0001080602-13-000032.txt : 20130719 0001080602-13-000032.hdr.sgml : 20130719 20130719160835 ACCESSION NUMBER: 0001080602-13-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20130531 FILED AS OF DATE: 20130719 DATE AS OF CHANGE: 20130719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Novation Holdings Inc CENTRAL INDEX KEY: 0001080602 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 980413066 STATE OF INCORPORATION: FL FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-33090 FILM NUMBER: 13977161 BUSINESS ADDRESS: STREET 1: 1800 NW CORPORATE BOULEVARD STREET 2: SUITE 201 CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 321-452-9091 MAIL ADDRESS: STREET 1: 1800 NW CORPORATE BOULEVARD STREET 2: SUITE 201 CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: Allezoe Medical Holdings Inc DATE OF NAME CHANGE: 20110315 FORMER COMPANY: FORMER CONFORMED NAME: STANFORD MANAGEMENT LTD DATE OF NAME CHANGE: 19990225 10-Q 1 f10q053113.htm FORM 10-Q Converted by EDGARwiz

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q


(Mark One)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

       OF 1934

For the Quarterly Period Ended May 31, 2013

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

     OF 1934

For the Transition Period From ____ To______


Commission file number: 001-33090


NOVATION HOLDINGS, INC.

( Exact Name of Registrant as Specified in its Charter)


Florida

46-1420443

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)


1800 NW Corporate Boulevard, Suite 201, Boca Raton, FL

33431

(Address of principal executive offices)

(Zip Code)


(321)-452-9091

(Registrants Telephone Number, Including Area Code )


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer

                            [   ]

Accelerated filer

                                          [   ]

Non-accelerated filer

                              [   ]

Smaller reporting company                          [X]

(Do not check if a smaller reporting company)



Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X]


As of July 19, 2013, there were 245,128,156 shares of Common Stock ($0.001 par value) outstanding.







TABLE OF CONTENTS




Page Number




PART I.

FINANCIAL INFORMATION





ITEM 1.

Condensed consolidated Financial Statements (unaudited)

1





Condensed consolidated Balance Sheets as of May 31, 2013 and August 31, 2012

2





Condensed consolidated Statements of Operations for the three and nine months ended May 31, 2013 and May 31, 2012

3


Condensed consolidated Statements of Cash Flows for the nine months ended May 31, 2013 and May 31, 2012

5


Notes to the Condensed consolidated Financial Statements.

6




ITEM 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

17




ITEM 3.

Quantitative and Qualitative Disclosure about Market Risk

22




ITEM 4.

Controls and Procedures

23




PART II.

OTHER INFORMATION

24




ITEM 1.

Legal Proceedings

24




ITEM 1A.

Risk Factors

24




ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24




ITEM 3.

Defaults Upon Senior Securities

25




ITEM 4.

(Removed and Reserved)

25

ITEM 5.

Other Information

25




ITEM 6.

Exhibits

25





SIGNATURES

25






PART 1 FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The accompanying condensed consolidated balance sheets of Novation Holdings, Inc. and subsidiaries () (the "Company) at May 31, 2013 (with comparative figures as at August 31, 2012); and the  condensed consolidated statements of operations for the three months ended May 31, 2013 and May 31, 2012; the statement of stockholders equity (deficit) for the period from August 31, 2012 to May 31, 2013; and the condensed consolidated statements of cash flows for the three and nine months ended May 31, 2013 and May 31, 2012 have been prepared by the Companys management in conformity with accounting principles generally accepted in the United States of America.


The condensed consolidated financial statements included in this report include the operating results of the Company as well as its wholly-owned subsidiaries, Burgoyne Internet Services, Inc., Novation Consulting Services, Inc., and Casita de los Ninos, LLC.


In the opinion of management, all adjustments considered necessary for a fair presentation of the condensed consolidated results of operations and financial position have been included and all such adjustments are of a normal recurring nature.


Condensed consolidated operating results for the three months ended May 31, 2013 are not necessarily indicative of the results that can be expected for the year ending August 31, 2013.

























1


Novation Holdings, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS






May 31,  


August 31,  





2013


2012





(Unaudited)



ASSETS




CURRENT ASSETS





 Cash


 $                 5,744


 $                 1,245


 Accounts Receivable

                  62,787


                         -   


 Prepaid expenses

                    2,678


                    1,000


 Deferred loan costs, net of accumulated amortization of $33,767 and $15,689

                  12,233


                    4,811



 Total current assets

                  83,442


                    7,056

OTHER ASSETS




 Property, plant and equipment (net of accumulated





 depreciation of $539 and $221 respectively)

                    1,581


                    1,899

 Loan receivable

                500,000


                  48,000

 Investment in subsidiaries

             1,067,690


                         -   

 Advances to related parties

                       250


                  42,500



 Total assets

 $          1,652,963


 $               99,455

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)




CURRENT LIABILITIES





 Accounts payable and accrued expenses

 $             195,379


 $               18,590


 Accrued interest

                  28,293


                  13,428


 Due to related party

                       712


                         -   


 Note payable

                  86,378


                         -   


 Notes payable - net of debt discount of $55,828 and $25,861

                141,699


                181,319


 Derivative liability

                  40,365


                  30,815



 Total current liabilities

                492,826


                244,152

LONG-TERM LIABILITIES





 Acquisition note payable

                489,689


                         -   


 Convertible note payable - net of discount of $8,571

                263,219


                         -   



 Total liabilities

             1,245,734


                244,152

STOCKHOLDERS' EQUITY (DEFICIT)





Preferred stock, $0.001 par value; 5,000,000 shares authorized






1,000,000 and  no shares issued and outstanding at






February 28, 2013 and August 31, 2012, respectively

                    1,000


                         -   


Common stock, $0.001 par value; 500,000,000 shares authorized,






137,829,373 and  30,094,500 shares issued and outstanding at






February 28, 2013 and August 31, 2012, respectively

                137,829


                  30,094


Additional paid in capital

             9,863,181


             9,091,652


Deficit accumulated during the development stage

           (9,594,781)


           (9,266,443)



Total stockholders' equity (deficit)

                407,229


              (144,697)



Total liabilities and stockholders' equity

 $          1,652,963


 $               99,455


The accompanying notes are an integral part of these condensed consolidated financial statements.



2

Novation Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



For the Three Months Ended

For the Nine Months Ended



May 31, 2013

May 31, 2012

May 31, 2013

May 31, 2012







REVENUES

 $             77,201

 $                    -   

 $           147,744

 $                    -   







COST OF GOODS SOLD

                15,271

                         -

                46,168

                         -







NET REVENUES

 $             61,930

 $                    -   

 $           101,576

 $                    -   







GENERAL AND ADMINISTRATIVE EXPENSES





Payroll and payroll taxes

30,000   

           304,226

                90,000

           2,940,566


Professional fees

                98,459

              123,100

              317,111

              992,228


General and administrative

                15,759

                31,331

                78,843

                118,638


Rent

                  3,190

                       -   

                14,919

                       -   


Total operating expenses

              147,409

           458,657

              500,874

4,051,432








Loss from operations

              (85,479)

         (458,657)

            (399,298)

         (4,051,432)







OTHER INCOME (EXPENSE)






Finance cost

                (9,623)

                       -   

              (19,581)

                       -   


Gain on sale of subsidiary

              172,000

                       -   

              418,876

                       -   


Gain on extinguishment of debt

                       -   

                     520,483   

                       -   

520,493   


Interest, net

              (33,196)

              8,995)

            (192,572)

            (346,315)


Change in fair value of derivatives

              (69,217)

                       -   

            (135,764)

                       -   


Other, net

                       -   

                       -   

                       -   

                       -   


Total other income (expense)

                59,964

              511,488

                70,959

            (174,178)








Net income (loss)

 $               (25,515)

 $      52,841

 $         (328,338)

 $      (3,877,254)







Net loss per share (basic and diluted)

 $                 0.00

 $               (0.00)

 $               (0.00)

 $               (0.02)







Weighted average number of shares outstanding during the period-basic and diluted

         75,861,316

         13,595,356

         69,517,749

           9,034,747




The accompanying notes are an integral part of these condensed consolidated financial statements.




3


Novation Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





For the Nine Months Ended





May 31, 2013

May 31, 2012

CASH FLOWS FROM OPERATING ACTIVITIES




Net loss

 $               (328,338)

 $            (3,877,254)


Adjustments to reconcile net loss to net





cash used by operations:





Depreciation expense

                          318

                          114



Capital contributions-noncash expenses

                               -

                               -



Stock based compensation expense

                               -

                3,380,941



Gain on extinguishment of debt

                               -

                  (520,493)



Loss on derivatives

                               -

                               -



Amortization of deferred loan costs

                     18,078

                          825



Amortization of debt discount

                   128,176

                   106,679


Changes in certain operating assets and liabilities:





Interest accrued on notes payable

                     14,865

                     15,472



Increase in accounts receivable

                    (62,787)

                               -



Increase in prepaid expenses

                      (1,678)

                    (96,500)



Loans receivable

                    (46,174)

                  (212,174)



Increase  in accounts payable

                   176,789

                     39,806

Net cash used by operating activities

                  (100,751)

               (1,162,584)

CASH FLOWS FROM INVESTING ACTIVITIES




Purchase of property and equipment

                               -

                      (2,120)

Net cash used by investing activities

                               -

                      (2,120)

CASH FLOWS FROM FINANCING ACTIVITIES




Additional capital contributed

                               -

                               -


Proceeds from issuance of common stock

                               -

                               -


Proceeds from notes payable

                   147,500

                1,201,407


Related party advances

                    (42,250)

                    (38,000)

Net cash provided by financing activities

                   105,250

                1,163,407

Net increase (decrease) in cash

                       4,499

                      (1,297)

Cash and equivalents, beginning of period

                       1,245

                     21,972

Cash and equivalents, end of period

 $                    5,744

 $                  20,675

Supplemental cash flow information:




Cash paid for interest

 $                            -

 $                            -


Cash paid for income taxes

 $                            -

 $                            -


Significant non-cash activities





Notes payable and accrued interest converted to common stock

$                 225,105

 $               1,148,407



Accrued interest converted to notes payable

 $                            -

 $                            -



Debt discount on notes payable from derivative liability

 $                 237,500

 $                            -



Reclassification of derivative liabilities to paid-in-capital

 $                 286,295

 $                            -


The accompanying notes are an integral part of these condensed consolidated financial statements.

4






NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 1.           ORGANIZATION


Novation Holdings, Inc., formerly Allezoe Medical Holdings, Inc., and formerly Stanford Management, Ltd. (the Company), was incorporated under the laws of the State of Delaware on September 24, 2008.  Effective October 25, 2012, the Company amended its Articles of Incorporation to change its name to Novation Holdings, Inc., increased its authorized capital to 500 million shares of common stock, par value $0.001, and 10 million shares of preferred stock, par value $0.001, and changed its place of incorporation from Delaware to Florida.  The corporate trading symbol also was changed from ALZM to NOHO.


The Company was originally organized for the purpose of acquiring and developing mineral properties.  On February 18, 2011, all of the mineral properties and related development and exploration activities were disposed of as part of a series of transactions resulting in the Company moving into the medical technology industry.


Effective October 25, 2012, the Company completed a 1 for 15 reverse split of its common stock as part of its recapitalization, name change and change of corporate domicile.  The reverse stock split has been given retroactive recognition in the Form 10-K for the fiscal year ended August 31, 2012 and in this Form 10-Q.  All shares and per share information have been retroactively adjusted to reflect the stock split.


On December 6, 2012, the Company completed the acquisition of Burgoyne Internet Services, LLC (Burgoyne), a Utah limited liability company, with an effective closing date of December 1, 2012.  Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and a wholly-owned subsidiary.


On December 6, 2012, the Company also completed the acquisition of Casita de los Ninos, LLC, a California limited liability company doing business as Immersion House (www.immersionhouse.com). The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.  If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock.

 

In January, 2013, the Company acquired a controlling interest in Alternative Energy Partners, Inc., a mining and energy holding company whose common shares are traded on the OTCQB under the symbol AEGY.  As a result of the acquisition, Novation acquired 40 million shares of common stock, representing approximately 19 percent of the common shares issued and outstanding, and 1 million shares of Series A Convertible Preferred stock holding voting power equal to 51 percent of the total vote of all shares entitled to vote. AEGY currently has 2 wholly-owned subsidiaries, Clarrix Energy, LLC and SAC Acquisition Corp., and anticipates acquiring a third operating subsidiary shortly, all as previously announced by AEGY.


Effective January 1, 2013, the Company acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.  The acquisition was accomplished by the assumption of debt.



5


NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 1.           ORGANIZATION (continued)

On February 3, 2013, the Company sold its controlling interest in SureScreen Medical, Inc., its wholly-owned medical device development subsidiary, to AVM Licensing Corp., the licensor of the HPV virus treatment technology being developed by SureScreen. SureScreen is the holder of the recently granted European patent rights to the technology, although the US Patent application has recently been denied.  The Company received a combination of cash, stock and notes, secured by the assets of SureScreen, as consideration for the sale.  The total value of the sale was estimated at $250,000.

NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Nature of Operations


On December 6, 2012, the Company completed the acquisition of Burgoyne Internet Services, LLC (Burgoyne), a Utah limited liability company, with an effective closing date of December 1, 2012.  Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and a wholly-owned subsidiary.


On December 6, 2012, the Company also completed the acquisition of Casita de los Ninos, LLC, a California limited liability company doing business as Immersion House (www.immersionhouse.com). The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.  If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock.

 

Effective January 1, 2013, the Company acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.  The acquisition was accomplished by the assumption of debt.


As a result of these acquisitions, the Company is now a holding and management company with operating subsidiaries engaged in administrative and financial consulting, ISP services and full immersion language training, all of which are producing revenues, and plans to expand the business and operations of each subsidiary.






Basis of Presentation of Interim Period Financial Statements


The accompanying unaudited Condensed Consolidated Financial Statements of Novation Holdings, Inc. (the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim period ended May 31, 2013 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim period. This includes all normal and recurring adjustments, but does not include all of the information


6


NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


and footnotes required by generally accepted accounting principles (GAAP) for complete financial statements. Financial results for the Company can be seasonal in nature. Operating results for the nine-month period ended May 31, 2013 are not necessarily indicative of the results that may be expected for the year ended August 31, 2013. For further information, refer to the Financial Statements and footnotes thereto included in the Companys Form 10-K/A for the year ended August 31, 2012 filed with the Commission on December 17, 2012.


The Company has adopted an August 31 year end.


As a result of the recent acquisitions by the Company, management has determined that the Company is no longer a development stage company in accordance with Accounting Standards Codification (ASC) Topic No. 915.


Use of Estimates


The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A significant estimate as of May 31, 2013 and August 31, 2012 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception.


Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates.


Cash and Equivalents


The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.  The Company had no cash equivalents at May 31, 2013 and August 31, 2012, respectively. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.  There were no balances that exceeded the federally insured limit at May 31, 2013 and August 31, 2012, respectively.






Earnings per Share


In accordance with Financial Accounting Standards Board FASB Accounting Standards Codification ASC Topic 260, Earnings per Share,  basic earnings (loss) per share (EPS) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The computation of basic and diluted loss per share for the period from September 24, 1998 (inception) to May 31, 2013, is equivalent since the Company has had continuing losses. The Company also has no common stock equivalents.  The calculation of earnings per share has been done by applying the 1 for 15 reverse split of common stock, effective November 7, 2012, retroactively to September 24, 1998, the date of inception.

7

NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Accounting for Stock-Based Compensation


The Company adopted the provisions of FASB ASC 718-20, Stock Compensation Awards Classified as Equity, which require companies to expense the estimated fair value of employee stock options and similar awards based on the fair value of the award on the date of grant. The cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. At the Annual Meeting of Shareholders held on October 24, 2012, the shareholders approved the adoption of the Novation Holdings, Inc. 2012 Stock Incentive Plan, and the setting aside of 4,500,000 shares of post-reverse split common stock for grants under the Plan.  There have been no grants of any stock or other equity under the Plan, or otherwise, as of May 31, 2013.

On July 1, 2011, the Company issued 333,333 post-split shares of common stock valued at $2,100,000 to the Companys Chairman and CEO, with the shares originally vesting over 5 years on a proportionate basis. As of August 31, 2011, one-fifth or 66,667 shares valued at $420,000 had vested. Mr. Gelmon conveyed two thirds of the original 333,333 post-split shares to two other parties for reasons unrelated to the Company, retaining a total of 111,111 shares. The non-vested balance at August 31, 2011 of 266,667 total shares valued at $1,680,000 had been issued but were being held in escrow for release on an annual basis each July 1. During the year ended August 31, 2012, the Company revised the vesting term to 3 years and released an additional 155,556 shares valued at $980,000. The non-vested balance of 111,111 post-split shares at August 31, 2012 was one-third of the original issuance valued as of the original issue date at $700,000, of which Mr. Gelmon holds 37,037 shares to be received, with a current market value of less than $600.  


Non-Employee Stock Based Compensation


Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.






Income Taxes


The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


Management has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, management believes that no accruals for tax liabilities are necessary. Therefore, no reserves for uncertain income tax positions have been recorded.


Concentrations of Credit Risk


The Company maintains its cash in a bank deposit account in a bank which participates in the Federal Deposit Insurance Corporation (FDIC) Program. As of May 31, 2013 and August 31, 2012, the Company had no balances in excess of federally insured limits.


8


NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Fair Value of Financial Instruments


All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.

 

The carrying amounts of the Companys other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The


Company does not utilize financial derivatives or other contracts to manage commodity price risks. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).


The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:


Level 1  quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.


Level 2  inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.


Level 3  unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.


Derivatives


The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the condensed consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Companys stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.


If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 Debt with Conversion and Other Options for consideration of any beneficial conversion feature.

9


NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Recurring Fair Value Measurements


In accordance with accounting principles generally accepted in the United States of America, certain assets and liabilities are required to be recorded at fair value on a recurring basis.


Going Concern


As reflected in the accompanying consolidated financial statements, the Company has a net loss of $298,338 and net cash used in operations of $100,751 for the three months ended





May 31, 2013; and negative working capital of $379,384 and an accumulated deficit of $9,564,781 at May 31, 2013.


The accompanying consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company is  and has suffered recurring losses and has no established source of revenue.  Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows.


There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding.  These factors create substantial doubt about the Companys ability to continue as a going concern.  The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty.


Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence.


Recent Accounting Pronouncements


In September 2011, the FASB issued an amendment to Topic 350, IntangiblesGoodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The Company is currently evaluating whether early adoption is necessary.


The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Companys financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Companys financials properly reflect the change.


10






NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 3.   INCOME TAXES


The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.


The following is a schedule of deferred tax assets as of May 31, 2013, and August 31, 2012:




May 31, 2013


August 31, 2012

Net operating loss


 $             9,564,781


 $                  9,266,443

Future tax benefit at 34%                      


3,252,026


3,150,591

Less: Valuation allowance


   (3,252,026)


(3,150,591)

Net deferred tax asset


 $                           --


 $                               --


The valuation allowance changed by approximately $101,435 during the three months ended May 31, 2013.


Under Sections 382 and 269 (the shell corporation rule) of the Internal Revenue Code, following an ownership change, special limitations (Section 382 Limitations) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the Applicable Tax Attributes). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at May 31, 2013.


The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Companys expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through May 31, 2013. The Companys continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense.


NOTE 4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES


Michael Gelmon, who serves the Company as CEO, is paid as a consultant to the Company at the rate of $10,000 per month, commencing July 1, 2012.  Mr. Gelmon is a Canadian citizen and resident.  


NOTE 5.

CAPITAL STOCK


The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001 per share and 10 million shares of preferred stock, par value $0.001.  

.

During the quarter ended May 31, 2013, the Company issued Company stock as follows:


In March, 2013 we issued a total of 13,764,832 common shares on conversions totaling $16,886 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.

10





NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 5.

CAPITAL STOCK (continued)


In April, 2013 we issued a total of 19,176,623 common shares on conversions totaling $22,845 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.


In May, 2013 we issued a total of 56,571,681 common shares on conversions totaling $45,304 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period.


As a result of the issue of these shares, we now have a total of 137,829,373 common shares and 1,000,000 preferred shares issued and outstanding as of January 18, 2013.


NOTE 6.  NOTES PAYABLE


*The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15    "Derivatives and Hedging" and determined that certain outstanding instruments should be classified as liabilities once the conversion option became effective (typically after three or six months) due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.


The following is a summary of notes payable at May 31, 2013 and August 31, 2012:


Description

May 31, 2013

(Unaudited)


August 31, 2012

(Audited)


Asher Enterprises, Inc.*





On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $200 and $0, respectively.

-


37,500




11





NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)

NOTE 6.  NOTES PAYABLE (continued)


Description

May 31, 2013

(Unaudited)


August 31, 2012

(Audited)

Asher Enterprises, Inc.*




 

On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-


35,000

 

Asher Enterprises, Inc.*




On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $0 and $8,288, respectively. The note was fully converted as of May 31, 2013.

-


6,712

Asher Enterprises, Inc.*




On September 1, 2012, the Company issued its promissory note in the amount of $42,500 to an unrelated third party for additional working capital. The note is due on June 7, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-


-






12






NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)

NOTE 6.  NOTES PAYABLE (continued)


Description

May 31, 2013

(Unaudited)


August 31, 2012

(Audited)

Asher Enterprises, Inc.*




 

On October 3, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on July 5, 2013 and carries interest at 8 percent per annum, payable at maturity. The note  is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $18,910 and $0, respectively. The Company converted $7,100 into shares.

6,490


-

 

Asher Enterprises, Inc.*




On December 18, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on September 14, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.

53,000


-

Common Stock LLC *





On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-


5,507





13






NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)

NOTE 6.  NOTES PAYABLE (continued)


Description

May 31, 2013

(Unaudited)


August 31, 2012

(Audited)

Common Stock LLC *




On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-


20,000

Common Stock LLC




On May 2, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $5,600 and $0, respectively. The Company converted $5,236 into shares.

9,164


20,000

Panache Group *




On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $1,112 and $0, respectively. $40,320 had been converted to common stock as of May 31, 2013.

-


6,100

Asher Enterprises, Inc.*




On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.

27,500


-


14





NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)

NOTE 6.  NOTES PAYABLE (continued)

Description

May 31, 2013

(Unaudited)


August 31, 2012

(Audited)

JMJ Financial *




On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $1,004 unamortized portion remains at May 31, 2013.

7,248


50,500

JMJ Financial *

On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $2,047 unamortized portion remains at May 31, 2013.

38,297

 

-

ISP Holdings, Inc.




On December 6, 2012, the Company issued its promissory note in the amount of $280,000 to an unrelated third party for additional working capital. The note is due on May 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.03. The Note was issued at a discount of $15,000, of which $8,571 unamortized portion remains at May 31, 2013.

263,219


-

Total notes payable

404,918

 

181,319

Current portion

141,699


181,319

Notes payable-Long-term portion

$                 263,219


$                            -  


NOTE 7.  DERIVATIVE LIABILITIES


The Company has various convertible instruments outstanding more fully described in Note 7. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments.

As a result, under ASC 815-15 Derivatives and Hedging, all other share-settleable instruments must be classified as liabilities.


Embedded Derivative Liabilities in Convertible Notes


During the three months ended May 31, 2013, the Company recognized new derivative liabilities of $127,556 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $16,661, and was recorded as a loss on derivatives for the three months ended May 31, 2013.

15






NOVATION HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2013

 (UNAUDITED)


NOTE 7.  DERIVATIVE LIABILITIES (continued)


As a result of conversion of notes payable described in Note 7, the Company reclassified $217,765 of derivative liabilities to equity and the change in fair value of derivatives was $16,661.


As of May 31, 2013, the fair value of the Companys derivative liabilities was $40,365 during the three months ended May 31, 2013.


The following table summarizes the derivative liabilities included in the condensed consolidated balance sheet:

 

  

Fair Value

Measurements Using Significant

Unobservable

Inputs (Level 3)

Derivative Liabilities:

  

 

 

Balance at August 31, 2012

  

$

30,815

ASC 815-15 additions

  

 

346,493

Change in fair value

  

 

28,784

ASC 815-15 deletions

  

 

(365,727)

Balance at May 31, 2013

  

40,365



The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:


 

  

Included in Other Income (Expense) on Condensed consolidated Statement of Operations

Gain/(Loss) on Derivative Liability:

  

 

 

Change in fair value of derivatives

  

$

(16,661)

Derivative expense

  

 

 (52,556)

Balance for the three months ended May 31, 2013

  

 (69,217)


The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions:

 

  

Convertible Debt Instruments

Risk-free rate

  

 

0.21% - 0.30% 

Expected volatility

  

 

100% - 300%

Expected life

  

 

 9 months 12 months


NOTE 8.  SUBSEQUENT EVENTS


In accordance with ASC 855, management evaluated all activity of the Company through the issue date of the financial statements and concluded that no other subsequent events have occurred that would require recognition or disclosure in the financial statements.


16







ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS


FORWARD-LOOKING INFORMATION


To the extent that the information presented in this Quarterly Report on Form 10-Q for the quarter ended May 31, 2013 discusses financial projections, information or expectations about our products, services, or markets, or otherwise makes statements about future events or statements regarding the intent, belief or current expectations of Allezoe Medical Holdings, Inc. and its subsidiary (collectively the Company), its directors or its officers with respect to, among other things, future events and financial trends affecting the Company, such statements are forward-looking. We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Forward-looking statements are typically identified by the words believes, expects, anticipates, and similar expressions. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and that matters referred to in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise these forward-looking statements because of new information, future events or otherwise, except as required by law.


OVERVIEW


We were incorporated under the laws of the State of Delaware on September 24, 1998 with authorized common stock of 25,000,000 shares at $0.001 par value. On March 9, 2007, at the Annual General Meeting of Stockholders a Resolution was approved increasing the authorized share capital to 500,000,000 common shares with a par value of $0.001 per share.  In February, 2011, our Articles of Incorporation were amended to change the corporate name to Allezoe Medical Holdings, Inc. Effective October 25, 2012, our corporate name was changed to Novation Holdings, Inc., our place of incorporation was transferred from Delaware to Florida, and we completed a reverse split of our common shares in the ratio of 1 new shares for each 15 common shares previously issued.  The amendment to our Articles also provided that we are authorized to issue up to 500 million common shares, par value $0.001, and 10 million preferred shares, par value $0.001.  The rights and preferences of any preferred shares we issue may be set by resolution of our Board of Directors.  At the date of this report, 1 million shares of preferred shares have been issued. The reverse stock split was given retroactive recognition in our Form 10-K filed on December 14, 2012.  All shares and per share information were retroactively adjusted to reflect the stock split.


We are engaged in the business of acquiring and managing operating companies, initially in the medical device development and production market, and subsequently in other healthcare, education, technology and similar markets. We formed our Company for the purpose of acquiring and developing mineral properties. On February 18, 2011, all of the mineral properties and related development and exploration activities were disposed of as part of a series of transactions resulting in the Company moving into the medical device industry. On February 18, 2011, the Company acquired all of the outstanding shares of Organ Transport Systems, Inc. (OTS), a Nevada corporation, and simultaneously disposed of the assets relating to its former activities in mining exploration, along with all related liabilities. Consequently, OTS was then considered to be the surviving entity, with the Company including only the financial results of OTS in our financial statements. In March, 2012, however, the Company determined that the development costs and time to development for the OTS technology were significantly greater than originally expected and that there were other, unexpected issues and concerns relating to the acquisition. As a result, we determined to reverse the acquisition and the transaction was rescinded by agreement.


As a result of the rescission of the OTS transaction, on July 11, 2012, we amended our prior SEC periodic filings to remove the financial results for OTS by filing an amended Form 10-K/A for the year ended August 31, 2011, and amended Forms 10-Q/A for the quarters ended May 31, 2012 and May 31, 2012.

17





On December 6, 2012, we completed the acquisition of Burgoyne Internet Services, LLC (Burgoyne), a Utah limited liability company, with an effective closing date of December 1, 2012.  Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and our wholly-owned subsidiary. The consideration for the acquisition was the issuance of a convertible debt in the principal amount of $280,000, which included a $50,000 cash investment by the seller.


On December 6, 2012, we also completed the acquisition of Casita de los Ninos, LLC, a California limited liability company doing business as Immersion House (www.immersionhouse.com). The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.  If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock.

 

Effective January 1, 2013, we acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.  The acquisition was accomplished by the assumption of debt.  

On February 3, 2013, the Company sold its controlling interest in SureScreen Medical, Inc., its wholly-owned medical device development subsidiary, to AVM Licensing Corp., the licensor of the HPV virus treatment technology being developed by SureScreen. SureScreen is the holder of the recently granted European patent rights to the technology, although the US Patent application has recently been denied.  The Company received a combination of cash, stock and notes, secured by the assets of SureScreen, as consideration for the sale.  The total value of the sale was estimated at $250,000.

The Business


Novation Holdings, Inc. (the Company or we), formerly Allezoe Medical Holdings, Inc., is  engaged in the business of managing operating companies. We were organized originally under the laws of the State of Delaware as Stanford Management Ltd., on September 24, 1998, and, effective on October 25, 2012, transferred our place of incorporation from Delaware to Florida and changed our corporate name to Novation Holdings, Inc.  


We are in the business of medical technology development and marketing, childhood language development, ISP management, administrative and financial management consulting and other new businesses, operating through wholly-owned subsidiaries to which we provide management, administrative, financial and other support services.  We are also actively seeking other related acquisitions in other market segments where the development time and cost are less and the production of operating revenues can be accelerated.

SureScreen

Our wholly-owned subsidiary, SureScreen Medical, Inc., entered into a licensing agreement with AVM Corp. for the licensing of proprietary, patent pending technology that would enable healthcare providers to "see and treat" Human Papillomavirus (HPV), the most common sexually transmitted infection and a cause of cervical cancer. In addition to offering easy, affordable, and on-the-spot HPV diagnosis, the technology offers an important alternative to the HPV vaccine.





A European patent has been granted for the technology and a patent application to the US Patent and Trademark Office was denied.  After reviewing the patent application status, the lack of a working model of the device and the considerable costs anticipated to complete the patent process, develop a working model, obtain regulatory approvals eventually develop a marketing program, our management determined that the costs and time were excessive and the likely return too uncertain to predict so we sold SureScreen back to AVM Licensing Corp. and no longer have any interest in the company or its technology.

18


Burgoyne ISP

On December 6, 2012, we completed the acquisition of Burgoyne Internet Services, LLC (Burgoyne), a Utah limited liability company, with an effective closing date of December 1, 2012.  Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and our wholly-owned subsidiary.  In addition to the acquisition consideration of $200,000, the seller, ISP Holdings, LLC, a Utah limited liability company, also agreed to provide $50,000 in working capital at closing and an additional $50,000 in working capital if the median dollar value of Novations trading volume for its common stock for any consecutive 30 day period equals or exceeds $50,000 during the one year period after closing. The closing was completed on December 6, 2012 on the transfer of the initial $50,000 in working capital funds, although the acquisition transaction has been treated as closing effective on December 1, 2012 for accounting purposes.

Novation has issued its convertible promissory note to ISP Holdings, Inc. in the principal amount of $280,000, representing the $200,000 purchase price for Burgoyne, the initial $50,000 working capital. advance, a $15,000 original issue discount, and a $15,000 expense allowance to cover ISP Holdings expenses related to the transaction.  The promissory note has a term of 14 months, bears interest at 8 percent, and is convertible into common stock (subject to a maximum holding of 9.9 percent of the total common shares outstanding at any time) at $0.03 per share.  The second working capital loan of $50,000, if made, will bear similar terms, except that there will be no original issue discount or expense allowance.  

Burgoyne provides Internet access, emails, and related services to customers throughout the United States, primarily in areas where high speed cable and other high speed Internet access services are not readily available.  Its web site is at www.burgoyne.com.  As a result of this initial ISP acquisition, Novation plans to undertake acquisitions of other regional ISP companies in a national roll-up strategy.  We have already identified 5 other regional ISP companies for sale and believe that, with the added infrastructure provided by Novation, the existing operating success can grow and add to the bottom line for Novation.


 As part of the transaction, we also executed a Transition Services Agreement with ISP Holdings, LLC. under which ISP Holdings will continue to provide administrative services in managing the ISP business of Burgoyne for a period of 9 months from closing, or until August 31,2013, for a nominal fee of the greater of 2 percent of revenues or $200 per month.






The acquisition agreement also provided that the parties would undertake a reconciliation of income and expenses as of December 31, 2012 and that ISP Holdings would then transfer the net funds due for the operations of Burgoyne through December 31, 2012 to Burgoyne Internet Services, Inc.  Thereafter, all income and expenses related to the operations of the ISP business will be recorded directly by Burgoyne Internet Services, Inc. and included in the condensed consolidated results of operations with the Company.


19


Immersion HouseTM


On December 6, 2012, we also completed the acquisition of Casita de los Ninos, LLC, a California limited liability company doing business as Immersion House (www.immersionhouse.com) which is devoted to helping children learn new languages and gain cultural experiences in those targeted languages. Casita de los Niños, the flagship company for Immersion House, was launched in 2009 in Northern California (Bay Area) and focuses on teaching children Spanish through learning centers and various after school enrichment programs. Immersion House learning centers, products, publications, media, partnerships, resources, and instructors are all committed to one goal: to provide the best immersive experience so that students and their families can learn to: Think Global, Act Global, and Be Global.  Immersion House differs from other learning language programs in the way that it immerses students in the target language they are learning. When students enter its learning centers they are transported into the world of that language. They experience the sights, sounds, and tastes of the target language they are learning. When students eat, bake, converse, play, and interact with native speakers, they not only learn the language, they experience its people, culture, and traditions. Paul Bliss, President, and Christy Bliss, the founders of Immersion House, remain as management.  The plan is to expand both the language experiences offered and the geographic locations of Immersion House learning.


The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.  If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock.


Novation Consulting Services, Inc.


Effective January 1, 2013, we acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.  The acquisition was accomplished by the assumption of debt.  As a result of the acquisition, we have been able to bring all of the administrative, legal and financial services in house that were previously contracted for at a monthly fee of $10,000, and also will be able to offer the same services to other companies.  A new consulting agreement to provide these services to Alternative Energy Partners, Inc. (AEGY), was entered into effective January 1, 2013, for a monthly fee of $10,000.  That agreement was amended effective May 1, 2013 to include payment of the consulting fees due to Indian River Consulting, Inc., which will now be paid through Novation Consulting Services, Inc. rather than directly by AEGY


Alternative Energy Partners, Inc.


In January, 2013, the Company acquired a controlling interest in Alternative Energy Partners, Inc., a mining and energy holding company whose common shares are traded on the OTCQB under the symbol AEGY.  As a result of the acquisition, Novation acquired 40 million shares of common stock, representing approximately 19 percent of the common shares issued and outstanding, and 1 million shares of Series A Convertible Preferred stock holding voting power equal to 51 percent of the total vote of all shares entitled to vote. Due to the inability of AEGY to effect a reverse split of its common stock, we determined that continued involvement with AEGY was not in our best interests and, as a result, we sold the control preferred stock to a third party for a note in the amount of $250,000.


Liquidity and Capital Resources


We have historically met our capital requirements through either private placement of equity or private borrowings. Our cash balance increased $4,499 from $1,245 at August 31, 2012 to $5,744 at May 31, 2013. Since our operating subsidiaries are now producing revenues, a portion of our operating expenses are now being paid from current income.


20


We received loan proceeds of $40,000 in September of 2012 from Asher Enterprises, LLC, an unrelated third party, due June 7, 2013 at 8 percent interest. The note is convertible into common stock at a price equal to 51 percent of the three lowest trading prices for our common stock for the ten trading days prior to the notice of conversion.


We received loan proceeds of $30,000 in October of 2012 from Asher Enterprises, LLC, an unrelated third party, due July 5, 2013 at 8 percent interest. The note is convertible into common stock at a price equal to 51 percent of the three lowest trading prices for our common stock for the ten trading days prior to the notice of conversion..


We received loan proceeds of $50,000 in October of 2012 from JMJ Financial, an unrelated third party, due October 3, 2013 at 5 percent interest. The note is convertible into common stock at a price equal to 70 percent of the lowest trading price for our common stock for the twenty five trading days prior to the notice of conversion.


We received loan proceeds of $27,500 in April of 2013 from Asher Enterprises, LLC, an unrelated third party, due July 5, 2013 at 8 percent interest. The note is convertible into common stock at a price equal to 51 percent of the three lowest trading prices for our common stock for the ten trading days prior to the notice of conversion.


In our opinion, available funds will satisfy our capital requirements for the next several months while we are in the process of negotiating additional funding to cover operating expenses and for further development of our operating subsidiaries. We expect to do so during the remainder of our fiscal year 2013. There can be no assurance that we will be successful in raising additional funds to meet our capital needs.






Recurring Fair Value Measurements


In accordance with accounting principles generally accepted in the United States of America, certain assets and liabilities are required to be recorded at fair value on a recurring basis.


Off-Balance Sheet Arrangements


None


Current Economic Environment


The U.S. economy is currently in a recession, which could be long-term. Consumer confidence continued to deteriorate and unemployment figures continued to increase in 2012. However, in recent months, certain economic indicators have shown modest improvements. The generally deteriorating economic situation, together with the limited availability of debt and equity capital, including bank financing, will likely have a disproportionate impact on all micro-cap companies. As a result, we may not be able to execute our business plan due to our inability to raise sufficient capital and/or be able to develop a customer base for our planned products.


Contractual obligations


We have entered into a consulting agreement dated July 1, 2011 with Michael Gelmon, our Chairman and Chief Executive Officer, under which Mr. Gelmon provides services as an officer and director for a monthly fee of $10,000. The consulting agreement is for an initial term of three years and extends annually unless terminated by either party at the end of the term, as extended. We also entered into a consulting agreement with CFOs to GO, Inc. to provide legal, financial, accounting and similar services, including assistance in preparing, filing and converting to EDGAR and XBRL filings for a monthly fee of $10,000, and a similar agreement with Matriarch Management, Inc. for the provision of administrative, IR, PR and related services, also for a fee of $10,000 monthly. The consulting agreements with CFOs to Go, Inc. and Matriarch Management, Inc. were terminated effective December 31, 2012. Novation Consulting Services, Inc. now provides a portion of these services directly or through consultants. John Burke, who serves as our consulting principal financial officer, does so through a consulting arrangement between his company and Novation Consulting Services, Inc. Indian River Financial Services, LLC provides consulting corporate general counsel and financial services directly to us under a consulting agreement effective January 1, 2013, assumed by Novation Consulting Services, Inc.

21


A summary of notes payable by the Company at August 31, 2012 and May 31, 2013 is contained in Note 6 to the Financial Statements included in this Quarterly Report which summary is incorporated here by reference.


We now maintain our corporate offices in space made available at no charge by our Chief Executive Officer, located in Boca Raton, Florida.


Results of Operations


For the three months ended May 31, 2013 and May 31, 2012, the Company had revenues of $77,201 and $0, respectively. For the three months ended May 31, 2013, the Company had net income of $4,486. For the three months ended May 31, 2012, the Company had a net income of $52,841.

 

For the quarters ended May 31, 2013 and May 31, 2012, we incurred operating expenses of $117,409 and $458,657, respectively.


For the nine months ended May 31, 2013 and May 31, 2012, the Company had operating revenues of $147,744 and $0, respectively. For the nine months ended May 31, 2013 and May 31, 2012, the Company had a net loss of $298,338 and $3,877,254 respectively.

 

For the nine months ended May 31, 2013 and May 31, 2012, we incurred operating expenses of $470,874 and $4,051,432, respectively.



ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


Market Information






There are no common shares subject to outstanding options, warrants or securities convertible into common equity of our Company at May 31, 2013, except certain convertible promissory notes as detailed in Note 6 to the financial statements included in this Report.


There are no shares that have been offered pursuant to an employee benefit plan or dividend reinvestment plan as of May 31, 2013. Our shares are traded on the OTCQB under the symbol NOHO. Although the OTCQB does not

have any listing requirements per se, to be eligible for quotation on the OTCBB, we must remain current in our filings with the SEC, being at a minimum Forms 10-Q and 10-K.


In the future our common stock trading price might be volatile with wide fluctuations. Things that could cause wide fluctuations in our trading price of our stock could be due to one of the following or a combination of several of them:


variations in our operations results, either quarterly or annually;



trading patterns and share prices in other medical technology companies which our shareholders consider similar to ours; and



other events which we have no control over.


22


In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of managements attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.


Trends

 

We are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term or short term, other than as more fully described under Risk Factors in our annual report on Form 10-K for the year ended August 31, 2012, filed with the SEC on December 14, 2012.


ITEM 4. CONTROLS AND PROCEDURES


(a)

Evaluation of disclosure controls and procedures


It is managements responsibility for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, we have evaluated the effectiveness of our disclosure controls and procedures as required by the Exchange Act Rule 13a-15(d) as of May 31, 2013 (the Evaluation Date). Based on the evaluation by management, they have concluded these disclosure controls and procedures were not effective as of the Evaluation Date as a result of material weaknesses in internal control over financial reporting as more fully discussed below.


Under Rule 13a-15(e)/15d-15(e); Regulation S-K, Item 307, the SEC states that disclosure controls and procedures have the following characteristics:


designed to ensure disclosure of information that is required to be disclosed in the reports that we file or submit under the Exchange Act;


recorded, processed, summarized and reported with the time period required by the SECs rules and forms; and


accumulated and communicated to management to allow them to make timely decisions about the required disclosures.


As of May 31, 2013, our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments.


Management concluded, during the three and six months ended May 31, 2013, internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules. Management realized there are deficiencies in the design or operation of our internal control that adversely affected our internal controls which management considers to be material weaknesses.


23


Material Weaknesses


Management assessed the effectiveness of our internal control over financial reporting as of the Evaluation Date and identified the following material weaknesses:


Due to a significant number and magnitude of out-of-period adjustments identified during the quarter-end closing process, management has concluded that the controls over the quarter-end financial reporting process were not operating effectively. A material weakness in the quarter-end financial reporting process could result in our not being able to meet our regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.


There is no system in place to review and monitor internal control over financial reporting. This is due to our maintaining an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.


(a)

Changes in control over financial reporting


There were no changes in our internal controls over financial reporting during the three months ended May 31, 2013 that have materially affected, or are reasonably likely to material affect, our internal control over financial reporting.


PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


There are no legal proceedings to which we are a party or to which we are subject, nor, to the best of our knowledge, are any material legal proceedings contemplated.


ITEM 1A RISK FACTORS



The list of risk factors contained in our Annual Report on Form 10-K for the year ended August 31, 2012, under Part 1 ITEM 1A, Risk Factors, are incorporated by reference.






ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS



In June, 2013, we issued a total of 107,298,783 common shares to various unrelated parties for various conversions.


As a result of the issue of these shares, we now have a total of 245,128,156 common shares issued and outstanding as of July 19, 2013.

24


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4. (Removed and Reserved)


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS


31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2

Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

32.2

Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


NOVATION HOLDINGS, INC. (Registrant)


/s/MICHAEL GELMON

Michael Gelmon

Chief Executive Officer


/s/JOHN BURKE

John Burke

Consulting Principal Accounting Officer


Dated: July 19, 2013

    





25





EX-31 2 exhibit311.htm PRINCIPAL EXECUTIVE OFFICER CERTIFICATION Converted by EDGARwiz

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION


I, Michael Gelmon, certify that:


(1) 

I have reviewed this quarterly report on Form 10-Q of Novation Holdings, Inc.


(2) 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

 

 

(3) 

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

(4) 

The issuers other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and we have:


 

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

(b) 

Evaluated the effectiveness of the issuers disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon based such evaluation; and

 

 

 

 

(c) 

Disclosed in this report any change in the issuers internal control over financial reporting that occurred during the small business issuers most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuers internal control over financial reporting;

 

(5) 

The issuers other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of the issuers board of directors (or persons performing the equivalent function):


 

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuers ability to record, process, summarize and report financial information; and


 

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuers internal controls over financial reporting.


Dated: July 19, 2013

By:

/s/ Michael Gelmon

 

 

 

Michael Gelmon

Chief Executive Officer

 

 





EX-31 3 exhibit312.htm PRINCIPAL ACCOUNTING OFFICER CERTIFICATION Converted by EDGARwiz

Exhibit 31.2

PRINCIPAL ACCOUNTING OFFICER CERTIFICATION


I, John Burke, certify that:


(1) 

I have reviewed this quarterly report on Form 10-Q of Novation Holdings, Inc.


(2) 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

 

 

(3) 

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

(4) 

The issuers other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and we have:


 

(a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

(b) 

Evaluated the effectiveness of the issuers disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon based such evaluation; and

 

 

 

 

(c) 

Disclosed in this report any change in the issuers internal control over financial reporting that occurred during the small business issuers most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuers internal control over financial reporting;

 

(5) 

The issuers other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of the issuers board of directors (or persons performing the equivalent function):


 

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuers ability to record, process, summarize and report financial information; and


 

(b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuers internal controls over financial reporting.


Dated: July 19, 2013

By:

/s/ John Burke

 

 

 

John Burke

Principal Accounting Officer

 

 





EX-32 4 exhibit32.htm CERTIFICATION Converted by EDGARwiz

Exhibit 32

CERTIFICATION

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, each of the undersigned officers of Novation Holdings, Inc., (the Company), does hereby certify, to each such officers knowledge, that:  


(1)    The quarterly report on form 10-Q of the Company for the quarter ended May 31, 2013 (the Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

 

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


Dated: July 19, 2013

By:

/s/ Michael Gelmon

 

 

Michael Gelmon

Chief Executive Officer

Dated: July 19, 2013

By:

/s/ John Burke

 

 

John Burke

Principal Accounting Officer

 


A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.




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The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.&nbsp; If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock<b>.</b></p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Effective January 1, 2013, the Company acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.&nbsp; The acquisition was accomplished by the assumption of debt.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of these acquisitions, the Company is now a holding and management company with operating subsidiaries engaged in administrative and financial consulting, ISP services and full immersion language training, all of which are producing revenues, and plans to expand the business and operations of each subsidiary.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'><font lang="EN-GB">The accompanying unaudited Condensed Consolidated Financial Statements of Novation Holdings, Inc. (the &#147;Company&#148;) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim period ended May 31, 2013 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim period. This includes all normal and recurring adjustments, but does not include all of the information </font></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'><font lang="EN-GB">and footnotes required by generally accepted accounting principles (&#147;GAAP&#148;) for complete financial statements. Financial results for the Company can be seasonal in nature. Operating results for the nine-month period ended May 31, 2013 are not necessarily indicative of the results that may be expected for the year ended August 31, 2013. For further information, refer to the Financial Statements and footnotes thereto included in the Company&#146;s Form 10-K/A for the year ended August 31, 2012 filed with the Commission on December 17, 2012.</font></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company has adopted an August 31 year end.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>As a result of the recent acquisitions by the Company, management has determined that the Company is no longer a development stage company in accordance with Accounting Standards Codification (&#147;ASC&#148;) Topic No. 915.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of&nbsp;revenues and expenses during the reporting period. A significant estimate as of May 31, 2013 and August 31, 2012 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.&nbsp;&nbsp;The Company had no cash equivalents at May 31, 2013 and August 31, 2012, respectively. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.&nbsp;&nbsp;There were no balances that exceeded the federally insured limit at May 31, 2013 and August 31, 2012, respectively. </p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>In accordance with Financial Accounting Standards Board &#147;FASB&#148; Accounting Standards Codification &#147;ASC&#148; Topic 260, <i>&#147;Earnings per Share,&#148;&nbsp;&nbsp;</i>basic earnings (loss) per share (&#147;EPS&#148;) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The computation of basic and diluted loss per share for the period from September 24, 1998 (inception) to May 31, 2013, is equivalent since the Company has had continuing losses. The Company also has no common stock equivalents.&nbsp; The calculation of earnings per share has been done by applying the 1 for 15 reverse split of common stock, effective November 7, 2012, retroactively to September 24, 1998, the date of inception.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 8.35pt'>The Company adopted the provisions of FASB ASC 718-20, Stock Compensation &#150; Awards Classified as Equity, which require companies to expense the estimated fair value of employee stock options and similar awards based on the fair value of the award on the date of grant. The cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. At the Annual Meeting of Shareholders held on October 24, 2012, the shareholders approved the adoption of the <font style='background:white'>Novation Holdings, Inc. 2012 Stock Incentive Plan, and the setting aside of 4,500,000 shares of post-reverse split common stock for grants under the Plan.&nbsp; </font>There have been no grants of any stock or other equity under the Plan, or otherwise, as of May 31, 2013. </p> <p style='text-align:justify;margin:0in 0in 0pt'>On July 1, 2011, the Company issued 333,333 post-split shares of common stock valued at $2,100,000 to the Company&#146;s Chairman and CEO, with the shares originally vesting over 5 years on a proportionate basis. As of August 31, 2011, one-fifth or 66,667 shares valued at $420,000 had vested. Mr. Gelmon conveyed two thirds of the original 333,333 post-split shares to two other parties for reasons unrelated to the Company, retaining a total of 111,111 shares. The non-vested balance at August 31, 2011 of 266,667 total shares valued at $1,680,000 had been issued but were being held in escrow for release on an annual basis each July 1. During the year ended August 31, 2012, the Company revised the vesting term to 3 years and released an additional 155,556 shares valued at $980,000. The non-vested balance of 111,111 post-split shares at August 31, 2012 was one-third of the original issuance valued as of the original issue date at $700,000, of which Mr. Gelmon holds 37,037 shares to be received, with a current market value of less than $600.&nbsp; </p> <p style='text-align:justify;margin:0in 0in 0pt'>Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Management has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, management believes that no accruals for tax liabilities are necessary. Therefore, no reserves for uncertain income tax positions have been recorded.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company maintains its cash in a bank deposit account in a bank which participates in the Federal Deposit Insurance Corporation (FDIC) Program. As of May 31, 2013 and August 31, 2012, the Company had no balances in excess of federally insured limits.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <!--egx--><p style='margin:0in 0in 0pt'>All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The carrying amounts of the Company&#146;s other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Company does not utilize financial derivatives or other contracts to manage commodity price risks. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'><u>Level 1</u>&nbsp;&#150; quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'><u>Level 2</u>&nbsp;&#150; inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'><u>Level 3</u>&nbsp;&#150; unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company evaluates embedded conversion features within convertible debt under ASC 815 &#147;<i>Derivatives and Hedging</i>&#148; to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the condensed consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Company&#146;s stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 <i>&#147;Debt with Conversion and Other Options&#148;</i> for consideration of any beneficial conversion feature.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>As reflected in the accompanying consolidated financial statements, the Company has a net loss of $298,338 and net cash used in operations of $100,751 for the three months ended May 31, 2013; and negative working capital of $379,384 and an accumulated deficit of $9,564,781 at May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The accompanying consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.&nbsp;&nbsp;The Company is&nbsp; and has suffered recurring losses and has no established source of revenue.&nbsp;&nbsp;Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding.&nbsp;&nbsp;These factors create substantial doubt about the Company&#146;s ability to continue as a going concern.&nbsp;&nbsp;The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence. </p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In September 2011, the FASB issued an amendment to Topic 350, Intangibles&#151;Goodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The Company is currently evaluating whether early adoption is necessary.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company&#146;s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company&#146;s financials properly reflect the change. </p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The following is a schedule of deferred tax assets as of May 31, 2013, and August 31, 2012:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <table cellspacing="0" cellpadding="0" border="0" style='border-collapse:collapse;margin:auto auto auto 41.4pt'> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>May 31, 2013</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>August 31, 2012</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Net operating loss </p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,564,781</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <div style='border-top:windowtext 1pt solid;border-right:medium none;border-bottom:windowtext 1pt solid;padding-bottom:1pt;padding-top:1pt;padding-left:0in;border-left:medium none;padding-right:0in'> <p align="right" style='border-top:medium none;border-right:medium none;border-bottom:medium none;padding-bottom:0in;text-align:right;padding-top:0in;padding-left:0in;margin:0in 0in 0pt;border-left:medium none;padding-right:0in'>&nbsp;$&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,266,443</p></div></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Future tax benefit at 34%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,252,026</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,150,591</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Less: Valuation allowance</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;&nbsp; (3,252,026)</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(3,150,591)</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Net deferred tax asset</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; --</p></td></tr></table> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The valuation allowance changed by approximately $101,435 during the three months ended May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Under Sections 382 and 269 (the &#145;shell corporation&#146; rule) of the Internal Revenue Code, following an &#147;ownership change,&#148; special limitations (&#147;Section 382 Limitations&#148;) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the &#145;Applicable Tax Attributes&#146;). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at May 31, 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Company&#146;s expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through May 31, 2013. The Company&#146;s continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense.</p> <!--egx--><p style='background:white;text-align:justify;margin:0in 0in 0pt'>Michael Gelmon, who serves the Company as CEO, is paid as a consultant to the Company at the rate of $10,000 per month, commencing July 1, 2012.&nbsp; Mr. Gelmon is a Canadian citizen and resident.&nbsp; </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001 per share and 10 million shares of preferred stock, par value $0.001.&nbsp; </p> <p style='text-align:justify;margin:0in 0in 0pt'>. </p> <p style='text-align:justify;margin:0in 0in 0pt'>During the quarter ended May 31, 2013, the Company issued Company stock as follows:</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In March, 2013 we issued a total of 13,764,832 common shares on conversions totaling $16,886 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In April, 2013 we issued a total of 19,176,623 common shares on conversions totaling $22,845 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In May, 2013 we issued a total of 56,571,681 common shares on conversions totaling $45,304 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of the issue of these shares, we now have a total of 137,829,373 common shares and 1,000,000 preferred shares issued and outstanding as of January 18, 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>*The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 &nbsp;&nbsp;&nbsp;"Derivatives and Hedging" and determined that certain outstanding instruments should be classified as liabilities once the conversion option became effective (typically after three or six months) due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The following is a summary of notes payable at May 31, 2013 and August 31, 2012:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <table cellspacing="0" cellpadding="0" width="673" border="0" style='border-collapse:collapse;margin:auto auto auto 4.65pt;width:504.75pt'> <tr style='height:3.85pt'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Description</p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>May 31, 2013</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(Unaudited)</p></td> <td valign="bottom" width="15" colspan="4" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.1pt;background-color:transparent'></td> <td valign="bottom" width="115" colspan="9" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:86pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>August 31, 2012</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(Audited)</p></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:13.9pt'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.* </p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="114" colspan="7" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:85.3pt;background-color:transparent'></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:1.4in'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $200 and $0, respectively. </p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="114" colspan="7" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:85.3pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>37,500</p></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:21.15pt'> <td valign="bottom" width="389" colspan="2" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:291.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="138" colspan="7" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.5pt;background-color:transparent'></td> <td width="26" colspan="5" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:108.9pt'> <td valign="bottom" width="389" colspan="2" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:291.65pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="138" colspan="7" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>35,000 </p></td> <td width="26" colspan="5" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:14.85pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:123.75pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $0 and $8,288, respectively. The note was fully converted as of May 31, 2013. </p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,712 </p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:0.3in'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:120.6pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On September 1, 2012, the Company issued its promissory note in the amount of $42,500 to an unrelated third party for additional working capital. The note is due on June 7, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013. </p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:21.15pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="138" colspan="8" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="4" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.75pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:107.1pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on July 5, 2013 and carries interest at 8 percent per annum, payable at maturity. The note &nbsp;is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $18,910 and $0, respectively. The Company converted $7,100 into shares.</p></td> <td valign="bottom" width="138" colspan="8" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,490</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="4" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.75pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:24.3pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:96.75pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On December 18, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on September 14, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>53,000 </p></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:27.45pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>Common Stock LLC *</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:96.75pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,507</p></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Common Stock LLC *</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:116.55pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>20,000</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Common Stock LLC</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>On May 2, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $5,600 and $0, respectively. The Company converted $5,236 into shares.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9,164</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>20,000</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:0.25in'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Panache Group *</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:99pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $1,112 and $0, respectively. $40,320 had been converted to common stock as of May 31, 2013. </p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,100</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:12.15pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:108.9pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>27,500</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:16.65pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>JMJ Financial *</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in -9.9pt 0pt 0in'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:16.65pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $1,004 unamortized portion remains at May 31, 2013. </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>7,248</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>50,500</p></td></tr> <tr style='height:116.55pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>JMJ Financial *</p> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $2,047 unamortized portion remains at May 31, 2013. </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>38,297</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td></tr> <tr style='height:29.2pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>ISP Holdings, Inc.</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:67.95pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On December 6, 2012, the Company issued its promissory note in the amount of $280,000 to an unrelated third party for additional working capital. The note is due on May 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.03. The Note was issued at a discount of $15,000, of which $8,571 unamortized portion remains at May 31, 2013.</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>263,219</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Total notes payable </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>404,918</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>181,319</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Current portion</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>141,699</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>181,319</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Notes payable-Long-term portion</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 263,219</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp; </p></td></tr></table> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company has various convertible instruments outstanding more fully described in Note 7. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments. </p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result, under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;, all other share-settleable instruments must be classified as liabilities. </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><b>Embedded Derivative Liabilities in Convertible Notes </b></p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>During the three months ended May 31, 2013, the Company recognized new derivative liabilities of $127,556 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $16,661, and was recorded as a loss on derivatives for the three months ended May 31, 2013. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of conversion of notes payable described in Note 7, the Company reclassified $217,765 of derivative liabilities to equity and the change in fair value of derivatives was $16,661. </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As of May 31, 2013, the fair value of the Company&#146;s derivative liabilities was $40,365 during the three months ended May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes the derivative liabilities included in the condensed consolidated balance sheet: </p> <div align="center"> <table cellspacing="0" cellpadding="0" width="606" border="0" style='border-collapse:collapse'> <tr style='height:53.55pt'> <td valign="bottom" width="283" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="204" colspan="2" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:153pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Fair Value</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Measurements Using&nbsp;Significant</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Unobservable</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Inputs (Level 3)</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'><b>Derivative Liabilities:</b></p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance at August 31, 2012</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>30,815</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>ASC 815-15 additions</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>346,493</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Change in fair value</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>28,784</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>ASC 815-15 deletions </p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(365,727)</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance at May 31, 2013</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>40,365</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table cellspacing="0" cellpadding="0" width="564" border="0" style='border-collapse:collapse'> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="162" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:121.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Included in Other Income (Expense) on Condensed consolidated Statement of Operations</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'><b>Gain/(Loss) on Derivative Liability:</b></p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Change in fair value of derivatives</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(16,661)</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Derivative expense</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;(52,556)</p></td></tr> <tr style='height:3.5pt'> <td valign="bottom" width="283" style='border-top:#f0f0f0;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance for the three months ended May 31, 2013</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:windowtext 1pt solid;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:windowtext 1pt solid;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;(69,217)</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions:</p> <div align="center"> <table cellspacing="0" cellpadding="0" width="564" border="0" style='border-collapse:collapse'> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="162" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:121.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Convertible Debt Instruments</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Risk-free rate</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>0.21% - 0.30%&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Expected volatility</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>100% - 300%</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Expected life</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;9 months &#150; 12 months</p></td></tr></table></div> <!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>In accordance with ASC 855, management evaluated all activity of the Company through the issue date of the financial statements and concluded that no other subsequent events have occurred that would require recognition or disclosure in the financial statements.</p> 0001080602 2013-05-31 0001080602 2012-09-01 2013-05-31 0001080602 2012-08-31 0001080602 2012-03-01 2013-05-31 0001080602 2011-03-01 2012-05-31 0001080602 2011-09-01 2012-05-31 0001080602 2012-05-31 0001080602 2013-03-01 2013-05-31 0001080602 2012-02-29 2012-05-31 0001080602 2013-02-28 0001080602 2012-02-28 shares iso4217:USD iso4217:USD shares Net of 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This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6327-108592 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 20 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6404-108592 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 20 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13531-108611 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 18 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6351-108592 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6442-108592 false0falseRisks and UncertaintiesUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureRisksAndUncertainties12 XML 12 R6.xml IDEA: Organization, Consolidation and Presentation of Financial Statements 2.4.0.8200000 - Disclosure - Organization, Consolidation and Presentation of Financial Statementstruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract1fil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_NatureOfOperationsus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>On December 6, 2012, the Company completed the acquisition of Burgoyne Internet Services, LLC (&#147;Burgoyne&#148;), a Utah limited liability company, with an effective closing date of December 1, 2012.&nbsp; Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and a wholly-owned subsidiary.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>On December 6, 2012, the Company also completed the acquisition of Casita de los Ninos, LLC, <font style='background:white'>a California limited liability company doing business as Immersion House<sup>&#153;</sup> </font>(www.immersionhouse.com). The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.&nbsp; If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock<b>.</b></p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Effective January 1, 2013, the Company acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.&nbsp; The acquisition was accomplished by the assumption of debt.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of these acquisitions, the Company is now a holding and management company with operating subsidiaries engaged in administrative and financial consulting, ISP services and full immersion language training, all of which are producing revenues, and plans to expand the business and operations of each subsidiary.</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for the nature of an entity's business, the major products or services it sells or provides and its principal markets, including the locations of those markets. If the entity operates in more than one business, the disclosure also indicates the relative importance of its operations in each business and the basis for the determination (for example, assets, revenues, or earnings).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6003-108592 false03false 2us-gaap_BasisOfAccountingus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'><font lang="EN-GB">The accompanying unaudited Condensed Consolidated Financial Statements of Novation Holdings, Inc. (the &#147;Company&#148;) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim period ended May 31, 2013 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim period. This includes all normal and recurring adjustments, but does not include all of the information </font></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'><font lang="EN-GB">and footnotes required by generally accepted accounting principles (&#147;GAAP&#148;) for complete financial statements. Financial results for the Company can be seasonal in nature. Operating results for the nine-month period ended May 31, 2013 are not necessarily indicative of the results that may be expected for the year ended August 31, 2013. For further information, refer to the Financial Statements and footnotes thereto included in the Company&#146;s Form 10-K/A for the year ended August 31, 2012 filed with the Commission on December 17, 2012.</font></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company has adopted an August 31 year end.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>As a result of the recent acquisitions by the Company, management has determined that the Company is no longer a development stage company in accordance with Accounting Standards Codification (&#147;ASC&#148;) Topic No. 915.</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for the basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).No definition available.false04false 2us-gaap_UseOfEstimatesus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of&nbsp;revenues and expenses during the reporting period. A significant estimate as of May 31, 2013 and August 31, 2012 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates.</p>falsefalsefalsenonnum:textBlockItemTypenaDisclosure of accounting policy for the use of estimates in the preparation of financial statements in conformity with generally accepted accounting principles.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6143-108592 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6132-108592 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6061-108592 false05false 2us-gaap_LiquidityDisclosureGoingConcernNoteus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>As reflected in the accompanying consolidated financial statements, the Company has a net loss of $298,338 and net cash used in operations of $100,751 for the three months ended May 31, 2013; and negative working capital of $379,384 and an accumulated deficit of $9,564,781 at May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The accompanying consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.&nbsp;&nbsp;The Company is&nbsp; and has suffered recurring losses and has no established source of revenue.&nbsp;&nbsp;Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding.&nbsp;&nbsp;These factors create substantial doubt about the Company&#146;s ability to continue as a going concern.&nbsp;&nbsp;The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence. </p>falsefalsefalsexbrli:stringItemTypestringIf there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date), disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 948 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6490092&loc=d3e47214-110998 false0falseOrganization, Consolidation and Presentation of Financial StatementsUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureOrganizationConsolidationAndPresentationOfFinancialStatements15 XML 13 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Related Party Disclosures
9 Months Ended
May 31, 2013
Related Party Disclosures:  
Related Party Transactions Disclosure

Michael Gelmon, who serves the Company as CEO, is paid as a consultant to the Company at the rate of $10,000 per month, commencing July 1, 2012.  Mr. Gelmon is a Canadian citizen and resident. 

 

XML 14 R4.htm IDEA: XBRL DOCUMENT v2.4.0.8
STATEMENT OF CASH FLOWS (USD $)
3 Months Ended 15 Months Ended
May 31, 2013
May 31, 2012
May 31, 2013
May 31, 2012
Statement of Cash Flows        
Net Income (loss) $ (328,338) $ (3,877,254) $ (25,514) $ 52,842
Depreciation 318 114    
Stock based compensation expense 0 3,380,941    
Debt cancellation 0 (520,493)    
Amortization 18,078 825    
Amortization of debt discount 128,176 106,679    
Accrued interest payable 14,865 15,472    
Increase in prepaid expenses (1,678) (96,500)    
Accounts receivable (62,787) 0    
Loans receivable (46,174) (212,174)    
Accounts payable and accrued expenses 176,789 39,806    
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (100,751) (1,162,584)    
Purchase of property and equipment 0 (2,120)    
NET CASH PROVIDED BY INVESTING ACTIVITIES 0 (2,120)    
Additional capital contributed 0 0 0 0
Issuance of Common Stock 0 0    
Proceeds from notes payable 147,500 1,201,407    
Related party advances (42,250) (38,000)    
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 105,250 1,163,407    
Increase (Decrease) in cash and cash equivalents 4,499 (1,297)    
Cash and Cash Equivalents, at Carrying Value, Beginning Balance 1,245 21,972    
Cash and Cash Equivalents, at Carrying Value, Ending Balance 5,744 20,675 5,744 20,675
Interest 0 0    
Income taxes, net 0 0    
Conversion of notes payable to stock $ 748,900 $ 1,148,407    
XML 15 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
Debt
9 Months Ended
May 31, 2013
Debt:  
Schedule of Short-term Debt

*The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15    "Derivatives and Hedging" and determined that certain outstanding instruments should be classified as liabilities once the conversion option became effective (typically after three or six months) due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

The following is a summary of notes payable at May 31, 2013 and August 31, 2012:

 

Description

May 31, 2013

(Unaudited)

August 31, 2012

(Audited)

 

 

Asher Enterprises, Inc.*

 

On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $200 and $0, respectively.

-

37,500

 

Asher Enterprises, Inc.*

 

On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-

35,000

 

Asher Enterprises, Inc.*

 

On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $0 and $8,288, respectively. The note was fully converted as of May 31, 2013.

-

6,712

 

Asher Enterprises, Inc.*

 

On September 1, 2012, the Company issued its promissory note in the amount of $42,500 to an unrelated third party for additional working capital. The note is due on June 7, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-

-

 

Asher Enterprises, Inc.*

 

On October 3, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on July 5, 2013 and carries interest at 8 percent per annum, payable at maturity. The note  is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $18,910 and $0, respectively. The Company converted $7,100 into shares.

6,490

-

 

Asher Enterprises, Inc.*

 

On December 18, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on September 14, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.

53,000

-

 

Common Stock LLC *

 

On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-

5,507

 

Common Stock LLC *

 

 

 

 

On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.

-

 

20,000

 

Common Stock LLC

 

 

 

 

On May 2, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $5,600 and $0, respectively. The Company converted $5,236 into shares.

9,164

 

20,000

 

Panache Group *

 

On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $1,112 and $0, respectively. $40,320 had been converted to common stock as of May 31, 2013.

-

6,100

 

Asher Enterprises, Inc.*

 

 

 

 

On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.

27,500

 

-

 

JMJ Financial *

 

 

 

On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $1,004 unamortized portion remains at May 31, 2013.

7,248

50,500

JMJ Financial *

On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $2,047 unamortized portion remains at May 31, 2013.

38,297

 

-

ISP Holdings, Inc.

 

 

 

On December 6, 2012, the Company issued its promissory note in the amount of $280,000 to an unrelated third party for additional working capital. The note is due on May 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.03. The Note was issued at a discount of $15,000, of which $8,571 unamortized portion remains at May 31, 2013.

263,219

 

-

Total notes payable

404,918

 

181,319

Current portion

141,699

 

181,319

Notes payable-Long-term portion

$                 263,219

 

$                            - 

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Subsequent Events
9 Months Ended
May 31, 2013
Subsequent Events:  
Subsequent Events

In accordance with ASC 855, management evaluated all activity of the Company through the issue date of the financial statements and concluded that no other subsequent events have occurred that would require recognition or disclosure in the financial statements.

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The balance at times may exceed federally insured limits.&nbsp;&nbsp;There were no balances that exceeded the federally insured limit at May 31, 2013 and August 31, 2012, respectively. </p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for cash and cash equivalent footnotes, which may include the types of deposits and money market instruments, applicable carrying amounts, restricted amounts and compensating balance arrangements. Cash and equivalents include: (1) currency on hand (2) demand deposits with banks or financial institutions (3) other kinds of accounts that have the general characteristics of demand deposits (4) short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments maturing within three months from the date of acquisition qualify.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Cash -URI http://asc.fasb.org/extlink&oid=6506951 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Cash Equivalents -URI http://asc.fasb.org/extlink&oid=6507016 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 1 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.1) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 230 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367179&loc=d3e4273-108586 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 6.H.3) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13728-122682 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 6 -Section H -Subsection 3 false0falseCash and Cash EquivalentsUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureCashAndCashEquivalents12 XML 19 R12.xml IDEA: Compensation Related Costs, Share Based Payments 2.4.0.8710000 - Disclosure - Compensation Related Costs, Share Based Paymentstruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_CompensationRelatedCostsShareBasedPaymentsAbstractfil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 8.35pt'>The Company adopted the provisions of FASB ASC 718-20, Stock Compensation &#150; Awards Classified as Equity, which require companies to expense the estimated fair value of employee stock options and similar awards based on the fair value of the award on the date of grant. The cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. At the Annual Meeting of Shareholders held on October 24, 2012, the shareholders approved the adoption of the <font style='background:white'>Novation Holdings, Inc. 2012 Stock Incentive Plan, and the setting aside of 4,500,000 shares of post-reverse split common stock for grants under the Plan.&nbsp; </font>There have been no grants of any stock or other equity under the Plan, or otherwise, as of May 31, 2013. </p> <p style='text-align:justify;margin:0in 0in 0pt'>On July 1, 2011, the Company issued 333,333 post-split shares of common stock valued at $2,100,000 to the Company&#146;s Chairman and CEO, with the shares originally vesting over 5 years on a proportionate basis. As of August 31, 2011, one-fifth or 66,667 shares valued at $420,000 had vested. Mr. Gelmon conveyed two thirds of the original 333,333 post-split shares to two other parties for reasons unrelated to the Company, retaining a total of 111,111 shares. The non-vested balance at August 31, 2011 of 266,667 total shares valued at $1,680,000 had been issued but were being held in escrow for release on an annual basis each July 1. During the year ended August 31, 2012, the Company revised the vesting term to 3 years and released an additional 155,556 shares valued at $980,000. The non-vested balance of 111,111 post-split shares at August 31, 2012 was one-third of the original issuance valued as of the original issue date at $700,000, of which Mr. Gelmon holds 37,037 shares to be received, with a current market value of less than $600.&nbsp; </p> <p style='text-align:justify;margin:0in 0in 0pt'>Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 false0falseCompensation Related Costs, Share Based PaymentsUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureCompensationRelatedCostsShareBasedPayments12 XML 20 R6.htm IDEA: XBRL DOCUMENT v2.4.0.8
Organization, Consolidation and Presentation of Financial Statements
9 Months Ended
May 31, 2013
Organization, Consolidation and Presentation of Financial Statements:  
Nature of Operations

On December 6, 2012, the Company completed the acquisition of Burgoyne Internet Services, LLC (“Burgoyne”), a Utah limited liability company, with an effective closing date of December 1, 2012.  Since the effect of the change of control of the limited liability company under Utah law was a legal dissolution of the old company, the acquisition has been treated as an asset acquisition by Burgoyne Internet Services, Inc., a newly formed Florida corporation and a wholly-owned subsidiary.

 

On December 6, 2012, the Company also completed the acquisition of Casita de los Ninos, LLC, a California limited liability company doing business as Immersion House (www.immersionhouse.com). The consideration for the acquisition was the issuance of one million shares of convertible preferred stock having a stated value of $100,000, carrying voting power equal to 51 percent of the total voting power of all classes of stock, a dividend preference equal to $0.01 per share, and a conversion option into shares of common stock valued at the time of conversion at 1 million dollars, based on the 5 day trailing average closing price of the stock.  If not already converted, the preferred stock converts automatically five years after issue into shares of common stock valued at the time of conversion at 2 million dollars, based on the 5 day trailing average closing price of the stock.

 

Effective January 1, 2013, the Company acquired a portion of the administrative consulting business operated by CFOs to Go, Inc. and Matriarch Management, Inc., terminated the consulting agreements between CFOs to Go, Inc. and both the Company and AEGY, and transferred the acquired assets and business to Novation Consulting Services, Inc., a newly formed Florida corporation formed by the Company for the purpose.  The acquisition was accomplished by the assumption of debt.

 

As a result of these acquisitions, the Company is now a holding and management company with operating subsidiaries engaged in administrative and financial consulting, ISP services and full immersion language training, all of which are producing revenues, and plans to expand the business and operations of each subsidiary.

Basis of Accounting

The accompanying unaudited Condensed Consolidated Financial Statements of Novation Holdings, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim period ended May 31, 2013 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim period. This includes all normal and recurring adjustments, but does not include all of the information

 

 

and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements. Financial results for the Company can be seasonal in nature. Operating results for the nine-month period ended May 31, 2013 are not necessarily indicative of the results that may be expected for the year ended August 31, 2013. For further information, refer to the Financial Statements and footnotes thereto included in the Company’s Form 10-K/A for the year ended August 31, 2012 filed with the Commission on December 17, 2012.

 

The Company has adopted an August 31 year end.

 

As a result of the recent acquisitions by the Company, management has determined that the Company is no longer a development stage company in accordance with Accounting Standards Codification (“ASC”) Topic No. 915.

Use of Estimates, Policy

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A significant estimate as of May 31, 2013 and August 31, 2012 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception.

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates.

Going Concern Note

As reflected in the accompanying consolidated financial statements, the Company has a net loss of $298,338 and net cash used in operations of $100,751 for the three months ended May 31, 2013; and negative working capital of $379,384 and an accumulated deficit of $9,564,781 at May 31, 2013.

 

The accompanying consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company is  and has suffered recurring losses and has no established source of revenue.  Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows.

 

There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding.  These factors create substantial doubt about the Company’s ability to continue as a going concern.  The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty.

 

Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence.

XML 21 R8.htm IDEA: XBRL DOCUMENT v2.4.0.8
Risks and Uncertainties
9 Months Ended
May 31, 2013
Risks and Uncertainties:  
Concentration Risk Disclosure

The Company maintains its cash in a bank deposit account in a bank which participates in the Federal Deposit Insurance Corporation (FDIC) Program. As of May 31, 2013 and August 31, 2012, the Company had no balances in excess of federally insured limits.

 

XML 22 R11.xml IDEA: Equity 2.4.0.8500000 - Disclosure - Equitytruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_EquityAbstract1fil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_StockholdersEquityNoteDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001 per share and 10 million shares of preferred stock, par value $0.001.&nbsp; </p> <p style='text-align:justify;margin:0in 0in 0pt'>. </p> <p style='text-align:justify;margin:0in 0in 0pt'>During the quarter ended May 31, 2013, the Company issued Company stock as follows:</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In March, 2013 we issued a total of 13,764,832 common shares on conversions totaling $16,886 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In April, 2013 we issued a total of 19,176,623 common shares on conversions totaling $22,845 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In May, 2013 we issued a total of 56,571,681 common shares on conversions totaling $45,304 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of the issue of these shares, we now have a total of 137,829,373 common shares and 1,000,000 preferred shares issued and outstanding as of January 18, 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. 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Equity
9 Months Ended
May 31, 2013
Equity:  
Stockholders' Equity Note Disclosure

The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001 per share and 10 million shares of preferred stock, par value $0.001. 

.

During the quarter ended May 31, 2013, the Company issued Company stock as follows:

 

In March, 2013 we issued a total of 13,764,832 common shares on conversions totaling $16,886 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.

 

In April, 2013 we issued a total of 19,176,623 common shares on conversions totaling $22,845 in principal amounts of loans and accrued interest, representing 50 percent of the low price for the shares during a three day trading period.

 

In May, 2013 we issued a total of 56,571,681 common shares on conversions totaling $45,304 in principal amounts of loans, representing 50 percent of the low price for the shares during a three day trading period.

 

As a result of the issue of these shares, we now have a total of 137,829,373 common shares and 1,000,000 preferred shares issued and outstanding as of January 18, 2013.

 

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Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of additional paid-in capital associated with common and preferred stock. For additional paid-in capital associated with only common stock, use the element additional paid in capital, common stock. 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Cash and Cash Equivalents
9 Months Ended
May 31, 2013
Cash and Cash Equivalents:  
Cash and Cash Equivalents Disclosure

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.  The Company had no cash equivalents at May 31, 2013 and August 31, 2012, respectively. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.  There were no balances that exceeded the federally insured limit at May 31, 2013 and August 31, 2012, respectively.

XML 27 R10.xml IDEA: Debt 2.4.0.8460000 - Disclosure - Debttruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_DebtAbstractfil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_ScheduleOfShortTermDebtTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>*The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 &nbsp;&nbsp;&nbsp;"Derivatives and Hedging" and determined that certain outstanding instruments should be classified as liabilities once the conversion option became effective (typically after three or six months) due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The following is a summary of notes payable at May 31, 2013 and August 31, 2012:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <table cellspacing="0" cellpadding="0" width="673" border="0" style='border-collapse:collapse;margin:auto auto auto 4.65pt;width:504.75pt'> <tr style='height:3.85pt'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Description</p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>May 31, 2013</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(Unaudited)</p></td> <td valign="bottom" width="15" colspan="4" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.1pt;background-color:transparent'></td> <td valign="bottom" width="115" colspan="9" style='border-top:#f0f0f0;height:3.85pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:86pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>August 31, 2012</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(Audited)</p></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:13.9pt'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.* </p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="114" colspan="7" style='border-top:#f0f0f0;height:13.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:85.3pt;background-color:transparent'></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:1.4in'> <td valign="bottom" width="401" colspan="5" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:300.65pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $200 and $0, respectively. </p></td> <td valign="bottom" width="126" colspan="5" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="114" colspan="7" style='border-top:#f0f0f0;height:1.4in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:85.3pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>37,500</p></td> <td width="17" colspan="3" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:21.15pt'> <td valign="bottom" width="389" colspan="2" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:291.65pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="138" colspan="7" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.5pt;background-color:transparent'></td> <td width="26" colspan="5" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:108.9pt'> <td valign="bottom" width="389" colspan="2" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:291.65pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="138" colspan="7" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>35,000 </p></td> <td width="26" colspan="5" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:14.85pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:14.85pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:123.75pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $0 and $8,288, respectively. The note was fully converted as of May 31, 2013. </p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:123.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,712 </p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:0.3in'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:0.3in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:120.6pt'> <td valign="bottom" width="394" colspan="3" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:295.35pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On September 1, 2012, the Company issued its promissory note in the amount of $42,500 to an unrelated third party for additional working capital. The note is due on June 7, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013. </p></td> <td valign="bottom" width="139" colspan="8" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:12.2pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:120.6pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:21.15pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="138" colspan="8" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="4" style='border-top:#f0f0f0;height:21.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.75pt;background-color:transparent'></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:107.1pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on July 5, 2013 and carries interest at 8 percent per annum, payable at maturity. The note &nbsp;is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $18,910 and $0, respectively. The Company converted $7,100 into shares.</p></td> <td valign="bottom" width="138" colspan="8" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.2pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,490</p></td> <td valign="bottom" width="16" colspan="6" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.8pt;background-color:transparent'></td> <td valign="bottom" width="105" colspan="4" style='border-top:#f0f0f0;height:107.1pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:78.75pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="18" colspan="4" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:24.3pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:24.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:96.75pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On December 18, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital. The note is due on September 14, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>53,000 </p></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:27.45pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>Common Stock LLC *</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:27.45pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:96.75pt'> <td valign="bottom" width="402" colspan="6" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:301.45pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="139" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:104.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="16" colspan="7" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:11.95pt;background-color:transparent'></td> <td valign="bottom" width="106" colspan="5" style='border-top:#f0f0f0;height:96.75pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:79.45pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,507</p></td> <td width="10" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Common Stock LLC *</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:116.55pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully converted as of May 31, 2013.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>20,000</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Common Stock LLC</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:17.95pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>On May 2, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carries interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $5,600 and $0, respectively. The Company converted $5,236 into shares.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9,164</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:17.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>20,000</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:0.25in'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Panache Group *</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:0.25in;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:99pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carries interest at 10 percent per annum, payable at maturity. The note was immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $1,112 and $0, respectively. $40,320 had been converted to common stock as of May 31, 2013. </p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:99pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>6,100</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:12.15pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Asher Enterprises, Inc.*</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:12.15pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:108.9pt'> <td valign="bottom" width="379" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:284.25pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On April 23, 2012, the Company issued its promissory note in the amount of $27,500 to an unrelated third party for additional working capital. The note is due on January 8, 2014 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of May 31, 2013.</p></td> <td valign="bottom" width="132" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>27,500</p></td> <td valign="bottom" width="30" colspan="6" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.7pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="11" style='border-top:#f0f0f0;height:108.9pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td width="12" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:16.65pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>JMJ Financial *</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in -9.9pt 0pt 0in'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:16.65pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $1,004 unamortized portion remains at May 31, 2013. </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>7,248</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:16.65pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>50,500</p></td></tr> <tr style='height:116.55pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>JMJ Financial *</p> <p style='text-align:justify;margin:0in 0in 0pt'>On October 3, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on October 3, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $2,047 unamortized portion remains at May 31, 2013. </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>38,297</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:116.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>- </p></td></tr> <tr style='height:29.2pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>ISP Holdings, Inc.</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:29.2pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr style='height:67.95pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='text-align:justify;margin:0in 0in 0pt'>On December 6, 2012, the Company issued its promissory note in the amount of $280,000 to an unrelated third party for additional working capital. The note is due on May 31, 2014. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.03. The Note was issued at a discount of $15,000, of which $8,571 unamortized portion remains at May 31, 2013.</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>263,219</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:67.95pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Total notes payable </p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>404,918</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>181,319</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Current portion</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>141,699</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>181,319</p></td></tr> <tr style='height:10.3pt'> <td valign="bottom" width="397" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:297.75pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Notes payable-Long-term portion</p></td> <td valign="bottom" width="126" colspan="4" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:94.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 263,219</p></td> <td valign="bottom" width="30" colspan="11" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:22.5pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="120" colspan="7" style='border-top:#f0f0f0;height:10.3pt;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:1.25in;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp; </p></td></tr></table>falsefalsefalsenonnum:textBlockItemTypenaTabular disclosure of short-term debt arrangements (having initial terms of repayment within one year or the normal operating cycle, if longer) including: (1) description of the short-term debt arrangement; 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CONSOLIDATED STATEMENT OF OPERATIONS (USD $)
3 Months Ended 9 Months Ended 15 Months Ended
May 31, 2013
May 31, 2012
May 31, 2013
May 31, 2012
May 31, 2013
May 31, 2012
Net Income (Loss)            
Revenues     $ 147,744 $ 0 $ 77,201 $ 0
Cost of Goods Sold     46,168 0 15,271 0
Gross Profit     101,576 0 61,930 0
General & Administrative            
Payroll and payroll taxes     90,000 2,940,566 30,000 304,226
Professional fees     317,111 992,228 98,459 123,100
General and administrative     78,843 118,638 15,759 31,331
Rent     14,919 0 3,190 0
Total Expenses     500,873 4,051,432 147,409 458,657
Loss from operations     (399,298) (4,051,432) (85,479) (458,657)
Other income (expense)            
Finance cost     (19,581) 520,493 (9,623) 520,494
Interest, net     (192,572) (346,315) (33,196) (8,995)
Other     283,112 0 102,784 0
Income (loss) before income taxes     (328,338) (3,877,254) (25,514) 52,842
Income taxes     0 0 0 0
Net income (loss) $ (328,338) $ (3,877,254) $ (328,338) $ (3,877,254) $ (25,514) $ 52,842
Earnings Per Share:            
Net loss per common share (basic and diluted)     $ 0.00 $ (0.43) $ 0.00 $ 0.00
Weighted average number of common shares outstanding            
Weighted average number of shares outstanding during the period - basic and diluted 69,517,749 9,034,747 69,517,749 9,034,747 69,517,749 9,034,747
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Earnings Per Share
9 Months Ended
May 31, 2013
Earnings Per Share: {1}  
Earnings Per Share

In accordance with Financial Accounting Standards Board “FASB” Accounting Standards Codification “ASC” Topic 260, “Earnings per Share,”  basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The computation of basic and diluted loss per share for the period from September 24, 1998 (inception) to May 31, 2013, is equivalent since the Company has had continuing losses. The Company also has no common stock equivalents.  The calculation of earnings per share has been done by applying the 1 for 15 reverse split of common stock, effective November 7, 2012, retroactively to September 24, 1998, the date of inception.

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CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)
May 31, 2013
Aug. 31, 2012
Stockholders' Equity:    
Common stock, par value $ 0.001 $ 0.001
Common shares authorized 500,000,000 500,000,000
Common shares issued 137,829,373 30,094,500
Common shares outstanding 137,829,373 30,094,500
Preferred stock, par value $ 0.001 $ 0.000
Preferred shares authorized 5,000,000 0
Preferred shares issued 1,000,000 0
Preferred shares outstanding 33,117,128 30,094,500
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CONSOLIDATED BALANCE SHEETS (USD $)
May 31, 2013
Aug. 31, 2012
Current Assets    
Cash $ 5,744 $ 1,245
Prepaid expenses 2,678 1,000
Accounts receivable 62,787 0
Deferred loan costs 12,233 [1] 4,811
Total Current Assets 83,442 7,056
Property, plant, and equipment 1,581 [2] 1,899
Loans receivable, net 500,000 48,000
Acquisitions 1,067,690 0
Advances to related parties 250 42,500
Total Noncurrent Assets 1,569,521 92,399
Total Assets 1,652,963 99,455
Current Liabilities    
Accounts payable and accrued liabilities 195,379 18,590
Notes payable-current 141,699 [3] 181,319
Prepaid services 712 0
Customer deposits 86,378 0
Accrued interest 28,293 13,428
Derivative liability 40,365 30,815
Total Current Liabilities 492,826 244,152
Non-current Liabilities    
Notes Payable 752,908 [4] 0
Total Liabilities 1,245,734 244,152
Stockholder's Equity (Deficit)    
Common Stock 137,829 [5] 30,094
Preferred Stock 1,000 [6] 0
Additional paid in capital 9,863,181 9,091,652
Deficit accumulated during the development stage (9,594,781) (9,266,443)
Total Stockholders' Equity (Deficit) 407,229 (144,697)
Total Liabilities and Stockholders' Equity (Deficit) $ 1,652,963 $ 99,455
[1] Net of accumulated amortization of $33,767 and $15,689
[2] Net of accumulated depreciation of $539 and $221
[3] Net of debt discount of $55,828 and $25,861
[4] Net of debt discount of $8,571 and $0
[5] $0.001 par value, 500,000,000 shares authorized, 137,829,373 and 30,094,500 shares issued and outstanding
[6] $0.001 par value, 1,000,000 shares authorized, 1,000,000 and 0 shares issued and outstanding
XML 36 R7.xml IDEA: Accounting Changes and Error Corrections 2.4.0.8250000 - Disclosure - Accounting Changes and Error Correctionstruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_AccountingChangesAndErrorCorrectionsAbstract1fil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_NewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>In September 2011, the FASB issued an amendment to Topic 350, Intangibles&#151;Goodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The Company is currently evaluating whether early adoption is necessary.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company&#146;s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company&#146;s financials properly reflect the change. </p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 01 -Paragraph b -Subparagraph 6 -Article 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 270 -SubTopic 10 -Section 45 -Paragraph 13 -URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e765-108305 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 270 -SubTopic 10 -Section 45 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6372559&loc=d3e725-108305 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22499-107794 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22580-107794 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Direct Effects of a Change in Accounting Principle -URI http://asc.fasb.org/extlink&oid=6510796 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Indirect Effects of a Change in Accounting Principle -URI http://asc.fasb.org/extlink&oid=6515603 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Accounting Change -URI http://asc.fasb.org/extlink&oid=6503790 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Change in Accounting Principle -URI http://asc.fasb.org/extlink&oid=6507316 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 270 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.10-01.(b)(6)) -URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Retrospective Application -URI http://asc.fasb.org/extlink&oid=6523989 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=28359718&loc=d3e22583-107794 false0falseAccounting Changes and Error CorrectionsUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureAccountingChangesAndErrorCorrections12 XML 37 R17.xml IDEA: Related Party Disclosures 2.4.0.8845000 - Disclosure - Related Party Disclosurestruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_RelatedPartyDisclosuresAbstractfil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_RelatedPartyTransactionsDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='background:white;text-align:justify;margin:0in 0in 0pt'>Michael Gelmon, who serves the Company as CEO, is paid as a consultant to the Company at the rate of $10,000 per month, commencing July 1, 2012.&nbsp; Mr. Gelmon is a Canadian citizen and resident.&nbsp; </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph b -Article 3A Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 false0falseRelated Party DisclosuresUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureRelatedPartyDisclosures12 XML 38 R16.xml IDEA: Fair Value Measures and Disclosures 2.4.0.8815000 - Disclosure - Fair Value Measures and Disclosurestruefalsefalse1false falsefalseD120901_130531http://www.sec.gov/CIK0001080602duration2012-09-01T00:00:002013-05-31T00:00:001true 1fil_FairValueMeasuresAndDisclosuresAbstractfil_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_FairValueDisclosuresTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='margin:0in 0in 0pt'>All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The carrying amounts of the Company&#146;s other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Company does not utilize financial derivatives or other contracts to manage commodity price risks. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. 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Income Taxes
9 Months Ended
May 31, 2013
Income Taxes:  
Income Tax Disclosure

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Management has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, management believes that no accruals for tax liabilities are necessary. Therefore, no reserves for uncertain income tax positions have been recorded.

Summary of Deferred Tax Liability Not Recognized

The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

 

The following is a schedule of deferred tax assets as of May 31, 2013, and August 31, 2012:

 

 

 

May 31, 2013

 

August 31, 2012

Net operating loss

 

 $             9,564,781

 

 $                  9,266,443

Future tax benefit at 34%                     

 

3,252,026

 

3,150,591

Less: Valuation allowance

 

   (3,252,026)

 

(3,150,591)

Net deferred tax asset

 

 $                           --

 

 $                               --

 

The valuation allowance changed by approximately $101,435 during the three months ended May 31, 2013.

 

Under Sections 382 and 269 (the ‘shell corporation’ rule) of the Internal Revenue Code, following an “ownership change,” special limitations (“Section 382 Limitations”) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the ‘Applicable Tax Attributes’). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at May 31, 2013.

 

The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through May 31, 2013. The Company’s continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense.

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Fair Value Measures and Disclosures
9 Months Ended
May 31, 2013
Fair Value Measures and Disclosures:  
Fair Value Disclosures

All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.

 

The carrying amounts of the Company’s other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The

 

Company does not utilize financial derivatives or other contracts to manage commodity price risks. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

 

The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

 

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

 

Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

 

Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

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Compensation Related Costs, Share Based Payments
9 Months Ended
May 31, 2013
Compensation Related Costs, Share Based Payments:  
Disclosure of Compensation Related Costs, Share-based Payments

The Company adopted the provisions of FASB ASC 718-20, Stock Compensation – Awards Classified as Equity, which require companies to expense the estimated fair value of employee stock options and similar awards based on the fair value of the award on the date of grant. The cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. At the Annual Meeting of Shareholders held on October 24, 2012, the shareholders approved the adoption of the Novation Holdings, Inc. 2012 Stock Incentive Plan, and the setting aside of 4,500,000 shares of post-reverse split common stock for grants under the Plan.  There have been no grants of any stock or other equity under the Plan, or otherwise, as of May 31, 2013.

On July 1, 2011, the Company issued 333,333 post-split shares of common stock valued at $2,100,000 to the Company’s Chairman and CEO, with the shares originally vesting over 5 years on a proportionate basis. As of August 31, 2011, one-fifth or 66,667 shares valued at $420,000 had vested. Mr. Gelmon conveyed two thirds of the original 333,333 post-split shares to two other parties for reasons unrelated to the Company, retaining a total of 111,111 shares. The non-vested balance at August 31, 2011 of 266,667 total shares valued at $1,680,000 had been issued but were being held in escrow for release on an annual basis each July 1. During the year ended August 31, 2012, the Company revised the vesting term to 3 years and released an additional 155,556 shares valued at $980,000. The non-vested balance of 111,111 post-split shares at August 31, 2012 was one-third of the original issuance valued as of the original issue date at $700,000, of which Mr. Gelmon holds 37,037 shares to be received, with a current market value of less than $600. 

Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.

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Accounting Changes and Error Corrections
9 Months Ended
May 31, 2013
Accounting Changes and Error Corrections:  
New Accounting Pronouncements and Changes in Accounting Principles

 

In September 2011, the FASB issued an amendment to Topic 350, Intangibles—Goodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The Company is currently evaluating whether early adoption is necessary.

 

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change.

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Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Management has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, management believes that no accruals for tax liabilities are necessary. Therefore, no reserves for uncertain income tax positions have been recorded.</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 false03false 3us-gaap_SummaryOfDeferredTaxLiabilityNotRecognizedTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The following is a schedule of deferred tax assets as of May 31, 2013, and August 31, 2012:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <table cellspacing="0" cellpadding="0" border="0" style='border-collapse:collapse;margin:auto auto auto 41.4pt'> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>May 31, 2013</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>August 31, 2012</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Net operating loss </p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9,564,781</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <div style='border-top:windowtext 1pt solid;border-right:medium none;border-bottom:windowtext 1pt solid;padding-bottom:1pt;padding-top:1pt;padding-left:0in;border-left:medium none;padding-right:0in'> <p align="right" style='border-top:medium none;border-right:medium none;border-bottom:medium none;padding-bottom:0in;text-align:right;padding-top:0in;padding-left:0in;margin:0in 0in 0pt;border-left:medium none;padding-right:0in'>&nbsp;$&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,266,443</p></div></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Future tax benefit at 34%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,252,026</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,150,591</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Less: Valuation allowance</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;&nbsp; (3,252,026)</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(3,150,591)</p></td></tr> <tr> <td valign="top" width="204" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:153pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>Net deferred tax asset</p></td> <td valign="top" width="60" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:45pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="132" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:99pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</p></td> <td valign="top" width="36" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:27pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:5.4pt;border-left:#f0f0f0;padding-right:5.4pt;width:103.5pt;background-color:transparent'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; --</p></td></tr></table> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The valuation allowance changed by approximately $101,435 during the three months ended May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>Under Sections 382 and 269 (the &#145;shell corporation&#146; rule) of the Internal Revenue Code, following an &#147;ownership change,&#148; special limitations (&#147;Section 382 Limitations&#148;) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the &#145;Applicable Tax Attributes&#146;). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at May 31, 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Company&#146;s expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through May 31, 2013. The Company&#146;s continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense.</p>falsefalsefalsenonnum:textBlockItemTypenaTabular disclosure of deferred tax liabilities not recognized because of the exceptions to comprehensive recognition of deferred taxes, including a description of the temporary differences, events that would cause the temporary differences to become taxable, the cumulative amounts of the temporary differences and the amounts not recognized as deferred tax liabilities or a statement that the determination of the deferred tax liabilities is not practicable.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 740 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6487024&loc=d3e29054-158556 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 25 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=29652012&loc=d3e28200-109314 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 false0falseIncome TaxesUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://NOHO/20130531/role/idr_DisclosureIncomeTaxes13 XML 47 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Derivative Instruments and Hedging Activities
9 Months Ended
May 31, 2013
Derivative Instruments and Hedging Activities:  
Derivative Instruments and Hedging Activities Disclosure

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the condensed consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.

 

If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

 

Derivative Instruments, Gain (Loss)

The Company has various convertible instruments outstanding more fully described in Note 7. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments.

As a result, under ASC 815-15 “Derivatives and Hedging”, all other share-settleable instruments must be classified as liabilities.

 

Embedded Derivative Liabilities in Convertible Notes

 

During the three months ended May 31, 2013, the Company recognized new derivative liabilities of $127,556 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $16,661, and was recorded as a loss on derivatives for the three months ended May 31, 2013.

 

As a result of conversion of notes payable described in Note 7, the Company reclassified $217,765 of derivative liabilities to equity and the change in fair value of derivatives was $16,661.

 

As of May 31, 2013, the fair value of the Company’s derivative liabilities was $40,365 during the three months ended May 31, 2013.

 

The following table summarizes the derivative liabilities included in the condensed consolidated balance sheet:

 

  

Fair Value

Measurements Using Significant

Unobservable

Inputs (Level 3)

Derivative Liabilities:

  

 

 

Balance at August 31, 2012

  

$

30,815

ASC 815-15 additions

  

 

346,493

Change in fair value

  

 

28,784

ASC 815-15 deletions

  

 

(365,727)

Balance at May 31, 2013

  

40,365

 

 

The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:

 

 

  

Included in Other Income (Expense) on Condensed consolidated Statement of Operations

Gain/(Loss) on Derivative Liability:

  

 

 

Change in fair value of derivatives

  

$

(16,661)

Derivative expense

  

 

 (52,556)

Balance for the three months ended May 31, 2013

  

 (69,217)

 

The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions:

 

  

Convertible Debt Instruments

Risk-free rate

  

 

0.21% - 0.30% 

Expected volatility

  

 

100% - 300%

Expected life

  

 

 9 months – 12 months

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http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 false03false 3us-gaap_ScheduleOfDerivativeInstrumentsGainLossInStatementOfFinancialPerformanceTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<!--egx--><p style='text-align:justify;margin:0in 0in 0pt'>The Company has various convertible instruments outstanding more fully described in Note 7. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments. </p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result, under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;, all other share-settleable instruments must be classified as liabilities. </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><b>Embedded Derivative Liabilities in Convertible Notes </b></p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>During the three months ended May 31, 2013, the Company recognized new derivative liabilities of $127,556 as a result of convertible debt issuances having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $16,661, and was recorded as a loss on derivatives for the three months ended May 31, 2013. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As a result of conversion of notes payable described in Note 7, the Company reclassified $217,765 of derivative liabilities to equity and the change in fair value of derivatives was $16,661. </p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='text-align:justify;margin:0in 0in 0pt'>As of May 31, 2013, the fair value of the Company&#146;s derivative liabilities was $40,365 during the three months ended May 31, 2013.</p> <p style='text-align:justify;margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes the derivative liabilities included in the condensed consolidated balance sheet: </p> <div align="center"> <table cellspacing="0" cellpadding="0" width="606" border="0" style='border-collapse:collapse'> <tr style='height:53.55pt'> <td valign="bottom" width="283" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="204" colspan="2" style='border-top:#f0f0f0;height:53.55pt;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:153pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Fair Value</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Measurements Using&nbsp;Significant</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Unobservable</b></p> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Inputs (Level 3)</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'><b>Derivative Liabilities:</b></p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance at August 31, 2012</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>30,815</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>ASC 815-15 additions</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>346,493</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Change in fair value</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>28,784</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>ASC 815-15 deletions </p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:windowtext 1pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(365,727)</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance at May 31, 2013</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$&nbsp;</p></td> <td valign="bottom" width="180" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:135pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>40,365</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table cellspacing="0" cellpadding="0" width="564" border="0" style='border-collapse:collapse'> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="162" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:121.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Included in Other Income (Expense) on Condensed consolidated Statement of Operations</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'><b>Gain/(Loss) on Derivative Liability:</b></p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Change in fair value of derivatives</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(16,661)</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Derivative expense</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;(52,556)</p></td></tr> <tr style='height:3.5pt'> <td valign="bottom" width="283" style='border-top:#f0f0f0;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Balance for the three months ended May 31, 2013</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:windowtext 1pt solid;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>$&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:windowtext 1pt solid;height:3.5pt;border-right:#f0f0f0;background:white;border-bottom:windowtext 1.5pt double;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;(69,217)</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions:</p> <div align="center"> <table cellspacing="0" cellpadding="0" width="564" border="0" style='border-collapse:collapse'> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt;background-color:transparent'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="162" colspan="2" style='border-top:#f0f0f0;border-right:#f0f0f0;border-bottom:black 1.5pt solid;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:121.5pt;background-color:transparent'> <p align="center" style='text-align:center;margin:0in 0in 0pt'><b>Convertible Debt Instruments</b></p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Risk-free rate</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>0.21% - 0.30%&nbsp;</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Expected volatility</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:white;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>100% - 300%</p></td></tr> <tr> <td valign="bottom" width="283" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:212.1pt'> <p style='margin:0in 0in 0pt'>Expected life</p></td> <td valign="bottom" width="119" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:89.4pt'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;</p></td> <td valign="bottom" width="24" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:0.25in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="138" style='border-top:#f0f0f0;border-right:#f0f0f0;background:#cceeff;border-bottom:#f0f0f0;padding-bottom:0in;padding-top:0in;padding-left:0in;border-left:#f0f0f0;padding-right:0in;width:103.5pt'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>&nbsp;9 months &#150; 12 months</p></td></tr></table></div>falsefalsefalsenonnum:textBlockItemTypenaTabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name 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Document and Entity Information
9 Months Ended
May 31, 2013
Document and Entity Information:  
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Document Fiscal Period Focus Q3
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