Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended |
Feb. 28, 2015 | |
Document And Entity Information | |
Document Type | 10-Q |
Amendment Flag | FALSE |
Document Period End Date | 28-Feb-15 |
Trading Symbol | ELRN |
Entity Registrant Name | Greenwood Hall, Inc. |
Entity Central Index Key | 1557644 |
Current Fiscal Year End Date | -23 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 39,786,450 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well Known Seasoned Issuer | No |
Document Fiscal Year Focus | 2015 |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $48,479 | $367,286 |
Accounts receivable, net | 492,660 | 1,039,065 |
Prepaid expenses and other current assets | 91,077 | 305,691 |
Current assets to be disposed of | 36,860 | 36,860 |
Total Current Assets | 669,076 | 1,748,902 |
Property and Equipment, net | 165,723 | 211,525 |
Other Assets | ||
Deposits and other assets | 40,812 | 57,659 |
Total Other Assets | 40,812 | 57,659 |
Total Assets | 875,611 | 2,018,086 |
Current Liabilities | ||
Accounts payable | 911,798 | 835,423 |
Accrued expenses | 279,992 | 284,362 |
Accrued payroll and related expenses | 592,574 | 411,280 |
Deferred revenue | 323,810 | 1,102,500 |
Accrued interest | 32,506 | 35,773 |
Due to shareholders / officer | 182,223 | 155,476 |
Notes payable, net of discount of $353,873 and $71,758, respectively | 2,224,893 | 2,053,134 |
Line of credit | 1,500,000 | 1,500,000 |
Derivative liability | 578,257 | 118,363 |
Current liabilities to be disposed of | 335,857 | 335,857 |
Total Current Liabilities | 6,961,910 | 6,832,168 |
Notes payable, non-current | 1,046,686 | 1,297,988 |
TOTAL LIABILITIES | 8,008,596 | 8,130,156 |
Commitments and Contingencies | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock, $0.001 par value; 75,000,000 shares authorized,39,786,450 and 38,536,450 shares issued and outstanding, respectively | 39,786 | 38,536 |
Additional paid-in capital | 4,921,404 | 3,149,711 |
Accumulated deficit | -12,094,175 | -9,300,317 |
TOTAL GREENWOOD HALL, INC. STOCKHOLDERS' EQUITY (DEFICIT) | -7,132,985 | -6,112,070 |
Noncontrolling interest | ||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | -7,132,985 | -6,112,070 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $875,611 | $2,018,086 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Debt Instrument, Unamortized Discount | $353,873 | $71,758 |
Common Stock, Par Value Per Share | $0.00 | $0.00 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares, Issued | 39,786,450 | 38,536,450 |
Common Stock, Shares, Outstanding | 39,786,450 | 38,536,450 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Income Statement [Abstract] | ||||
REVENUES | $1,480,420 | $1,944,852 | $4,145,388 | $4,048,124 |
OPERATING EXPENSES | ||||
Direct cost of services | 979,967 | 1,002,184 | 2,558,438 | 1,893,987 |
Personnel | 859,274 | 893,092 | 1,718,234 | 2,403,832 |
Selling, general and administrative | 1,412,596 | 897,265 | 2,182,045 | 2,131,853 |
TOTAL OPERATING EXPENSES | 3,251,837 | 2,792,541 | 6,458,717 | 6,429,672 |
INCOME (LOSS) FROM OPERATIONS | -1,771,417 | -847,689 | -2,313,329 | -2,381,548 |
OTHER INCOME (EXPENSE) | ||||
Interest expense | -202,270 | -283,654 | -311,798 | -372,982 |
Change in value of derivatives | -136,870 | -136,870 | ||
Miscellaneous income (expense), net | -114,088 | -12,183 | -31,861 | -14,860 |
TOTAL OTHER INCOME (EXPENSE) | -453,228 | -295,837 | -480,529 | -387,842 |
INCOME (LOSS) FROM BEFORE PROVISION FOR INCOME TAXES | -2,224,645 | -1,143,526 | -2,793,858 | -2,769,390 |
Provision for income taxes | ||||
NET LOSS | -2,224,645 | -1,143,526 | -2,793,858 | -2,769,390 |
Net income (loss) attributable to noncontrolling interests | ||||
Net income (loss) attributable to Grenwood Hall, Inc. | ($2,224,645) | ($1,143,526) | ($2,793,858) | ($2,769,390) |
Earnings per share - basic and diluted | ||||
Basic earnings per share attributable to Greenwood Hall, Inc. | ($0.06) | ($0.05) | ($0.07) | ($0.11) |
Weighted average common shares - basic and diluted | 39,539,228 | 25,051,591 | 39,452,196 | 25,051,591 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) from continuing operations | ($2,793,858) | ($2,769,390) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations: | ||
Non-cash interest on convertible promissory notes | 40,909 | |
Change in value of derivative liabilities | 135,901 | |
Warrants issued for services | 534,498 | |
Depreciation and amortization | 31,861 | 90,913 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 546,405 | 539,323 |
Prepaid expenses and other current assets | 231,461 | 113,161 |
Accounts payable | 78,605 | 324,189 |
Accrued expenses | -4,372 | 228,679 |
Accrued payroll and related | 181,294 | 12,279 |
Deferred revenue | -778,690 | 47,223 |
Accrued interest and related | -3,265 | 194,509 |
Advances from officers, net | 26,747 | 160,834 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -1,772,504 | -1,058,280 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | ||
NET CASH USED IN INVESTING ACTIVITIES | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Book overdraft | -170,408 | |
Proceeds from issuance of notes payable | 600,000 | 2,186,354 |
Payments on notes payable | -384,748 | -1,299,934 |
Repurchase of common stock | -26,000 | |
Proceeds from the sale of stock | 1,238,445 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 1,453,697 | 690,012 |
NET INCREASE (DECREASE) IN CASH | -318,807 | -368,268 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 367,286 | 368,268 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 48,479 | |
Supplemental disclosures: | ||
Interest paid in cash | 288,169 | 371,492 |
Income taxes paid in cash |
ORGANIZATION_AND_SUMMARY_OF_SI
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | ||||||||||||
Feb. 28, 2015 | |||||||||||||
Notes to Financial Statements [Abstract] | |||||||||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1 | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
Organization | |||||||||||||
Greenwood Hall is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 133 employees and has served more than 40 education clients and over 70 degree programs. | |||||||||||||
Basis of Presentation | |||||||||||||
On July 23, 2014, Greenwood Hall, Inc. (formerly Divio Holdings, Corp. (“Divio”)) and its wholly owned subsidiary, Merger Sub, completed the Merger Agreement, dated July 22, 2014, by and among Divio, Merger Sub, and PCS Link, Inc. (“PCS Link”). Pursuant to the Merger Agreement, Merger Sub merged with and into PCS Link with PCS Link remaining as the surviving corporation (the “Surviving Corporation”) in the Merger. Upon the consummation of the Merger, the separate existence of Merger Sub ceased, and PCS Link became a wholly owned subsidiary of Divio. In connection with the Merger and at the Effective Time, the holders of all of the issued and outstanding shares of PCS Link Common Stock exchanged all of such shares (other than “dissenting shares” as defined in California Corporations Code Section 1300) for a combined total of 25,250,000 shares of Common Stock, representing approximately 71% of the total outstanding shares on the date of the Merger. In connection with the merger, Divio Holdings, Corp. changed its name to Greenwood Hall, Inc. | |||||||||||||
The Merger was accounted for as a “reverse merger” with PCS Link as the accounting acquirer and the Company as the legal acquirer. Although, from a legal perspective, the Company acquired PCS Link, from an accounting perspective, the transaction is viewed as a recapitalization of PCS Link accompanied by an issuance of stock by PCS Link for the net assets of Greenwood Hall, Inc. This is because Greenwood Hall, Inc. did not have operations immediately prior to the merger, and following the merger, PCS Link is the operating company. The board of directors of Greenwood Hall, Inc. immediately after the merger consisted of five directors, with four of the five directors nominated by PCS Link. Additionally, PCS Link’s stockholders owned 71% of the outstanding shares of Greenwood Hall, Inc. immediately after completion of the transaction. | |||||||||||||
The presentation of the consolidated statements of stockholders' deficit reflects the historical stockholders' deficit of PCS Link through July 23, 2014. The effect of the issuance of shares of Divio common stock in connection with the Merger and the inclusion of Divio’s outstanding shares of common stock at the time of the Merger on July 23, 2014 is reflected during the eight months ended August 31, 2014. | |||||||||||||
Principles of Consolidation | |||||||||||||
The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, and University Financial Aid Solutions, LLC (“UFAS”), collectively referred to herein as the Company, we, us, our, and Greenwood Hall. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, it is presented in the accompanying consolidated financial statements as discontinued operations. | |||||||||||||
Going Concern | |||||||||||||
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates the continuation of the Company as a going concern. The Company has an accumulated deficit and a working capital deficit as of February 28, 2015 and has incurred a loss from operations during 2014. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. | |||||||||||||
The Company has historically funded its activities through cash generated from operations, debt financing, the issuance of equity for cash, and advances from shareholders. During the six months ended February 28, 2015 the Company received approximately $1,453,697 in net proceeds from financing activities. | |||||||||||||
Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern. | |||||||||||||
Use of Estimates | |||||||||||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates. | |||||||||||||
Cash and Cash Equivalents | |||||||||||||
For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less. | |||||||||||||
Research and Development | |||||||||||||
Costs relating to designing and developing new products are expensed in the period incurred. | |||||||||||||
Revenue Recognition | |||||||||||||
The Company’s contracts are typically structured into two categories, i) fixed-fee service contracts that span a period of time, often in excess of one year, and ii) service contracts at agreed-upon rates based on the volume of service provided. Some of the Company’s service contracts are subject to guaranteed minimum amounts of service volume. | |||||||||||||
The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, services have been rendered, the selling price is fixed or determinable, and collectability of the selling price is reasonably assured. For fixed-fee service contracts, the Company recognizes revenue on a straight-line basis over the period of contract performance. Costs incurred under these service contracts are expensed as incurred. | |||||||||||||
Deferred Revenue | |||||||||||||
Deferred revenue primarily consists of prepayments received from customers for which the Company’s revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met. | |||||||||||||
Accounts Receivable | |||||||||||||
The Company extends credit to its customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of the Company’s customers to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company’s trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Based on the information available, management believes the Company’s accounts receivable, net of the allowance for doubtful accounts, are collectable. | |||||||||||||
Property and Equipment | |||||||||||||
Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows: | |||||||||||||
Classification | Life | ||||||||||||
Equipment | 5-7 Years | ||||||||||||
Computer equipment | 7 Years | ||||||||||||
Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized. | |||||||||||||
Income Taxes | |||||||||||||
The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||||||||||||
Earnings (Loss) per Share | |||||||||||||
Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted- average number of common shares and dilutive potential common shares outstanding during the period. During 2013, the Company had no instruments that could potentially dilute the number of common shares outstanding. Warrants to purchase common stock were excluded from the computation of diluted shares during the three and six months ended February 28, 2015 and 2014 as their effect is anti-dilutive. | |||||||||||||
Variable Interest Entities | |||||||||||||
Generally, an entity is defined as a variable interest entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns. | |||||||||||||
University Financial Aid Services, LLC was 60% owned by John Hall and Zan Greenwood, who at the time held a combined 92.5% of our common stock and served as directors of PCS Link. John Hall is the CEO of the Company and Zan Greenwood served as the Company’s Chief Operating Officer through June 2013. The equity owners of UFAS have no equity at risk, Greenwood Hall has funded UFAS’ operations since it was formed in 2010, and we have the ability to exercise control over UFAS through our two shareholders / directors. | |||||||||||||
Based on our assessment, we have determined that UFAS is a VIE and that we are the primary beneficiary, as defined in current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of UFAS. To date, the Company has not allocated any income or loss of UFAS to noncontrolling interests as the noncontrolling interests never had any equity at risk. As previously discussed, UFAS ceased operations during 2013 and is presently winding down its affairs. The Company does not anticipate having any future involvement with UFAS after it is dissolved. | |||||||||||||
Marketing and Advertising | |||||||||||||
Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $22,813 and $319,948 for the six months ended February 28, 2015 and the six months ended February 28, 2014 respectively, and are included in selling, general and administrative expenses. | |||||||||||||
Derivative Liabilities | |||||||||||||
We account for warrants as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on our Consolidated Balance Sheet and no further adjustments to their valuation are made. Some of our warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on our Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. We estimate the fair value of these liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. | |||||||||||||
As part of a debt financing during May 2014, the Company issued warrants to acquire 248,011 shares of Common Stock. These warrants contain a mechanism to increase the number of warrants upon the issuance of certain dilutive equity securities. If during the terms of the warrants, the Company issues additional shares of Common Stock or equivalents, the warrant holders are entitled to additional warrants with the same terms as the original warrants. As a result of these features, the warrants are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the warrants on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the Warrants is estimated at the end of each reporting period and the change in the fair value of the Warrants is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. | |||||||||||||
In December 2014, the Company entered into a Secured Convertible Note with Colgan Financial Group, Inc. (“ Colgan ”) and Rob Logan pursuant to which the Company issued a convertible promissory note of $500,000 and the right to purchase warrants upon the payment or conversion of the note principal. The conversion feature and warrants both include provisions that call for the instrument to be converted to equity at a price equal to the lesser of i) $1.50 per share or ii) 85% of the weighted average price per share of the Company’s trading price for the 10 trading days prior to conversion / exercise. As a result of this feature, the warrants and conversion feature are subject to derivative accounting pursuant to ASC 815. Accordingly, the fair value of the warrants and conversion feature on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability and a note discount. The fair value of the warrants and conversion feature is estimated at the end of each reporting period and the change in the fair value is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. During the six months ended February 28, 2015 and 2014, the Company recognized a change in value of the derivative liability of $136,870 and $0, respectively. | |||||||||||||
Fair Value of Financial Instruments | |||||||||||||
The Company groups financial assets and financial liabilities measured at fair value into three levels of hierarchy in accordance with ASC 820-10, “Fair Value Measurements and Disclosure”. Assets and liabilities recorded at fair value in the accompanying balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. | |||||||||||||
Level Input: | Input Definition: | ||||||||||||
Level I | Observable quoted prices in active markets for identical assets and liabilities. | ||||||||||||
Level II | Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | ||||||||||||
Level III | Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques. | ||||||||||||
For certain of our financial instruments, including working capital instruments, the carrying amounts are approximate fair value due to their short-term nature. Our notes payable approximate fair value based on prevailing interest rates. | |||||||||||||
The following table summarizes fair value measurements at February 28, 2015 for assets and liabilities measured at fair value on a recurring basis. | |||||||||||||
28-Feb-15 | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivative Liabilities | $ | - | $ | - | $ | 578,257 | |||||||
The assumptions used in valuing derivative instruments issued during the six months ended February 28, 2015 were as follows: | |||||||||||||
Risk free interest rate | 1.1 | % | |||||||||||
Expected life | 3.0 Years | ||||||||||||
Dividend yield | None | ||||||||||||
Volatility | 60 | % | |||||||||||
The following is a reconciliation of the derivative liability related to these instruments for the six months ended February 28, 2015: | |||||||||||||
Value at August 31, 2014 | $ | 118,363 | |||||||||||
Issuance of instruments | 323,024 | ||||||||||||
Change in value | 136,870 | ||||||||||||
Net settlements | - | ||||||||||||
Value at February 28, 2015 | $ | 578,257 | |||||||||||
The derivative liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price, term and volatility. Other inputs have a comparatively insignificant effect. | |||||||||||||
Effect of Recently Issued Accounting Standards | |||||||||||||
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The revenue recognition standard is required to be applied retrospectively, including any combination of practical expedients as allowed in the standard. We are evaluating the impact, if any, of the adoption of ASU 2014-09 to our financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | |||||||||||||
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which eliminates diversity in practice for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward is available to reduce the taxable income or tax payable that would result from disallowance of a tax position. ASU 2013-11 affects only the presentation of such amounts in an entity’s balance sheet and is effective for fiscal years beginning after December 15, 2013 and interim periods within those years. Early adoption is permitted. We adopted this standard during fiscal 2015 and believe that it did not have a significant effect on our financial position or results of operation. | |||||||||||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended | |||
Feb. 28, 2015 | ||||
Notes to Financial Statements [Abstract] | ||||
PROPERTY AND EQUIPMENT | 2 | PROPERTY AND EQUIPMENT | ||
Depreciation and amortization of property and equipment amounted to $31,861 and $90,913 for the six months ended February 28, 2015 and 2014, respectively, and is included in the accompanying consolidated statements of operations in selling, general and administrative expenses. | ||||
At February 28, 2015, property and equipment consists of the following: | ||||
Feb-15 | ||||
Computer equipment | $ | 553,255 | ||
Software and Equipment | 39,400 | |||
592,655 | ||||
Accumulated depreciation | -426,932 | |||
Net property and equipment | $ | 165,723 |
NOTES_PAYABLE
NOTES PAYABLE | 6 Months Ended | ||||
Feb. 28, 2015 | |||||
Notes to Financial Statements [Abstract] | |||||
NOTES PAYABLE | 3 | NOTES PAYABLE | |||
Bank | |||||
In May 2014, the Company entered into a Credit Agreement and related term loan and line of credit with Opus Bank (“ Opus ”). Pursuant to the terms of the agreement, the Company issued a promissory note in the amount of $2,000,000, the proceeds of which were required to be used to finance repayment of the amounts owed to TCA. Monthly payments of principal and interest are required through the maturity date in May 2017. The amounts owed to Colgan and CUB are subordinated to amounts owed to Opus under the Credit Agreement and related debt facilities. Amounts outstanding under the Credit Agreement are secured by substantially all assets of the Company. | |||||
The line of credit is for a maximum amount of $3,000,000. Payments of interest only will be due monthly with the unpaid balance due, in full, on the maturity date in May 2017. | |||||
As of February 28, 2015, the balance outstanding on the term loan and line of credit amounted to $1,575,758 and $1,500,000, respectively. At February 28, 2015, amounts owed pursuant to the Credit Agreement bear interest at a rate of 5.75% per annum. | |||||
In connection with the Credit Agreement, the Company issued 248,011 warrants to purchase common stock at an exercise price of $1.00 per share, which increased to 375,000 warrants due to dilutive issuances of equity by the Company during the eight months ended August 31, 2014. The warrants are exercisable immediately. In the event of future dilutive issuances, the number of warrants issuable shall be increased based on a specified formula. The warrants were valued at $78,281 on the date of issuance, which was recorded as a note discount. During the six months ended February 28, 2015, the Company recognized $13,046 of amortization related to this discount, leaving a balance of $58,712 at February 28, 2015. | |||||
Bank | |||||
In October 2010, the Company issued a promissory note to California United Bank (“CUB”) for $1,250,000 and has been amended several times since issuance. The note was last amended in May 2013. The note bears interest at a variable rate, subject to a minimum of 7.25% per annum. The interest rate at December 31, 2013 was 7.25%. Payments of interest are due monthly with one payment of all outstanding principal plus accrued interest due on March 5, 2014. The note is secured by substantially all assets of the Company and is guaranteed by one former shareholders/officer, by one shareholders/officer, a trust of one of the officers/shareholders, and UFAS. | |||||
In May 2014, the Company and CUB amended the promissory note of $1,250,000 to extend the maturity date to the earlier of i) October 2014 or ii) the completion of specified debt / equity funding. CUB also agreed to subordinate its security interest to another lender if certain criteria were met. In December 2014, the Company entered into a Change in Terms Agreement with California United Bank (“CUB”) which included an extension of the maturity date of the facility to April 30, 2015 and an adjustment of the interest rate to five percent (5%) in excess of the Prime Rate. As of February 28, 2015, the balance remaining is $876,250. | |||||
Secured Convertible Note | |||||
In December 2014, in consideration for funds in the amount of $500,000 received by Greenwood Hall, Inc. from Colgan Financial Group, Inc. and Robert Logan (“Logan,” and together with CFG, the “Holder”), the Company executed a secured convertible promissory note. The note bears interest at 12% per year, the interest of which is payable monthly. This is a 3 year note and is secured by substantially all assets of the Company. This note is subordinate to the notes held by Opus Bank and California United Bank. | |||||
In connection with this debt, the Company issued the right to purchase warrants upon the payment or conversion of the note principal. The conversion feature and warrants both include provisions that call for the instrument to be converted to equity at a price equal to the lesser of i) $1.50 per share or ii) 85% of the weighted average price per share of the Company’s trading price for the 10 trading days prior to conversion / exercise. As a result of this feature, the warrants and conversion feature are subject to derivative accounting pursuant to ASC 815. Accordingly, the fair value of the warrants and conversion feature on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability and a note discount. The fair value of the discount on the issuance date was estimated at $303,024 and is being amortized over the term of the note using the effective interest method. Amortization of the note discount during the six months ended February 28, 2015 amounted to $27,863. | |||||
Credit Agreement | |||||
During 2013, the Company entered into a Credit Agreement with TCA Global Credit Master Fund, LP (“TCA”). Pursuant to the Credit Agreement, the Company was granted an initial revolving credit facility of $1,500,000, which was subsequently increased to $1,850,000 later in 2013, and may be increased up to $7,000,000 upon i) the written request of the Company and ii) approval by TCA. | |||||
In December 2013, the Company and TCA entered into the Second Amendment to Credit Agreement whereby the parties aggregated all amounts owed to TCA under the Credit Agreement, which totaled $2,210,798 inclusive of $330,000 of loan fees incurred in connection with the second amendment. In addition, TCA waived the Company’s default of the terms of the Credit Agreement as of December 2, 2013 in connection with the execution of Second Amendment to Credit Agreement. | |||||
Amounts outstanding under the Second Amendment to Credit Agreement bore interest at 15% per annum and are payable in monthly payments of principal and interest commencing in March 2014, with the final payment due in October 2014, and share first priority with California United Bank on a pari passu basis. | |||||
As of December 31, 2013, the amount of principal and accrued interest outstanding amounted to $2,210,798 and $25,431, respectively. The $330,000 of loan fees was recorded as a note discount on the date of the promissory note and is being amortized to interest expense over the term of the note. As of December 31, 2013, the unamortized note discount amounted to $298,417. | |||||
During the eight months ended August 31, 2014, in connection with the funding of the Opus Credit Agreement, all amounts owed to TCA were paid off and the note discount of $298,417 was recognized as interest expense. | |||||
Loan and Security Agreement | |||||
During 2013, the Company entered into a Loan and Security Agreement with Colgan Financial Group, Inc. (“ Colgan ”) pursuant to which the Company issued a promissory note of $600,000. The note bears interest at 2.5% per month, is payable in monthly installments of principal and interest through June 2014, is guaranteed by one shareholder of the Company and an advisor to the Company and is secured by substantially all assets of the Company. This note is subordinate to the notes held by California United Bank. In July 2014, a paydown of $144,000 was made in connection with an equity funding. As of February 28, 2015, the balance remaining is $556,000. | |||||
During the eight months ended August 31, 2014, the Company issued two convertible promissory notes to Colgan, one in the amount of $175,000 and one in the amount of $200,000. In connection with these two convertible promissory notes, the Company issued 198,409 shares of common stock valued at $186,270 (the estimated fair value of the shares on the issuance date), which was recorded as interest expense during the eight months ended August 31, 2014. In addition, the Company incurred an aggregate of $80,000 in fixed loan fees / interest expense. The notes were paid in full during the eight months ended August 31, 2014. | |||||
Unsecured Promissory Note | |||||
In March 2014, the Company issued an unsecured promissory note in the amount of $1,350,000. The note bore interest at a rate of 10% per annum and was due in September 2014. This note and related accrued interest was converted to units, comprised of one share of common stock and one warrant at an exercise price of $1.30, in July of 2014 (refer to note 5 for further discussion). | |||||
The Company also finances the purchases of small equipment. The amount of such notes is not significant at February 28, 2015. The following is a schedule, by year, of future minimum principal payments required under notes payable as of February 28, 2015: | |||||
Years Ending | |||||
August 31, | |||||
2015 (remainder of) | $ | 1,838,571 | |||
2016 | 772,643 | ||||
2017 | 514,238 | ||||
2018 | 500,000 | ||||
2019 | - | ||||
Total | 3,625,452 | ||||
Note discount | -353,873 | ||||
$ | 3,271,579 |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Feb. 28, 2015 | |
Notes to Financial Statements [Abstract] | |
RELATED PARTY TRANSACTIONS | 4. RELATED PARTY TRANSACTIONS |
One of the Company’s customers, MarkeTouch Media, Inc. (“MarkeTouch”), held a 7.5% interest in our common stock during 2013. Pursuant to an agreement between the Company and MarkeTouch, the Company is repurchasing the shares held by MarkeTouch. As of February 28, 2015 and 2014, the Company owed $0 and $14,333, respectively, relating to this share repurchase obligation, which is recorded in accrued expenses. |
STOCKHOLDERS_EQUITY
STOCKHOLDERSb EQUITY | 6 Months Ended | ||||||||
Feb. 28, 2015 | |||||||||
Equity [Abstract] | |||||||||
STOCKHOLDERSb EQUITY | 5. STOCKHOLDERS’ EQUITY | ||||||||
The Company is authorized to issue one class of stock, which represents 937,500,000 shares of common stock, par value $0.0001. | |||||||||
Common Stock | |||||||||
Pursuant to an agreement between the Company and MarkeTouch, the Company is repurchasing the shares held by MarkeTouch. As of February 28 2014, the Company owed $14,333 relating to this share repurchase obligation, which is recorded in accrued expenses. The shares of MarkeTouch are still considered issued and outstanding as of February 28, 2014 and were cancelled during the eight months ended August 31, 2014 upon payment in full of the share repurchase obligation. | |||||||||
In July 2014, the Company sold 3,036,450 units, comprised of one share of common stock and one warrant to purchase common stock, at a price of $1.00 per unit. As a result, the Company raised $1,645,611 net of fees and converted $1,386,450 of debt and accrued interest. The warrants have an exercise price of $1.30 per share and expire 24 months from the date of closing of the Merger. | |||||||||
In September 2014, the Company sold 1,000,000 units, comprised of one share of common stock and one warrant to purchase common stock, at a price of $1.00 per unit, for total proceeds of $1,000,000. | |||||||||
In January 2015, the Company sold 250,000 shares of common stock at a price of $1.00 per unit, for total proceeds of $250,000. The Company incurred $11,555 of fees associated with this raise, which are presented net of the proceeds. | |||||||||
Warrants Issued for Services | |||||||||
During the period ended February 28, 2015, the Company issued 1,264,023 warrants to a consultant for services. The warrants are exercisable at $1.00 per share, have a term of 10 years, and were 100% vested upon issuance. The Company valued these warrants at $493,329 using the Black-Scholes model and the significant inputs to that model below. The Company recognized these warrants as an expense during the period ended February 28, 2015. In addition, these warrants include provisions that call for the issuance of an additional 1,264,024 warrants at substantially the same terms in the event of certain achievements by the consultant. | |||||||||
During the period ended February 28, 2015, the Company issued 100,000 warrants for services. The warrants are exercisable at $0.01 per share, have a term of 1.7 years, and were 100% vested upon issuance. The Company valued these warrants at $41,168 using the Black-Scholes model and the significant inputs to that model below. The Company recognized these warrants as an expense during the period ended February 28, 2015. | |||||||||
The assumptions used in valuing warrants issued for services during the six months ended February 28, 2015 were as follows: | |||||||||
Risk free interest rate | 1.1 | % | |||||||
Expected life | 1.5 - 10 Years | ||||||||
Dividend yield | None | ||||||||
Volatility | 60 | % | |||||||
The following is a summary of warrants outstanding at February 28, 2015: | |||||||||
Exercise Price | Number of Warrants | Expiration Date | |||||||
$ | 1 | 375,000 | May-21 | ||||||
$ | 1.3 | 3,036,450 | Jul-16 | ||||||
$ | 1.3 | 1,000,000 | Sep-16 | ||||||
$ | 1 | 1,264,023 | Nov-24 | ||||||
$ | 0.01 | 100,000 | Jul-16 | ||||||
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended |
Feb. 28, 2015 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | 6. CONCENTRATIONS |
Concentration of Credit Risk | |
The Company maintains its cash and cash equivalents at a financial institution which may, at times, exceed federally insured limits. Historically, the Company has not experienced any losses in such accounts. | |
Major Customers | |
For the six months ended February 28, 2015, 1 customer represented 44% of net revenues and for the six months ended February 28, 2014, 2 customers represented 37% of net revenues. As of February 28, 2015, 4 customers represented 48% of accounts receivables. |
INCOME_TAXES
INCOME TAXES | 6 Months Ended | ||
Feb. 28, 2015 | |||
Notes to Financial Statements [Abstract] | |||
INCOME TAXES | 7 | INCOME TAXES | |
The difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to pre-tax income (loss) is mainly related to an increase in the valuation allowance, partially offset by state income taxes. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. Deferred income tax assets are mainly related to net operating loss carryforwards. Management has chosen to take a 100% valuation allowance against the deferred income tax asset until such time as management believes that its projections of future profits make the realization of the deferred income tax assets more likely than not. Significant judgment is required in the evaluation of deferred income tax benefits and differences in future results from management’s estimates could result in material differences. | |||
A majority of the Company’s deferred tax asset is comprised of net operating loss carryforwards, offset by a 100% valuation allowance at February 28, 2015 and August 31, 2014. | |||
As of February 28, 2015, the Company is in process of determining the amount of Federal and State net operating loss carry forwards (“ NOL ”) available to offset future taxable income. The Company’s NOLs will begin expiring in 2032. These NOLs may be used to offset future taxable income, to the extent the Company generates any taxable income, and thereby reduce or eliminate future federal income taxes otherwise payable. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three-year period. In the event that an ownership change has occurred, or were to occur, utilization of the Company’s NOLs would be subject to an annual limitation under Section 382. Any unused annual limitation may be carried over to later years. The Company could experience an ownership change under Section 382 as a result of events in the past in combination with events in the future. If so, the use of the Company’s NOLs, or a portion thereof, against future taxable income may be subject to an annual limitation under Section 382, which may result in expiration of a portion of the NOLs before utilization. | |||
Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that expire prior to utilization as a result of such limitations will be removed, if applicable, from deferred tax assets with a corresponding reduction of the valuation allowance. | |||
The difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to pre-tax income (loss) is mainly related to an increase in the valuation allowance, partially offset by state income taxes. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. Deferred income tax assets are mainly related to net operating loss carryforwards. Management has chosen to take a 100% valuation allowance against the deferred income tax asset until such time as management believes that its projections of future profits make the realization of the deferred income tax assets more likely than not. Significant judgment is required in the evaluation of deferred income tax benefits and differences in future results from management’s estimates could result in material differences. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended | ||||
Feb. 28, 2015 | |||||
Notes to Financial Statements [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | 8 | COMMITMENTS AND CONTINGENCIES | |||
Lease Commitments | |||||
The Company leases its operating facilities under non-cancelable operating leases that expire through 2024. Total rent expense for the six months ended February 28, 2015 and 2014 amounted to $225,121 and $270,051, respectively. The Company is responsible for certain operating expenses in connection with these leases. The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of February 28, 2015: | |||||
Years Ending | |||||
August 31, | |||||
2015 (remainder of) | $ | 152,646 | |||
2016 | 327,884 | ||||
2017 | 345,980 | ||||
2018 | 355,660 | ||||
2019 | 366,000 | ||||
Thereafter | 1,971,200 | ||||
$ | 3,519,370 | ||||
Employment Agreements | |||||
At February 28, 2015, the Company maintained an employment agreement with an officer, the terms of which may require the payment of severance benefits upon termination. | |||||
Legal Matters | |||||
The Company is involved from time to time in various legal proceedings in the normal conduct of its business. | |||||
The Company is the subject of pending litigation, which could cause it to incur significant costs in defending such litigation or in resulting actions or judgments. The Robin Hood Foundation (“ Robin Hood ”) filed suit against Patriot Communications, LLC (“ Patriot ”), a client of the Company, in the Superior Court of the State of California for the County of Los Angeles (Central District) for breach of contract and failure to perform, including among other things an intentional tort claim, in the amount of not less than $5,000,000. On May 6, 2014, Patriot filed a cross-complaint naming PCS Link as a cross-defendant. Patriot denies the allegations set forth by Robin Hood. On August 22, 2014, Robin Hood filed a First Amended Complaint, naming the Company and John Hall, in his individual capacity, as defendants. The First Amended Complaint asserts claims against the Company and Hall for fraud, fraudulent concealment, negligent misrepresentation, negligence and violation of Business & Professions Code section 17200. The First Amended Complaint also alleges a cause of action for breach of contract solely against the Company. An adverse judgment against the Company could be detrimental to the Company’s financial standing. Additionally, in the event that Patriot is held liable, Patriot alleges that PCS Link is responsible to indemnify and/or contribute to the satisfaction of any damages because PCS Link acted as a sub-contractor on behalf of Patriot with regard to the filed incident. We believe that we have strong defenses and we are vigorously defending against this lawsuit, but the potential range of loss related to this matter cannot be determined, as the pleadings are still not resolved, and will not be until May 2015, at the earliest. The outcome of this matter is inherently uncertain and could have a materially adverse effect on our business, financial condition and results of operations if decided unfavorably against the Company and John Hall. | |||||
The Company is the subject of pending litigation, which could cause it to incur significant costs in defending such litigation or in resulting actions or judgments. Finance 500, Inc. (“Finance 500”) filed suit against the Company, in the Superior Court of the State of California for the County of Orange (Central Justice) for breach of contract and unjust enrichment, among other things, in the amount of not less than $ 250,000. We believe that we have strong defenses and we are vigorously defending against this lawsuit, but the potential range of loss related to this matter cannot be determined, as the pleadings are still not resolved, and will not resolved anytime in the near future. The outcome of this matter is inherently uncertain and could have a materially adverse effect on our business, financial condition and results of operations if decided unfavorably against the Company. | |||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended | ||
Feb. 28, 2015 | |||
Discontinued Operations and Disposal Groups [Abstract] | |||
DISCONTINUED OPERATIONS | 9 | DISCONTINUED OPERATIONS | |
During 2013, we ceased operations in our affiliated company, UFAS. The operations of UFAS are now presented as discontinued operations in the accompanying consolidated financial statements. UFAS was inactive during the periods ended February 28, 2015 and 2014. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 6 Months Ended | ||
Feb. 28, 2015 | |||
Notes to Financial Statements [Abstract] | |||
SUBSEQUENT EVENT | 10. | SUBSEQUENT EVENTS | |
In March 2015, the Company issued an S-1 to register 5,673,980 shares of common stock. As part of this offering, the Company agreed to issue 1,387,530 shares to Company shareholders holding warrants for the purchase of the Company’s common stock. This resulted in the warrant holders forfeiting warrants equal that could have been exercised for 4,286,450 shares of common stock of the Company. | |||
On March 31, 2015, the Company entered into a $ 295,000 Convertible Note (“Note”) with Redwood Fund LP (“Redwood”). In conjunction with the Note, the Company issued Redwood warrants that can be exercised for 295,000 shares of the Company’s common stock over the next five (5) years at an exercise price of $ 1.00 per share. Redwood has an option to provide additional convertible debt to the Company in the amount of $250,000 at the same terms. | |||
On or around March 20, 2015, the Company entered into a service agreement with a new customer, Greenville Technical College System of South Carolina, to provide financial aid advising and other student services. | |||
In April 2015, the Company was informed by Spartanburg Technical College that the college intended to award a new contract for financial aid advising and other student services to the Company. | |||
In April 2015, the Company entered into a commercial building lease agreement. The sixty-six (66) month lease, estimated to begin on or about April 10, 2015 provides for the lease by the Company of approximately 10,199 square feet of space in Phoenix, Arizona. Base annual rent is initially set at approximately $ 9,137 per month. Total base rent payable over the lease period is $1,282,932. The Company has one option to extend the term of the lease for an additional five year period with respect to the entire premises. | |||
On April 14, 2015, the Company and its lenders executed a second amendment (“Second Amendment”) of the Company’s Credit Facilities (the “Credit Agreement”) with Opus Bank ratified by California United Bank and Colgan Financial Group (collectively “Lenders”). The Second Amendment was designed to provide the Company with increased cash and credit availability as the Company seeks to expand and raise additional equity for working capital purposes. Under the terms of the Second Amendment, the Lenders agreed to waive any and all covenant violations that existed prior to the Second Amendment or that may occur through June 30, 2015. The Amendment also permitted the Company to not make any principal and/or interest payments to the Lenders through August 1, 2015, provided there are no Events of Default by the Company. |
ORGANIZATION_AND_SUMMARY_OF_SI1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | ||||||||||||
Feb. 28, 2015 | |||||||||||||
Notes to Financial Statements [Abstract] | |||||||||||||
Organization | Organization | ||||||||||||
Greenwood Hall is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 133 employees and has served more than 40 education clients and over 70 degree programs. | |||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||
On July 23, 2014, Greenwood Hall, Inc. (formerly Divio Holdings, Corp. (“Divio”)) and its wholly owned subsidiary, Merger Sub, completed the Merger Agreement, dated July 22, 2014, by and among Divio, Merger Sub, and PCS Link, Inc. (“PCS Link”). Pursuant to the Merger Agreement, Merger Sub merged with and into PCS Link with PCS Link remaining as the surviving corporation (the “Surviving Corporation”) in the Merger. Upon the consummation of the Merger, the separate existence of Merger Sub ceased, and PCS Link became a wholly owned subsidiary of Divio. In connection with the Merger and at the Effective Time, the holders of all of the issued and outstanding shares of PCS Link Common Stock exchanged all of such shares (other than “dissenting shares” as defined in California Corporations Code Section 1300) for a combined total of 25,250,000 shares of Common Stock, representing approximately 71% of the total outstanding shares on the date of the Merger. In connection with the merger, Divio Holdings, Corp. changed its name to Greenwood Hall, Inc. | |||||||||||||
The Merger was accounted for as a “reverse merger” with PCS Link as the accounting acquirer and the Company as the legal acquirer. Although, from a legal perspective, the Company acquired PCS Link, from an accounting perspective, the transaction is viewed as a recapitalization of PCS Link accompanied by an issuance of stock by PCS Link for the net assets of Greenwood Hall, Inc. This is because Greenwood Hall, Inc. did not have operations immediately prior to the merger, and following the merger, PCS Link is the operating company. The board of directors of Greenwood Hall, Inc. immediately after the merger consisted of five directors, with four of the five directors nominated by PCS Link. Additionally, PCS Link’s stockholders owned 71% of the outstanding shares of Greenwood Hall, Inc. immediately after completion of the transaction. | |||||||||||||
The presentation of the consolidated statements of stockholders' deficit reflects the historical stockholders' deficit of PCS Link through July 23, 2014. The effect of the issuance of shares of Divio common stock in connection with the Merger and the inclusion of Divio’s outstanding shares of common stock at the time of the Merger on July 23, 2014 is reflected during the eight months ended August 31, 2014. | |||||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||||
The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, and University Financial Aid Solutions, LLC (“UFAS”), collectively referred to herein as the Company, we, us, our, and Greenwood Hall. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, it is presented in the accompanying consolidated financial statements as discontinued operations. | |||||||||||||
Going Concern | Going Concern | ||||||||||||
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates the continuation of the Company as a going concern. The Company has an accumulated deficit and a working capital deficit as of February 28, 2015 and has incurred a loss from operations during 2014. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. | |||||||||||||
The Company has historically funded its activities through cash generated from operations, debt financing, the issuance of equity for cash, and advances from shareholders. During the six months ended February 28, 2015 the Company received approximately $1,453,697 in net proceeds from financing activities. | |||||||||||||
Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern. | |||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates. | |||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||
For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less. | |||||||||||||
Research and Development | Research and Development | ||||||||||||
Costs relating to designing and developing new products are expensed in the period incurred. | |||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||
The Company’s contracts are typically structured into two categories, i) fixed-fee service contracts that span a period of time, often in excess of one year, and ii) service contracts at agreed-upon rates based on the volume of service provided. Some of the Company’s service contracts are subject to guaranteed minimum amounts of service volume. | |||||||||||||
The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, services have been rendered, the selling price is fixed or determinable, and collectability of the selling price is reasonably assured. For fixed-fee service contracts, the Company recognizes revenue on a straight-line basis over the period of contract performance. Costs incurred under these service contracts are expensed as incurred. | |||||||||||||
Deferred Revenue | Deferred Revenue | ||||||||||||
Deferred revenue primarily consists of prepayments received from customers for which the Company’s revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met. | |||||||||||||
Accounts Receivable | Accounts Receivable | ||||||||||||
The Company extends credit to its customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of the Company’s customers to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company’s trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Based on the information available, management believes the Company’s accounts receivable, net of the allowance for doubtful accounts, are collectable. | |||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||
Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows: | |||||||||||||
Classification | Life | ||||||||||||
Equipment | 5-7 Years | ||||||||||||
Computer equipment | 7 Years | ||||||||||||
Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized. | |||||||||||||
Income Taxes | Income Taxes | ||||||||||||
The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||||||||||||
Earnings (Loss) per Share | Earnings (Loss) per Share | ||||||||||||
Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted- average number of common shares and dilutive potential common shares outstanding during the period. During 2013, the Company had no instruments that could potentially dilute the number of common shares outstanding. Warrants to purchase common stock were excluded from the computation of diluted shares during the three and six months ended February 28, 2015 and 2014 as their effect is anti-dilutive. | |||||||||||||
Variable Interest Entities | Variable Interest Entities | ||||||||||||
Generally, an entity is defined as a variable interest entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns. | |||||||||||||
University Financial Aid Services, LLC was 60% owned by John Hall and Zan Greenwood, who at the time held a combined 92.5% of our common stock and served as directors of PCS Link. John Hall is the CEO of the Company and Zan Greenwood served as the Company’s Chief Operating Officer through June 2013. The equity owners of UFAS have no equity at risk, Greenwood Hall has funded UFAS’ operations since it was formed in 2010, and we have the ability to exercise control over UFAS through our two shareholders / directors. | |||||||||||||
Based on our assessment, we have determined that UFAS is a VIE and that we are the primary beneficiary, as defined in current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of UFAS. To date, the Company has not allocated any income or loss of UFAS to noncontrolling interests as the noncontrolling interests never had any equity at risk. As previously discussed, UFAS ceased operations during 2013 and is presently winding down its affairs. The Company does not anticipate having any future involvement with UFAS after it is dissolved. | |||||||||||||
Marketing and Advertising | Marketing and Advertising | ||||||||||||
Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $22,813 and $319,948 for the six months ended February 28, 2015 and the six months ended February 28, 2014 respectively, and are included in selling, general and administrative expenses. | |||||||||||||
Derivative Liabilities | Derivative Liabilities | ||||||||||||
We account for warrants as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on our Consolidated Balance Sheet and no further adjustments to their valuation are made. Some of our warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on our Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. We estimate the fair value of these liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. | |||||||||||||
As part of a debt financing during May 2014, the Company issued warrants to acquire 248,011 shares of Common Stock. These warrants contain a mechanism to increase the number of warrants upon the issuance of certain dilutive equity securities. If during the terms of the warrants, the Company issues additional shares of Common Stock or equivalents, the warrant holders are entitled to additional warrants with the same terms as the original warrants. As a result of these features, the warrants are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the warrants on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the Warrants is estimated at the end of each reporting period and the change in the fair value of the Warrants is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. | |||||||||||||
In December 2014, the Company entered into a Secured Convertible Note with Colgan Financial Group, Inc. (“ Colgan ”) and Rob Logan pursuant to which the Company issued a convertible promissory note of $500,000 and the right to purchase warrants upon the payment or conversion of the note principal. The conversion feature and warrants both include provisions that call for the instrument to be converted to equity at a price equal to the lesser of i) $1.50 per share or ii) 85% of the weighted average price per share of the Company’s trading price for the 10 trading days prior to conversion / exercise. As a result of this feature, the warrants and conversion feature are subject to derivative accounting pursuant to ASC 815. Accordingly, the fair value of the warrants and conversion feature on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability and a note discount. The fair value of the warrants and conversion feature is estimated at the end of each reporting period and the change in the fair value is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. During the six months ended February 28, 2015 and 2014, the Company recognized a change in value of the derivative liability of $136,870 and $0, respectively. | |||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||
The Company groups financial assets and financial liabilities measured at fair value into three levels of hierarchy in accordance with ASC 820-10, “Fair Value Measurements and Disclosure”. Assets and liabilities recorded at fair value in the accompanying balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. | |||||||||||||
Level Input: | Input Definition: | ||||||||||||
Level I | Observable quoted prices in active markets for identical assets and liabilities. | ||||||||||||
Level II | Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | ||||||||||||
Level III | Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques. | ||||||||||||
For certain of our financial instruments, including working capital instruments, the carrying amounts are approximate fair value due to their short-term nature. Our notes payable approximate fair value based on prevailing interest rates. | |||||||||||||
The following table summarizes fair value measurements at February 28, 2015 for assets and liabilities measured at fair value on a recurring basis. | |||||||||||||
28-Feb-15 | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivative Liabilities | $ | - | $ | - | $ | 578,257 | |||||||
The assumptions used in valuing derivative instruments issued during the six months ended February 28, 2015 were as follows: | |||||||||||||
Risk free interest rate | 1.1 | % | |||||||||||
Expected life | 3.0 Years | ||||||||||||
Dividend yield | None | ||||||||||||
Volatility | 60 | % | |||||||||||
The following is a reconciliation of the derivative liability related to these instruments for the six months ended February 28, 2015: | |||||||||||||
Value at August 31, 2014 | $ | 118,363 | |||||||||||
Issuance of instruments | 323,024 | ||||||||||||
Change in value | 136,870 | ||||||||||||
Net settlements | - | ||||||||||||
Value at February 28, 2015 | $ | 578,257 | |||||||||||
The derivative liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price, term and volatility. Other inputs have a comparatively insignificant effect. | |||||||||||||
Effect of Recently Issued Accounting Standards | Effect of Recently Issued Accounting Standards | ||||||||||||
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The revenue recognition standard is required to be applied retrospectively, including any combination of practical expedients as allowed in the standard. We are evaluating the impact, if any, of the adoption of ASU 2014-09 to our financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | |||||||||||||
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which eliminates diversity in practice for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward is available to reduce the taxable income or tax payable that would result from disallowance of a tax position. ASU 2013-11 affects only the presentation of such amounts in an entity’s balance sheet and is effective for fiscal years beginning after December 15, 2013 and interim periods within those years. Early adoption is permitted. We adopted this standard during fiscal 2015 and believe that it did not have a significant effect on our financial position or results of operation. |
ORGANIZATION_AND_SUMMARY_OF_SI2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | ||||||||||||
Feb. 28, 2015 | |||||||||||||
Notes to Financial Statements [Abstract] | |||||||||||||
Property and Equipment | The estimated useful lives used are as follows: | ||||||||||||
Classification | Life | ||||||||||||
Equipment | 5-7 Years | ||||||||||||
Computer equipment | 7 Years | ||||||||||||
summarizes fair value measurements | The following table summarizes fair value measurements at February 28, 2015 for assets and liabilities measured at fair value on a recurring basis. | ||||||||||||
28-Feb-15 | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
Derivative Liabilities | $ | - | $ | - | $ | 578,257 | |||||||
Derivative | The assumptions used in valuing derivative instruments issued during the six months ended February 28, 2015 were as follows: | ||||||||||||
Risk free interest rate | 1.1 | % | |||||||||||
Expected life | 3.0 Years | ||||||||||||
Dividend yield | None | ||||||||||||
Volatility | 60 | % | |||||||||||
Derivative liability | The following is a reconciliation of the derivative liability related to these instruments for the six months ended February 28, 2015: | ||||||||||||
Value at August 31, 2014 | $ | 118,363 | |||||||||||
Issuance of instruments | 323,024 | ||||||||||||
Change in value | 136,870 | ||||||||||||
Net settlements | - | ||||||||||||
Value at February 28, 2015 | $ | 578,257 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended | |||
Feb. 28, 2015 | ||||
Notes to Financial Statements [Abstract] | ||||
Property and equipment | At February 28, 2015, property and equipment consists of the following: | |||
Feb-15 | ||||
Computer equipment | $ | 553,255 | ||
Software and Equipment | 39,400 | |||
592,655 | ||||
Accumulated depreciation | -426,932 | |||
Net property and equipment | $ | 165,723 |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 6 Months Ended | ||||
Feb. 28, 2015 | |||||
Notes to Financial Statements [Abstract] | |||||
Schedule of future minimum principal payments required under notes payable | The following is a schedule, by year, of future minimum principal payments required under notes payable as of February 28, 2015: | ||||
Years Ending | |||||
August 31, | |||||
2015 (remainder of) | $ | 1,838,571 | |||
2016 | 772,643 | ||||
2017 | 514,238 | ||||
2018 | 500,000 | ||||
2019 | - | ||||
Total | 3,625,452 | ||||
Note discount | -353,873 | ||||
$ | 3,271,579 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERSb EQUITY (Tables) | 6 Months Ended | ||||||||
Feb. 28, 2015 | |||||||||
Equity [Abstract] | |||||||||
Warrants issued for services | The assumptions used in valuing warrants issued for services during the six months ended February 28, 2015 were as follows: | ||||||||
Risk free interest rate | 1.1 | % | |||||||
Expected life | 1.5 - 10 Years | ||||||||
Dividend yield | None | ||||||||
Volatility | 60 | % | |||||||
Summary of warrants outstanding | The following is a summary of warrants outstanding at February 28, 2015: | ||||||||
Exercise Price | Number of Warrants | Expiration Date | |||||||
$ | 1 | 375,000 | May-21 | ||||||
$ | 1.3 | 3,036,450 | Jul-16 | ||||||
$ | 1.3 | 1,000,000 | Sep-16 | ||||||
$ | 1 | 1,264,023 | Nov-24 | ||||||
$ | 0.01 | 100,000 | Jul-16 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended | ||||
Feb. 28, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of February 28, 2015: | ||||
Years Ending | |||||
August 31, | |||||
2015 (remainder of) | $ | 152,646 | |||
2016 | 327,884 | ||||
2017 | 345,980 | ||||
2018 | 355,660 | ||||
2019 | 366,000 | ||||
Thereafter | 1,971,200 | ||||
$ | 3,519,370 |
ORGANIZATION_AND_SUMMARY_OF_SI3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 6 Months Ended |
Feb. 28, 2015 | |
Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 5 years |
Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 7 years |
Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 7 years |
ORGANIZATION_AND_SUMMARY_OF_SI4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | Feb. 28, 2015 |
Fair Value, Inputs, Level 3 [Member] | |
Derivative Liabilities | $578,257 |
Fair Value, Inputs, Level 2 [Member] | |
Derivative Liabilities | |
Fair Value, Inputs, Level 1 [Member] | |
Derivative Liabilities |
ORGANIZATION_AND_SUMMARY_OF_SI5
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (Warrant [Member]) | 6 Months Ended |
Feb. 28, 2015 | |
Warrant [Member] | |
Fair Value Assumptions, Expected Dividend | 0.00% |
Fair Value Assumptions, Expected Volatility | 60.00% |
Fair Value Assumptions, Risk-free interest rate | 1.10% |
Fair Value Assumptions, Expected Life | 3 years |
ORGANIZATION_AND_SUMMARY_OF_SI6
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 6 Months Ended |
Feb. 28, 2015 | |
Notes to Financial Statements [Abstract] | |
Value at August 31, 2014 | $118,363 |
Issuance of instruments | 323,024 |
Change in value | 136,870 |
Net settlements | |
Value at February 28, 2015 | $578,257 |
ORGANIZATION_AND_SUMMARY_OF_SI7
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Details Narratives) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Marketing and advertising | $22,813 | $319,948 | ||
Change in fair value of derivative liability | 136,870 | 136,870 | ||
Net amount from financing activities | 1,453,697 | |||
Description of Organization | Our Company currently has 133 employees and has served more than 40 education clients and over 70 degree programs. | |||
Number of outstanding common shares | 25,250,000 | 25,250,000 | ||
Total percentage of Common stock | 71.00% | |||
Acquire warrants | 248,011 | |||
Change in value of the derivative liability | 136,870 | 0 | ||
Convertible promissory note | $500,000 | $500,000 | ||
Weighted average price per share | $1.50 | |||
John Hall [Member] | ||||
Ownership of percentage | 60.00% | 60.00% | ||
Zan Greenwood [Member] | ||||
Ownership of percentage | 92.50% | 92.50% |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Property, Plant and Equipment, Gross | $592,655 | |
Accumulated depreciation | -426,932 | |
Net property and equipment | 165,723 | 211,525 |
Equipment [Member] | ||
Property, Plant and Equipment, Gross | 39,400 | |
Net property and equipment | 39,400 | |
Computer Equipment [Member] | ||
Property, Plant and Equipment, Gross | 553,255 | |
Net property and equipment | $553,255 |
PROPERTY_AND_EQUIPMENT_Details1
PROPERTY AND EQUIPMENT (Details Narratives) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $31,861 | $90,913 |
NOTES_PAYABLE_Details
NOTES PAYABLE (Details) (USD $) | Feb. 28, 2015 | Nov. 30, 2014 | Aug. 31, 2014 |
Years Ending December 31, | |||
2015 (remainder of) | $1,838,571 | ||
2016 | 772,643 | ||
2017 | 514,238 | ||
2018 | 500,000 | ||
2019 | |||
Total | 3,625,452 | ||
Note discount | -353,873 | -65,235 | -71,758 |
Long-term Debt | $3,271,579 |
NOTES_PAYABLE_Details_Narrativ
NOTES PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||||||
Nov. 30, 2014 | Feb. 28, 2015 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 31, 2010 | Sep. 30, 2014 | |
Interest rate | 5.75% | 1.20% | |||||||||
Exercise price | $0.01 | $1.30 | $1.30 | ||||||||
Amortization of Debt Discount (Premium) | $13,046 | ||||||||||
Warrants value | 78,281 | 78,281 | |||||||||
Warrants due to dilutive issuances | 375,000 | ||||||||||
Debt Instrument, Unamortized Discount | 65,235 | 353,873 | 71,758 | 71,758 | |||||||
Interest expense. | 298,417 | ||||||||||
Line of credit amount | 300,000 | ||||||||||
Line of credit | 1,500,000 | ||||||||||
Weighted average price per share | $1.50 | ||||||||||
Amortization of the note discount | 27,863 | ||||||||||
Fair value issunace of note | 303,024 | ||||||||||
Line of credit | 3,000,000 | ||||||||||
Convertible promissory notes | 175,000 | 175,000 | |||||||||
Issued shares of common stock | 198,409 | ||||||||||
Estimated fair value of shares issued | 186,270 | ||||||||||
Fixed loan fees / interest expense | 80,000 | ||||||||||
Unsecured Promissory Note [Member] | |||||||||||
Debt Instrument, Fee Amount | 1,350,000 | ||||||||||
Exercise price | $1.30 | ||||||||||
Credit Agreement [Member] | |||||||||||
Debt Instrument, Fee Amount | 876,250 | ||||||||||
Interest rate | 5.00% | ||||||||||
Warrants value | 248,011 | 248,011 | |||||||||
Debt Instrument Maturity Period | 500,000 | ||||||||||
Line of credit amount | 1,575,758 | ||||||||||
California United Bank [Member] | Credit Agreement [Member] | |||||||||||
Debt Instrument, Fee Amount | 456,000 | ||||||||||
TCA Global Credit Master Fund, LP [Member] | Revolving Credit Facility [Member] | Credit Agreement [Member] | |||||||||||
Debt Instrument, Face Amount | 1,500,000 | ||||||||||
Debt Instrument Increase Additional Borrowings | 1,850,000 | ||||||||||
TCA Global Credit Master Fund, LP [Member] | Revolving Credit Facility [Member] | Credit Agreement [Member] | Maximum [Member] | |||||||||||
Debt Instrument Increase Additional Borrowings | 7,000,000 | ||||||||||
TCA Global Credit Master Fund, LP [Member] | Revolving Credit Facility [Member] | Second Amendment [Member] | Credit Agreement [Member] | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | 15.00% | 15.00% | ||||||||
Debt Instrument, Outstanding Amount | 2,210,798 | 2,210,798 | 2,210,798 | ||||||||
Debt Instrument, Fee Amount | 330,000 | 330,000 | 330,000 | ||||||||
Interest rate | 2543100.00% | ||||||||||
Debt Instrument, Increase, Accrued Interest | 25,431 | ||||||||||
Amortization of Debt Discount (Premium) | 330,000 | ||||||||||
Debt Instrument, Unamortized Discount | 298,417 | 298,417 | 298,417 | ||||||||
Debt Instrument, Frequency of Periodic Payment | monthly | ||||||||||
Debt Instrument, Date of First Required Payment | 31-Mar-14 | ||||||||||
Debt Instrument Maturity Period | Oct-14 | ||||||||||
Promissory Note Two [Member] | California United Bank [Member] | |||||||||||
Debt Instrument, Face Amount | 1,250,000 | 1,250,000 | 1,250,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | 7.25% | |||||||||
Debt Instrument, Maturity Date | 5-Mar-14 | ||||||||||
Debt Instrument, Outstanding Amount | 2,000,000 | ||||||||||
Amortization of Debt Discount (Premium) | 6,523 | ||||||||||
Debt Instrument, Unamortized Discount | 58,712 | ||||||||||
Promissory Note [Member] | Colgan Financial Group, Inc [Member] | Loan and Security Agreement [Member] | |||||||||||
Debt Instrument, Face Amount | 600,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.50% | ||||||||||
Debt Instrument, Unamortized Discount | 298,417 | ||||||||||
Paydown amount in connection with an equity funding | 144,000 | ||||||||||
Balance Paydown amount in connection with an equity funding | 556,000 | ||||||||||
Convertible promissory notes | 200,000 | ||||||||||
Promissory Note One [Member] | California United Bank [Member] | |||||||||||
Debt Instrument, Face Amount | $500,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | ||||||||||
Unsecured Promissory Note [Member] | |||||||||||
Interest rate | 10.00% |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Narratives) (USD $) | Feb. 28, 2015 | Feb. 28, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | |||
Accrued Liabilities, Current | $0 | $14,333 | |
MarkeTouch Media, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 7.50% |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERSb EQUITY (Details) (Warrant [Member]) | 6 Months Ended |
Feb. 28, 2015 | |
Risk free interest rate | 1.10% |
Expected life | 3 years |
Dividend yield | 0.00% |
Volatility | 60.00% |
Minimum [Member] | |
Expected life | 1 year 6 months |
Maximum [Member] | |
Expected life | 10 years |
STOCKHOLDERS_EQUITY_Details_1
STOCKHOLDERSb EQUITY (Details 1) (USD $) | Nov. 30, 2024 | 31-May-21 | Sep. 30, 2016 | Jul. 31, 2016 | Jul. 01, 2016 |
Equity [Abstract] | |||||
Warrants Outstanding Exercise Price 1 | $1 | $1 | $1.30 | $1.30 | $0.01 |
Number of Warrants Outstanding 1 | 1,264,023 | 375,000 | 1,000,000 | 3,036,450 | 100,000 |
STOCKHOLDERS_EQUITY_Details_Na
STOCKHOLDERS' EQUITY (Details Narratives) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Aug. 31, 2014 | |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Par or Stated Value Per Share | $0.00 | $0.00 |
Share repurchase obligation | $14,333 | |
Exercise price | $0.01 | $1.30 |
Warrnts value | 41,168 | |
Warrants for services | 100,000 | |
Expected term | 1 year 8 months 12 days | |
Sep-14 | ||
Share repurchase obligation | 1,000,000 | |
Total debt | 1,386,450 | |
Accrued interest | 27,333 | |
Exercise price | $1 | |
Total proceeds | 1,000,000 | |
Jan-15 | ||
Common Stock, Shares Authorized | 250,000 | |
Accrued interest | 11,555 | |
Exercise price | $1 | |
Total proceeds | 250,000 | |
Consultant [Member] | ||
Exercise price | $1 | |
Additional warrants | 1,264,024 | |
Warrants for services | 1,264,023 | |
Expected term | 10 years | |
Common Stock | ||
Common Stock, Shares Authorized | 937,500,000 | |
Common Stock, Par or Stated Value Per Share | $0.00 | |
Share repurchase obligation | 3,036,450 | |
Accrued interest | $1,645,611 |
CONCENTRATIONS_Details_Narrati
CONCENTRATIONS (Details Narratives) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Customer [Member] | ||
Concentration Risk [Line Items] | ||
Net revenues | 44.00% | |
Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Net revenues | 37.00% | |
Customer Four [Member] | ||
Concentration Risk [Line Items] | ||
Net revenues | 48.00% |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narratives) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Income Tax Disclosure [Abstract] | ||
Percentage Of Valuation Allowance | 100.00% | 100.00% |
Income Tax Examination, Penalties and Interest Expense | $0 | $0 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Feb. 28, 2015 |
Commitments and Contingencies Disclosure [Abstract] | |
2015 (remainder of) | $152,646 |
2016 | 327,884 |
2017 | 345,980 |
2018 | 355,660 |
2019 | 366,000 |
Thereafter | 1,971,200 |
Total | $3,519,370 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narratives) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss Contingency, Loss in Period | $5,000,000 | |
Lease Expiration Period | 2024 | |
Operating Leases, Rent Expense, Net | 225,121 | 270,051 |
Gain (Loss) on Contract Termination | $250,000 |
SUBSEQUENT_EVENTS_Details_Narr
SUBSEQUENT EVENTS (Details Narratives) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Mar. 31, 2015 | |
sqft | ||
Total base rent payable | $1,282,932 | |
Annual rent | 9,137 | |
Lease Area | 10,699 | |
Exercise price | $1 | |
Convertible Note | 295,000 | |
Additional convertible debt | $250,000 | |
Shares common stock | 43,382,900 | |
Shares exercised | 4,286,450 | |
Common Stock [Member] | ||
Shares common stock | 5,673,980 |