares of Common Stock at an exercise price of $0.50 per share. Under the Master Agreement, all the Debenture and Warrant holders, with the exception of ALS, agreed to exchange such Debentures, accrued interest and Warrants for 52,767,193 shares of newly designated Series A Preferred Stock. ALS has agreed to convert all of its Debentures, accrued interest and Warrants into 9,918,883 shares of Common Stock. | ||||||||||
As of February 28, 2015 the Company issued 9,918,883 shares of Common Stock to ALS in exchange for its Debentures, accrued interest and Warrants. The entire unamortized discount remaining at the date of the conversion in amount of approximately $443,000 was recognized immediately as interest income. The carrying amount of the debt was credited to equity to reflect the stock issued. | ||||||||||
February 28, 2015 | August 31, 2014 | |||||||||
1.2% convertible debentures | 6,557,543 | 7,043,543 | ||||||||
Debt discount/ beneficial conversion feature | (3,366,110 | ) | (3,751,613 | ) | ||||||
Balance | $ | 3,191,433 | $ | 3,291,930 | ||||||
Commitments_and_Contingent_Lia
Commitments and Contingent Liabilities | 6 Months Ended | |
Feb. 28, 2015 | ||
Commitments and Contingent Liabilities [Abstract] | ||
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 4: | COMMITMENTS AND CONTINGENT LIABILITIES |
With respect to our prior activities in the life insurance settlement business, we were recently joined as a defendant in a lawsuit captioned as CMS Life Ins. Opportunity Fund L.P., et al. v. Progressive Capital Solutions in the New York State Supreme Court, New York County. The intervening plaintiffs, Genesis Merchant Partners, LP and Genesis Merchant Partners II, LP, to which we collectively refer to herein as Genesis, claim that we owned certain unidentified "Life Settlement" insurance policies, that are subject to Genesis' rights. | ||
Genesis is seeking declaratory and injunctive relief (but no money damages). We exited the life settlement insurance business in November 2012 and do not own or claim any rights in any such life settlement insurance policies. Accordingly, we believe that the claims are frivolous and intends to vigorously defend against the allegations. | ||
On December 8, 2014, the Company filed a Motion to Dismiss Genesis’ Complaint as it relates to both of the claims against the Company. On March 5, 2015 oral argument was held and the Judge partially granted and partially denied the Motion to Dismiss dismissing the preliminary injunction cause of action in Genesis’ Complaint, and denied the Motion to Dismiss the declaratory judgement cause of action. The Company is preparing an Answer to the Genesis Complaint, including affirmative defenses, which is required to be filed by April 6, 2015. | ||
The case is currently in the discovery stage of the litigation. Genesis has noticed depositions of the Company’s representatives for September of 2015. Following the close of discovery, the Company may file a summary judgment motion to dismiss the Genesis Complaint. The Company is continuing to vigorously defend against Genesis’ baseless declaratory judgment claim. |
Common_Stock_Warrants_and_Stoc
Common Stock, Warrants and Stock Options | 6 Months Ended | |||||||||||||||||
Feb. 28, 2015 | ||||||||||||||||||
Common Stock, Warrants and Stock Options [Abstract] | ||||||||||||||||||
COMMON STOCK, WARRANTS AND STOCK OPTIONS | NOTE 5: | COMMON STOCK, WARRANTS AND STOCK OPTIONS | ||||||||||||||||
Common Stock | ||||||||||||||||||
As of February 28, 2015 the Company issued 9,918,883 shares of Common Stock to ALS in exchange for its Debentures, accrued interest and Warrants. | ||||||||||||||||||
Warrants | ||||||||||||||||||
Warrant transactions are summarized as follows: | ||||||||||||||||||
Number of warrants | Weighted | Weighted average life remaining | ||||||||||||||||
average | (in years) | |||||||||||||||||
exercise | ||||||||||||||||||
price | ||||||||||||||||||
Balance as at August 31, 2014 – Issued | 34,174,172 | 0.41 | 3.97 years | |||||||||||||||
Additions | 3,000,000 | 0.5 | 4.61 years | |||||||||||||||
Conversions into Common Shares | (4,944,000 | ) | 0 | - | ||||||||||||||
Balance as at February 28, 2015 | 32,230,172 | 0.41 | 3.21 years | |||||||||||||||
As of February 28, 2015, there were 32,230,172 warrants outstanding and exercisable with expiration dates from June 2015 through November 2019. | ||||||||||||||||||
Stock options | ||||||||||||||||||
On December 7, 2014, the Board of Directors granted to an Infinity Israel employee 50,000 Non-Qualified Stock Options with an exercise price of $0.07, vesting semiannually over the next 3 years and expiring on December 7, 2019. | ||||||||||||||||||
The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the six months and three months ended February 28, 2015 and 2014: | ||||||||||||||||||
Three months ended February 28, | Six months ended | |||||||||||||||||
February 28, | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Employee awards | $ | 583,525 | $ | 236,995 | $ | 1,412,213 | $ | 258,633 | ||||||||||
Non- employee awards, net of forfeitures | - | 35,989 | $ | - | 35,989 | |||||||||||||
Total stock options compensation expense | $ | 583,525 | $ | 272,984 | $ | 1,412,213 | $ | 294,622 | ||||||||||
The following table summarizes stock option activity: | ||||||||||||||||||
Number of Shares | Weighted | Total | Weighted | |||||||||||||||
Average | Weighted | Average | ||||||||||||||||
Exercise | Average | Remaining | ||||||||||||||||
Price | Intrinsic | Contractual | ||||||||||||||||
Value | Life | |||||||||||||||||
(in years) | ||||||||||||||||||
Outstanding at August 31, 2014 | 25,800,000 | 0.07 | 0.07 | 8.41 | ||||||||||||||
Options granted | 50,000 | 0.07 | 0.01 | 4.77 | ||||||||||||||
Options exercised | - | - | - | - | ||||||||||||||
Options forfeited | - | - | - | - | ||||||||||||||
Options cancelled | - | - | - | - | ||||||||||||||
Outstanding at February 28, 2015 | 25,850,000 | 0.07 | 0.05 | 7.91 | ||||||||||||||
Options exercisable at February 28, 2015 | 12,541,667 | 0.07 | 0.05 | 7.68 | ||||||||||||||
Subsequent_Events
Subsequent Events | 6 Months Ended | |
Feb. 28, 2015 | ||
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 6: | SUBSEQUENT EVENTS |
On March 17, 2015 Coventry Enterprises, LLC exercised 5,957,227 warrants at a cashless exercise. The Company issued 5,510,435 Common Shares. | ||
On April 6, 2015, the Company entered into a definitive agreement (the “Agreement”) with Singulariteam Fund II L.P. (f/k/a Genesis Angels Fund, LP) (“Singulariteam II”), Platinum Partners Value Arbitrage Fund, LP, both existing stockholders of the Company, and SUNCORPORATION of Japan (collectively, the “Investors”), for the purpose of raising funds for the Company’s operation and activities. According to the Agreement, the Investors will invest $1.25 million at the initial closing and receive convertible notes (the “Notes”) which will be convertible into Series B Preferred Stock upon the creation thereof. The Agreement also provides that if the Company shall have an effective certificate of designation of Series B Preferred Stock of the Company, par value $0.00001 each filed with the Secretary of State of Nevada, the Investors have agreed to invest an additional $3.75 million. | ||
The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws. | ||
The shares of Preferred B Stock shares shall have a liquidation preference of 3 times the amount that has been invested plus 1.2% per year, provided that if the amount of proceeds to be received in an actual or deemed liquidation which be distributed on an as converted basis prior to calculating of the liquidation preference, the preferred shares will instead be converted to Common Stock. The Preferred Stock may be converted to common stock at any time and shall be automatically converted to Common Stock if the Company has a public offering raising at least $20 million. The Series B Stock will have special approval rights, will have a right to elect a director, a preemptive right and a right of first refusal. In addition, 75% of the shareholders of the Company will have a right to cause the other shareholders of the Company to sell their shares. | ||
The Notes to be issued at the initial closing shall bear interest at the rate of 1.2% per annum, commencing on the date of its purchase and until the conversion or repayment thereof, and shall be converted immediately upon the effectiveness of the Certificate of Designation of the Series B Preferred Stock. The holders of the Notes may convert the Note into Common Stock at any time prior to such Series Preferred Stock being created. | ||
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) | 6 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Significant Accounting Policies [Abstract] | ||||||||||
Basis of Presentation | Basis of Presentation | |||||||||
The accompanying unaudited condensed consolidated financial statements as of February 28, 2015 and for the three months and six months ended February 28, 2015 and 2014, have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the EC and on the same basis as the annual audited financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All significant intercompany accounts and transactions are eliminated in the consolidation process. The unaudited Balance Sheet as of February 28, 2015, Statements of Operations and comprehensive loss for the three months and six months ended February 28, 2015 and February 28, 2014, and Statements of Cash Flows for the six months ended February 28, 2015 and February 28, 2014, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The results for the three months and six months ended February 28, 2015 are not necessarily indicative of results to be expected for the year ending August 31, 2015 or for any future interim period. In addition, the balance sheet data at August 31, 2014 was derived from the audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on November 26, 2014. | ||||||||||
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 deferred income tax amounts and rates and timing of the reversal of income tax differences. | ||||||||||
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 for each period presented 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. As of February 28, 2015, 78,310,344 shares of common stock, comprised of 26,230,172 convertible debentures with a conversion price of $0.25, 26,230,172 warrants with an exercise price of $0.50, and stock options exercisable into 25,850,000 common shares are not included in diluted loss per share since their effect would be anti-dilutive. As of February 28, 2014, 59,709,834 shares of common stock, comprised of 15,830,172 convertible debentures with a conversion price of $0.25, 15,830,172 warrants with an exercise price of $0.50, and stock options exercisable into 28,049,490 common shares are not included in diluted loss 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. | ||||||||||
Valuation Assumptions | ||||||||||
The Company estimates the fair value of stock option grants using a Black-Scholes option pricing model. 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: | ||||||||||
Three Months ended | Six Months ended | |||||||||
February 28, | February 28, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Exercise price | $0.07 | $0.10 - $0.40 | $0.07 | $0.10 - $0.40 | ||||||
Expected stock price volatility | 94.29% - 105.62% | 87.9% - 92.4% | 94.29% -105.62% | 66.3% - 92.4% | ||||||
Risk-free rate of interest | 0.98% - 1.39% | 0.04% - 1.65% | 0.98% - 1.39% | 0.04% - 1.72% | ||||||
Expected life of options | 2.75-4 Years | 1-4 Years | 2.75-4 Years | 1-4 Years | ||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | |||||||||
In November 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-17, Pushdown Accounting. This ASU provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The election to apply pushdown accounting can be made either in the period in which the change of control occurred, or in a subsequent period. This ASU is effective as of November 18, 2014. The adoption will not have a material impact on the Company’s results of operations, cash flows or financial position. | ||||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (ASC) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual periods beginning after December 15, 2016 (fiscal 2018) and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company’s results of operations, cash flows or financial position. | ||||||||||
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU raises the threshold for a disposal to qualify as discontinued operations and requires new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. Under the new standard, companies report discontinued operations when they have a disposal that represents a strategic shift that has or will have a major impact on operations or financial results. This update will be applied prospectively and is effective for annual periods, and interim periods within those years, beginning after December 15, 2014 (fiscal 2016). Early adoption is permitted provided the disposal was not previously disclosed. This update will not have a material impact on the Company's reported results of operations and financial position. The impact is non-cash in nature and will not affect the Company's cash position. | ||||||||||
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 condensed financial statements of the Company. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 6 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Significant Accounting Policies [Abstract] | ||||||||||
Fair value of option award was estimated on the grant date using the Black Scholes option-pricing model | Three Months ended | Six Months ended | ||||||||
February 28, | February 28, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Exercise price | $0.07 | $0.10 - $0.40 | $0.07 | $0.10 - $0.40 | ||||||
Expected stock price volatility | 94.29% - 105.62% | 87.9% - 92.4% | 94.29% -105.62% | 66.3% - 92.4% | ||||||
Risk-free rate of interest | 0.98% - 1.39% | 0.04% - 1.65% | 0.98% - 1.39% | 0.04% - 1.72% | ||||||
Expected life of options | 2.75-4 Years | 1-4 Years | 2.75-4 Years | 1-4 Years |
Convertible_Debentures_Tables
Convertible Debentures (Tables) | 6 Months Ended | |||||||||
Feb. 28, 2015 | ||||||||||
Convertible Debentures [Abstract] | ||||||||||
Schedule of warrant valuation assumptions | September 15, 2014 | November 7, 2014 | ||||||||
Contractual term (Years) | 5 | 5 | ||||||||
Volatility | 139.6 | % | 162.5 | % | ||||||
Dividend yield | 0 | % | 0 | % | ||||||
Risk-free interest rate | 1.8 | % | 1.6 | % | ||||||
Schedule of senior convertible notes | February 28, 2015 | August 31, 2014 | ||||||||
1.2% convertible debentures | 6,557,543 | 7,043,543 | ||||||||
Debt discount/ beneficial conversion feature | (3,366,110 | ) | (3,751,613 | ) | ||||||
Balance | $ | 3,191,433 | $ | 3,291,930 |
Common_Stock_Warrants_and_Stoc1
Common Stock, Warrants and Stock Options (Tables) | 6 Months Ended | |||||||||||||||||
Feb. 28, 2015 | ||||||||||||||||||
Common Stock, Warrants and Stock Options [Abstract] | ||||||||||||||||||
Schedule of warrant transactions | Number of warrants | Weighted | Weighted average life remaining | |||||||||||||||
average | (in years) | |||||||||||||||||
exercise | ||||||||||||||||||
price | ||||||||||||||||||
Balance as at August 31, 2014 – Issued | 34,174,172 | 0.41 | 3.97 years | |||||||||||||||
Additions | 3,000,000 | 0.5 | 4.61 years | |||||||||||||||
Conversions into Common Shares | (4,944,000 | ) | 0 | - | ||||||||||||||
Balance as at February 28, 2015 | 32,230,172 | 0.41 | 3.21 years | |||||||||||||||
Schedule of stock-based compensation expense | Three months ended February 28, | Six months ended | ||||||||||||||||
February 28, | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Employee awards | $ | 583,525 | $ | 236,995 | $ | 1,412,213 | $ | 258,633 | ||||||||||
Non- employee awards, net of forfeitures | - | 35,989 | $ | - | 35,989 | |||||||||||||
Total stock options compensation expense | $ | 583,525 | $ | 272,984 | $ | 1,412,213 | $ | 294,622 | ||||||||||
Schedule of stock-based compensation summarizes stock option activity | Number of Shares | Weighted | Total | Weighted | ||||||||||||||
Average | Weighted | Average | ||||||||||||||||
Exercise | Average | Remaining | ||||||||||||||||
Price | Intrinsic | Contractual | ||||||||||||||||
Value | Life | |||||||||||||||||
(in years) | ||||||||||||||||||
Outstanding at August 31, 2014 | 25,800,000 | 0.07 | 0.07 | 8.41 | ||||||||||||||
Options granted | 50,000 | 0.07 | 0.01 | 4.77 | ||||||||||||||
Options exercised | - | - | - | - | ||||||||||||||
Options forfeited | - | - | - | - | ||||||||||||||
Options cancelled | - | - | - | - | ||||||||||||||
Outstanding at February 28, 2015 | 25,850,000 | 0.07 | 0.05 | 7.91 | ||||||||||||||
Options exercisable at February 28, 2015 | 12,541,667 | 0.07 | 0.05 | 7.68 | ||||||||||||||
Nature_and_Continuance_of_Oper1
Nature and Continuance of Operations (Details) (USD $) | 6 Months Ended | 0 Months Ended | |
Feb. 28, 2015 | Apr. 06, 2015 | Aug. 31, 2014 | |
Nature and Continuance of Operations (Textual) | |||
Aggregate principal amount | $6,557,543 | $7,043,543 | |
Common stock, par value | $0.00 | $0.00 | |
Preferred stock, shares authorized | 100,000,000 | ||
Common stock, shares authorized | 500,000,000 | 500,000,000 | |
Preferred stock, par value | $0.00 | ||
Increase in common stock authorized | 1,000,000,000 | ||
Increase in preferred shares authorized | 500,000,000 | ||
Motti Kushnir [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Restricted stock units | 60,000,000 | ||
Matan Protter [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Restricted stock units | 60,000,000 | ||
Ortal Zanzuri [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Restricted stock units | 12,600,000 | ||
Directors And Employees [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Issuance of additional common stock | 155,000,000 | ||
Series A Preferred Stock [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Aggregate principal amount | 6,634,256 | ||
Warrants shares of newly designated | 52,767,193 | ||
Preferred stock, shares authorized | 52,767,193 | ||
Debt instrument, interest rate percentage | 1.20% | ||
Proceeds from issuance initial public offering | 20,000,000 | ||
Preferred stock, par value | $0.00 | ||
Series B Preferred Stock [Member] | Subsequent Event [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Common stock, par value | $0.00 | ||
Convertible notes to conversion of stock | 1,250,000 | ||
Agreed to invest an additional amount | 3,750,000 | ||
Common Stock [Member] | |||
Nature and Continuance of Operations (Textual) | |||
Aggregate principal amount | 7,793,543 | ||
Common stock, par value | $0.00 | ||
Conversion price | $0.25 | ||
Warrants issued to purchase maximum shares | 31,174,172 | ||
Warrants exercise price | $0.50 | ||
Warrants shares of newly designated | 9,918,883 | ||
Reverse stock split of outstanding common stock | 101-for-1 | ||
Forward stock split of outstanding common stock | 1-for-101 | ||
Pre split per share | $0.15 | ||
Purchase price of common stock | 5,000,000 | ||
Pre money valuation of common stock | $6,000,000 | ||
Number of record holders | 300 |
Significant_Accounting_Policie3
Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price | $0.07 | $0.07 | ||
Expected stock price volatility, minimum | 94.29% | 87.90% | 94.29% | 66.30% |
Expected stock price volatility, maximum | 105.62% | 92.40% | 105.62% | 92.40% |
Risk-free rate of interest, minimum | 0.98% | 0.04% | 0.98% | 0.04% |
Risk-free rate of interest, maximum | 1.39% | 1.65% | 1.39% | 1.72% |
Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price | 0.1 | 0.1 | ||
Expected life of options | 2 years 9 months | 1 year | 2 years 9 months | 1 year |
Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price | 0.4 | 0.4 | ||
Expected life of options | 4 years | 4 years | 4 years | 4 years |
Significant_Accounting_Policie4
Significant Accounting Policies (Details Textual) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Warrants exercisable | 6,000,000 | |
Exercise price of warrants | 0.01 | |
Common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in computation of earnings per common share | 78,310,344 | 59,709,834 |
Convertible Debentures [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in computation of earnings per common share | 26,230,172 | 15,830,172 |
Conversion price | 0.25 | 0.25 |
Stock option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in computation of earnings per common share | 25,850,000 | 28,049,490 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in computation of earnings per common share | 26,230,172 | 15,830,172 |
Exercise price of warrants | 0.5 | 0.5 |
Convertible_Debentures_Details
Convertible Debentures (Details) (Warrant [Member]) | 6 Months Ended |
Feb. 28, 2015 | |
Issued on September 15, 2014 [Member] | |
Class of Warrant or Right [Line Items] | |
Contractual term (Years) | 5 years |
Volatility | 139.60% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.80% |
Issued on November 07, 2014 [Member] | |
Class of Warrant or Right [Line Items] | |
Contractual term (Years) | 5 years |
Volatility | 162.50% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.60% |
Convertible_Debentures_Details1
Convertible Debentures (Details 1) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Debt Instrument, Redemption [Line Items] | ||
1.2% convertible debentures | $6,557,543 | $7,043,543 |
Debt discount/ beneficial conversion feature | -3,366,110 | -3,751,613 |
Balance | $3,191,433 | $3,291,930 |
Convertible_Debentures_Details2
Convertible Debentures (Details Textual) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Aug. 31, 2014 | |
Convertible Debentures (Textual) | ||
Aggregate principal amount | $6,557,543 | $7,043,543 |
Aggregate fair value of warrants and beneficial conversion feature | 249,145 | |
Common stock issued | 105,235,038 | 95,316,155 |
Convertible Debt [Member] | ||
Convertible Debentures (Textual) | ||
Aggregate principal amount | 7,793,543 | |
Conversion price | $0.25 | |
Warrants shares of newly designated | 52,767,193 | |
Warrants exercise price | $0.50 | |
Warrants issued to purchase maximum shares | 31,174,172 | |
Common stock issued | 9,918,883 | |
Unamortized discount | 443,000 | |
Credit Strategies Llc [Member] | ||
Convertible Debentures (Textual) | ||
Aggregate principal amount | $750,000 | |
Term | 5 years | |
Interest rate | 1.20% | |
Conversion price | $0.25 | |
Term of warrants | 5 years | |
Number of shares available for warrants exercised | 3,000,000 |
Common_Stock_Warrants_and_Stoc2
Common Stock, Warrants and Stock Options (Details) (Warrant [Member], USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Warrant [Member] | ||
Number of warrants | ||
Balance | 34,174,172 | |
Additions | 3,000,000 | |
Conversions Into Common Shares | -4,944,000 | |
Balance | 32,230,172 | |
Weighted average exercise price | ||
Balance | $0.41 | |
Additions | $0.50 | |
Conversions Into Common Shares Price | $0 | |
Balance | $0.41 | |
Weighted average life remaining (in years) | ||
Balance | 3 years 2 months 16 days | 3 years 11 months 19 days |
Additions | 4 years 7 months 10 days |
Common_Stock_Warrants_and_Stoc3
Common Stock, Warrants and Stock Options (Details 1) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock options compensation expense | $583,525 | $272,984 | $1,412,213 | $294,622 |
Employee awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock options compensation expense | 583,525 | 236,995 | 1,412,213 | 258,633 |
Non-Employee Award [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock options compensation expense | $35,989 | $35,989 |
Common_Stock_Warrants_and_Stoc4
Common Stock, Warrants and Stock Options (Details 2) (Employee Stock Option [Member], USD $) | 6 Months Ended | 12 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Employee Stock Option [Member] | ||
Number of Shares | ||
Outstanding | 25,800,000 | |
Options granted | 50,000 | |
Options exercised | ||
Options forfeited | ||
Options cancelled | ||
Outstanding | 25,850,000 | 25,800,000 |
Options exercisable | 12,541,667 | |
Weighted Average Exercise Price | ||
Outstanding | $0.07 | |
Options granted | $0.07 | |
Options exercised | ||
Options forfeited | ||
Options cancelled | ||
Outstanding | $0.07 | $0.07 |
Options exercisable | $0.07 | |
Total Weighted Average Intrinsic Value | ||
Outstanding | $0.07 | |
Options granted | $0.01 | |
Options exercised | ||
Options forfeited | ||
Options cancelled | ||
Outstanding | $0.05 | $0.07 |
Options exercisable | $0.05 | |
Weighted Average Remaining Contactual Life (in years) | ||
Options granted | 4 years 9 months 7 days | |
Options outstanding | 7 years 10 months 28 days | 8 years 4 months 28 days |
Options exercisable | 7 years 8 months 5 days |
Common_Stock_Warrants_and_Stoc5
Common Stock, Warrants and Stock Options (Details Textual) (USD $) | 0 Months Ended | 6 Months Ended | |
Dec. 07, 2014 | Feb. 28, 2015 | Aug. 31, 2014 | |
Common Stock, Warrants And Stock Options [Textual] | |||
Common stock, shares issued | 105,235,038 | 95,316,155 | |
Employee Stock Option [Member] | |||
Common Stock, Warrants And Stock Options [Textual] | |||
Stock option granted | 50,000 | ||
Options granted | $0.07 | ||
Share-based compensation expiration period | 3 years | ||
Stock option, expiration date | 7-Dec-19 | ||
Warrant [Member] | |||
Common Stock, Warrants And Stock Options [Textual] | |||
Warrants outstanding and exercisable | 32,230,172 | ||
Warrants outstanding and exercisable description | warrants outstanding and exercisable with expiration dates from June 2015 through November 2019. | ||
Convertible Debt [Member] | |||
Common Stock, Warrants And Stock Options [Textual] | |||
Common stock, shares issued | 9,918,883 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | 1 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Apr. 06, 2015 | Mar. 17, 2015 | Feb. 28, 2015 | Aug. 31, 2014 |
Subsequent Events (Textual) | ||||
Common stock, par value | $0.00 | $0.00 | ||
Subsequent Event [Member] | ||||
Subsequent Events (Textual) | ||||
Warrant exercisable at cashless basis | 5,957,227 | |||
Stock issued during period, shares, new issues | 5,510,435 | |||
Sale of shares, Percentage | 75.00% | |||
Interest rate | 1.20% | |||
Subsequent Event [Member] | Series B Preferred Stock [Member] | ||||
Subsequent Events (Textual) | ||||
Common stock, par value | 0.00001 | |||
Agreed to invest an additional amount | 3.75 | |||
Liquidation preference percentage | 1.20% | |||
Converted to common stock public offering | 20 | |||
Subsequent Event [Member] | Series B Preferred Stock [Member] | Investors [Member] | ||||
Subsequent Events (Textual) | ||||
Agreement of initial closing invest amount | 1.25 | |||
Agreed to invest an additional amount | 3.75 |