Document and Entity Information
Document and Entity Information | 6 Months Ended |
Feb. 28, 2015 | |
Document And Entity Information | |
Document Type | S1 |
Amendment Flag | true |
Amendment Description | The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. |
Document Period End Date | Feb. 28, 2015 |
Trading Symbol | ELRN |
Entity Registrant Name | Greenwood Hall, Inc. |
Entity Central Index Key | 1,557,644 |
Current Fiscal Year End Date | --08-31 |
Entity Filer Category | Smaller Reporting Company |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Feb. 28, 2015 | Aug. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 48,479 | $ 367,286 | $ 125,859 |
Accounts receivable, net | 492,660 | 1,039,065 | 1,001,773 |
Prepaid expenses and other current assets | 91,077 | 305,691 | 64,865 |
Current assets to be disposed of | 36,860 | 36,860 | 36,860 |
TOTAL CURRENT ASSETS | 669,076 | 1,748,902 | 1,229,357 |
PROPERTY AND EQUIPMENT, net | 165,723 | 211,525 | 66,598 |
OTHER ASSETS | |||
Deposits and other assets | 40,812 | 57,659 | 16,547 |
TOTAL OTHER ASSETS | 40,812 | 57,659 | 16,547 |
TOTAL ASSETS | 875,611 | 2,018,086 | 1,312,502 |
CURRENT LIABILITIES | |||
Accounts payable | 911,798 | 835,423 | 1,598,669 |
Accrued expenses | 279,992 | 284,362 | 385,128 |
Accrued payroll and related expenses | 592,574 | 411,280 | 612,305 |
Deferred revenue | 323,810 | 1,102,500 | 177,981 |
Accrued interest | 32,506 | 35,773 | 25,431 |
Due to shareholders / officer | 182,223 | 155,476 | 184,016 |
Notes payable, net of discount of $353,873, $71,758 and 298,417 respectively | 2,224,893 | 2,053,134 | 3,762,381 |
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 | 335,857 |
TOTAL CURRENT LIABILITIES | 6,961,910 | 6,832,168 | 7,081,768 |
Notes payable, non-current | 1,046,686 | 1,297,988 | |
TOTAL LIABILITIES | $ 8,008,596 | $ 8,130,156 | $ 7,081,768 |
COMMITMENTS AND CONTINGENCIES | |||
Stockholders' Equity (Deficit) | |||
Common stock, $0.001 par value; 937,500,000 shares authorized and 75,000,000 at February 28,2015, and 38,536,450 and 25,051,591 shares issued and outstanding 39,786,450 and 38,536,450 shares issued and outstanding at February 28, 2015 and August 31 2014 respectively | $ 39,786 | $ 38,536 | $ 25,052 |
Additional paid-in capital | 4,921,404 | 3,149,711 | (20,552) |
Accumulated deficit | (12,094,175) | (9,300,317) | (5,773,766) |
TOTAL GREENWOOD HALL, INC. STOCKHOLDERS' EQUITY (DEFICIT) | $ (7,132,985) | (6,112,070) | (5,769,266) |
Noncontrolling interest | |||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $ (7,132,985) | (6,112,070) | (5,769,266) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 875,611 | $ 2,018,086 | $ 1,312,502 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Feb. 28, 2015 | Aug. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | |||
Debt Instrument, Unamortized Discount | $ 353,873 | $ 71,758 | $ 298,417 |
Accounts receivable, net | $ 0 | $ 0 | |
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 75,000,000 | 937,500,000 | 937,500,000 |
Common Stock, Shares, Issued | 39,786,450 | 38,536,450 | 25,051,591 |
Common Stock, Shares, Outstanding | 39,786,450 | 38,536,450 | 25,051,591 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | |||||||
REVENUES | $ 1,480,420 | $ 1,944,852 | $ 4,145,388 | $ 4,048,124 | $ 5,291,511 | $ 11,215,586 | $ 15,358,376 |
OPERATING EXPENSES | |||||||
Direct cost of services | 979,967 | 1,002,184 | 2,558,438 | 1,893,987 | 2,596,795 | 3,635,679 | 2,533,302 |
Personnel | 859,274 | 893,092 | 1,718,234 | 2,403,832 | 2,520,858 | 4,916,964 | 7,696,899 |
Selling, general and administrative | 1,412,596 | 897,265 | 2,182,045 | 2,131,853 | 2,501,662 | 3,100,450 | 2,692,276 |
TOTAL OPERATING EXPENSES | 3,251,837 | 2,792,541 | 6,458,717 | 6,429,672 | 7,619,315 | 11,653,093 | 12,922,477 |
INCOME (LOSS) FROM OPERATIONS | (1,771,417) | (847,689) | (2,313,329) | (2,381,548) | (2,327,804) | (437,507) | 2,435,899 |
OTHER INCOME (EXPENSE) | |||||||
Interest expense | (202,270) | $ (283,654) | (311,798) | $ (372,982) | (1,158,665) | $ (379,987) | (242,856) |
Change in value of derivatives | (136,870) | (136,870) | (40,082) | 0 | |||
Miscellaneous income (expense), net | (114,088) | $ (12,183) | (31,861) | $ (14,860) | $ (24,027) | 7,125 | |
TOTAL OTHER INCOME (EXPENSE) | (453,228) | (295,837) | (480,529) | (387,842) | (1,198,747) | (404,014) | (235,731) |
INCOME (LOSS) FROM BEFORE PROVISION FOR INCOME TAXES | $ (2,224,645) | $ (1,143,526) | $ (2,793,858) | $ (2,769,390) | (3,526,551) | (841,521) | 2,200,168 |
Provision for income taxes | 632,514 | ||||||
Income (Loss) From Continuing Operations | $ (2,793,858) | $ (2,769,390) | (3,526,551) | (841,521) | 1,567,654 | ||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax | (2,079,729) | (948,771) | |||||
NET LOSS | $ (2,224,645) | $ (1,143,526) | $ (2,793,858) | $ (2,769,390) | $ (3,526,551) | $ (2,921,250) | $ 618,883 |
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) | $ (3,526,551) | $ (2,921,250) | $ 618,883 |
Earnings per share - basic and diluted | |||||||
Income (loss) from continuing operations attributable to PCS Link, Inc. common stockholders (in dollars per shares) | $ (0.14) | $ (0.03) | $ 0.06 | ||||
Income (loss) from discontinued operations attributable to Greenwood Hall, Inc. common stockholders | (0.09) | (0.04) | |||||
Basic earnings per share attributable to Greenwood Hall, Inc. | $ (0.06) | $ (0.05) | $ (0.07) | $ (0.11) | $ (0.14) | $ (0.12) | $ 0.02 |
Weighted average common shares - basic and diluted | 39,539,228 | 25,051,591 | 39,452,196 | 25,051,591 | 25,119,360 | 25,051,591 | 25,051,591 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||||
Feb. 28, 2015 | Nov. 30, 2014 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net income (loss) | $ (2,224,645) | $ (1,143,526) | $ (2,793,858) | $ (2,769,390) | $ (3,526,551) | $ (2,921,250) | $ 618,883 | ||
Net (income) loss from discontinued operations | 2,079,729 | 948,771 | |||||||
Net income (loss) from continuing operations | (2,793,858) | $ (2,769,390) | (3,526,551) | (841,521) | 1,567,654 | ||||
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 | 491,210 | 31,583 | ||||||
Amortization of note discount | $ 13,046 | ||||||||
Change in value of derivative liabilities | 135,901 | 40,082 | |||||||
Warrants issued for services | 534,498 | 1,645,611 | |||||||
Depreciation and amortization | 31,861 | $ 90,913 | 14,819 | 63,836 | 64,011 | ||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 546,405 | 539,323 | (37,292) | (296,855) | 290,293 | ||||
Prepaid expenses and other current assets | 231,461 | 113,161 | (281,938) | (40,609) | 3,000 | ||||
Accounts payable | 78,605 | 324,189 | (777,831) | 532,157 | (173,582) | ||||
Accrued expenses | (4,372) | 228,679 | (77,764) | 226,284 | 600,858 | ||||
Accrued payroll and related | 181,294 | 12,279 | (201,025) | 82,099 | 41,921 | ||||
Deferred revenue | (778,690) | 47,223 | 924,519 | (314,343) | 388,879 | ||||
Accrued interest and related | (3,265) | 194,509 | 46,790 | 218,260 | 21,550 | ||||
Advances from officers, net | 26,747 | 160,834 | (28,540) | 67,761 | (79,119) | ||||
Net cash provided by (used in) operating activities of continuing operations | (3,413,521) | (271,348) | 2,725,465 | ||||||
Net cash provided by (used in) operating activities of discontinued operations | (1,826,422) | (1,868,851) | |||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ (1,772,504) | $ (1,058,280) | (3,413,521) | $ (2,097,770) | $ 856,614 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Purchase of property and equipment | (159,746) | ||||||||
Net cash used in investing activities of continuing operations | (159,746) | ||||||||
Net cash used in investing activities of discontinued operations | $ (26,250) | ||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (159,746) | (26,250) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Book overdraft | $ (170,408) | ||||||||
Proceeds from issuance of notes payable | $ 600,000 | 2,186,354 | 5,711,110 | $ 3,573,650 | (23,125) | ||||
Payments on notes payable | $ (384,748) | (1,299,934) | (3,519,027) | (1,432,862) | (620,398) | ||||
Repurchase of common stock | $ (26,000) | (23,000) | (52,000) | (52,000) | |||||
Proceeds from sale of units and stock | $ 1,238,445 | 1,645,611 | |||||||
Net cash provided by (used in) financing activities of continuing operations | $ 3,814,694 | $ 2,088,788 | $ (695,523) | ||||||
Net cash provided by (used in) financing activities of discontinued operations | |||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | $ 1,453,697 | $ 690,012 | $ 3,814,694 | $ 2,088,788 | $ (695,523) | ||||
NET INCREASE (DECREASE) IN CASH FROM CONTINUING OPERATIONS | 241,427 | 1,817,440 | 2,029,942 | ||||||
NET INCREASE (DECREASE) IN CASH FROM DISCONTINUED OPERATIONS | (1,826,422) | (1,895,101) | |||||||
NET INCREASE (DECREASE) IN CASH | (318,807) | (368,268) | 241,427 | (8,982) | 134,841 | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | $ 367,286 | 367,286 | $ 368,268 | 125,859 | $ 368,268 | 134,841 | |||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ 48,479 | 48,479 | 367,286 | $ 367,286 | 125,859 | 134,841 | |||
Supplemental disclosures: | |||||||||
Interest paid in cash | $ 288,169 | $ 371,492 | 1,156,066 | $ 354,556 | $ 242,856 | ||||
Income taxes paid in cash | |||||||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||
Conversion of convertible note and accrued interest into common stock | $ 1,386,450 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit [Member] | Total Greenwood Hall, Inc Stockholders' Equity (Deficit) | Noncontrolling Interest | Total |
Balance at Dec. 31, 2011 | $ 25,052 | $ (20,552) | $ (3,471,399) | $ (3,466,899) | $ (3,466,899) | |
Balance (In Shares) at Dec. 31, 2011 | 25,051,591 | |||||
Net income (loss) | 618,883 | 618,883 | 618,883 | |||
Balance at Dec. 31, 2012 | $ 25,052 | $ (20,552) | $ (2,852,516) | (2,848,016) | (2,848,016) | |
Balance (In Shares) at Dec. 31, 2012 | 25,051,591 | |||||
Net income (loss) | (2,921,250) | $ (2,921,250) | (2,921,250) | |||
Balance at Dec. 31, 2013 | $ 25,052 | $ (20,552) | $ (5,773,766) | (5,769,266) | (5,769,266) | |
Balance (In Shares) at Dec. 31, 2013 | 25,051,591 | |||||
Recapitalization of Greenwood Hall, Inc.,Amount | $ 10,250 | (44,834) | (34,584) | (34,584) | ||
Recapitalization of Greenwood Hall, Inc.,Shares | 10,250,000 | |||||
Issuance of units (1 share and 1 warrant) for cash, net of fees,Amount | $ 1,650 | 1,643,961 | 1,645,611 | 1,645,611 | ||
Issuance of units (1 share and 1 warrant) for cash, net of fees,Shares | 1,650,000 | |||||
Conversion of debt into units (1 share and 1 warrant) ,Amount | $ 1,386 | 1,385,064 | 1,386,450 | 1,386,450 | ||
Conversion of debt into units (1 share and 1 warrant),Shares | 1,386,450 | |||||
Issuance of stock with debt,Amount | $ 198 | 186,072 | 186,270 | 186,270 | ||
Issuance of stock with debt,Shares | 198,409 | |||||
Issuance of warrants with debt,Amount | 78,281 | 78,281 | 78,281 | |||
Reclassification of warrants to liabilities,Amount | $ (78,281) | (78,281) | (78,281) | |||
Net income (loss) | $ (3,526,551) | (3,526,551) | (3,526,551) | |||
Balance at Aug. 31, 2014 | $ 38,536 | $ 3,149,711 | $ (9,300,317) | $ (6,112,070) | (6,112,070) | |
Balance (In Shares) at Aug. 31, 2014 | 38,536,450 | |||||
Issuance of units (1 share and 1 warrant) for cash, net of fees,Amount | 534,498 | |||||
Net income (loss) | (2,793,858) | |||||
Balance at Feb. 28, 2015 | $ (7,132,985) |
CONSOLIDATED STATEMENTS OF STO7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Parenthetical) | 8 Months Ended |
Aug. 31, 2014$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Issuance of warrants | $ 1 |
Issuance of Shares | $ 1 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 Links 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 Divios 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 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 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 Companys 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 Companys 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 Companys Consolidated Statement of Operations. In December 2014, the Company entered into a Secured Convertible Note with Colgan Financial Group, Inc. ( Colgan 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. February 28, 2015 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 1.10 % 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 Companys 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 entitys 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. | 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 141 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 Links stockholders owned 71% of the outstanding shares of Greenwood Hall, Inc. immediately after completion of the transaction. The results of Divio 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 Divios 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 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 eight months ended August 31, 2014, the Company received a net amount of approximately $3.8 million 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 and 2012, 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 eight months ended August 31, 2014 as their effect is anti-dilutive. Variable Interest Entities Generally, an entity is defined as a variable interest entity ( VIE University Financial Aid Services, LLC is 60% owned by two individuals that hold a combined 92.5% of our common stock and serve as directors of the Company. 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 $159,377, $920,830 and $812,474 for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012, 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 Companys 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 Companys Consolidated Statement of Operations. During the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012, the Company recorded a non-cash loss from the change in fair value of the derivative liability of $40,082, $0, 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 August 31, 2014 for assets and liabilities measured at fair value on a recurring basis. There were no instruments subject to this classification at December 31, 2013. August 31, 2014: Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 118,363 The assumptions used in valuing warrants issued during the eight months ended August 31, 2014 were as follows: Risk free interest rate 2.12 % Expected life 7 Years Dividend yield None Volatility 30 % The following is a reconciliation of the derivative liability related to these warrants for the eight months ended August 31, 2014: Value at December 31, 2013 $ Issuance of instruments 78,281 Change in value 40,082 Net settlements Value at August 31, 2014 $ 118,363 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 Companys stock price, term and volatility. Other inputs have a comparatively insignificant effect. Effect of Recently Issued Accounting Standards 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 entitys 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 the first quarter of fiscal 2014 and believe that adoption did not have a material impact to our financial statements. 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 2015 Computer equipment $ 553,255 Software and Equipment 39,400 592,655 Accumulated depreciation (426,932) Net property and equipment $ 165,723 | 2. PROPERTY AND EQUIPMENT Depreciation and amortization of property and equipment amounted to $14,819 for 2014, $63,836 and $64,011 during the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012, respectively, and is included in the accompanying consolidated statements of operations in selling, general and administrative expenses. At August 31, 2014 and December 31, 2013, property and equipment consists of the following: 2014 2013 Computer equipment $ 567,196 $ 395,818 Software and Equipment 39,400 51,032 606,596 446,850 Accumulated depreciation (395,071 ) (380,252 ) Net property and equipment $ 211,525 $ 66,598 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 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 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 and Robert Logan (Logan, and together with Colgan Financial Group, 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 Companys 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 Companys 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 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 Companys 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 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 | 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 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 August 31, 2014, the balance outstanding on the term loan and line of credit amounted to $1,939,394 and $1,500,000, respectively. At August 31, 2014, 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 $1.01 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 eight months ended August 31, 2014, the Company recognized $6,523 of amortization related to this discount, leaving a balance of $71,758 at August 31, 2014. Bank In October 2010, the Company issued two promissory notes to California United Bank ( CUB The second promissory note is 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. The balance outstanding amounted to $1,250,000 at December 31, 2013 and 2012. 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. As of August 31, 2014, the balance remaining is $876,250. During the eight months ended August 31, 2014, the Company borrowed $350,000 from CUB relating to overdraft protection. These advances bear interest at a rate of 18% per annum and are considered short-term liabilities. These advances, associated interest and fees were repaid in July 2014. Credit Agreement During 2013, the Company entered into a Credit Agreement with TCA Global Credit Master Fund, LP ( 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 Companys 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 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 August 31, 2014. The following is a schedule, by year, of future minimum principal payments required under notes payable as of August 31, 2014: Years Ending 2015 $ 2,124,892 2016 772,643 2017 525,345 2018 - 2019 - Total 3,422,880 Note discount (71,758 ) $ 3,351,122 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Notes to Financial Statements [Abstract] | ||
RELATED PARTY TRANSACTIONS | 4. RELATED PARTY TRANSACTIONS One of the Companys customers, MarkeTouch Media, Inc. ( MarkeTouch | 4. Related Party Transactions One of the Companys customers, MarkeTouch Media, Inc. ( MarkeTouch Pursuant to an agreement between the Company and MarkeTouch, the Company is repurchasing the shares held by MarkeTouch for $200,000. As of December 31, 2013, the Company owed $23,000 relating to this share repurchase obligation, which is recorded in accrued expenses. The shares of MarkeTouch were considered issued and outstanding as of December 31, 2013 and 2012 and were cancelled in 2014 upon payment in full of the share repurchase obligation. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Equity [Abstract] | ||
STOCKHOLDERS' 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. 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 1.10 % 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 $ 1.00 375,000 May 2021 $ 1.30 3,036,450 July 2016 $ 1.30 1,000,000 September 2016 $ 1.00 1,264,023 November 2024 $ 0.01 100,000 July 2016 | 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. Pursuant to an agreement between the Company and MarkeTouch, the Company is repurchasing the shares held by MarkeTouch for $200,000. As of December 31, 2013, the Company owed $23,000 relating to this share repurchase obligation, which is recorded in accrued expenses. The shares of MarkeTouch are still considered issued and outstanding as of December 31, 2013 and 2012 and were cancelled in 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. The following is a summary of warrants outstanding at August 31, 2014: Exercise Price Number of Warrants Expiration Date $ 1.01 375,000 May 2021 $ 1.30 1,386,450 July 2016 |
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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. | 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 eight months ended August 31, 2014 and years ended December 31, 2013 and 2012, 2, 1 and 3 customers represented 34%, 30% and 48% of net revenues, respectively. For the eight months ended August 31, 2014 and December 31, 2013 and 2012, 2, 1 and 3 customers represented 29%, 71% and 43% of accounts receivable, respectively. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 8 Months Ended |
Aug. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | 7. Employee Benefit Plan The Company has established a 401(k) employee retirement savings plan that is available to all of its employees. Under the provisions of the plan, employees may make pre-tax contributions not to exceed the limit set by the Internal Revenue Service. The Company elected to terminate this plan effective May 2013. |
INCOME TAXES
INCOME TAXES | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 managements estimates could result in material differences. A majority of the Companys 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 Due to the existence of the valuation allowance, future changes in the Companys 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 managements estimates could result in material differences. | 8. 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 managements estimates could result in material differences. A reconciliation of the expected income tax (benefit) from continuing operations computed using the federal statutory income tax rate to the Companys effective income tax rate is as follows for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012: 2014 2013 2012 Income tax (benefit) computed at federal statutory tax rate (34.00 )% (34.00 )% 34.00 % State taxes, net of federal (5.83 ) (5.83 ) 5.83 Permanent differences 0.10 0.10 0.10 Change in valuation allowance 39.73 39.73 (11.18 ) Effective income tax rate - % - % 28.75 % A majority of the Companys deferred tax asset is comprised of net operating loss carryforwards, offset by a 100% valuation allowance at August 31, 2014 and December 31, 2013. During 2014, 2013 and 2012, the breakdown of the provision for (benefit from) income taxes is as follows: 2014 2013 2012 Continuing operations $ - $ - $ 632,514 Discontinued operations - - (632,514 ) Total income tax expense $ - $ - $ - As of August 31, 2014, the Company is in process of determining the amount of Federal and State net operating loss carry forwards ( NOL Due to the existence of the valuation allowance, future changes in the Companys 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 Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Companys policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012. The Company files income tax returns with the Internal Revenue Service ( IRS 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 managements estimates could result in material differences. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 Patriot 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. | 9. 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 eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012 was $275,017, $370,460 and $433,720, 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 August 31, 2014: Years Ending 2015 $ 319,541 2016 336,356 2017 348,530 2018 358,015 2019 368,700 Thereafter 1,971,200 $ 3,702,342 Employment Agreements At August 31, 2014, 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 Patriot |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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. | 10. 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. The revenue and expenses of discontinued operations for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012 are as follows: 2014 2013 2012 Net sales $ - $ 1,017,932 $ 1,424,931 Operating expenses - (3,097,661 ) (3,006,216 ) Benefit from (provision for) income taxes - - 632,514 Income (loss) from discontinued operations $ - $ (2,079,729 ) $ (948,771 ) |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Notes to Financial Statements [Abstract] | ||
SUBSEQUENT EVENT | 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 Companys 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). 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 Companys 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. | 11. SUBSEQUENT EVENTS In September 2014, the Company sold 500,000 units at a price of $1.00 per unit, which comprised one share of common stock and one warrant to purchase common stock at an exercise price of $1.30 per share, resulting in gross proceeds of $500,000. |
ORGANIZATION AND SUMMARY OF S19
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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. | 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 141 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 Links 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 Divios 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. | 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 Links stockholders owned 71% of the outstanding shares of Greenwood Hall, Inc. immediately after completion of the transaction. The results of Divio 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 Divios 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. | 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 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. | Going Concern The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ( US GAAP 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 eight months ended August 31, 2014, the Company received a net amount of approximately $3.8 million 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. | 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. | 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. | Research and Development Costs relating to designing and developing new products are expensed in the period incurred. |
Revenue Recognition | Revenue Recognition The Companys 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 Companys 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. | Revenue Recognition The Companys 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 Companys 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 Companys revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met. | Deferred Revenue Deferred revenue primarily consists of prepayments received from customers for which the Companys 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 Companys 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 Companys 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 Companys accounts receivable, net of the allowance for doubtful accounts, are collectable. | 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 Companys 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 Companys 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 Companys 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. | 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. | 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. | 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 and 2012, 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 eight months ended August 31, 2014 as their effect is anti-dilutive. |
Variable Interest Entities | Variable Interest Entities Generally, an entity is defined as a variable interest entity ( VIE 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 Companys 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. | Variable Interest Entities Generally, an entity is defined as a variable interest entity ( VIE University Financial Aid Services, LLC is 60% owned by two individuals that hold a combined 92.5% of our common stock and serve as directors of the Company. 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. | Marketing and Advertising Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $159,377, $920,830 and $812,474 for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012, 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 Companys 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 Companys Consolidated Statement of Operations. In December 2014, the Company entered into a Secured Convertible Note with Colgan Financial Group, Inc. ( Colgan | 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 Companys 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 Companys Consolidated Statement of Operations. During the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012, the Company recorded a non-cash loss from the change in fair value of the derivative liability of $40,082, $0, 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. February 28, 2015 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 1.10 % 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 Companys stock price, term and volatility. Other inputs have a comparatively insignificant effect. | 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 August 31, 2014 for assets and liabilities measured at fair value on a recurring basis. There were no instruments subject to this classification at December 31, 2013. August 31, 2014: Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 118,363 The assumptions used in valuing warrants issued during the eight months ended August 31, 2014 were as follows: Risk free interest rate 2.12 % Expected life 7 Years Dividend yield None Volatility 30 % The following is a reconciliation of the derivative liability related to these warrants for the eight months ended August 31, 2014: Value at December 31, 2013 $ Issuance of instruments 78,281 Change in value 40,082 Net settlements Value at August 31, 2014 $ 118,363 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 Companys 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 entitys 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. | Effect of Recently Issued Accounting Standards 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 entitys 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 the first quarter of fiscal 2014 and believe that adoption did not have a material impact to our financial statements. 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. |
ORGANIZATION AND SUMMARY OF S20
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 | 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 |
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. February 28, 2015 Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 578,257 | The following table summarizes fair value measurements at August 31, 2014 for assets and liabilities measured at fair value on a recurring basis. There were no instruments subject to this classification at December 31, 2013. August 31, 2014: Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 118,363 |
Warrants | The assumptions used in valuing derivative instruments issued during the six months ended February 28, 2015 were as follows: Risk free interest rate 1.10 % Expected life 3.0 Years Dividend yield None Volatility 60 % | The assumptions used in valuing warrants issued during the eight months ended August 31, 2014 were as follows: Risk free interest rate 2.12 % Expected life 7 Years Dividend yield None Volatility 30 % |
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 | The following is a reconciliation of the derivative liability related to these warrants for the eight months ended August 31, 2014: Value at December 31, 2013 $ Issuance of instruments 78,281 Change in value 40,082 Net settlements Value at August 31, 2014 $ 118,363 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Notes to Financial Statements [Abstract] | ||
Property and equipment | At February 28, 2015, property and equipment consists of the following: FEB 2015 Computer equipment $ 553,255 Software and Equipment 39,400 592,655 Accumulated depreciation (426,932) Net property and equipment $ 165,723 | At August 31, 2014 and December 31, 2013, property and equipment consists of the following: 2014 2013 Computer equipment $ 567,196 $ 395,818 Software and Equipment 39,400 51,032 606,596 446,850 Accumulated depreciation (395,071 ) (380,252 ) Net property and equipment $ 211,525 $ 66,598 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 | The Company also finances the purchases of small equipment. The amount of such notes is not significant at August 31, 2014. The following is a schedule, by year, of future minimum principal payments required under notes payable as of August 31, 2014: Years Ending 2015 $ 2,124,892 2016 772,643 2017 525,345 2018 - 2019 - Total 3,422,880 Note discount (71,758 ) $ 3,351,122 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 1.10 % 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 $ 1.00 375,000 May 2021 $ 1.30 3,036,450 July 2016 $ 1.30 1,000,000 September 2016 $ 1.00 1,264,023 November 2024 $ 0.01 100,000 July 2016 | The following is a summary of warrants outstanding at August 31, 2014: Exercise Price Number of Warrants Expiration Date $ 1.01 375,000 May 2021 $ 1.30 1,386,450 July 2016 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 8 Months Ended |
Aug. 31, 2014 | |
Notes to Financial Statements [Abstract] | |
Expected income tax (benefit) from continuing operations | A reconciliation of the expected income tax (benefit) from continuing operations computed using the federal statutory income tax rate to the Companys effective income tax rate is as follows for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012: 2014 2013 2012 Income tax (benefit) computed at federal statutory tax rate (34.00 )% (34.00 )% 34.00 % State taxes, net of federal (5.83 ) (5.83 ) 5.83 Permanent differences 0.10 0.10 0.10 Change in valuation allowance 39.73 39.73 (11.18 ) Effective income tax rate - % - % 28.75 % |
Provision for (benefit from) income taxes | During 2014, 2013 and 2012, the breakdown of the provision for (benefit from) income taxes is as follows: 2014 2013 2012 Continuing operations $ - $ - $ 632,514 Discontinued operations - - (632,514 ) Total income tax expense $ - $ - $ - |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
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 | 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 August 31, 2014: Years Ending 2015 $ 319,541 2016 336,356 2017 348,530 2018 358,015 2019 368,700 Thereafter 1,971,200 $ 3,702,342 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 8 Months Ended |
Aug. 31, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block] | The revenue and expenses of discontinued operations for the eight months ended August 31, 2014 and the years ended December 31, 2013 and 2012 are as follows: 2014 2013 2012 Net sales $ - $ 1,017,932 $ 1,424,931 Operating expenses - (3,097,661 ) (3,006,216 ) Benefit from (provision for) income taxes - - 632,514 Income (loss) from discontinued operations $ - $ (2,079,729 ) $ (948,771 ) |
ORGANIZATION AND SUMMARY OF S27
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | P7Y | P7Y |
Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | P5Y | P5Y |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | P7Y | P7Y |
ORGANIZATION AND SUMMARY OF S28
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Feb. 28, 2015 | Aug. 31, 2014 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative Liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative Liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Derivative Liabilities | $ 578,257 | $ 118,363 |
ORGANIZATION AND SUMMARY OF S29
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Range Member | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Fair Value Assumptions, Risk-free interest rate | 2.12% | |
Fair Value Assumptions, Expected Life | 7 years | |
Fair Value Assumptions, Expected Dividend | 0.00% | |
Fair Value Assumptions, Expected Volatility | 30.00% | |
Warrant [Member] | ||
Fair Value Assumptions, Risk-free interest rate | 1.10% | |
Fair Value Assumptions, Expected Life | 3 years | |
Fair Value Assumptions, Expected Dividend | 0.00% | |
Fair Value Assumptions, Expected Volatility | 60.00% |
ORGANIZATION AND SUMMARY OF S30
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Notes to Financial Statements [Abstract] | ||
Value | $ 118,363 | |
Issuance of instruments | 323,024 | $ 78,281 |
Change in value | $ 136,870 | 40,082 |
Net settlements | ||
Value | $ 578,257 | $ 118,363 |
ORGANIZATION AND SUMMARY OF S31
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Details Narratives) - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 18, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Marketing and advertising | $ 22,813 | $ 319,948 | $ 159,377 | $ 920,830 | $ 812,474 | ||||
Change in fair value of derivative liability | $ 136,870 | 136,870 | 40,082 | $ 0 | $ 0 | ||||
Net amount from financing activities | $ 1,453,697 | 3,800,000 | |||||||
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 | $ 135,901 | $ 40,082 | |||||||
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 | Dec. 31, 2013 |
Property, Plant and Equipment, Gross | $ 592,655 | $ 606,596 | $ 446,850 |
Accumulated depreciation | (426,932) | (395,071) | (380,252) |
Net property and equipment | 165,723 | 211,525 | 66,598 |
Computer Equipment [Member] | |||
Property, Plant and Equipment, Gross | 553,255 | 567,196 | 395,818 |
Net property and equipment | 553,255 | 567,196 | 395,818 |
Equipment [Member] | |||
Property, Plant and Equipment, Gross | 39,400 | ||
Net property and equipment | $ 39,400 | ||
Software and Equipment [Member] | |||
Property, Plant and Equipment, Gross | 39,400 | 51,032 | |
Net property and equipment | $ 39,400 | $ 51,032 |
PROPERTY AND EQUIPMENT (Detai33
PROPERTY AND EQUIPMENT (Details Narratives) - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |
Nov. 30, 2014 | Feb. 28, 2015 | Aug. 31, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation, Depletion and Amortization | $ 90,913 | $ 31,861 | $ 14,819 | $ 64,011 | $ 63,836 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Feb. 28, 2015 | Aug. 31, 2014 | Dec. 31, 2013 |
Years Ending December 31, | |||
2,015 | $ 1,838,571 | $ 2,124,892 | |
2,016 | 772,643 | 772,643 | |
2,017 | 514,238 | $ 525,345 | |
2,018 | 500,000 | ||
2,019 | |||
Total | 3,625,452 | $ 3,422,880 | |
Note discount | (353,873) | (71,758) | $ (298,417) |
Long-term Debt | $ 3,271,579 | $ 3,351,122 |
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, 2014 | Aug. 31, 2013 | Sep. 30, 2014 | Jul. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 31, 2010 | |
Interest rate | 5.75% | ||||||||||
Exercise price | $ 0.01 | ||||||||||
Amortization of Debt Discount (Premium) | $ 13,046 | ||||||||||
Warrants due to dilutive issuances | 375,000 | 375,000 | |||||||||
Debt Instrument, Unamortized Discount | $ 353,873 | $ 71,758 | $ 71,758 | $ 298,417 | |||||||
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 | ||||||||||
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 | ||||||||||
Maximum [Member] | |||||||||||
Debt Instrument, Maturity Date | May 1, 2017 | ||||||||||
Line of credit amount | $ 3,000,000 | ||||||||||
Credit Agreement [Member] | |||||||||||
Debt Instrument, Face Amount | $ 876,250 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||||||
Debt Instrument, Maturity Date | Apr. 30, 2015 | ||||||||||
Warrants value | 248,011 | 248,011 | |||||||||
Debt Instrument Maturity Period | 500,000 | ||||||||||
Line of credit amount | $ 1,575,758 | 1,939,394 | |||||||||
Unsecured Promissory Note [Member] | |||||||||||
Interest rate | 10.00% | ||||||||||
California United Bank [Member] | Promissory Note Two [Member] | |||||||||||
Debt Instrument, Face Amount | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | 7.25% | 7.25% | 7.25% | |||||||
Debt Instrument, Maturity Date | Mar. 5, 2014 | ||||||||||
Debt Instrument, Outstanding Amount | $ 2,000,000 | ||||||||||
Amortization of Debt Discount (Premium) | $ 6,523 | ||||||||||
Debt Instrument, Unamortized Discount | $ 58,712 | $ 71,758 | $ 71,758 | ||||||||
California United Bank [Member] | Promissory Note Three [Member] | |||||||||||
Debt Instrument, Face Amount | $ 350,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 18.00% | ||||||||||
California United Bank [Member] | Promissory Note One [Member] | |||||||||||
Debt Instrument, Face Amount | $ 500,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | ||||||||||
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] | 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 | Mar. 31, 2014 | ||||||||||
Debt Instrument Maturity Period | October2014 | ||||||||||
TCA Global Credit Master Fund, LP [Member] | Revolving Credit Facility [Member] | Maximum [Member] | Credit Agreement [Member] | |||||||||||
Debt Instrument Increase Additional Borrowings | 7,000,000 | ||||||||||
Colgan Financial Group, Inc [Member] | Promissory Note [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 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narratives) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2015 | Aug. 31, 2014 | Feb. 28, 2014 | |
Related Party Transaction [Line Items] | |||||
Accrued Liabilities, Current | $ 23,000 | $ 0 | $ 14,333 | ||
Stock Repurchased During Period, Value | 124,328 | $ 137,924 | |||
Due to Officers or Stockholders, Current | $ 184,016 | $ 182,223 | $ 155,476 | ||
MarkeTouch Media, Inc. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 7.50% | 7.50% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 6 Months Ended | 8 Months Ended |
Feb. 28, 2015 | Aug. 31, 2014 | |
Risk free interest rate | 2.12% | |
Expected life | 7 years | |
Dividend yield | 0.00% | |
Volatility | 30.00% | |
Warrant [Member] | ||
Risk free interest rate | 1.10% | |
Expected life | 3 years | |
Dividend yield | 0.00% | |
Volatility | 60.00% | |
Minimum [Member] | Warrant [Member] | ||
Expected life | 1 year 6 months | |
Maximum [Member] | Warrant [Member] | ||
Expected life | 10 years |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - $ / shares | Nov. 30, 2024 | May. 31, 2021 | Sep. 30, 2016 | Jul. 31, 2016 | Jul. 01, 2016 |
Warrants Outstanding Exercise Price 1 | $ 1 | $ 1 | $ 1.3 | $ 1.3 | $ 0.01 |
Number of Warrants Outstanding 1 | 1,264,023 | 375,000 | 1,000,000 | 3,036,450 | 100,000 |
August 31, 2014 [Member] | |||||
Warrants Outstanding Exercise Price 1 | $ 1 | $ 1.3 | |||
Number of Warrants Outstanding 1 | 375,000 | 3,036,450 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narratives) - USD ($) | 6 Months Ended | ||
Feb. 28, 2015 | Aug. 31, 2014 | Dec. 31, 2013 | |
Common Stock, Shares Authorized | 75,000,000 | 937,500,000 | 937,500,000 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Share repurchase obligation | $ 14,333 | $ 23,000 | |
Exercise price | $ 0.01 | ||
Warrnts value | $ 41,168 | ||
Warrants for services | 100,000 | ||
Expected term | 1 year 8 months 12 days | ||
Consultant [Member] | |||
Exercise price | $ 1 | ||
Additional warrants | 1,264,024 | ||
Warrants for services | 1,264,023 | ||
Expected term | 10 years | ||
Common Stock [Member] | |||
Common Stock, Shares Authorized | 937,500,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | ||
Share repurchase obligation | $ 3,036,450 | ||
Accrued interest | 1,645,611 | ||
September 2,014 | |||
Share repurchase obligation | 1,000,000 | ||
Total debt | 1,386,450 | ||
Accrued interest | $ 27,333 | ||
Exercise price | $ 1 | ||
Total proceeds | $ 1,000,000 | ||
January 2,015 | |||
Common Stock, Shares Authorized | 250,000 | ||
Exercise price | $ 1 | ||
Total proceeds | $ 250,000 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narratives) | 6 Months Ended | 8 Months Ended | 12 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 29.00% | 71.00% | 43.00% | ||
Sales Revenue, Services, Net [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 34.00% | 30.00% | 48.00% | ||
Customer Four [Member] | |||||
Concentration Risk [Line Items] | |||||
Net revenues | 48.00% | ||||
Customer [Member] | |||||
Concentration Risk [Line Items] | |||||
Net revenues | 44.00% | ||||
Customer Two [Member] | |||||
Concentration Risk [Line Items] | |||||
Net revenues | 37.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) | 8 Months Ended | 12 Months Ended | |
Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | |||
Income tax (benefit) computed at federal statutory tax rate | (34.00%) | (34.00%) | 34.00% |
State taxes, net of federal | (5.83%) | (5.83%) | 5.83% |
Permanent differences | 0.10% | 0.10% | 0.10% |
Change in valuation allowance | 39.73% | 39.73% | (11.18%) |
Effective income tax rate | 0.00% | 0.00% | 28.75% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | |||||||
Continuing operations | $ 632,514 | ||||||
Discontinued operations | (632,514) | ||||||
Total income tax expense | $ 0 | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narratives) - USD ($) | 6 Months Ended | 8 Months Ended | 12 Months Ended | |
Feb. 28, 2015 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ||||
Percentage Of Valuation Allowance | 100.00% | 100.00% | 100.00% | |
Income Tax Examination, Penalties and Interest Expense | $ 0 | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES44
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Feb. 28, 2015 | Aug. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ||
2,015 | $ 152,646 | $ 319,541 |
2,016 | 327,884 | 336,356 |
2,017 | 345,980 | 348,530 |
2,018 | 355,660 | 358,015 |
2,019 | 366,000 | 368,700 |
Thereafter | 1,971,200 | 1,971,200 |
Total | $ 3,519,370 | $ 3,702,342 |
COMMITMENTS AND CONTINGENCIES45
COMMITMENTS AND CONTINGENCIES (Details Narratives) - USD ($) | 6 Months Ended | 8 Months Ended | 12 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Loss Contingency, Loss in Period | $ 5,000,000 | $ 5,000,000 | |||
Lease Expiration Period | 2,024 | 2,024 | |||
Operating Leases, Rent Expense, Net | $ 225,121 | $ 270,051 | $ 275,017 | $ 370,460 | $ 433,720 |
Gain (Loss) on Contract Termination | $ 250,000 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - USD ($) | 8 Months Ended | 12 Months Ended | |
Aug. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Net sales | $ 1,017,932 | $ 1,424,931 | |
Operating expenses | $ (3,097,661) | (3,006,216) | |
Benefit from (provision for) income taxes | 632,514 | ||
Income (loss) from discontinued operations | $ (2,079,729) | $ (948,771) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narratives) | 6 Months Ended | 8 Months Ended | |
Feb. 28, 2015USD ($)ft²shares | Aug. 31, 2014USD ($)$ / shares | Mar. 31, 2015USD ($)$ / sharesshares | |
Gross proceeds | $ 500,000 | ||
Warrant purchase exercise price | $ / shares | $ 1.30 | ||
Total base rent payable | $ 1,282,932 | ||
Annual rent | $ 9,137 | ||
Lease Area | ft² | 10,699 | ||
Exercise price | $ / shares | $ 1 | ||
Convertible Note | $ 295,000 | ||
Additional convertible debt | $ 250,000 | ||
Shares common stock | shares | 43,382,900 | ||
Shares exercised | shares | 4,286,450 | ||
Common Stock [Member] | |||
Shares common stock | shares | 5,673,980 |