Notes Payable | 12 Months Ended |
Feb. 28, 2014 |
Notes Payable [Abstract] | ' |
Notes Payable Disclosure | ' |
6 | Notes Payable | |
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On September 26, 2013, the Company entered into two unsecured corporate demand notes with two related parties, William Begley and Keith Spickelmier. Each note was in the amount of $7,500, and repayment can be demanded, with 5 days’ notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on a note, the note becomes due and payable in full on its first annual anniversary. The notes are non-interest bearing. |
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On October 21, 2013, the Company entered into an unsecured corporate demand note with related party, William Begley. The note was in the amount of $3,500, and repayment can be demanded, with 5 days’ notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on the note, the note becomes due and payable in full on its first annual anniversary. The note is non-interest bearing. During December 2013, he also advanced $2,000 and in January he advanced another $3,500. These amounts are unsecured, noninterest bearing, and due on demand. |
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On December 16, 2013, the Company entered into an unsecured corporate demand note with related party Keith Spickelmier. The note was in the amount of $17,500, and repayment can be demanded, with 5 days’ notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on a note, the note becomes due and payable in full on its first annual anniversary. The notes are non-interest bearing. |
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On December 20, 2013, the Company entered into an unsecured corporate demand note with related party, Mark Thompson. The note was in the amount of $17,000, and repayment can be demanded, with 5 days’ notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on the note, the note becomes due and payable in full on its first annual anniversary. The note is non-interest bearing. |
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On January 6, 2014, the Company entered into an unsecured corporate demand note with related party, Keith Spickelmier. The note was in the amount of $25,000, and repayment can be demanded, with 5 days’ notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on the note, the note becomes due and payable in full on its first annual anniversary. The note is non-interest bearing. |
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Two promissory notes were issued on October 26, 2012 to Liberty upon delivery of the License with aggregate principal amount of $650,000. The original terms of the notes were: |
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| (i) | One note in the original principal amount of $500,000 originally due on April 26, 2013. |
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| (ii) | The other note in the original principal amount of $150,000 originally due on July 26, 2013. |
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| (iii) | Both notes accrued interest at a floating rate equal to the one month term LIBOR rate, plus an additional 3%. Interest expense amounting $7,290 to $7,212 is included in other liabilities as of February 28, 2014 and February 28, 2013, respectively. |
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On March 7, 2013, in consideration of a partial payment of the outstanding principal on the $500,000 Liberty Note in the amount of $100,000, the Company and Liberty agreed to amend the $500,000 Note so that the remaining outstanding principal amounting to $400,000 and accrued interest became due and payable on June 12, 2013. |
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On June 4, 2013, in consideration of a partial payment of the outstanding principal of $400,000 on the $500,000 Liberty Note in the amount of $25,000, the Company and Liberty agreed to amend the $500,000 Note so that the remaining outstanding principal amounting to $375,000 and interest would become due and payable on July 1, 2013. On July 1, 2013, by mutual agreement of the parties, the due date of the $500,000 Liberty note was extended to July 26, 2013. |
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On July 26, 2013, the Company and Liberty agreed to amend both the $500,000 and $150,000 Liberty Notes so that the remaining outstanding principal on and accrued interest on each of the Notes would become due and payable on the earlier to occur of (a) the completion of a private placement of the Company’s common stock or (b) August 26, 2013. |
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On August 26, 2013, the Company and Liberty agreed to amend each of the Notes so that the remaining outstanding principal on and accrued interest on each of the Notes would become due and payable on September 26, 2013. |
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On September 26, 2013, the two Liberty notes with a total remaining balance of $525,000 were amended wherein the notes were consolidated including accrued interest to date into one note with a balance of $542,294. The maturity date was extended to December 10, 2013 (the “Initial Due Date”); provided, however, that if the Company had made prepayments in the aggregate amount of $250,000 prior to the Initial Due Date, then the due date for the remainder of the principal amount of and accrued interest on the consolidation note would have been extended until February 3, 2014. The note bears interest at a floating rate equal to the one-month term LIBOR rate, plus an additional 3%. The Company considered whether the transaction was within the scope of ASC 470-60-55 Accounting for Troubled Debt Restructuring, which states that if a Company is experiencing financial difficulties and a concession is granted, troubled debt restructuring accounting should be applied. The Company concluded the revised terms constituted a debt modification, rather than a debt extinguishment or a troubled debt restructuring. |
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On December 10, 2013, the Liberty note with a total remaining balance of $542,294 was amended wherein the Initial Due Date was extended to January 10, 2014; provided, however, that if the Company had made prepayments in the aggregate amount of $250,000 prior to the Initial Due Date, then the due date for the remainder of the principal amount of and accrued interest on the consolidation note would have been extended until February 3, 2014. |
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On January 10, 2014, the Liberty note with a total remaining balance of $542,294 was further amended wherein the Initial Due Date was extended to March 10, 2014; provided, however, that if the Company makes prepayments in the aggregate amount of $250,000 prior to the Initial Due Date, then the due date for the remainder of the principal amount of and accrued interest on the consolidation note shall be extended until May 2, 2014. |
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On October 4, 2012 a promissory note was issued to Mark Thompson, the Company’s corporate secretary, with aggregate principal amount of $25,000, with a conversion feature amounting to 300,000 shares of the Company’s common stock. The loan was due to be paid or converted on or before February 4, 2013 with interest accruing monthly at 6%. At Mr. Thompson’s option, the note was converted into 300,000 shares of the Company’s common stock on February 4, 2013. In connection with the issuance of this convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, “Embedded Derivatives”, and determined the note and the conversion feature did not qualify as derivatives. The Company also evaluated the note for a beneficial conversion feature under ASC 470-20, “Debit with Conversion and Other Options”, and determined a beneficial conversion feature existed. The intrinsic value of the beneficial conversion feature of the convertible note was $11,765 and was recorded as a debt discount. The Company fully amortized the debt discount as of February 28, 2013, which is included in interest expense. |