Document and Entity Information
Document and Entity Information - May. 31, 2015 - shares | Total |
Document And Entity Information | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | May 31, 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 |
Entity Common Stock, Shares Outstanding | 41,503,980 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well Known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | May. 31, 2015 | Aug. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 367,286 | |
Accounts receivable, net | $ 727,140 | 1,039,065 |
Prepaid expenses and other current assets | 91,636 | 305,691 |
Current assets to be disposed of | 36,860 | 36,860 |
TOTAL CURRENT ASSETS | 855,636 | 1,748,902 |
PROPERTY AND EQUIPMENT, net | 149,717 | 211,525 |
OTHER ASSETS | ||
Deposits and other assets | 40,812 | 57,659 |
TOTAL OTHER ASSETS | 40,812 | 57,659 |
TOTAL ASSETS | 1,046,165 | 2,018,086 |
CURRENT LIABILITIES | ||
Accounts payable | 957,736 | 835,423 |
Accrued expenses | 401,955 | 284,362 |
Accrued payroll and related expenses | 440,129 | $ 411,280 |
Book Overdraft | $ 173,948 | |
Deferred revenue | $ 1,102,500 | |
Accrued interest | $ 101,630 | 35,773 |
Due to shareholders / officer | 169,238 | 155,476 |
Notes payable, net of discount of $689,002 and $71,758, respectively | 3,088,753 | 2,053,134 |
Line of credit | 2,000,000 | 1,500,000 |
Derivative liability | 709,060 | 118,363 |
Current liabilities to be disposed of | 335,857 | 335,857 |
TOTAL CURRENT LIABILITIES | 8,378,306 | 6,832,168 |
Notes payable, non-current | 515,000 | 1,297,988 |
TOTAL LIABILITIES | $ 8,893,306 | $ 8,130,156 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock, $0.001 par value; 937,500,000 shares authorized, 41,503,980 and 38,536,450 shares issued and outstanding, respectively | $ 41,974 | $ 38,536 |
Additional paid-in capital | 6,182,259 | 3,149,711 |
Accumulated deficit | (14,071,374) | (9,300,317) |
TOTAL GREENWOOD HALL, INC. STOCKHOLDERS' EQUITY (DEFICIT) | $ (7,847,141) | $ (6,112,070) |
Noncontrolling interest | ||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $ (7,847,141) | $ (6,112,070) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,046,165 | $ 2,018,086 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | May. 31, 2015 | Aug. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Debt Instrument, Unamortized Discount | $ 689,002 | $ 71,758 |
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 937,500,000 | 937,500,000 |
Common Stock, Shares, Issued | 41,503,980 | 38,536,450 |
Common Stock, Shares, Outstanding | 41,503,980 | 38,536,450 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2015 | May. 31, 2014 | |
Income Statement [Abstract] | ||||
REVENUES | $ 2,170,894 | $ 1,644,090 | $ 6,316,282 | $ 5,692,214 |
OPERATING EXPENSES | ||||
Direct cost of services | 1,166,113 | 877,990 | 3,724,551 | 2,771,977 |
Personnel | 1,339,866 | 942,940 | 2,364,335 | 3,346,772 |
Selling, general and administrative | 364,863 | $ 711,925 | 2,706,176 | $ 2,843,778 |
Stock Based Compensation | 1,031,226 | 1,565,723 | ||
TOTAL OPERATING EXPENSES | 3,902,068 | $ 2,532,855 | 10,360,785 | $ 8,962,527 |
INCOME (LOSS) FROM OPERATIONS | (1,731,174) | (888,765) | (4,044,503) | (3,270,313) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (198,477) | $ (562,667) | (510,275) | $ (935,649) |
Change in value of derivatives | (57,956) | (194,826) | ||
Miscellaneous income (expense), net | 10,518 | $ (50,495) | (21,343) | $ (104,309) |
TOTAL OTHER INCOME (EXPENSE) | (245,915) | (613,162) | (726,444) | (1,039,958) |
INCOME (LOSS) FROM BEFORE | (1,977,089) | (1,501,927) | (4,770,947) | (4,310,271) |
PROVISION FOR INCOME TAXES | (111) | (523) | (111) | (523) |
NET LOSS | $ (1,977,200) | $ (1,502,450) | $ (4,771,058) | $ (4,310,794) |
Net income (loss) attributable to noncontrolling interests | ||||
Net income (loss) attributable to Grenwood Hall, Inc. | $ (1,977,200) | $ (1,502,450) | $ (4,771,058) | $ (4,310,794) |
Earnings per share - basic and diluted | ||||
Basic earnings per share attributable to Greenwood Hall, Inc. | $ (0.05) | $ (0.06) | $ (0.12) | $ (0.17) |
Weighted average common shares - basic and diluted | 41,221,068 | 25,051,591 | 40,048,299 | 25,051,591 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) from continuing operations | $ (4,771,058) | $ (4,310,794) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations: | ||
Stock-based compensation | 1,565,723 | |
Depreciation and amortization | 47,866 | $ 94,624 |
Amortization of note discount | 98,945 | $ 410,125 |
Change in value of derivative liabilities | 194,826 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 311,925 | $ 348,796 |
Prepaid expenses and other current assets | 230,903 | 154,684 |
Accounts payable | 124,544 | 308,778 |
Accrued expenses | 117,592 | 429,555 |
Accrued payroll and related | 28,849 | 11,555 |
Deferred revenue | (1,102,500) | 82,780 |
Accrued interest and related | 65,859 | 133,433 |
Advances from officers, net | 60,882 | 86,782 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ (3,025,644) | (2,249,682) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (21,772) | |
NET CASH USED IN INVESTING ACTIVITIES | (21,772) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Book overdraft | $ 173,948 | (208,436) |
Proceeds from issuance of notes payable | 1,701,500 | 5,661,354 |
Payments on notes payable | $ (455,535) | (3,510,732) |
Repurchase of common stock | $ (39,000) | |
Proceeds from the sale of stock | $ 1,238,445 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,658,358 | $ 1,903,186 |
NET INCREASE (DECREASE) IN CASH | (367,286) | (368,268) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | $ 367,286 | $ 368,268 |
CASH AND CASH EQUIVALENTS, END OF YEAR | ||
Supplemental disclosures: | ||
Interest paid in cash | $ 297,009 | $ 935,649 |
Income taxes paid in cash |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Greenwood Hall is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 121 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 nine months ended May 31, 2015 the Company received approximately $2,658,358 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. Warrants to purchase common stock were excluded from the computation of diluted shares during the three and nine months ended May 31, 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 $117,596 and $331,918 for the nine months ended May 31, 2015 and the nine months ended May 31, 2014 respectively, and are included in selling, general and administrative expenses. Stock-Based Compensation Compensation costs related to stock options and other equity awards are determined in accordance with FASB ASC 718-10, Compensation-Stock Compensation. Under this method, compensation cost is calculated based on the grant-date fair value estimated in accordance FASB ASC 718-10, amortized on a straight-line basis over the awards vesting period. Stock-based compensation was $1,565,723 and $0 for the nine months ended May 31, 2015 and 2014, respectively, and was $1,031,226 and $0 for the three months ended May 31, 2015 and 2014, respectively. This expense is included in the condensed consolidated statements of operations as Stock-Based Compensation. 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 In March 2015, the Company entered into a Convertible Note with Redwood Fund, LP ( Redwood In April 2015, the Company entered into a Convertible Note with Lincoln Park Capital Fund, LLP ( Lincoln Park During the nine months ended May 31, 2015 and 2014, the Company recognized a change in value of the derivative liability of $194,826 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 May 31, 2015 for assets and liabilities measured at fair value on a recurring basis. May 31, 2015 Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 709,060 The assumptions used in valuing derivative instruments issued during the nine months ended May 31, 2015 were as follows: Risk free interest rate 0.26 % Expected life 1.0 Years Dividend yield None Volatility 60 % The following is a reconciliation of the derivative liability related to these instruments for the nine months ended May 31, 2015: Value at August 31, 2014 $ 118,363 Issuance of instruments 395,871 Change in value 194,826 Net settlements - Value at May 31, 2015 $ 709,060 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 August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. The adoption of this standard is not expected to have a material impact on the Company's consolidated 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. 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
PROPERTY AND EQUIPMENT | 2. PROPERTY AND EQUIPMENT Depreciation and amortization of property and equipment amounted to $47,866 and $94,624 for the nine months ended May 31, 2015 and 2014, respectively, and is included in the accompanying consolidated statements of operations in selling, general and administrative expenses. At May 31, 2015, property and equipment consists of the following: MAY 2015 Computer equipment $ 553,255 Software and Equipment 39,400 592,655 Accumulated depreciation (442,938 ) Net property and equipment $ 149,717 |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
NOTES PAYABLE | 3. NOTES PAYABLE Bank In May 2014, the Company entered into a Credit Agreement and related term loan and line of credit with Opus Bank ( Opus On April 13, 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. 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 January 2016. As of May 31, 2015, the balance outstanding on the term loan and line of credit amounted to $1,537,416 and $2,025,084, respectively. At May 31, 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 nine months ended May 31, 2015, the Company recognized $19,569 of amortization related to this discount, leaving a balance of $52,189 at May 31, 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. On April 13, 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 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 and extended the maturity date of the facility to January 1, 2016. As of May 31, 2015, the balance remaining is $894,812. Secured Convertible Notes In December 2014, in consideration for funds in the amount of $500,000 received by Greenwood Hall, Inc. from Colgan Financial Group, Inc. and Robert Logan (Logan, and together with CFG, the Holder), the Company executed a secured convertible promissory note. The note bears interest at 12% per year, the interest of which is payable monthly. This is a 3 year note and is secured by substantially all assets of the Company. This note is subordinate to the notes held by Opus Bank and California United Bank. On April 13, 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 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. 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 $322,730 and is being amortized over the term of the note using the effective interest method. Amortization of the note discount during the nine months ended May 31, 2015 amounted to $53,788. On March 31, 2015, the Company entered into a one-year $ 295,000 Convertible Note (Note) with Redwood Fund LP (Redwood). In conjunction with the Note, the Company issued Redwood warrants that are exercisable for 295,000 shares of the Companys common stock over the next five (5) years at an exercise price of $ 1.00 per share. Redwood has an option to provide additional convertible debt to the Company in the amount of $ 250,000 at the same terms. Interest will accrue monthly at 10% annually and the note is unsecured. On April 24, 2015, the Company entered into a one-year $ 295,000 Convertible Note (Note) with Lincoln Park Capital Fund LLC (Lincoln Park). In conjunction with the Note, the Company issued Lincoln Park warrants that are exercisable for 295,000 shares of the Companys common stock over the next five (5) years at an exercise price of $ 1.00 per share. Redwood has an option to provide additional convertible debt to the Company in the amount of $ 250,000 at the same terms. Interest will accrue monthly at 10% annually and the note is unsecured. 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 On April 13, 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 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. As of May 31, 2015, the balance remaining is $715,071. 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 May 31, 2015. The following is a schedule, by year, of future minimum principal payments required under notes payable as of May 31, 2015: Years Ending August 31, 2015 (remainder of) $ 3,187,755 2016 590,000 2017 - 2018 515,000 2019 - Total 4,292,755 Note discount (689,002 ) $ 3,603,753 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
RELATED PARTY TRANSACTIONS | 4. RELATED PARTY TRANSACTIONS One of the Companys customers, MarkeTouch Media, Inc. ( MarkeTouch |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
May. 31, 2015 | |
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 May 31, 2014 the Company owed $14,333 relating to this share repurchase obligation, which is recorded in accrued expenses. 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 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 $250,000. The Company incurred $11,555 of fees associated with this raise, which are presented net of the proceeds. Stock Issued for Services In April 2015, the Company entered into a 3-month agreement with a vendor for advisory and consulting services. For the nine months ended May 31, 2015, the vendor had received 80,000 shares which were recognized as an operating expense of $72,000. Stock Option Plan In July 2014, the Board of Directors adopted, and the shareholders approved, the 2014 Stock Option Plan (the "Option Plan") under which a total of 5,000,000 shares of common stock had been reserved for issuance. The 2014 Stock Option Plan will terminate in September 2024. Stock Options As of May 31, 2015, employees hold 0 shares of common, which were granted prior to May 31, 2015. As of May 31, 2015, the members of the Board of Directors hold options to purchase 1,750,000 shares of common stock at exercise prices ranging from $0.01 to $0.75, which were granted prior to May 31, 2015. Transactions in FY2015 Quantity Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 1,085,000 0.01 9.15 Granted 1,050,000 0.61 9.81 Exercised 0 Cancelled/Forfeited (385,000) 0.01 9.15 Outstanding, May 31, 2015 1,750,000 0.37 9.54 Exercisable, May 31, 2015 700,000 0.01 9.15 The fair value of the options, granted during the nine months ended May 31, 2015 is estimated at $210,692. The fair value of these options was estimated at the date of grant using the Black Scholes option pricing model with the following assumptions for Fiscal quarter ended May 31, 2015: no dividend, expected volatility of 30%, risk free interest rate of 2.72%, and expected life of 5.5 years. The weighted average remaining contractual life of options outstanding issued under the Plan, both Qualified ISO and NonQualified SO, was 9.54 years at May 31, 2015. The exercise prices for the options outstanding at May 31, 2015 ranged from $0.01 to $0.75, and the information relating to these options is as follows: Options Exerciseable Options Outstanding Exercise Price Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life $ 0.01 700,000 $ 0.01 9.15 700,000 0.01 9.15 $ 0.50 600,000 0.50 9.78 $ 0.75 450,000 0.75 9.84 Total 700,000 $ 0.01 9.15 1,750,000 0.37 9.54 Warrants Issued for Services During the period ended May 31, 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 nine months ended May 31, 2015 were as follows: Risk free interest rate 1.10 % Expected life 1.5 - 10 Years Dividend yield None Volatility 60 % Warrants Outstanding 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. The company recognized $693,765 of expense associated with this exchange. Mr. Kyle Murphy agreed to accept 250,000 warrants in exchange for previously agreed to stock-based compensation upon his resignation from the Company. The following is a summary of warrants outstanding at May 31, 2015: Exercise Price Number of Warrants Expiration Date $ 1.00 375,000 May 2021 $ 1.00 1,264,023 November 2024 $ 0.01 100,000 July 2016 $ 1.00 295,000 March 2020 $ 1.00 295,000 April 2020 |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
May. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | 6. CONCENTRATIONS Concentration of Credit Risk The Company maintains its cash and cash equivalents at a financial institution which may, at times, exceed federally insured limits. Historically, the Company has not experienced any losses in such accounts. Major Customers For the nine months ended May 31, 2015, 1 customer, and 3 specific projects with that customer, represented 41% of net revenues and for the nine months ended May 31, 2014, 2 customers represented 34% of net revenues. As of May 31, 2015, 3 customers represented 53% of accounts receivable, and for the nine months ended May 31, 2014, 1 customer, and 6 specific projects with that customer, represented 47% of accounts receivable. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
INCOME TAXES | 7. INCOME TAXES The difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to pre-tax income (loss) is mainly related to an increase in the valuation allowance, partially offset by state income taxes. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. Deferred income tax assets are mainly related to net operating loss carryforwards. Management has chosen to take a 100% valuation allowance against the deferred income tax asset until such time as management believes that its projections of future profits make the realization of the deferred income tax assets more likely than not. Significant judgment is required in the evaluation of deferred income tax benefits and differences in future results from 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 May 31, 2015 and August 31, 2014. As of May 31, 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases its operating facilities under non-cancelable operating leases that expire through 2024. Total rent expense for the nine months ended May 31, 2015 and 2014 amounted to $398,708 and $382,033, 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 May 31, 2015: Years Ending August 31, 2015 (remainder of) $ 103,733 2016 475,769 2017 572,058 2018 586,837 2019 602,277 Thereafter 2,253,372 $ 4,594,046 Employment Agreements At May 31, 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. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
May. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | 9. DISCONTINUED OPERATIONS During 2013, we ceased operations in our affiliated company, UFAS. The operations of UFAS are now presented as discontinued operations in the accompanying consolidated financial statements. UFAS was inactive during the periods ended May 31, 2015 and 2014. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS On June 3, 2015, the Company executed an agreement with Technical College of Lowcountry to provide student engagement services. On June 5, 2015, the Company completed a private placement of units (each, a "Unit") at $1.00 per Unit (the "Financing Price") for aggregate gross proceeds of $140,000 (the "Private Placement Financing"). Each Unit consists of one share of Common Stock and one immediately vested warrant, with each such warrant entitling the holder to acquire one additional share of Common Stock on or before the date which is two years from the date of the placement for a price of $1.30 per share. The Company neither has nor will be required to pay any other fees, issue additional stock/warrants other than described in this paragraph, or enter into any consulting agreements with any third parties in connection with the aforementioned Private Placement Financing. As of May 31, 2015 the transaction had not yet funded. On June 5, 2015, the Company entered into a commercial building lease agreement. The sixty-one (61) month lease, commenced on June 15, 2015, provided for the lease by the Company of approximately 2,369 square feet of space in Los Angeles, California. Base annual rent is initially set at approximately $8,355 per month. Total base rent payable over the lease period is $556,418. On June 30, 2015, the Company executed an agreement with Jacksonville State University to provide student retention services. |
ORGANIZATION AND SUMMARY OF S16
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
Organization | Organization Greenwood Hall is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 121 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. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, and University Financial Aid Solutions, LLC (UFAS), collectively referred to herein as the Company, we, us, our, and Greenwood Hall. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, it is presented in the accompanying consolidated financial statements as discontinued operations. |
Going Concern | Going Concern The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ( US GAAP 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 nine months ended May 31, 2015 the Company received approximately $2,658,358 in net proceeds from financing activities. Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less. |
Research and Development | Research and Development Costs relating to designing and developing new products are expensed in the period incurred. |
Revenue Recognition | Revenue Recognition The 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. |
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. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows: Classification Life Equipment 5-7 Years Computer equipment 7 Years Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. |
Earnings (Loss) per Share | Earnings (Loss) per Share Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted- average number of common shares and dilutive potential common shares outstanding during the period. During 2013, the Company had no instruments that could potentially dilute the number of common shares outstanding. Warrants to purchase common stock were excluded from the computation of diluted shares during the three and nine months ended May 31, 2015 and 2014 as their effect is anti-dilutive . |
Variable Interest Entities | Variable Interest Entities Generally, an entity is defined as a variable interest entity ( VIE 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 Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $117,596 and $331,918 for the nine months ended May 31, 2015 and the nine months ended May 31, 2014 respectively, and are included in selling, general and administrative expenses. |
Stock-Based Compensation | Stock-Based Compensation Compensation costs related to stock options and other equity awards are determined in accordance with FASB ASC 718-10, Compensation-Stock Compensation. Under this method, compensation cost is calculated based on the grant-date fair value estimated in accordance FASB ASC 718-10, amortized on a straight-line basis over the awards vesting period. Stock-based compensation was $1,565,723 and $0 for the nine months ended May 31, 2015 and 2014, respectively, and was $1,031,226 and $0 for the three months ended May 31, 2015 and 2014, respectively. This expense is included in the condensed consolidated statements of operations as Stock-Based Compensation. |
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 In March 2015, the Company entered into a Convertible Note with Redwood Fund, LP ( Redwood In April 2015, the Company entered into a Convertible Note with Lincoln Park Capital Fund, LLP ( Lincoln Park During the nine months ended May 31, 2015 and 2014, the Company recognized a change in value of the derivative liability of $194,826 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 May 31, 2015 for assets and liabilities measured at fair value on a recurring basis. May 31, 2015 Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 709,060 The assumptions used in valuing derivative instruments issued during the nine months ended May 31, 2015 were as follows: Risk free interest rate 0.26 % Expected life 1.0 Years Dividend yield None Volatility 60 % The following is a reconciliation of the derivative liability related to these instruments for the nine months ended May 31, 2015: Value at August 31, 2014 $ 118,363 Issuance of instruments 395,871 Change in value 194,826 Net settlements - Value at May 31, 2015 $ 709,060 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 August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. The adoption of this standard is not expected to have a material impact on the Company's consolidated 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. 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. |
ORGANIZATION AND SUMMARY OF S17
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
Property and Equipment | The estimated useful lives used are as follows: Classification Life Equipment 5-7 Years Computer equipment 7 Years |
summarizes fair value measurements | The following table summarizes fair value measurements at May 31, 2015 for assets and liabilities measured at fair value on a recurring basis. May 31, 2015 Level 1 Level 2 Level 3 Derivative Liabilities $ - $ - $ 709,060 |
Warrants | The assumptions used in valuing derivative instruments issued during the nine months ended May 31, 2015 were as follows: Risk free interest rate 0.26 % Expected life 1.0 Years Dividend yield None Volatility 60 % |
Derivative liability | The following is a reconciliation of the derivative liability related to these instruments for the nine months ended May 31, 2015: Value at August 31, 2014 $ 118,363 Issuance of instruments 395,871 Change in value 194,826 Net settlements - Value at May 31, 2015 $ 709,060 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
Property and equipment | At May 31, 2015, property and equipment consists of the following: MAY 2015 Computer equipment $ 553,255 Software and Equipment 39,400 592,655 Accumulated depreciation (442,938 ) Net property and equipment $ 149,717 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
May. 31, 2015 | |
Notes to Financial Statements [Abstract] | |
Schedule of future minimum principal payments required under notes payable | The following is a schedule, by year, of future minimum principal payments required under notes payable as of May 31, 2015: Years Ending August 31, 2015 (remainder of) $ 3,187,755 2016 590,000 2017 - 2018 515,000 2019 - Total 4,292,755 Note discount (689,002 ) $ 3,603,753 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
May. 31, 2015 | |
Equity [Abstract] | |
Summary of Stock Options activity | As of May 31, 2015, the members of the Board of Directors hold options to purchase 1,750,000 shares of common stock at exercise prices ranging from $0.01 to $0.75, which were granted prior to May 31, 2015. Transactions in FY2015 Quantity Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 1,085,000 0.01 9.15 Granted 1,050,000 0.61 9.81 Exercised 0 Cancelled/Forfeited (385,000) 0.01 9.15 Outstanding, May 31, 2015 1,750,000 0.37 9.54 Exercisable, May 31, 2015 700,000 0.01 9.15 |
Summary of Stock Options, Exercise Price | The exercise prices for the options outstanding at May 31, 2015 ranged from $0.01 to $0.75, and the information relating to these options is as follows: Options Exerciseable Options Outstanding Exercise Price Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life $ 0.01 700,000 $ 0.01 9.15 700,000 0.01 9.15 $ 0.50 600,000 0.50 9.78 $ 0.75 450,000 0.75 9.84 Total 700,000 $ 0.01 9.15 1,750,000 0.37 9.54 |
Warrants issued for services | The assumptions used in valuing warrants issued for services during the nine months ended May 31, 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 May 31, 2015: Exercise Price Number of Warrants Expiration Date $ 1.00 375,000 May 2021 $ 1.00 1,264,023 November 2024 $ 0.01 100,000 July 2016 $ 1.00 295,000 March 2020 $ 1.00 295,000 April 2020 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
May. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of May 31, 2015: Years Ending August 31, 2015 (remainder of) $ 103,733 2016 475,769 2017 572,058 2018 586,837 2019 602,277 Thereafter 2,253,372 $ 4,594,046 |
ORGANIZATION AND SUMMARY OF S22
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended |
May. 31, 2015 | |
Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 7 years |
Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 5 years |
Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | 7 years |
ORGANIZATION AND SUMMARY OF S23
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | May. 31, 2015USD ($) |
Fair Value, Inputs, Level 1 [Member] | |
Derivative Liabilities | |
Fair Value, Inputs, Level 2 [Member] | |
Derivative Liabilities | |
Fair Value, Inputs, Level 3 [Member] | |
Derivative Liabilities | $ 709,060 |
ORGANIZATION AND SUMMARY OF S24
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - 9 months ended May. 31, 2015 - Range Member | Total |
Risk-free interest rate | 2.72% |
Expected Life | 5 years 6 months |
Dividend yield | 0.00% |
Volatility | 30.00% |
Warrant [Member] | |
Risk-free interest rate | 1.10% |
Expected Life | 1 year |
Dividend yield | 0.00% |
Volatility | 60.00% |
ORGANIZATION AND SUMMARY OF S25
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) | 9 Months Ended |
May. 31, 2015USD ($) | |
Notes to Financial Statements [Abstract] | |
Value at August 31, 2014 | $ 118,363 |
Issuance of instruments | 395,871 |
Change in value | $ 194,826 |
Net settlements | |
Value at May 31, 2015 | $ 709,060 |
ORGANIZATION AND SUMMARY OF S26
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Details Narratives) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Apr. 30, 2015 | Mar. 31, 2015 | May. 31, 2015 | May. 31, 2014 | Feb. 28, 2015 | May. 31, 2015 | May. 31, 2014 | |
Marketing and advertising | $ 117,596 | $ 331,918 | |||||
Change in fair value of derivative liability | $ 57,956 | 194,826 | |||||
Net amount from financing activities | $ 2,658,358 | ||||||
Description of Organization | Our Company currently has 121 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 | $ (194,826) | ||||||
Convertible promissory note | $ 500,000 | $ 500,000 | |||||
Weighted average price per share | $ 1.50 | $ 0.61 | |||||
Stock-based compensation | $ 1,031,226 | $ 1,565,723 | |||||
Redwood [Member] | |||||||
Convertible promissory note | $ 250,000 | ||||||
Conversion price, Description | The conversion feature includes provisions that call for the instrument to be converted to equity at a price equal to (i) $1.00 if the Companys common stock price closes above $1.00; (ii) the average of the publicly reported closing bid and ask price if the Companys publicly reported common stock price closes between $0.50 and $0.99; or (iii) $0.50 if the Companys publicly reported common stock price closes below $0.50. | ||||||
Lincoln Park [Member] | |||||||
Convertible promissory note | $ 250,000 | ||||||
Conversion price, Description | The conversion feature includes provisions that call for the instrument to be converted to equity at a price equal to (i) $1.00 if the Companys common stock price closes above $1.00; (ii) the average of the publicly reported closing bid and ask price if the Companys publicly reported common stock price closes between $0.50 and $0.99; or (iii) $0.50 if the Companys publicly reported common stock price closes below $0.50. | ||||||
John Hall [Member] | |||||||
Ownership of percentage | 60.00% | 60.00% | |||||
Zan Greenwood [Member] | |||||||
Ownership of percentage | 92.50% | 92.50% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | May. 31, 2015 | Aug. 31, 2014 |
Property, Plant and Equipment, Gross | $ 592,655 | |
Accumulated depreciation | (442,938) | |
Net property and equipment | 149,717 | $ 211,525 |
Computer Equipment [Member] | ||
Property, Plant and Equipment, Gross | 553,255 | |
Equipment [Member] | ||
Property, Plant and Equipment, Gross | $ 39,400 |
PROPERTY AND EQUIPMENT (Detai28
PROPERTY AND EQUIPMENT (Details Narratives) - USD ($) | 9 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation, Depletion and Amortization | $ 47,866 | $ 94,624 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | May. 31, 2015 | Aug. 31, 2014 |
Years Ending December 31, | ||
2015 (remainder of) | $ 3,187,755 | |
2,016 | $ 590,000 | |
2,017 | ||
2,018 | $ 515,000 | |
2,019 | ||
Total | $ 4,292,755 | |
Note discount | (689,002) | $ (71,758) |
Long-term Debt | $ 3,603,753 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 8 Months Ended | 9 Months Ended | |||||||||
Apr. 30, 2015 | Apr. 24, 2015 | Mar. 31, 2015 | Dec. 31, 2013 | Feb. 28, 2015 | Aug. 31, 2014 | May. 31, 2015 | May. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2012 | Oct. 31, 2010 | |
Interest rate | 5.75% | 12.00% | |||||||||||
Exercise price | $ 1.30 | $ 0.01 | |||||||||||
Amortization of Debt Discount (Premium) | $ 98,945 | $ 410,125 | |||||||||||
Warrants value | $ 78,281 | ||||||||||||
Warrants due to dilutive issuances | 375,000 | ||||||||||||
Debt Instrument, Unamortized Discount | 71,758 | $ 689,002 | |||||||||||
Interest expense | 298,417 | ||||||||||||
Line of credit | $ 2,025,084 | ||||||||||||
Weighted average price per share | $ 1.50 | $ 0.61 | |||||||||||
Amortization of the note discount | $ 53,788 | ||||||||||||
Fair value issunace of note | 322,730 | ||||||||||||
Convertible promissory notes | $ 175,000 | ||||||||||||
Issued shares of common stock | 198,409 | ||||||||||||
Estimated fair value of shares issued | $ 186,270 | ||||||||||||
Fixed loan fees / interest expense | 80,000 | ||||||||||||
Maximum [Member] | |||||||||||||
Line of credit amount | $ 3,000,000 | ||||||||||||
Unsecured Promissory Note [Member] | |||||||||||||
Debt Instrument, Fee Amount | $ 1,350,000 | ||||||||||||
Exercise price | $ 1.30 | ||||||||||||
Promissory Note Two [Member] | California United Bank [Member] | |||||||||||||
Debt Instrument, Face Amount | $ 1,250,000 | $ 1,250,000 | $ 1,250,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | 7.25% | |||||||||||
Debt Instrument, Outstanding Amount | $ 2,000,000 | ||||||||||||
Amortization of Debt Discount (Premium) | $ 19,569 | ||||||||||||
Debt Instrument, Unamortized Discount | 52,189 | ||||||||||||
Promissory Note [Member] | Loan and Security Agreement [Member] | Colgan Financial Group, Inc [Member] | |||||||||||||
Debt Instrument, Face Amount | $ 600,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.50% | ||||||||||||
Debt Instrument Increase Additional Borrowings | $ 200,000 | ||||||||||||
Debt Instrument, Unamortized Discount | $ 298,417 | ||||||||||||
Paydown amount in connection with an equity funding | 144,000 | ||||||||||||
Balance Paydown amount in connection with an equity funding | 715,071 | ||||||||||||
Convertible promissory notes | 200,000 | ||||||||||||
Unsecured Promissory Note [Member] | |||||||||||||
Interest rate | 10.00% | ||||||||||||
Promissory Note One [Member] | California United Bank [Member] | |||||||||||||
Debt Instrument, Face Amount | $ 500,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | ||||||||||||
Convertible Note [Member] | Redwood [Member] | |||||||||||||
Debt Instrument, Face Amount | $ 295,000 | ||||||||||||
Debt Instrument Increase Additional Borrowings | $ 250,000 | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Exercisable warrant issued | 295,000 | ||||||||||||
Exercise price of warrant | $ 1 | ||||||||||||
Exercisable period of warrant | 5 years | ||||||||||||
Convertible Note [Member] | Lincoln Park [Member] | |||||||||||||
Debt Instrument, Face Amount | $ 295,000 | ||||||||||||
Debt Instrument Increase Additional Borrowings | $ 250,000 | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Exercisable warrant issued | 295,000 | ||||||||||||
Exercise price of warrant | $ 1 | ||||||||||||
Exercisable period of warrant | 5 years | ||||||||||||
Credit Agreement [Member] | |||||||||||||
Debt Instrument, Fee Amount | $ 894,812 | ||||||||||||
Interest rate | 5.00% | ||||||||||||
Warrants value | $ 248,011 | ||||||||||||
Debt Instrument Maturity Period | 500,000 | ||||||||||||
Line of credit amount | $ 1,537,416 | ||||||||||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | TCA Global Credit Master Fund, LP [Member] | |||||||||||||
Debt Instrument, Face Amount | 1,500,000 | ||||||||||||
Debt Instrument Increase Additional Borrowings | $ 1,850,000 | ||||||||||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | TCA Global Credit Master Fund, LP [Member] | Second Amendment [Member] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | 15.00% | |||||||||||
Debt Instrument, Outstanding Amount | $ 2,210,798 | $ 2,210,798 | |||||||||||
Debt Instrument, Fee Amount | 330,000 | 330,000 | |||||||||||
Debt Instrument, Increase, Accrued Interest | 25,431 | ||||||||||||
Debt Instrument, Unamortized Discount | $ 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 | ||||||||||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Maximum [Member] | TCA Global Credit Master Fund, LP [Member] | |||||||||||||
Debt Instrument Increase Additional Borrowings | $ 7,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narratives) - USD ($) | May. 31, 2015 | May. 31, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | |||
Accrued Liabilities, Current | $ 0 | $ 14,333 | |
MarkeTouch Media, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 7.50% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | 6 Months Ended | 9 Months Ended |
Feb. 28, 2015 | May. 31, 2015 | |
Quantity | ||
Outstanding, Beggining Balance | 1,085,000 | 1,085,000 |
Granted | 1,050,000 | |
Exercised | ||
Cancelled/Forfeited | (385,000) | |
Outstanding, Ending Balance | 1,750,000 | |
Exercisable, Ending Balance | 700,000 | |
Weighted-Average Exercise Price Per Share | ||
Outstanding, Beggining Balance | $ 0.01 | $ 0.01 |
Granted | $ 1.50 | $ 0.61 |
Exercised | ||
Cancelled/Forfeited | $ 0.01 | |
Outstanding, Ending Balance | 0.37 | |
Exercisable, Ending Balance | $ 0.01 | |
Outstanding, Beggining Balance | 9 years 6 months 15 days | |
Granted | 9 years 9 months 22 days | |
Cancelled/Forfeited | 9 years 1 month 24 days | |
Outstanding, Ending Balance | 9 years 6 months 15 days | |
Exercisable, Ending Balance | 9 years 1 month 24 days |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 9 Months Ended | |
May. 31, 2015 | Aug. 31, 2014 | |
Option Exercisable | 700,000 | |
Option Exercisable, Price | $ 0.01 | |
Option Exercisable, Remaining Contractual Life | 9 years 1 month 24 days | |
Option Outstanding | 1,750,000 | 1,085,000 |
Option Exercise Price | $ 0.37 | $ 0.01 |
Option Remaining Contractual Life | 9 years 6 months 15 days | |
Stock Options [Member] | ||
Option Exercisable | 700,000 | |
Option Exercisable, Price | $ 0.01 | |
Option Exercisable, Remaining Contractual Life | 9 years 1 month 24 days | |
Option Outstanding | 1,750,000 | |
Option Exercise Price | $ 0.37 | |
Option Remaining Contractual Life | 9 years 6 months 15 days | |
0.01 [Member] | Stock Options [Member] | ||
Option Exercisable | 700,000 | |
Option Exercisable, Price | $ 0.01 | |
Option Exercisable, Remaining Contractual Life | 9 years 1 month 24 days | |
Option Outstanding | 700,000 | |
Option Exercise Price | $ 0.01 | |
Option Remaining Contractual Life | 9 years 1 month 24 days | |
0.50 [Member] | Stock Options [Member] | ||
Option Outstanding | 600,000 | |
Option Exercise Price | $ 0.50 | |
Option Remaining Contractual Life | 9 years 9 months 11 days | |
0.75 [Member] | Stock Options [Member] | ||
Option Outstanding | 450,000 | |
Option Exercise Price | $ 0.75 | |
Option Remaining Contractual Life | 9 years 10 months 2 days |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - 9 months ended May. 31, 2015 | Total |
Risk free interest rate | 2.72% |
Expected life | 5 years 6 months |
Dividend yield | 0.00% |
Volatility | 30.00% |
Warrant [Member] | |
Risk free interest rate | 1.10% |
Expected life | 1 year |
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 3
STOCKHOLDERS' EQUITY (Details 3) - $ / shares | Nov. 30, 2024 | May. 31, 2021 | Apr. 30, 2020 | Mar. 31, 2020 | Jul. 31, 2016 |
Equity [Abstract] | |||||
Warrants Outstanding Exercise Price 1 | $ 1 | $ 1 | $ 1 | $ 1 | $ 0.01 |
Number of Warrants Outstanding 1 | 1,264,023 | 375,000 | 295,000 | 295,000 | 100,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narratives) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
May. 31, 2015 | May. 31, 2014 | May. 31, 2015 | May. 31, 2014 | Jul. 31, 2015 | Aug. 31, 2014 | |
Common Stock, Shares Authorized | 937,500,000 | 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 | |||||
Exercise price | $ 0.01 | $ 0.01 | $ 1.30 | |||
Warrnts value | $ 41,168 | |||||
Warrants for services | 100,000 | |||||
Expected term | 1 year 8 months 12 days | |||||
Recognized operating expense | $ 3,902,068 | $ 2,532,855 | $ 10,360,785 | $ 8,962,527 | ||
Shares reserved for issuance | 5,000,000 | |||||
Granted shares | 1,050,000 | |||||
Fair value of options | $ 210,692 | |||||
Risk free interest rate | 2.72% | |||||
Expected life | 5 years 6 months | |||||
Dividend yield | 0.00% | |||||
Volatility | 30.00% | |||||
Offering of common stock | 5,673,980 | 5,673,980 | ||||
Common stock agreed to issue to shareholders | 1,387,530 | 1,387,530 | ||||
Warrants forfeited equal to common stock exercisable | 4,286,450 | 4,286,450 | ||||
Expense recognized | $ 693,765 | $ 693,765 | ||||
Mr. Kyle Murphy [Member] | ||||||
Warrants issued in exchange for previously agreed stock-based compensation | 250,000 | 250,000 | ||||
Maximum [Member] | ||||||
Options to purchase | 0.01 | |||||
Minimum [Member] | ||||||
Options to purchase | 0.75 | |||||
Stock Options [Member] | ||||||
Options to purchase | 1,750,000 | |||||
September 2,014 | ||||||
Share repurchase obligation | $ 1,000,000 | $ 1,000,000 | ||||
Total debt | $ 1,386,450 | $ 1,386,450 | ||||
Exercise price | $ 1 | $ 1 | ||||
Total proceeds | $ 1,000,000 | $ 1,000,000 | ||||
January 2,015 | ||||||
Common Stock, Shares Authorized | 250,000 | 250,000 | ||||
Accrued interest | $ 11,555 | $ 11,555 | ||||
Exercise price | $ 1 | $ 1 | ||||
Total proceeds | $ 250,000 | $ 250,000 | ||||
Consultant [Member] | ||||||
Exercise price | $ 1 | $ 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 | 937,500,000 | ||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||||
Share repurchase obligation | $ 3,036,450 | $ 3,036,450 | ||||
Accrued interest | $ 1,645,611 | $ 1,645,611 | ||||
Vendor [Member] | ||||||
Shares received by vender | 80,000 | |||||
Recognized operating expense | $ 72,000 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narratives) - Customer Concentration Risk [Member] | 9 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Sales Revenue, Services, Net [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 41.00% | 34.00% |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 53.00% | 47.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narratives) - USD ($) | 9 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Percentage Of Valuation Allowance | 100.00% | 100.00% |
Income Tax Examination, Penalties and Interest Expense | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES39
COMMITMENTS AND CONTINGENCIES (Details) | May. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2015 (remainder of) | $ 103,733 |
2,016 | 475,769 |
2,017 | 572,058 |
2,018 | 586,837 |
2,019 | 602,277 |
Thereafter | 2,253,372 |
Total | $ 4,594,046 |
COMMITMENTS AND CONTINGENCIES40
COMMITMENTS AND CONTINGENCIES (Details Narratives) - USD ($) | 9 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss Contingency, Loss in Period | $ 5,000,000 | |
Lease Expiration Period | 2,024 | |
Operating Leases, Rent Expense, Net | $ 398,708 | $ 382,033 |
Gain (Loss) on Contract Termination | $ 250,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narratives) - Jun. 05, 2015 - Subsequent Event [Member] | USD ($)ft²$ / shares |
Gross proceeds | $ 140,000 |
Warrant purchase exercise price | $ / shares | $ 1.30 |
Total base rent payable | $ 556,418 |
Annual rent | $ 8,355 |
Lease Area | ft² | 2,369 |