10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2013

¨  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 000-53446

INFINITY AUGMENTED REALITY, INC.

(Exact name of registrant as specified in its charter)

Nevada	71-1013330
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
45 Broadway New York, New York	10006
(Address of principal executive offices)	(Zip Code)

(212) 201-4070

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

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 past 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.

Yesx. 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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yesx. 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," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨. (Do not check if a smaller reporting company)	Smaller reporting company	x

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

Yes¨. Nox

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 92,529,291 shares of common stock as of July 14, 2013.

INFINITY AUGMENTED REALITY, INC.

(formerly known as ABSOLUTE LIFE SOLUTIONS, INC.)

(A Development Stage Company)

Quarterly Report On Form 10-Q

For The Quarterly Period Ended

May 31, 2013

INDEX

			Page
PART I - FINANCIAL INFORMATION
	Item 1.	Condensed Financial Statements	3
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
	Item 4.	Controls and Procedures	18
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings	18
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3.	Defaults Upon Senior Securities	19
	Item 4.	Mine Safety Disclosures	19
	Item 5.	Other Information	19
	Item 6.	Exhibits	19

2

Item 1. Financial Statements

The following unaudited interim financial statements of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc. and its Subsidiary) (sometimes referred to as "we", "us" or "our Company") are included in this quarterly report on Form 10-Q:

	Page
Condensed Balance Sheets at May 31, 2013 (unaudited) and August 31, 2012	4
Condensed Statements of Operations for the three months and nine months ended May 31, 2013 and 2012 and the period from November 15, 2012 to May 31, 2013 (unaudited)	5
Condensed Statements of Cash Flows for the nine months ended May 31, 2013 and 2012 and the period from November 15, 2012 to May 31, 2013 (unaudited)	6
Notes to Condensed Financial Statements	7

3

INFINITY AUGMENTED REALITY, INC.

(formerly known as ABSOLUTE LIFE SOLUTIONS, INC.AND ITS SUBSIDIARY)

(A Development Stage Company)

CONDENSED BALANCE SHEETS

	May 31, 2013 (unaudited)			August 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	320,740		$	4,885
Prepaid expenses		4,582			15,192
Current assets of discontinued operations		-			4,562,177
Total current assets		325,322			4,582,254
Equipment, net		48,164			66,129
Security deposit		56,688			56,688
Noncurrent assets of discontinued operations		145,781			64,667,124
TOTAL ASSETS	$	575,955		$	69,372,195
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses	$	339,313		$	441,297
Interest payable		417			-
Current liabilities of discontinued operations		775,000			60,076,710
Total current liabilities		1,114,730			60,518,007
Deferred rent		69,312			49,335
Convertible debentures, net of debt discount		73,575			-
Long-term liabilities of discontinued operations		-			4,243,044
TOTAL LIABILITIES		1,257,617			64,810,386
STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock ($0.00001 par value; 100,000,000 authorized;
of which 60,000 are designated as Series A 12.5% convertible preferred stock;  No Series A issued and outstanding ( August 31, 2012 – No Series A issued and outstanding)		-			-
of which 25,000 are designated as Series B 12.5% convertible preferred stock;  No Series B issued and outstanding ( August 31, 2012 – No Series B issued and outstanding)		-			-
Common stock ($0.00001 par value; 500,000,000 authorized; 92,784,759 issued and 92,429,291 outstanding) ( August 31, 2012 – 92,544,747 issued and 92,229,599 outstanding)		928			925
Additional paid in capital		56,725,262			51,486,890
Treasury stock, at cost (355,468 shares of common stock) ( August 31, 2012 – 315,148 shares of common stock)		(49,766	)		(44,121	)
Accumulated deficit		(57,358,086	)		(46,881,885	)
Total Stockholders' (Deficit) Equity		(681,662	)		4,561,809
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$	575,955		$	69,372,195

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

4

INFINITY AUGMENTED REALITY, INC.

(formerly known as ABSOLUTE LIFE SOLUTIONS, INC. AND ITS SUBSIDIARY)

(A Development Stage Company)

CONDENSED STATEMENTS OF OPERATIONS

UNAUDITED

	Three months ended May 31, 2013			Three months ended May 31, 2012			Nine months ended May 31, 2013			Nine months ended May 31, 2012			From November 15, 2012 to May 31, 2013
Sales, general and administrative expenses	$	(5,075,010	)	$	-		$	(5,957,683	)	$	-		$	(5,778,404	)
Other income (expense)
Interest income (expense)		(9,426	)		-			(9,426	)		-			(9,426	)
Loss from continuing operations before income tax		(5,084,436	)		-			(5,967,109	)		-			(5,787,830	)
Income tax provision		-			-			(190,652	)		-			(78,637	)
Loss from continuing operations		(5,084,436	)		-			(6,157,761	)		-			(5,866,467	)
Loss from discontinued operations (including loss on disposal of life settlement contracts of $0 and $8,438,584 for the three months and nine months ended May 31, 2013, respectively), net of tax		-			(14,494,223	)		(4,318,440	)		(20,468,899	)		-
Net loss		(5,084,436	)		(14,494,223	)		(10,476,201	)		(20,468,899	)		(5,866,467	)
Deemed dividend on issuance of Series A and Series B Preferred Stock		-			-			-			(932,643	)		-
Dividend on Convertible Preferred Stock		-			-			-			(3,233,104	)		-
Net loss applicable to common shareholders	$	(5,084,436	)	$	(14,494,223	)	$	(10,476,201	)	$	(24,634,646	)	$	(5,866,467	)
Basic and diluted loss per common share
Continuing operations	$	(0.05	)	$	-		$	(0.06	)	$	-
Discontinued operations		-			(0.15	)		(0.04	)		(0.26	)
Net loss per common share	$	(0.05	)	$	(0.15	)	$	(0.10	)	$	(0.26	)
Basic weighted average shares outstanding		98,225,803			94,625,690			98,380,260			93,188,703
Diluted weighted average shares outstanding		98,225,803			94,625,690			98,380,260			93,188,703

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

5

INFINITY AUGMENTED REALITY, INC.

(formerly known as ABSOLUTE LIFE SOLUTIONS, INC. AND ITS SUBSIDIARY)

(A Development Stage Company)

CONDENSED STATEMENTS OF CASH FLOWS

UNAUDITED

	Nine months ended May 31, 2013			Nine months ended May 31, 2012			From November 15, 2012 to May 31, 2013
OPERATING ACTIVITIES
Net loss	$	(10,476,201	)	$	(20,468,899	)	$	(5,866,467	)
Loss from discontinued operations		4,318,440			20,468,899			-
Adjustments to reconcile net loss to net cash (used in) provided by operations
Amortization of debt discount		6,466			-			6,466
Stock-based compensation		4,477,941			-			4,477,941
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders		(5,645	)		-			(5,645	)
Payment-in-kind interest on shareholder loan		2,543			-			2,543
Depreciation		17,965			17,965			12,975
Deferred rent		19,977			5,781			5,674
Deferred income taxes		190,652			-			78,637
Changes in operating assets and liabilities
Prepaid expenses		10,610			27,321			13,960
Accounts payable and accrued expenses		(101,984	)		150,680			(12,556	)
Interest payable		417			-			417
Net cash (used in) provided by operating activities- continuing operations		(1,538,819	)		201,747			(1,286,055	)
Net cash (used in) provided by operating activities- discontinued operations		(6,655,209	)		(7,447,926	)		5,858,675
Net cash (used in) provided by operating activities		(8,194,028	)		(7,246,179	)		4,572,620
INVESTING ACTIVITIES
Net cash provided by investing activities- continuing operations		-			-			-
Net cash provided by investing activities- discontinued operations		9,756,718			1,482,412			-
Net cash provided by investing activities		9,756,718			1,482,412			-
FINANCING ACTIVITIES
Proceeds from convertible debentures		625,000			-			625,000
Proceeds from shareholder loan		200,000			-			200,000
Net cash provided by financing activities- continuing operations		825,000			-			825,000
Net cash (used in) provided by financing activities- discontinued operations		(2,300,000	)		4,600,000			(5,135,000	)
Net cash (used in) provided by financing activities		(1,475,000	)		4,600,000			(4,310,000	)
Change in cash and cash equivalents		87,690			(1,163,767	)		262,620
Cash and cash equivalents, beginning		233,050			1,917,896			58,120
Cash and cash equivalents, ending		320,740			754,129			320,740
Less cash and cash equivalents of discontinued operations, ending		-			754,129			-
Cash and cash equivalents of continuing operations, ending	$	320,740		$	-		$	320,740
Non-cash financing activities:
Conversion of shareholder loan into convertible debentures	$	202,543		$	-		$	202,543
Warrants issued in connection with convertible debentures	$	317,380		$	-		$	317,380
Fair value of conversion option	$	443,054		$	-		$	443,054

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

6

INFINITY AUGMENTED REALITY, INC.

(formerly known as ABSOLUTE LIFE SOLUTIONS INC. AND ITS SUBSIDIARY)

(A Development Stage Company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

May 31, 2013

1. NATURE AND CONTINUANCE OF OPERATIONS

Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.) (the “Company” or “IAR” or “Infinity”) was originally incorporated as Shimmer Gold, Inc. in the State of Nevada on September 7, 2006 and was in the business of the acquisition and exploration of mineral resources.

On May 21, 2010, the Company changed its name from Shimmer Gold, Inc. to Absolute Life Solutions, Inc. During the fiscal year ended August 31, 2010, the Company commenced operations as a specialty financial services company engaged in the business of purchasing life settlement contracts for long-term investment purposes.

Effective November 15, 2012, the Company is no longer engaged in its prior primary activity as a specialty financial services company primarily engaged in the purchase of life settlement contracts. As a result of the foregoing, the Company is currently classified as a development stage company. All of the operations related to the Company’s life settlements business are reported as discontinued operations in the condensed financial statements. As discussed in Note 3, the prior period operations related to this business have also been reclassified as discontinued operations retrospectively for all periods presented.

During the year ended August 31, 2012, the Company formed a wholly-owned subsidiary Infinity Augmented Reality, LLC (“IAR Subsidiary”) and commenced activities to enable it to be actively engaged in the development of software applications which will utilize augmented reality. Effective March 7, 2013, the Company changed its name from Absolute Life Solutions, Inc. to Infinity Augmented Reality, Inc. On that same date, the IAR Subsidiary was merged into the Company. The Company is actively engaged in the development of software applications which will utilize augmented reality. The Company intends to develop a comprehensive augmented reality platform for consumers. The Company’s objective is to establish itself firmly as a preeminent source for state-of-the-art augmented reality experiences, forging a strong association, early on, between the Infinity brand and the burgeoning medium.

The continued existence of the Company is dependent upon its ability to generate profit from its augmented reality business and to meet its obligations as they come due. If additional cash is needed, the Company intends to finance the future capital required for continued operations from a combination of debt and equity markets. However, there is no assurance that (a) traditional debt and equity markets may be accessible as required, or if so, on acceptable terms and, or (b) the demand for and selling prices of the Company’s augmented reality software applications, may not be sufficient to meet cash flow requirements. The outcome of these matters cannot be predicted with certainty and therefore the Company may not be able to continue or expand operations as planned. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements as of May 31, 2013 and 2012 and for the three months and nine months then ended and for the period from November 15, 2012 to May 31, 2013 have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited financial statements. The unaudited Balance Sheet as of May 31, 2013, Statements of Operations for the three months and nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, and Statements of Cash Flows for the nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The results for the three months and nine months ended May 31, 2013 and for the period from November 15, 2012 to May 31, 2013 are not necessarily indicative of results to be expected for the year ending August 31, 2013 or for any future interim period. In addition, the balance sheet data at August 31, 2012 was derived from the audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on January 3, 2013.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the value of warrants and options and deferred income tax amounts and rates and timing of the reversal of income tax differences.

7

Development Stage Company

Effective November 15, 2012, the Company is considered a development stage company, having no operating revenues during the period from November 15, 2012 (“Inception”) to May 31, 2013, as defined by ASC 915-205, Development-Stage Entities. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows upon entering the development stage through the date that revenues are generated. From November 15, 2012 through May 31, 2013, all operating expenses of the Company related to its augmented reality business and is included in the Condensed Statements of Operations. The Company had operating expenses of $179,279 and $143,753 respectively for the period from September 1, 2012 to November 15, 2012 and the period from June 1, 2012 to August 31, 2012 respectively, relating to its augmented reality business.

Cash and Cash Equivalents

The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

Reclassifications

During the nine months ended May 31, 2013, the Company disposed of all its life settlement contracts. As of May 31, 2013, all of the operations related to the life settlement business, as well as any resulting gain or loss recognized from the disposal, have been reported as discontinued operations in the condensed financial statements. The Company has also reported the prior period operations related to this business as discontinued operations retrospectively for all periods presented. Additionally, the assets and liabilities related to the life settlements business have been classified as discontinued operations in the balance sheets for all periods presented. See Note 3 - Discontinued Operations for more information.

Financial Instruments

The fair value of certain of the Company's financial instruments, consisting of cash, accounts payable and accrued expenses are estimated to be equal to their carrying value due to the short-term nature of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency and credit risks arising from these financial instruments.

Deferred Rent Liability

The Company’s operating lease provides for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.

Software Development Costs

The Company applies the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until the Company has produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. The Company has expensed all software development costs when incurred since none of the Company’s products have reached technological feasibility.

Income Taxes

Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

8

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense.

Earnings (Loss) per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period. Included in basic loss per share calculations are the effects of 6,000,000 warrants exercisable at $.01. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method. For the three months and nine months ended May 31, 2013, 30,450,344 shares of common stock, comprised of 3,310,172 convertible debentures with a conversion price of $0.25, 3,310,172 warrants with an exercise price of $0.50, and 23,830,000 options, convertible into 23,830,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. For the three months and nine months ended May 31, 2012, 27,700,000 and 28,142,500 warrants with an exercise price of $2.00 and $4.00 respectively, and 55,400 Series A and Series B preferred shares, convertible into 55,400,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive.

Stock-Based Compensation

The Company records stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation. The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Recent Accounting Pronouncements

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the condensed financial statements of the Company.

3. DISCONTINUED OPERATIONS

Effective November 15, 2012, the Company reached an agreement with the agent of the Lenders regarding the satisfaction of the outstanding balance of the Loans, under the terms of a Loan Satisfaction Agreement. Such agreement resulted in the disposition of all of the life settlement contracts that were held by the Company to the Lender or an affiliate of the Lender. All of the operations related to the Company’s life settlements business are reported as discontinued operations in the condensed financial statements. The prior period operations related to this business have also been reported as discontinued operations retrospectively for all periods presented. The assets and liabilities related to the Company’s life settlements business are reported as assets and liabilities of discontinued operations in the condensed balance sheets as of May 31, 2013. The Company presented the prior year assets and liabilities related to the Company’s life settlements business as discontinued operations to provide comparability between the periods presented.

Discontinued operations on the condensed statement of operations for the three months and nine months ended May 31, 2013 and 2012 are as follows:

	Three months ended May 31, 2013		Three months ended May 31, 2012			Nine months ended May 31, 2013			Nine months ended May 31, 2012
Sales, general and administrative expenses	$	-	$	(418,327	)	$	(204,200	)	$	(1,303,100	)
Other income (expense)
Realized gain on life settlement contracts held under investment method		-		-			-			319,843
Realized loss on extinguishment of debt		-		-			(8,438,584	)		-
Change in fair value of life settlement contracts net of premiums paid		-		(25,625,608	)		2,055,438			(34,854,768	)
Interest expense		-		-			(1,610,571	)		-
Loss from discontinued operations before income tax		-		(26,043,935	)		(8,197,917	)		(35,838,025	)
Income tax benefit		-		11,549,712			3,879,477			15,369,126
Net loss from discontinued operations	$	-	$	(14,494,223	)	$	(4,318,440	)	$	(20,468,899	)

9

Assets and liabilities of discontinued operations for the Company’s life settlements business on the condensed balance sheets consist of the following:

	May 31, 2013 (unaudited)		August 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	-	$	228,165
Investment in life settlement contracts at investment method		-		4,334,012
Total current assets of discontinued operations		-		4,562,177
Investment in life settlement contracts at fair value		-		64,667,124
Deferred income taxes		145,781		-
Total noncurrent assets of discontinued operations	$	145,781	$	64,667,124
LIABILITIES
Current Liabilities
Interest payable	$	-	$	626,710
Loans payable		-		59,450,000
Income and other taxes payable		775,000		-
Total current liabilities of discontinued operations		775,000		60,076,710
Deferred income taxes		-		4,243,044
Total long-term liabilities of discontinued operations	$	-	$	4,243,044

During the nine months ended May 31, 2013, a life settlement contract matured resulting in cash proceeds of $10,000,000, these proceeds were used to satisfy the Company’s outstanding obligations of $9,378,807 in discontinued operations, including (i) interest on Term Loan of $2,123,281, (ii) $5,971,000 outstanding under the Revolving Loan, plus $114,000 in interest under the Revolving Loan, or a total of $6,085,000 due under the Revolving Loan and (iii) $1,170,526 premiums payable on behalf of ALS Capital Ventures LLC.

As of May 31, 2013, the Company had a deferred income tax asset of $145,781 from an NOL from discontinued operations and income tax payable of $775,000, which includes $75,000 for interest and penalties, as a result of a realized gain from maturity of a life settlement contract which could not be offset by the capital loss generated by the disposition of life settlement contracts.

4. CONVERTIBLE DEBENTURES

During the three months ended May 31, 2013, the Company completed a private placement of (i) five-year Convertible Debentures (the "Debentures") for an aggregate principal amount of $827,543, bearing interest at 1.2% per annum, convertible into shares (the "Conversion Shares") of common stock, at a conversion price of $0.25, and (ii) a five-year Warrant (the "Warrants") to purchase 3,310,172 shares of common stock (the "Warrant Shares"), to certain accredited investors (the "Purchasers") pursuant to Securities Purchase Agreements dated April 23, May 17, May 22 and May 29, 2013.

The Debentures bear interest at 1.2% per annum payable semi-annually in arrears in either cash or common stock (at the discretion of the Company). There are no provisions for early redemption by the Company.

The Purchasers were issued Warrants to purchase the Company's common stock, exercisable for a period of five years at an initial exercise price of $0.50, subject to adjustment. The Warrants provide for customary adjustments to the exercise price in the event of stock splits, stock dividends and other similar corporate events and may be exercised on a cashless basis. The Warrants do not confer any voting rights or any other rights as a shareholder.

The Company accounts for the beneficial conversion feature (“BCF”) and warrant valuation in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company records a BCF related to the issuance of convertible debt that has conversion features at fixed rates that are “in-the-money” when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. The discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the terms of the convertible notes. The Company recorded an aggregate of $760,434 for the calculated fair value of the warrants and BCF, in conjunction with the convertible notes issued on April 23, May 17, May 22 and May 29, 2013.

10

The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions:

	April 23, 2013			May 17, 2013			May 22, 2013			May 29, 2013
Contractual term (Years)		5.0			5.0			5.0			5.0
Volatility		71.0	%		71.9	%		71.7	%		72.0	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Risk-free interest rate		0.70	%		0.79	%		0.84	%		1.02	%

Senior convertible notes consist of the following at May 31, 2013:

1.2% convertible debentures (issued April 23, 2013)	$	200,000
Debt discount/ beneficial conversion feature		195,838
Balance		4,162
Accrued interest payable	$	250
1.2% convertible debentures (issued May 17, 2013)	$	200,000
Debt discount/ beneficial conversion feature		146,504
Balance		53,496
Accrued interest payable	$	92
1.2% convertible debentures (issued May 22, 2013)	$	202,543
Debt discount/ beneficial conversion feature		186,872
Balance		15,671
Accrued interest payable	$	60
1.2% convertible debentures (issued May 29, 2013)	$	225,000
Debt discount/ beneficial conversion feature		224,754
Balance		246
Accrued interest payable	$	15

5. PREFERRED STOCK

As of May 31, 2013, there are no outstanding Series A Preferred Stock or Series B Preferred Stock.

6. COMMON STOCK, WARRANTS AND OPTIONS

Common Stock

During the quarter ended May 31, 2013, the Company issued 240,012 shares of restricted stock to consultants for consulting services. The fair value of the restricted stock was estimated at $69,603.

During the nine months ended May 31, 2013, the Company received 40,320 shares of common stock from the Company’s CFO as reimbursement for $5,645 of taxes paid on his behalf. Those shares were returned to the Company’s treasury.

Warrants

Warrant transactions are summarized as follows:

	Number of warrants		Weighted average exercise price		Weighted average life remaining (in years)
Balance as at August 31, 2012
Issued		6,000,000		0.01		2.75 years
Additions as of May 31, 2013
Issued		3,310,172		-		4.96 years
Balance as at May 31, 2013		9,310,172		0.18		3.60 years

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As of May 31, 2013, there were 9,310,172 warrants outstanding and exercisable with expiration dates commencing June 2015 through May 2018.

Except as set forth under limited circumstances, the warrants do not permit net cash settlement.

Stock Options

During the three months ended May 31, 2013, the Board of Directors of the Company, through unanimous written consent, resolved to adopt the Company’s 2013 Equity Incentive Plan (the “2013 Plan”), pursuant to which the Company may issue up to 30,000,000 shares or options to purchase shares of the Company’s Common Stock to employees, officers, directors, consultants and advisors of the Company. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. There are 40,000,000 shares of common stock reserved for issuance under the 2013 Plan and the 2010 Plan (the “Plans”), of which 25,170,012 were granted, net of cancellations, and exercises as of May 31, 2013. 

The purpose of the Plans is to provide the Company with the flexibility to use shares, options or other awards based on the Company’s common stock as part of an overall compensation package to provide performance-based rewards to attract and retain qualified personnel. Such awards include, without limitation, options, stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may consist of one such security or benefit, or two or more of them in any combination or alternative. Vesting of awards may be based upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions.

During the three months ended May 31, 2013, the Company entered into separate agreements with five independent consultants, pursuant to which each of the respective consultants agreed to provide augmented reality consulting services for the Company’s augmented reality activities. In consideration of the consulting services, the Company granted these consultants a total of 22,600,000 Non Qualified Stock Options (the “Options”), of which 8,050,000 Options were issued under the 2010 Equity Incentive Plan (the “2010 Plan”) and 14,550,000 Options were issued under the 2013 Plan. The Options have an exercise price of $0.10, vesting on March 4, 2013 and expiring on March 5, 2018.

During the three months ended May 31, 2013, the Company granted an officer a total of 230,000 Options issued under the 2010 Plan with an exercise price of $0.25, which Options vest on March 6, 2013 and expire on March 7, 2018.

During the three months ended May 31, 2013, the Company entered into an At-Will Employment Agreement with Helen Papagiannis pursuant to which she will serve as the Chief Innovation Officer of the Company. Ms. Papagiannis will receive an annual base compensation of $200,000. Additionally, Ms. Papagiannis was granted 500,000 Options under the Company’s 2010 Plan, with an exercise price of $0.25. 100,000 of such Options vest on March 6, 2013 and expire on March 7, 2018. 400,000 of such Options vest quarterly over the next 2 years (in equal amounts of 50,000 Options at the beginning of the Company’s quarterly reporting periods, i.e. December 1, March 1, June 1 and September 1), and expire 5 years from each vesting date.

During the three months ended May 31, 2013, the Company agreed in principle to appoint Enon Landenberg as President and Chief Executive Officer, through May 31, 2014 with an initial base compensation of $250,000 per year. Mr. Landenberg will also receive a total of 300,000 Options with an exercise price of $0.405, which Options vest on May 30, 2013 and expire on May 29, 2018.

During the three months ended May 31, 2013, the Company granted its former CEO a total of 100,000 Options issued under the 2013 Plan with an exercise price of $0.405, which Options vest on December 1, 2013 and expire on May 29, 2018.

During the nine months ended May 31, 2013, the Company granted 100,000 Options issued under the 2010 Plan at an exercise price of $0.31 vesting on October 24, 2013 and expiring on October 23, 2017 to a director.

For the nine months ended May 31, 2013, the compensation expense of these options was $4,408,338 and is included in the Condensed Statements of Operations.

Valuation Assumptions

The Company estimates the fair value of stock option grants using a Black-Scholes option pricing. In applying this model, the Company uses the following assumptions:

· Risk-Free Interest Rate: The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate. 

· Expected Volatility: The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies.

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· Expected Term: Due to the limited exercise history of the Company’s stock options, the Company determined the expected term based on the stratification of employee groups and the expected effect of events that have indications on future exercise activity. Expected life for options granted to employees uses the Simplified Method, while options granted to non-employees uses an expected term equal to the life of the contract.

· Expected Dividend Rate: The Company has not paid and does not anticipate paying any cash dividends in the near future.

The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the straight line method. The following assumptions were used: 

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Exercise price		$0.100 - $0.405		n/a		$0.100 - $0.405		n/a
Expected stock price volatility		71.8% - 72.0%		n/a		71.8% - 72.0%		n/a
Risk-free rate of interest		0.72% - 1.01%		n/a		0.72% - 1.01%		n/a
Expected life of options		4.7 - 5.0 Years		n/a		4.4 - 5.0 Years		n/a

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the three months and nine months ended May 31, 2013 and 2012:

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Employee awards	$	118,783	$	-	$	122,294	$	-
Non- employee awards, net of forfeitures		4,286,044		-		4,286,044		-
Total stock options compensation expense	$	4,404,827	$	-	$	4,408,338	$	-

The following table summarizes stock option activity:

	Number of Shares		Weighted Average Exercise Price		Total Weighted Average Intrinsic Value		Weighted Average Remaining Contactual Life (in years)
Outstanding at August 31, 2012		-	$	-	$	-		-
Options granted		23,830,000		0.11		-		-
Options exercised		-		-		-		-
Options forfeited		-		-		-		-
Options cancelled		-		-		-		-
Outstanding at May 31, 2013		23,830,000		0.11		7,015,650		4.77
Options vested and expected to vest		23,830,000		0.11		7,015,650		4.77
Options vested and exercisable		23,230,000	$	0.11	$	6,944,150		4.77

7. INCOME TAXES

Income tax expense (benefit) consists of the following components at May 31, 2013 and 2012:

	2013		2012
Current tax expense	$	-	$	19,426
Deferred tax expense (benefit)		190,652		(15,388,552	)
Total income tax expense (benefit)	$	190,652	$	(15,369,126	)

The Company calculates its interim tax provision in accordance with the provisions of ASC 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

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In computing the annual estimated effective tax rate the Company makes certain estimates and judgments, such as estimated annual taxable income or loss, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. These estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. The Company is in the development stage and has no saleable product and no income, therefore all operating expenses are capitalized for tax purposes. The difference between the statutory rate of 35% and the effective rate of 3% is primarily attributable to the increase in valuation allowance.

As of May 31, 2013, the Company has filed income tax returns through the fiscal 2011 tax year. The Company is required to file income tax returns in the United States (federal) and in New York State and City. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The evaluation was performed for the August 31, 2008 – August 31, 2012 tax years, which remain subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There was $75,000 accrued for penalties and interest during the three months and nine months ended May 31, 2013. There was no significant amounts accrued for penalties or interest during the three months and nine months ended May 31, 2012. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

8. RELATED PARTY TRANSACTIONS

During the quarter ended May 31, 2013, the Company received a short-term loan from a principal shareholder of $200,000 (the “Note”). The Note was at a rate of 8% per annum with a maturity date ending on or before May 31, 2013. On May 7, 2013, the shareholder assigned all rights, title and interest in the Note to an affiliate of the principal shareholder. On May 22, 2013, with consent from the Lead Investor, the holder agreed to exchange a total of $202,543 (loan principal of $200,000 and accrued interest of $2,543) for a Convertible Debenture pursuant to a Securities Purchase Agreement.

9. SUBSEQUENT EVENTS

Subsequent to May 31, 2013, the Board of Directors of the Company unanimously resolved that in light of the Company’s ongoing development activities occurring in Israel, the Company should form a wholly owned Israeli subsidiary, and undertake such activities and expend such funds of the Company as may be necessary in connection therewith. In furtherance thereof, on June 30, 2013, the Company formed a wholly owned Israeli subsidiary, Infinity Augmented Reality Israel Ltd.

On June 17, 2013, a consultant exercised 50,000 options at an exercise price of $0.10 per share. The Company received cash proceeds of $5,000 on exercise of those options.

Effective June 30, 2013, the Company terminated its services agreement with Infinity Advanced Technologies, Ltd.

Effective June 30, 2013, the Company terminated its rental lease agreement with its landlord. The loss on lease termination was approximately $531. Effective July 1, 2013, the Company subleased space from another tenant in the same building.

On July 2, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $250,000.

On July 9, 2013, a consultant exercised 50,000 options at an exercise price of $0.10 per share. The Company received cash proceeds of $5,000 on exercise of those options.

On July 11, 2013, the Company entered into a Subscription Agreement with a certain seller pursuant to which the Company purchased a Convertible Promissory Note for an aggregate principal amount of $50,000. The Convertible Promissory Note has an interest rate of 5% per annum and a maturity date of July 31, 2014.

The Company evaluates events that have occurred after the balance sheet date through the date the financial statements were publicly available. Based upon the evaluation, the Company did not identify any other recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Note:  Certain statements in this quarterly report on Form 10-Q concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items, estimates as to size, growth in or projected revenues from the life settlement market, developments in industry regulations and the application of such regulations, expected outcomes of pending or potential litigation and regulatory actions, and our strategies, plans and objectives, together with other statements that are not historical facts, are “forward-looking statements” as that term is defined under the federal securities laws.  All of these forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.  You should carefully review the risks described herein and in other documents we file from time to time with the Securities and Exchange Commission, (“ SEC ”), including our Annual Report on Form 10-K for the year ended August 31, 2012 (“ Fiscal 2012 ”), particularly in the sections entitled “Item 1A – Risk Factors” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  

Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report or to reflect the occurrence of unanticipated events. Shareholders and potential shareholders should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Report. Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside of our control, and involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made, including, but not limited to, the following:

· actual or anticipated fluctuations in our quarterly and annual operating results;

· actual or anticipated product constraints;

· decreased demand resulting from changes in laws;

· product and services announcements by us or our competitors;

· loss of any of our key executives;

· regulatory announcements, proceedings or changes;

· competitive product developments and legal developments;

· any business combination we may propose or complete;

· any financing transactions we may propose or complete; or

· broader industry and market trends unrelated to its performance.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

Overview

During the year ended August 31, 2012, we formed a wholly-owned subsidiary Infinity Augmented Reality, LLC (“IAR Subsidiary”) which was actively engaged in the development of software applications which will utilize augmented reality.

On February 26, 2013, the Company memorialized its understandings regarding prior and future activities with Infinity Advanced Technologies LTD (“IATL”), a company organized under the laws of the State of Israel which is developing applications for the Company’s augmented reality activities. In consideration of the services provided, IATL shall be entitled to receive a monthly base fee of $53,000. Additional charges may be incurred upon prior approval of the Company. Effective June 30, 2013, the Company terminated its services agreement with IATL.

Effective March 7, 2013, we changed our name from Absolute Life Solutions, Inc. to Infinity Augmented Reality, Inc. On that same date, we merged our IAR Subsidiary into the Company. We are currently actively engaged in the development of software applications which will utilize Augmented Reality. We intend to develop a comprehensive augmented reality platform for consumers. Our objective is to establish ourself firmly as a preeminent source for state-of-the-art augmented reality experiences, forging a strong association, early on, between the Infinity brand and the burgeoning medium.

Augmented reality is a medium in which real sensory inputs are enhanced, or augmented, with relevant digital information from the Internet. Using specially equipped eyewear, virtual images, video, and sound are superimposed for the user over what is actually seen and heard, heightening the real-life experience with additional information that is pertinent, informative, practical, and/or entertaining. The individual user may also be fully immersed in a virtual world, temporarily blocking out real surroundings. With augmented reality, sensory inputs are no longer limited to what is within eyeshot or earshot, but may incorporate, in real-time, all that the network has to offer.

Augmented reality requires an interface, such as digitally-enhanced eyewear, that can instantaneously overlay virtual images and video on top of what is actually experienced. Companies like Google and Lumus are in the process of developing augmented reality glasses that will change the way users see and interact with the world. IAR will utilize their augmented reality applications through these glasses and/or through other mobile devices such as smart phones. As the individual turns his or her head in various directions and looks at different people or objects through the eyewear, the sights that are overlaid change accordingly. The eyewear incorporates speakers that add virtual sounds to the overall experience, as well as microphones that capture and interpret the user’s spoken commands through speech recognition technology in order to summon desired information and actions.

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Results of Operations

Our results of operations for the three months and nine months ended May 31, 2013, consisted of operating and administrative expenses for personnel, leased office space and professional fees, income tax expense and loss from discontinued operations.

Three months and nine months ended May 31, 2013 compared to three months and nine months ended May 31, 2012

INFINITY AUGMENTED REALITY, INC.

	Three months ended May 31, 2013			Three months ended May 31, 2012			Nine months ended May 31, 2013			Nine months ended May 31, 2012
Sales, general and administrative expenses	$	(5,075,010	)	$	-		$	(5,957,683	)	$	-
Other income (expense)
Interest income (expense)		(9,426	)		-			(9,426	)		-
Loss from continuing operations before income tax		(5,084,436	)		-			(5,967,109	)		-
Income tax provision		-			-			(190,652	)		-
Loss from continuing operations		(5,084,436	)		-			(6,157,761	)		-
Loss from discontinued operations (including loss on disposal of life settlement contracts of $0 and $8,438,584 for the three months and nine months ended May 31, 2013, respectively), net of tax		-			(14,494,223	)		(4,318,440	)		(20,468,899	)
Net loss	$	(5,084,436	)	$	(14,494,223	)	$	(10,476,201	)	$	(20,468,899	)

Expenses: Operating and administrative expenses for continuing operations increased from $0 for the three months and nine months ended May 31, 2012 respectively to $5,075,010 and $5,957,683 for the three months and nine months ended May 31, 2013 respectively. The increase of approximately $5,075,000 and $5,957,000 respectively is primarily attributable to an increase of approximately $675,000 and $1,557,000 related to consulting fees incurred for development of augmented reality applications, payroll and investor relations fees and an increase of approximately $4,400,000 related to the fair value of stock options issued to employees, directors and outside consultants. All of the operating and administrative expenses from the prior period related to our life settlements business and were reclassified to discontinued operations. See Note 3 - Discontinued Operations to the Condensed Financial Statements contained elsewhere in this Form 10-Q for more information.

Other Income (Loss): Other income and expense for continuing operations increased from $0 for the three months and nine months ended May 31, 2012 respectively to $9,426 for the three months and nine months ended May 31, 2013 respectively. The increase is primarily attributable to interest expense from shareholder loan and convertible debentures. We are currently a development stage company and have generated no income in the current period. All of the income (loss) from the prior period related to our life settlements business and was reclassified to discontinued operations. See Note 3 - Discontinued Operations to the Condensed Financial Statements contained elsewhere in this Form 10-Q for more information.

Income Tax: Income tax expense for continuing operations increased from $0 for the three months and nine months ended May 31, 2012 respectively to income tax expense of $0 and $190,652 for the three months and nine months ended May 31, 2013 respectively. The increase is primarily attributable to an increase in the valuation allowance pursuant to the Company currently being in the development stage. Income tax benefit from the prior period related to our life settlements business and was reclassified to discontinued operations. See Note 3 - Discontinued Operations to the Condensed Financial Statements contained elsewhere in this Form 10-Q for more information.

Net Income (Loss): We reported a net loss of $5,084,436 and $10,476,201 for the three months and nine months ended May 31, 2013 respectively compared to a net loss of $14,494,223 and $20,468,899 for the three months and nine months ended May 31, 2012 respectively. The decrease of approximately $9,410,000 and $9,993,000 respectively is primarily attributable to a decrease of approximately $14,494,000 and $16,150,000 loss from discontinued operations offset by an increase of approximately $5,075,000 and $5,957,000 in general and administrative expenses for continuing operations, an increase of approximately $9,000 in interest expense for continuing operations and an increase of approximately $0 and $191,000 in income tax expense for continuing operations. Refer to preceding discussions for explanation of variances.

Liquidity and Capital Resources

Net cash used in operating activities for the nine months ended May 31, 2013 was $8,194,028. Net cash provided by investing activities was $9,756,718 arising from proceeds received from discontinued operations. Net cash used in financing activities was $1,475,000 arising from proceeds received from convertible debenture and a loan less payments for discontinued operations. This resulted in an increase in cash of $87,690.

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Working Capital and Capital Availability: As of May 31, 2013, we had a working capital deficit of $789,408 consisting of a working capital deficit of $14,408 from continuing operations and a working capital deficit of $775,000 from discontinued operations. Subsequent to May 31, 2013, we issued Convertible Debentures and received aggregate proceeds of $250,000. We anticipate, that barring unforeseen developments, the proceeds received from this debt financing will sustain our operations for approximately two months. We expect to raise additional funds to continue our augmented reality operations through subsequent debt or equity offerings to one or more accredited investors. Such issuances may dilute the interests of our existing shareholders. During the next twelve months we anticipate that we will not generate significant cash from operations. We are unable to estimate our working capital requirements and capital availability for Infinity for the next twelve months.

Going Concern Qualification

The Company will require additional funds to finance its new augmented reality operations. Effective November 15, 2012, we are a development stage company dependent upon the expected demand for our software applications and our ability to generate sufficient cash from our augmented reality business to meet our obligations as they come due. We may not be able to obtain additional financing on reasonable terms or at all. However, there can be no assurance that the Company can successfully implement its business plan, and it is uncertain that the Company will achieve a profitable level of operations and be able to obtain additional financing. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. These conditions raise substantial doubt about our ability to continue as a going concern.

Application of Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based on our condensed financial statements that were prepared in accordance with accounting principles generally accepted in the United States of America.  To guide our preparation, we follow accounting policies, some of which represent critical accounting policies as defined by the SEC.  The SEC defines critical accounting policies as those that are both most important to the portrayal of a company’s financial condition and results and require management’s most difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.  Certain accounting estimates involve significant judgments, assumptions and estimates by management that may have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent liabilities, and the reported amounts of income and expenses during the reporting period that management considers critical accounting estimates.  The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, knowledge of the accounts and other factors that are believed to be reasonable.  Because of the nature of the judgments and assumptions made by management, actual results may differ materially from these judgments and estimates, which could have a material impact on the carrying values of assets and liabilities and the results of our operations.  Areas affected by our estimates and assumptions are identified below.

We apply the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. We have adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until we have produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. We have expensed all software development costs when incurred since they have not reached technological feasibility.

We account for the BCF and warrant valuation in accordance with ASC 470-20, Debt with Conversion and Other Options. We record a BCF related to the issuance of convertible debt that has conversion features at fixed rates that are “in-the-money” when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. The discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the termsof the convertible notes.

We record stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation. We expense stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, we re-measure the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

We review the carrying value of the property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets.  The factors considered by management in performing this assessment includes current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors.  Based on this assessment, there was no impairment during the three months ended May 31, 2013.

We evaluate the useful lives of our property and equipment to assure that an adequate amount of depreciation is being charged to operations.  Useful lives are based generally on specific knowledge of an asset’s life in combination with the Internal Revenue Service rules and guidelines for depreciable lives for specific types of assets.

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We are required to estimate our income taxes.  This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes.  These differences result in deferred tax assets and liabilities.  We then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and, to the extent we believe that recovery is not likely, we establish a valuation allowance.  To the extent we establish a valuation allowance or increase this allowance in a period, we include a tax provision or reduce our tax benefit in the statements of operations.  We use our judgment to determine our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations.  We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

We have not made any material changes to our critical accounting estimates or assumptions or the judgments affecting the application of those estimates or assumptions.

Off-Balance Sheet Arrangements

We did not engage in any off-balance sheet arrangements or transactions.

Outlook

Effective March 7, 2013, we changed our name from Absolute Life Solutions, Inc. to Infinity Augmented Reality, Inc. On that same date, we merged our IAR Subsidiary into the Company. We are actively engaged in the development of software applications which will utilize Augmented Reality. On February 26, 2013, we memorialized our understandings regarding prior and future activities with Infinity Advanced Technologies LTD, a company organized under the laws of the State of Israel which is developing applications for our augmented reality activities.Effective June 30, 2013, we terminated our services agreement with IATL. On June 30, 2013, we formed a wholly owned Israeli subsidiary, Infinity Augmented Reality Israel Ltd. We are currently in the process of developing a number of augmented reality applications. We believe our Company and our industry are fundamentally sound and well positioned to deal with the current uncertainty in the financial and capital markets.  We do not rely on leverage in our capital structure. We do rely, however, upon the availability of investment capital. While it is conceivable that a financial crisis could diminish the supply of investment capital throughout the economy, we believe that greater investment capital will be placed in the augmented reality sector. We believe this is due to the fact that augmented reality is one of the technologies of the future.

We believe that domestic and international demand for augmented reality products will continue to grow as the industry continues to mature.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.  With the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), as of the end of the period covered by this report.  Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such periods, our disclosure controls and procedures were not effective due to the material weaknesses noted below, in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

· Due to the small size of its staff, the Company did not have sufficient segregation of duties to support its internal control over financial reporting.

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

In the normal course of our business, we may periodically become subject to various lawsuits. However, to our knowledge, we are not a party to any pending or threatened material legal proceedings. To our knowledge, no governmental authority is contemplating commencing a legal proceeding in which we would be named as a party.

18

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description
10.32	Certificate of Incorporation of Infinity Augmented Reality Israel Ltd.
10.33	Articles of Association of Infinity Augmented Reality Israel Ltd.
31.1	Certification of Chief Executive Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer  pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification of Chief Financial Officer  pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

INFINITY AUGMENTED REALITY, INC. (formerly known as ABSOLUTE LIFE SOLUTIONS, INC.)
July 22, 2013	/s/ Joshua Yifat
	Joshua Yifat
	Treasurer and Chief Financial Officer
	(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity in which signed	Date
/s/ Enon Landenberg
Enon Landenberg	President and Chief Executive Officer (Principal Executive Officer )	July 22, 2013

20

EX-10.32

	State of Israel Ministry of justice – Registrar of Corporation Registrar of Partnerships and Companies
Registrar of Corporation Certificate of incorporation This certifies that the Company:
אינפיניטי אוגמנטד ריאליטי ישראל בע"מ שמספרה 514940790 Infinity Augmented Reality Israel LTD Number 514940790
Was incorporated and registered on 30/06/2013, 22th of Tammuz 5773 According to the Companies Law, 5759-1999, as a limited liability company.
	Yehuda Katz, ADV. Registrar of Corporation Registrar of Companies and Partnerships [Signature]	Given in Jerusalem on: 30/06/2013 22th of Tammuz 5773

EX-10.33

Companies Law, 5759-1999

Company's Article of Association

1. Company Name

Suggested Company Name: Infinity Augmented Reality Israel Ltd. [Hebrew]

Company Name in other language than Hebrew: Infinity Augmented Reality Israel Ltd.

2. Company Goals

2.1. To engage in any lawful activity or business.

3. Details regarding registered share capital of the firm

Share Capital; 10,000 NIS

Composed of: _________ no par value shares or –

Composed of: 10,000 shares of 1 NIS each and –

According to the types: regular shares

4. Details regarding company's limited liability

[The] Liability of shareholders is limited to the extent par value shares that have been issued to them.

5. Additional Provisions

5.1. The company is not obliged to implement an annual shareholders meeting, unless it is necessary to appoint an accountant-auditor, and unless one of the shareholders or the directors demanded its implementation.

5.2. Accountant-auditor would be appointed in every annual shareholders meeting and exercise its duties to the extent of the end of the following annual shareholders meeting; nevertheless, an annual shareholders meeting may appoint accountant-auditor for a longer term, as long as it would not be lengthened more than the end of the third annual shareholders meeting from which he had been appointed.

5.3. Invitation to the general meeting of the company shareholders will be delivered to anyone who is entitled to attend it, no later than two days prior to the date of its conference provided the invitation will not be delivered more than forty-five days before the date of its conference.

5.4. A general meeting of the company shareholders resolution may be accepted without invitation and without conference, provided that the decision is accepted unanimously by all shareholders entitled to vote at the general meeting.

5.5. The Company may hold a general meeting of the company shareholders by using any means of communication, so that all of the participating shareholders can hear each other simultaneously.

5.6. Notice of a Board of Directors meeting shall be given to all of its members in a reasonable time before the time appointed for the meeting, which is not less than two days before the time appointed for the meeting. Notwithstanding the foregoing, the Board may, with the consent of all the directors, convene a meeting without notice, provided that all of the directors agreed so.

6. Exemption, Insurance and Indemnification

6.1. Exemption from liability

The Company may exempt, in advance, by a special resolution of the Board of Directors, an officer's liability, in whole or in part, for damages due to breach of duty of care and any additional case allowed by the law. Notwithstanding the foregoing, the Company shall not waive in advance a director from his responsibilities due to breach of duty of care in distribution.

6.2. Liability Insurance

Subject to the provisions of any Law, The Company may procure, by a special resolution of the Board of Directors, for the benefit of any of its Office Holders, office holders' liability insurance under the customary conditions and risks.

6.3. Indemnification

6.3.1. The Company may indemnify an officer for any liability or expense as specified by law, imposed on him or issued by him due to any act done by him virtue of being an officer.

6.3.2. The Company may indemnify an officer as stated in retrospect, and it may also give an advance undertaking to indemnify an officer in it, all in accordance with statutory provisions and conditions.

6.3.3. Decision on indemnification will be accepted as a special resolution on Board of Directors.

6.4. For the avoidance of doubt, it is clarified that there is no intention in the above provisions of this section to restrict or limit the company in any way from exempting liability and / or entering into a liability insurance contract and / or indemnification, about those who are not officers of the company, including employees, contractors or consultants, all subjected to the provisions of any law.

7. Transfer of shares, offering shares and bonds to the public, the number of shareholders

7.1. Any transfer of shares requires the approval of the Board of Directors.

7.2. The company may not offer shares and/or bonds to the public.

7.3. The number of shareholders may not exceed 50 (fifty), despite company employees or people who where employees and by being the company employees, even after termination of employment, are continue to be company shareholders;

8. The first shareholders

Shareholder name: GAEA Holdings and Trusts Ltd.

Company ID: 51-410778-8

Address: Yigal Alon 65, Tel Aviv 67443

The number of shares allotted to him: 1,000 Ordinary shares.

Signature: ____________________

9. Verification of the shareholders signature or those how are authorized to sign on their behalf

I, Asaf lavi Adv., hereby certify that Ofir Vaisben Adv., appeared before me and signed this Articles of Association on behalf of GAEA Holdings and Trusts Ltd.

Asaf lavi	26.06.2013
Lawyer	Date	Sign and signature

EX-31.1

Exhibit 31.1 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

I, Enon Landenberg, certify that:

1. I have reviewed this Form 10-Q of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, 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 report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods present in this report;

4. The issuer’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the issuer and 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 issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the issuer’s 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 on such evaluation; and

d) Disclosed in this report any change in the issuer’s internal control over financing reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

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 issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: July 22, 2013

/s/ Enon Landenberg

Enon Landenberg

President and Chief Executive

Officer (principal executive officer

and duly authorized officer)

EX-31.2

Exhibit 31.2 

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

I, Joshua Yifat, certify that:

1. I have reviewed this Form 10-Q of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions , 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 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 present in this report;

4. The issuer’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the issuer and 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 issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the issuer’s 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 on such evaluation; and

d) Disclosed in this report any change in the issuer’s internal control over financing reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

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 issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: July 22, 2013

/s/ Joshua Yifat

Joshua Yifat

Treasurer and Chief Financial

Officer (principal financial officer

and duly authorized officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying Quarterly Report on Form 10-Q of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.), for the quarter ending May 31, 2013, I, Enon Landenberg, President and Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1.    Such Quarterly Report on Form 10-Q for the quarter ending May 31, 2013, fully complies with the requirements of  Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in such Quarterly Report on Form 10-Q for the quarter ending May 31, 2013, fairly represents in all material respects, the financial condition and results of operations of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.).

Date: July 22, 2013

/s/ Enon Landenberg

Enon Landenberg

President and Chief Executive Officer

(principal executive officer and duly authorized officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying Quarterly Report on Form 10-Q of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.), for the quarter ending May 31, 2013, I, Joshua Yifat, Treasurer and Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1.    Such Quarterly Report on Form 10-Q for the quarter ending May 31, 2013, fully complies with the requirements of  Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in such Quarterly Report on Form 10-Q for the quarter ending May 31, 2013, fairly represents in all material respects, the financial condition and results of operations of Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.).

Date: July 22, 2013

/s/ Joshua Yifat

Joshua Yifat

Treasurer and Chief Financial Officer

(principal financial officer and duly authorized officer)

XML

DISCONTINUED OPERATIONS (Tables)

9 Months Ended

May 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

Discontinued operations on the condensed statement of operations for the three months and nine months ended May 31, 2013 and 2012 are as follows:

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine  months ended May 31, 2013		Nine  months ended May 31, 2012
Sales, general and administrative expenses	$	-	$	(418,327)	$	(204,200)	$	(1,303,100)
Other income (expense)
Realized gain on life settlement contracts held under investment method		-		-		-		319,843
Realized loss on extinguishment of debt		-		-		(8,438,584)		-
Change in fair value of life settlement contracts net of premiums paid		-		(25,625,608)		2,055,438		(34,854,768)
Interest expense		-		-		(1,610,571)		-
Loss from discontinued operations before income tax		-		(26,043,935)		(8,197,917)		(35,838,025)
Income tax benefit		-		11,549,712		3,879,477		15,369,126
Net loss from discontinued operations	$	-	$	(14,494,223)	$	(4,318,440)	$	(20,468,899)

Assets and liabilities of discontinued operations for the Company’s life settlements business on the condensed balance sheets consist of the following:

	May 31, 2013 (unaudited)		August 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	-	$	228,165
Investment in life settlement contracts at investment method		-		4,334,012
Total current assets of discontinued operations		-		4,562,177
Investment in life settlement contracts at fair value		-		64,667,124
Deferred income taxes		145,781		-
Total noncurrent assets of discontinued operations	$	145,781	$	64,667,124
LIABILITIES
Current Liabilities
Interest payable	$	-	$	626,710
Loans payable		-		59,450,000
Income and other taxes payable		775,000		-
Total current liabilities of discontinued operations		775,000		60,076,710
Deferred income taxes		-		4,243,044
Total long-term liabilities of discontinued operations	$	-	$	4,243,044

XML

CONDENSED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2013	May 31, 2012
Sales, general and administrative expenses	$ (5,075,010)	$ 0	$ (5,778,404)	$ (5,957,683)	$ 0
Other income (expense)
Interest income (expense)	(9,426)	0	(9,426)	(9,426)	0
Loss from continuing operations before income tax	(5,084,436)	0	(5,787,830)	(5,967,109)	0
Income tax provision	0	0	(78,637)	(190,652)	0
Loss from continuing operations	(5,084,436)	0	(5,866,467)	(6,157,761)	0
Loss from discontinued operations (including loss on disposal of life settlement contracts of $0 and $8,438,584 for the three months and nine months ended May 31, 2013, respectively), net of tax	0	(14,494,223)	0	(4,318,440)	(20,468,899)
Net loss	(5,084,436)	(14,494,223)	(5,866,467)	(10,476,201)	(20,468,899)
Deemed dividend on issuance of Series A and Series B Preferred Stock	0	0	0	0	(932,643)
Dividend on Convertible Preferred Stock	0	0	0	0	(3,233,104)
Net loss applicable to common shareholders	$ (5,084,436)	$ (14,494,223)	$ (5,866,467)	$ (10,476,201)	$ (24,634,646)
Basic and diluted loss per common share
Continuing operations (in dollars per share)	$ (0.05)	$ 0		$ (0.06)	$ 0
Discontinued operations (in dollars per share)	$ 0	$ (0.15)		$ (0.04)	$ (0.26)
Net loss per common share (in dollars per share)	$ (0.05)	$ (0.15)		$ (0.10)	$ (0.26)
Basic weighted average shares outstanding (in shares)	98,225,803	94,625,690		98,380,260	93,188,703
Diluted weighted average shares outstanding (in shares)	98,225,803	94,625,690		98,380,260	93,188,703

XML

CONVERTIBLE DEBENTURES

9 Months Ended

May 31, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

4. CONVERTIBLE DEBENTURES

During the three months ended May 31, 2013, the Company completed a private placement of (i) five-year Convertible Debentures (the "Debentures") for an aggregate principal amount of $827,543,bearing interest at 1.2% per annum, convertible into shares (the "Conversion Shares") of common stock, at a conversion price of $0.25, and (ii) a five-year Warrant (the "Warrants") to purchase 3,310,172 shares of common stock (the "Warrant Shares"), to certain accredited investors (the "Purchasers") pursuant to Securities Purchase Agreements dated April 23, May 17, May 22 and May 29, 2013.

The Debentures bear interest at 1.2% per annum payable semi-annually in arrears in either cash or common stock (at the discretion of the Company). There are no provisions for early redemption by the Company.

The Purchasers were issued Warrants to purchase the Company's common stock, exercisable for a period of five years at an initial exercise price of $0.50, subject to adjustment. The Warrants provide for customary adjustments to the exercise price in the event of stock splits, stock dividends and other similar corporate events and may be exercised on a cashless basis. The Warrants do not confer any voting rights or any other rights as a shareholder.

The Company accounts for the beneficial conversion feature (“BCF”) and warrant valuation in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company records a BCF related to the issuance of convertible debt that has conversion features at fixed rates that are “in-the-money” when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. The discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the terms of the convertible notes. The Company recorded an aggregate of $760,434 for the calculated fair value of the warrants and BCF, in conjunction with the convertible notes issued on April 23, May 17, May 22 and May 29, 2013.

The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions:

	April 23, 2013			May 17, 2013			May 22, 2013			May 29, 2013
Contractual term (Years)		5.0			5.0			5.0			5.0
Volatility		71.0	%		71.9	%		71.7	%		72.0	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Risk-free interest rate		0.70	%		0.79	%		0.84	%		1.02	%

Senior convertible notes consist of the following at May 31, 2013:

1.2% convertible debentures (issued April 23, 2013)	$	200,000
Debt discount/ beneficial conversion feature		195,838
Balance		4,162
Accrued interest payable	$	250
1.2% convertible debentures (issued May 17, 2013)	$	200,000
Debt discount/ beneficial conversion feature		146,504
Balance		53,496
Accrued interest payable	$	92
1.2% convertible debentures (issued May 22, 2013)	$	202,543
Debt discount/ beneficial conversion feature		186,872
Balance		15,671
Accrued interest payable	$	60
1.2% convertible debentures (issued May 29, 2013)	$	225,000
Debt discount/ beneficial conversion feature		224,754
Balance		246
Accrued interest payable	$	15

XML

CONVERTIBLE DEBENTURES (Details) (Warrant [Member])	9 Months Ended
	May 31, 2013
Issued on April 23, 2013 [Member]
Contractual term (Years)	5 years 0 months
Volatility	71.00%
Dividend yield	0.00%
Risk-free interest rate	0.70%
Issued on May 17, 2013 [Member]
Contractual term (Years)	5 years 0 months
Volatility	71.90%
Dividend yield	0.00%
Risk-free interest rate	0.79%
Issued on May 22, 2013 [Member]
Contractual term (Years)	5 years 0 months
Volatility	71.70%
Dividend yield	0.00%
Risk-free interest rate	0.84%
Issued on May 29, 2013 [Member]
Contractual term (Years)	5 years 0 months
Volatility	72.00%
Dividend yield	0.00%
Risk-free interest rate	1.02%

XML

CONVERTIBLE DEBENTURES (Tables)

9 Months Ended

May 31, 2013

Debt Disclosure [Abstract]

Schedule Of Share Based Payment Award Warrants Valuation Assumptions [Table Text Block]

The Company valued the warrants at the date the warrants were issued, using the Black-Scholes valuation model and the following assumptions:

	April 23, 2013			May 17, 2013			May 22, 2013			May 29, 2013
Contractual term (Years)		5.0			5.0			5.0			5.0
Volatility		71.0	%		71.9	%		71.7	%		72.0	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Risk-free interest rate		0.70	%		0.79	%		0.84	%		1.02	%

Schedule Of Senior Convertible Debt [Table Text Block]

Senior convertible notes consist of the following at May 31, 2013:

1.2% convertible debentures (issued April 23, 2013)	$	200,000
Debt discount/ beneficial conversion feature		195,838
Balance		4,162
Accrued interest payable	$	250
1.2% convertible debentures (issued May 17, 2013)	$	200,000
Debt discount/ beneficial conversion feature		146,504
Balance		53,496
Accrued interest payable	$	92
1.2% convertible debentures (issued May 22, 2013)	$	202,543
Debt discount/ beneficial conversion feature		186,872
Balance		15,671
Accrued interest payable	$	60
1.2% convertible debentures (issued May 29, 2013)	$	225,000
Debt discount/ beneficial conversion feature		224,754
Balance		246
Accrued interest payable	$	15

XML

COMMON STOCK, WARRANTS AND OPTIONS (Details) (USD $)	9 Months Ended
	May 31, 2013
Balance (Ending)	9,310,172
Warrant [Member]
Balance (Beginning)	6,000,000
Number of Warrants, Issued	3,310,172
Balance (Ending)	9,310,172
Balance (Weighted average exercise price)	$ 0.01
Weighted average exercise price, Issued	$ 0
Balance (Weighted average exercise price)	$ 0.18
Balance (Weighted average life remaining) (in years)	2 years 9 months 0 days
Issued (Weighted average life remaining) (in years)	4 years 11 months 16 days
Balance (Weighted average life remaining) (in years)	3 years 7 months 6 days

XML

CONVERTIBLE DEBENTURES (Details Textual) (USD $)	3 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2013	May 29, 2013	May 22, 2013	May 17, 2013	Apr. 23, 2013
Debt Instrument, Face Amount	$ 827,543	$ 827,543
Debt Instrument, Interest Rate, Stated Percentage	1.20%	1.20%	1.20%	1.20%	1.20%	1.20%
Debt Instrument, Convertible, Conversion Price	$ 0.25	$ 0.25
Warrant Term	5 years
Warrant Exercise Price		$ 0.50
Fair Value Of Warrants And Beneficial Conversion Feature		$ 760,434
Warrant [Member]
Purchase Of Common Stock Shares	3,310,172

XML

RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	0 Months Ended	6 Months Ended	9 Months Ended
	Jul. 11, 2013	May 31, 2013	May 31, 2013	May 31, 2012
Short Term Debt		$ 200,000	$ 200,000
Interest Rate On Short Term Debt			8.00%
Debt Instrument, Maturity Date	Jul. 31, 2014		May 31, 2013
Conversion Of Shareholder Loan Into Convertible Debentures		202,543	202,543	0
Paid-in-Kind Interest		$ 2,543	$ 2,543	$ 0

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COMMON STOCK, WARRANTS AND OPTIONS (Details Textual) (USD $)	3 Months Ended	6 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2013	May 31, 2013	May 31, 2012
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders		$ (5,645)	$ (5,645)	$ 0
Number of Shares Outstanding	9,310,172	9,310,172	9,310,172
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total	240,012
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures, Total	69,603
Shares Or Options Issued To Purchase Common Stock	30,000,000
Investment Options, Exercise Price	$ 0.10
Investment Options, Expiration Date	Mar. 07, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	400,000 of such Options vest quarterly over the next 2 years (in equal amounts of 50,000 Options at the beginning of the Companys quarterly reporting periods, i.e. December 1, March 1, June 1 and September 1), and expire 5 years from each vesting date.
Stock Issued During Period Fair Value Share Based Compensation			4,408,338
Enon Landenberg [Member]
Investment Options, Exercise Price	$ 0.405
Investment Options, Expiration Date			May 29, 2018
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross	300,000
Officers Compensation	250,000
Chief Executive Officer [Member]
Investment Options, Exercise Price	$ 0.405
Investment Options, Expiration Date	May 29, 2018
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross	100,000
2013 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award Options Grants For Consulting Services	14,550,000
2013 Plan [Member] | Related Party [Member]
Shares Or Options Issued To Purchase Common Stock	30,000,000
2010 Plan [Member]
Common Stock, Capital Shares Reserved for Future Issuance	40,000,000	40,000,000	40,000,000
Share Based Compensation Arrangement By Share Based Payment Award Options Grants For Consulting Services	8,050,000
Investment Options, Exercise Price	$ 0.25
Investment Options, Expiration Date	Mar. 07, 2018
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross	230,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	100,000	100,000	100,000
2010 Plan [Member] | Related Party [Member]
Investment Options, Expiration Date	Mar. 07, 2018
2010 Plan [Member] | Papagiannis [Member]
Officers Compensation	200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	500,000	500,000	500,000
2010 Plan [Member] | Director [Member]
Investment Options, Exercise Price			$ 0.31
Investment Options, Expiration Date			Oct. 23, 2017
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross			100,000
Plan 2010 and 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date	Mar. 05, 2018
Common Stock Shares Granted From Those Reserved For Future Issuance	25,170,012	25,170,012	25,170,012
Share Based Compensation Arrangement By Share Based Payment Award Options Grants For Consulting Services Total	22,600,000
Common Stock [Member]
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders			$ 5,645
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders (in shares)			40,320

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CONVERTIBLE DEBENTURES (Details 1) (USD $)	May 31, 2013	Aug. 31, 2012
Balance	$ 73,575	$ 0
Issued on April 23, 2013 [Member]
1.2% convertible debentures	200,000
Debt discount/ beneficial conversion feature	195,838
Balance	4,162
Accrued interest payable	250
Issued on May 17, 2013 [Member]
1.2% convertible debentures	200,000
Debt discount/ beneficial conversion feature	146,504
Balance	53,496
Accrued interest payable	92
Issued on May 22, 2013 [Member]
1.2% convertible debentures	202,543
Debt discount/ beneficial conversion feature	186,872
Balance	15,671
Accrued interest payable	60
Issued on May 29, 2013 [Member]
1.2% convertible debentures	225,000
Debt discount/ beneficial conversion feature	224,754
Balance	246
Accrued interest payable	$ 15

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CONDENSED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2013	May 31, 2012
OPERATING ACTIVITIES
Net loss	$ (5,866,467)	$ (10,476,201)	$ (20,468,899)
Loss from discontinued operations	0	4,318,440	20,468,899
Adjustments to reconcile net loss to net cash (used in) provided by operations
Amortization of debt discount	6,466	6,466	0
Stock-based compensation	4,477,941	4,477,941	0
Stock forfeited by stockholders to settle payment of withholding tax on behalf of such stockholders	(5,645)	(5,645)	0
Payment-in-kind interest on shareholder loan	2,543	2,543	0
Depreciation	12,975	17,965	17,965
Deferred rent	5,674	19,977	5,781
Deferred income taxes	78,637	190,652	0
Changes in operating assets and liabilities
Prepaid expenses	13,960	10,610	27,321
Accounts payable and accrued expenses	(12,556)	(101,984)	150,680
Interest payable	417	417	0
Net cash (used in) provided by operating activities- continuing operations	(1,286,055)	(1,538,819)	201,747
Net cash (used in) provided by operating activities- discontinued operations	5,858,675	(6,655,209)	(7,447,926)
Net cash (used in) provided by operating activities	4,572,620	(8,194,028)	(7,246,179)
INVESTING ACTIVITIES
Net cash provided by investing activities- continuing operations	0	0	0
Net cash provided by investing activities- discontinued operations	0	9,756,718	1,482,412
Net cash provided by investing activities	0	9,756,718	1,482,412
FINANCING ACTIVITIES
Proceeds from convertible debentures	625,000	625,000	0
Proceeds from shareholder loan	200,000	200,000	0
Net cash provided by financing activities- continuing operations	825,000	825,000	0
Net cash (used in) provided by financing activities- discontinued operations	(5,135,000)	(2,300,000)	4,600,000
Net cash (used in) provided by financing activities	(4,310,000)	(1,475,000)	4,600,000
Change in cash and cash equivalents	262,620	87,690	(1,163,767)
Cash and cash equivalents, beginning	58,120	233,050	1,917,896
Cash and cash equivalents, ending	320,740	320,740	754,129
Less cash and cash equivalents of discontinued operations, ending	0	0	754,129
Cash and cash equivalents of continuing operations, ending	320,740	320,740	0
Non-cash financing activities:
Conversion of shareholder loan into convertible debentures	202,543	202,543	0
Warrants issued in connection with convertible debentures	317,380	317,380	0
Fair value of conversion option	$ 443,054	$ 443,054	$ 0

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SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

May 31, 2013

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements as of May 31, 2013 and 2012 and for the three months and nine months then ended and for the period from November 15, 2012 to May 31, 2013 have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited financial statements. The unaudited Balance Sheet as of May 31, 2013, Statements of Operations for the three months and nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, and Statements of Cash Flows for the nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The results for the three months and nine months ended May 31, 2013 and for the period from November 15, 2012 to May 31, 2013 are not necessarily indicative of results to be expected for the year ending August 31, 2013 or for any future interim period. In addition, the balance sheet data at August 31, 2012 was derived from the audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on January 3, 2013.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the value of warrants and options and deferred income tax amounts and rates and timing of the reversal of income tax differences.

Development Stage Company

Effective November 15, 2012, the Company is considered a development stage company, having no operating revenues during the period from November 15, 2012 (“Inception”) to May 31, 2013, as defined by ASC 915-205, Development-Stage Entities. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows upon entering the development stage through the date that revenues are generated. From November 15, 2012 through May 31, 2013, all operating expenses of the Company related to its augmented reality business and is included in the Condensed Statements of Operations. The Company had operating expenses of $179,279 and $143,753 respectively for the period from September 1, 2012 to November 15, 2012 and the period from June 1, 2012 to August 31, 2012 respectively, relating to its augmented reality business.

Cash and Cash Equivalents

The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

Reclassifications

During the nine months ended May 31, 2013, the Company disposed of all its life settlement contracts. As of May 31, 2013, all of the operations related to the life settlement business, as well as any resulting gain or loss recognized from the disposal, have been reported as discontinued operations in the condensed financial statements. The Company has also reported the prior period operations related to this business as discontinued operations retrospectively for all periods presented. Additionally, the assets and liabilities related to the life settlements business have been classified as discontinued operations in the balance sheets for all periods presented. See Note 3 - Discontinued Operations  for more information.

Financial Instruments

The fair value of certain of the Company's financial instruments, consisting of cash, accounts payable and accrued expenses are estimated to be equal to their carrying value due to the short-term nature of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency and credit risks arising from these financial instruments.

Deferred Rent Liability

The Company’s operating lease provides for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.

Software Development Costs

The Company applies the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until the Company has produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. The Company has expensed all software development costs when incurred since none of the Company’s products have reached technological feasibility.

Income Taxes

Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense.

Earnings (Loss) per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period. Included in basic loss per share calculations are the effects of 6,000,000 warrants exercisable at $.01. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method. For the three months and nine months ended May 31, 2013, 30,450,344 shares of common stock, comprised of 3,310,172 convertible debentures with a conversion price of $0.25, 3,310,172 warrants with an exercise price of $0.50, and 23,830,000 options, convertible into 23,830,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. For the three months and nine months ended May 31, 2012, 27,700,000 and 28,142,500 warrants with an exercise price of $2.00 and $4.00 respectively, and 55,400 Series A and Series B preferred shares, convertible into 55,400,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive.

Stock-Based Compensation

The Company records stock-based compensation expense in accordance with  ASC 718, Compensation - Stock Compensation. The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Recent Accounting Pronouncements

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the condensed financial statements of the Company.

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PREFERRED STOCK

9 Months Ended

May 31, 2013

Equity [Abstract]

Preferred Stock [Text Block]

5. PREFERRED STOCK

As of May 31, 2013, there are no outstanding Series A Preferred Stock or Series B Preferred Stock.

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DISCONTINUED OPERATIONS

9 Months Ended

May 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3. DISCONTINUED OPERATIONS

Effective November 15, 2012, the Company reached an agreement with the agent of the Lenders regarding the satisfaction of the outstanding balance of the Loans, under the terms of a Loan Satisfaction Agreement. Such agreement resulted in the disposition of all of the life settlement contracts that were held by the Company to the Lender or an affiliate of the Lender. All of the operations related to the Company’s life settlements business are reported as discontinued operations in the condensed financial statements. The prior period operations related to this business have also been reported as discontinued operations retrospectively for all periods presented. The assets and liabilities related to the Company’s life settlements business are reported as assets and liabilities of discontinued operations in the condensed balance sheets as of May 31, 2013. The Company presented the prior year assets and liabilities related to the Company’s life settlements business as discontinued operations to provide comparability between the periods presented.

Discontinued operations on the condensed statement of operations for the three months and nine months ended May 31, 2013 and 2012 are as follows:

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine  months ended May 31, 2013		Nine  months ended May 31, 2012
Sales, general and administrative expenses	$	-	$	(418,327)	$	(204,200)	$	(1,303,100)
Other income (expense)
Realized gain on life settlement contracts held under investment method		-		-		-		319,843
Realized loss on extinguishment of debt		-		-		(8,438,584)		-
Change in fair value of life settlement contracts net of premiums paid		-		(25,625,608)		2,055,438		(34,854,768)
Interest expense		-		-		(1,610,571)		-
Loss from discontinued operations before income tax		-		(26,043,935)		(8,197,917)		(35,838,025)
Income tax benefit		-		11,549,712		3,879,477		15,369,126
Net loss from discontinued operations	$	-	$	(14,494,223)	$	(4,318,440)	$	(20,468,899)

Assets and liabilities of discontinued operations for the Company’s life settlements business on the condensed balance sheets consist of the following:

	May 31, 2013 (unaudited)		August 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	-	$	228,165
Investment in life settlement contracts at investment method		-		4,334,012
Total current assets of discontinued operations		-		4,562,177
Investment in life settlement contracts at fair value		-		64,667,124
Deferred income taxes		145,781		-
Total noncurrent assets of discontinued operations	$	145,781	$	64,667,124
LIABILITIES
Current Liabilities
Interest payable	$	-	$	626,710
Loans payable		-		59,450,000
Income and other taxes payable		775,000		-
Total current liabilities of discontinued operations		775,000		60,076,710
Deferred income taxes		-		4,243,044
Total long-term liabilities of discontinued operations	$	-	$	4,243,044

During the nine months ended May 31, 2013, a life settlement contract matured resulting in cash proceeds of $10,000,000, these proceeds were used to satisfy the Company’s outstanding obligations of $9,378,807 in discontinued operations, including (i) interest on Term Loan of $2,123,281, (ii) $5,971,000 outstanding under the Revolving Loan, plus $114,000 in interest under the Revolving Loan, or a total of $6,085,000 due under the Revolving Loan and (iii) $1,170,526 premiums payable on behalf of ALS Capital Ventures LLC.

As of May 31, 2013, the Company had a deferred income tax asset of $145,781 from an NOL from discontinued operations and income tax payable of $775,000, which includes $75,000 for interest and penalties, as a result of a realized gain from maturity of a life settlement contract which could not be offset by the capital loss generated by the disposition of life settlement contracts.

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COMMON STOCK, WARRANTS AND OPTIONS (Details 1) (USD $)	3 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2013
Maximum [Member]
Exercise price	$ 0.405	$ 0.405
Expected stock price volatility	72.00%	72.00%
Risk-free rate of interest	1.01%	1.01%
Expected life of options	5 years	5 years
Minimum [Member]
Exercise price	$ 0.100	$ 0.100
Expected stock price volatility	71.80%	71.80%
Risk-free rate of interest	0.72%	0.72%
Expected life of options	4 years 8 months 12 days	4 years 4 months 24 days

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INCOME TAXES (Details) (USD $)	3 Months Ended		6 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2013	May 31, 2012
Current tax expense				$ 0	$ 19,426
Deferred tax expense (benefit)			78,637	190,652	0
Total income tax expense (benefit)	$ 0	$ 0	$ 78,637	$ 190,652	$ 0

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CONDENSED BALANCE SHEETS [Parenthetical] (USD $)	9 Months Ended	12 Months Ended
	May 31, 2013	Aug. 31, 2012
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	92,784,759	92,544,747
Common stock, shares outstanding	92,429,291	92,229,599
Treasury stock	355,468	315,148
Series A Convertible Preferred Stock [Member]
Preferred stock, shares designated	60,000	60,000
Preferred stock, dividend rate, percentage	12.50%	12.50%
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series B Convertible Preferred Stock [Member]
Preferred stock, shares designated	25,000	25,000
Preferred stock, dividend rate, percentage	12.50%	12.50%
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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RELATED PARTY TRANSACTIONS

9 Months Ended

May 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

8. RELATED PARTY TRANSACTIONS

During the quarter ended May 31, 2013, the Company received a short-term loan from a principal shareholder of $200,000 (the “Note”). The Note was at a rate of 8% per annum with a maturity date ending on or before May 31, 2013. On May 7, 2013, the shareholder assigned all rights, title and interest in the Note to an affiliate of the principal shareholder. On May 22, 2013, with consent from the Lead Investor, the holder agreed to exchange a total of $202,543 (loan principal of $200,000 and accrued interest of $2,543) for a Convertible Debenture pursuant to a Securities Purchase Agreement.

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CONDENSED STATEMENTS OF OPERATIONS [Parenthetical] (USD $)	3 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2013
loss on disposal of life settlement contracts	$ 0	$ 8,438,584

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CONDENSED BALANCE SHEETS (USD $)	May 31, 2013	Aug. 31, 2012
ASSETS
Cash and cash equivalents	$ 320,740	$ 4,885
Prepaid expenses	4,582	15,192
Current assets of discontinued operations	0	4,562,177
Total current assets	325,322	4,582,254
Equipment, net	48,164	66,129
Security deposit	56,688	56,688
Noncurrent assets of discontinued operations	145,781	64,667,124
TOTAL ASSETS	575,955	69,372,195
LIABILITIES
Accounts payable and accrued expenses	339,313	441,297
Interest payable	417	0
Current liabilities of discontinued operations	775,000	60,076,710
Total current liabilities	1,114,730	60,518,007
Deferred rent	69,312	49,335
Convertible debentures, net of debt discount	73,575	0
Long-term liabilities of discontinued operations	0	4,243,044
TOTAL LIABILITIES	1,257,617	64,810,386
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock,value	0	0
Common stock ($0.00001 par value; 500,000,000 authorized; 92,784,759 issued and 92,429,291 outstanding) ( August 31, 2012 - 92,544,747 issued and 92,229,599 outstanding)	928	925
Additional paid in capital	56,725,262	51,486,890
Treasury stock, at cost (355,468 shares of common stock) (August 31, 2012- 315,148 shares of common stock)	(49,766)	(44,121)
Accumulated deficit	(57,358,086)	(46,881,885)
Total Stockholders' (Deficit) Equity	(681,662)	4,561,809
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	575,955	69,372,195
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock,value	0	0
Series B Convertible Preferred Stock [Member]
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock,value	$ 0	$ 0

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COMMON STOCK, WARRANTS AND OPTIONS (Details 2) (USD $)	3 Months Ended		6 Months Ended	9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2013	May 31, 2012
Share-based Compensation	$ 4,404,827	$ 0	$ 4,477,941	$ 4,477,941	$ 0
Employee Stock Option [Member]
Share-based Compensation	118,783	0		122,294	0
Non-Employee Award [Member]
Share-based Compensation	$ 4,286,044	$ 0		$ 4,286,044	$ 0

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DISCONTINUED OPERATIONS (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2012
Disposal Group Including Discontinued Operation Life Settlement Contract			$ 10,000,000
Liabilities of Disposal Group, Including Discontinued Operation	9,378,807		9,378,807
Interest Paid			2,123,281
Disposal Group Including Discontinued Operation Revolving Loan Principal	5,971,000		5,971,000
Disposal Group Including Discontinued Operation Revolving Loan Interest	114,000		114,000
Disposal Group Including Discontinued Operation Revolving Total	6,085,000		6,085,000
Disposal Group Including Discontinued Operation Premium Payable	1,170,526		1,170,526
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense	$ 75,000	$ 0	$ 75,000	$ 0

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SUBSEQUENT EVENTS (Details Textual) (USD $)	0 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended		0 Months Ended		1 Months Ended
	Jul. 11, 2013	May 31, 2013	May 31, 2013	May 31, 2013	May 31, 2012	Jul. 09, 2013 Subsequent Event [Member]	Jul. 11, 2013 Subsequent Event [Member]	Jun. 17, 2013 Subsequent Event [Member]	Jun. 30, 2013 Subsequent Event [Member]	Jul. 02, 2013 Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period						50,000		50,000
Investment Options, Exercise Price		$ 0.10				$ 0.10		$ 0.10
Proceeds from Stock Options Exercised						$ 5,000		$ 5,000
Gain (Loss) on Contract Termination									531
Proceeds from Convertible Debt			625,000	625,000	0					250,000
Repayments of Convertible Debt							$ 50,000
Debt Instrument, Effective Interest Rate, Percentage							5.00%
Debt Instrument, Maturity Date	Jul. 31, 2014			May 31, 2013

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INCOME TAXES

9 Months Ended

May 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

7. INCOME TAXES

Income tax expense (benefit) consists of the following components at May 31, 2013 and 2012:

	2013		2012
Current tax expense	$	-	$	19,426
Deferred tax expense (benefit)		190,652		(15,388,552)
Total income tax expense (benefit)	$	190,652	$	(15,369,126)

The Company calculates its interim tax provision in accordance with the provisions of ASC 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

In computing the annual estimated effective tax rate the Company makes certain estimates and judgments, such as estimated annual taxable income or loss, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. These estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. The Company is in the development stage and has no saleable product and no income, therefore all operating expenses are capitalized for tax purposes. The difference between the statutory rate of 35% and the effective rate of 3% is primarily attributable to the increase in valuation allowance.

As of May 31, 2013, the Company has filed income tax returns through the fiscal 2011 tax year. The Company is required to file income tax returns in the United States (federal) and in New York State and City. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The evaluation was performed for the August 31, 2008 – August 31, 2012 tax years, which remain subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There was $75,000 accrued for penalties and interest during the three months and nine months ended May 31, 2013. There was no significant amounts accrued for penalties or interest during the three months and nine months ended May 31, 2012. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

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COMMON STOCK, WARRANTS AND OPTIONS (Details 3) (Employee Stock Option [Member], USD $)	9 Months Ended
	May 31, 2013	Aug. 31, 2012
Employee Stock Option [Member]
Balance (Beginning)	0
Number of Shares Options granted	23,830,000
Number of Shares Options exercised	0
Number of Shares Options forfeited	0
Number of Shares Options cancelled	0
Balance (Ending)	23,830,000
Number of Shares Options vested and expected to vest	23,830,000
Number of Shares Options vested and exercisable	23,230,000
Balance (Weighted average exercise price)	$ 0
Weighted Average Exercise Price Options granted	$ 0.11
Weighted Average Exercise Price Options exercised	$ 0
Weighted Average Exercise Price Options forfeited	$ 0
Weighted Average Exercise Price Options cancelled	$ 0
Balance (Weighted average exercise price)	$ 0.11
Weighted Average Exercise Price Options vested and expected to vest	$ 0.11
Weighted Average Exercise Price Options vested and exercisable	$ 0.11
Total Weighted Average Intrinsic Value Outstanding	$ 0
Total Weighted Average Intrinsic Value Options granted	0
Total Weighted Average Intrinsic Value Options exercised	0
Total Weighted Average Intrinsic Value Options forfeited	0
Total Weighted Average Intrinsic Value Options cancelled	0
Total Weighted Average Intrinsic Value Outstanding	7,015,650	0
Total Weighted Average Intrinsic Value Options vested and expected to vest	7,015,650
Total Weighted Average Intrinsic Value Options vested and exercisable	$ 6,944,150
Weighted Average Remaining Contactual Life Outstanding Beginning (in years)	0 years
Weighted Average Remaining Contactual Life Options granted (in years)	0 years
Weighted Average Remaining Contactual Life Options exercised (in years)	0 years
Weighted Average Remaining Contactual Life Options forfeited (in years)	0 years
Weighted Average Remaining Contactual Life Options cancelled (in years)	0 years
Weighted Average Remaining Contactual Life Outstanding Ending (in years)	4 years 9 months 7 days
Weighted Average Remaining Contactual Life Options vested and expected to vest (in years)	4 years 9 months 7 days
Weighted Average Remaining Contactual Life Options vested and exercisable (in years)	4 years 9 months 7 days

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

May 31, 2013

Accounting Policies [Abstract]

Basis Of Accounting Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited condensed financial statements as of May 31, 2013 and 2012 and for the three months and nine months then ended and for the period from November 15, 2012 to May 31, 2013 have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited financial statements. The unaudited Balance Sheet as of May 31, 2013, Statements of Operations for the three months and nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, and Statements of Cash Flows for the nine months ended May 31, 2013 and 2012 and for the period from November 15, 2012 to May 31, 2013, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The results for the three months and nine months ended May 31, 2013 and for the period from November 15, 2012 to May 31, 2013 are not necessarily indicative of results to be expected for the year ending August 31, 2013 or for any future interim period. In addition, the balance sheet data at August 31, 2012 was derived from the audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on January 3, 2013.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP 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. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the value of warrants and options and deferred income tax amounts and rates and timing of the reversal of income tax differences.

Development Stage Company [Policy Text Block]

Development Stage Company

Effective November 15, 2012, the Company is considered a development stage company, having no operating revenues during the period from November 15, 2012 (“Inception”) to May 31, 2013, as defined by ASC 915-205, Development-Stage Entities. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows upon entering the development stage through the date that revenues are generated. From November 15, 2012 through May 31, 2013, all operating expenses of the Company related to its augmented reality business and is included in the Condensed Statements of Operations. The Company had operating expenses of $179,279 and $143,753 respectively for the period from September 1, 2012 to November 15, 2012 and the period from June 1, 2012 to August 31, 2012 respectively, relating to its augmented reality business.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all short term investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

Reclassification, Policy [Policy Text Block]

Reclassifications

During the nine months ended May 31, 2013, the Company disposed of all its life settlement contracts. As of May 31, 2013, all of the operations related to the life settlement business, as well as any resulting gain or loss recognized from the disposal, have been reported as discontinued operations in the condensed financial statements. The Company has also reported the prior period operations related to this business as discontinued operations retrospectively for all periods presented. Additionally, the assets and liabilities related to the life settlements business have been classified as discontinued operations in the balance sheets for all periods presented. See Note 3 - Discontinued Operations  for more information.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Financial Instruments

The fair value of certain of the Company's financial instruments, consisting of cash, accounts payable and accrued expenses are estimated to be equal to their carrying value due to the short-term nature of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency and credit risks arising from these financial instruments.

Deferred Charges, Policy [Policy Text Block]

Deferred Rent Liability

The Company’s operating lease provides for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.

Research, Development, and Computer Software, Policy [Policy Text Block]

Software Development Costs

The Company applies the principles of ASC 985-20, Software- Costs of Software to Be Sold, Leased, or Marketed, which requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. The Company has adopted the "tested working model" approach to establishing technological feasibility for its products. Under this approach, a product in development is not considered to have passed the technological feasibility milestone until the Company has produced a model of the product that contains essentially all the functionality and features of the final product and have tested the model to ensure that it works as expected. The Company has expensed all software development costs when incurred since none of the Company’s products have reached technological feasibility.

Income Tax, Policy [Policy Text Block]

Income Taxes

Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense.

Earnings Per Share, Policy [Policy Text Block]

Earnings (Loss) per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period. Included in basic loss per share calculations are the effects of 6,000,000 warrants exercisable at $.01. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method. For the three months and nine months ended May 31, 2013, 30,450,344 shares of common stock, comprised of 3,310,172 convertible debentures with a conversion price of $0.25, 3,310,172 warrants with an exercise price of $0.50, and 23,830,000 options, convertible into 23,830,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive. For the three months and nine months ended May 31, 2012, 27,700,000 and 28,142,500 warrants with an exercise price of $2.00 and $4.00 respectively, and 55,400 Series A and Series B preferred shares, convertible into 55,400,000 common shares are not included in diluted earnings per share since their effect would be anti-dilutive.

Compensation Related Costs, Policy [Policy Text Block]

Stock-Based Compensation

The Company records stock-based compensation expense in accordance with  ASC 718, Compensation - Stock Compensation. The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

New Accounting Pronouncements Policy [Policy Text Block]

Recent Accounting Pronouncements

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the condensed financial statements of the Company.

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COMMON STOCK, WARRANTS AND OPTIONS

9 Months Ended

May 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

6. COMMON STOCK, WARRANTS AND OPTIONS

Common Stock

During the quarter ended May 31, 2013, the Company issued 240,012 shares of restricted stock to consultants for consulting services. The fair value of the restricted stock was estimated at $69,603.

During the nine months ended May 31, 2013, the Company received 40,320 shares of common stock from the Company’s CFO as reimbursement for $5,645 of taxes paid on his behalf. Those shares were returned to the Company’s treasury. 

Warrants

Warrant transactions are summarized as follows:

	Number of warrants		Weighted average exercise price		Weighted average life remaining (in years)
Balance as at August 31, 2012
Issued		6,000,000		0.01		2.75 years
Additions as of May 31, 2013
Issued		3,310,172		-		4.96 years
Balance as at May 31, 2013		9,310,172		0.18		3.60 years

As of May 31, 2013, there were 9,310,172warrants outstanding and exercisable with expiration dates commencing June 2015 through May 2018.

Except as set forth under limited circumstances, the warrants do not permit net cash settlement.

Stock Options

During the three months ended May 31, 2013, the Board of Directors of the Company, through unanimous written consent, resolved to adopt the Company’s 2013 Equity Incentive Plan (the “2013 Plan”), pursuant to which the Company may issue up to 30,000,000 shares or options to purchase shares of the Company’s Common Stock to employees, officers, directors, consultants and advisors of the Company. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. There are 40,000,000 shares of common stock reserved for issuance under the 2013 Plan and the 2010 Plan (the “Plans”), of which 25,170,012 were granted, net of cancellations, and exercises as of May 31, 2013.  

The purpose of the Plans is to provide the Company with the flexibility to use shares, options or other awards based on the Company’s common stock as part of an overall compensation package to provide performance-based rewards to attract and retain qualified personnel. Such awards include, without limitation, options, stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may consist of one such security or benefit, or two or more of them in any combination or alternative. Vesting of awards may be based upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions.

During the three months ended May 31, 2013, the Company entered into separate agreements with  five independent consultants,  pursuant to which each of the respective consultants agreed to provide augmented reality consulting services for the Company’s augmented reality activities. In consideration of the consulting services,  the Company granted these consultants a total of 22,600,000 Non Qualified Stock Options (the “Options”), of which 8,050,000 Options were issued under the 2010 Equity Incentive Plan (the “2010 Plan”) and 14,550,000 Options were issued under the 2013 Plan. The Options have an exercise price of $0.10, vesting on March 4, 2013 and expiring on March 5, 2018. 

During the three months ended May 31, 2013, the Company granted an officer a total of 230,000 Options issued under the 2010 Plan with an exercise price of $0.25, which Options vest on March 6, 2013 and expire on March 7, 2018.

During the three months ended May 31, 2013, the Company entered into an At-Will Employment Agreement with Helen Papagiannis pursuant to which she will serve as the Chief Innovation Officer of the Company. Ms. Papagiannis will receive an annual base compensation of $200,000. Additionally, Ms. Papagiannis was granted 500,000 Options under the Company’s 2010 Plan, with an exercise price of $0.25. 100,000 of such Options vest on March 6, 2013 and expire on March 7, 2018. 400,000 of such Options vest quarterly over the next 2 years (in equal amounts of 50,000 Options at the beginning of the Company’s quarterly reporting periods, i.e. December 1, March 1, June 1 and September 1), and expire 5 years from each vesting date. 

During the three months ended May 31, 2013, the Company agreed in principle to appoint Enon Landenberg as President and Chief Executive Officer, through May 31, 2014 with an initial base compensation of $250,000 per year. Mr. Landenberg will also receive a total of 300,000 Options with an exercise price of $0.405, which Options vest on May 30, 2013 and expire on May 29, 2018.

During the three months ended May 31, 2013, the Company granted its former CEO a total of 100,000 Options issued under the 2013 Plan with an exercise price of $0.405, which Options vest on December 1, 2013 and expire on May 29, 2018.

During the nine months ended May 31, 2013, the Company granted  100,000 Options issued under the 2010 plan at an exercise price of $0.31 vesting on October 24, 2013 and expiring on October 23, 2017 to a director.

For the nine months ended May 31, 2013, the compensation expense of these options was $4,408,338 and is included in the Condensed Statements of Operations.

Valuation Assumptions

The Company estimates the fair value of stock option grants using a Black-Scholes option pricing. In applying this model, the Company uses the following assumptions:  

 

⋅ Risk-Free Interest Rate: The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate. 

⋅ Expected Volatility: The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies.

⋅ Expected Term: Due to the limited exercise history of the Company’s stock options, the Company determined the expected term based on the stratification of employee groups and the expected effect of events that have indications on future exercise activity. Expected life for options granted to employees uses the Simplified Method, while options granted to non-employees uses an expected term equal to the life of the contract.

⋅ Expected Dividend Rate: The Company has not paid and does not anticipate paying any cash dividends in the near future.

The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the straight line method. The following assumptions were used: 

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Exercise price		$0.100 - $0.405		n/a		$0.100 - $0.405		n/a
Expected stock price volatility		71.8% - 72.0%		n/a		71.8% - 72.0%		n/a
Risk-free rate of interest		0.72% - 1.01%		n/a		0.72% - 1.01%		n/a
Expected life of options		4.7 - 5.0 Years		n/a		4.4 - 5.0 Years		n/a

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the three months and nine months ended May 31, 2013 and 2012:

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Employee awards	$	118,783	$	-	$	122,294	$	-
Non- employee awards, net of forfeitures		4,286,044		-		4,286,044		-
Total stock options compensation expense	$	4,404,827	$	-	$	4,408,338	$	-

The following table summarizes stock option activity:

	Number of Shares		Weighted Average Exercise Price		Total Weighted Average Intrinsic Value		Weighted Average Remaining Contactual Life (in years)
Outstanding at August 31, 2012		-	$	-	$	-		-
Options granted		23,830,000		0.11		-		-
Options exercised		-		-		-		-
Options forfeited		-		-		-		-
Options cancelled		-		-		-		-
Outstanding at May 31, 2013		23,830,000		0.11		7,015,650		4.77
Options vested and expected to vest		23,830,000		0.11		7,015,650		4.77
Options vested and exercisable		23,230,000	$	0.11	$	6,944,150		4.77

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NATURE AND CONTINUANCE OF OPERATIONS

9 Months Ended

May 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations [Text Block]

1. NATURE AND CONTINUANCE OF OPERATIONS

Infinity Augmented Reality, Inc. (formerly known as Absolute Life Solutions, Inc.) (the “Company” or “IAR” or “Infinity”) was originally incorporated as Shimmer Gold, Inc. in the State of Nevada on September 7, 2006 and was in the business of the acquisition and exploration of mineral resources.

On May 21, 2010, the Company changed its name from Shimmer Gold, Inc. to Absolute Life Solutions, Inc. During the fiscal year ended August 31, 2010, the Company commenced operations as a specialty financial services company engaged in the business of purchasing life settlement contracts for long-term investment purposes.

Effective November 15, 2012, the Company is no longer engaged in its prior primary activity as a specialty financial services company primarily engaged in the purchase of life settlement contracts. As a result of the foregoing, the Company is currently classified as a development stage company. All of the operations related to the Company’s life settlements business are reported as discontinued operations in the condensed financial statements. As discussed in Note 3, the prior period operations related to this business have also been reclassified as discontinued operations retrospectively for all periods presented.

During the year ended August 31, 2012, the Company formed a wholly-owned subsidiary Infinity Augmented Reality, LLC (“IAR Subsidiary”) and commenced activities to enable it to be actively engaged in the development of software applications which will utilize augmented reality. Effective March 7, 2013, the Company changed its name from Absolute Life Solutions, Inc. to Infinity Augmented Reality, Inc. On that same date, the IAR Subsidiary was merged into the Company. The Company is actively engaged in the development of software applications which will utilize augmented reality. The Company intends to develop a comprehensive augmented reality platform for consumers. The Company’s objective is to establish itself firmly as a preeminent source for state-of-the-art augmented reality experiences, forging a strong association, early on, between the Infinity brand and the burgeoning medium.

The continued existence of the Company is dependent upon its ability to generate profit from its augmented reality business and to meet its obligations as they come due. If additional cash is needed, the Company intends to finance the future capital required for continued operations from a combination of debt and equity markets. However, there is no assurance that (a) traditional debt and equity markets may be accessible as required, or if so, on acceptable terms and, or (b) the demand for and selling prices of the Company’s augmented reality software applications, may not be sufficient to meet cash flow requirements. The outcome of these matters cannot be predicted with certainty and therefore the Company may not be able to continue or expand operations as planned. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

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INCOME TAXES (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2012
United States statutory rate			35.00%
State income taxes			3.00%
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense	$ 75,000	$ 0	$ 75,000	$ 0

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COMMON STOCK, WARRANTS AND OPTIONS (Tables)

9 Months Ended

May 31, 2013

Stockholders' Equity Note [Abstract]

Schedule of Warrants Transaction [Table Text Block]

Warrant transactions are summarized as follows:

	Number of warrants		Weighted average exercise price		Weighted average life remaining (in years)
Balance as at August 31, 2012
Issued		6,000,000		0.01		2.75 years
Additions as of May 31, 2013
Issued		3,310,172		-		4.96 years
Balance as at May 31, 2013		9,310,172		0.18		3.60 years

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity [Table Text Block]

The following assumptions were used: 

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Exercise price		$0.100 - $0.405		n/a		$0.100 - $0.405		n/a
Expected stock price volatility		71.8% - 72.0%		n/a		71.8% - 72.0%		n/a
Risk-free rate of interest		0.72% - 1.01%		n/a		0.72% - 1.01%		n/a
Expected life of options		4.7 - 5.0 Years		n/a		4.4 - 5.0 Years		n/a

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards for the three months and nine months ended May 31, 2013 and 2012:

	Three months ended May 31, 2013		Three months ended May 31, 2012		Nine months ended May 31, 2013		Nine months ended May 31, 2012
Employee awards	$	118,783	$	-	$	122,294	$	-
Non- employee awards, net of forfeitures		4,286,044		-		4,286,044		-
Total stock options compensation expense	$	4,404,827	$	-	$	4,408,338	$	-

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes stock option activity:

	Number of Shares		Weighted Average Exercise Price		Total Weighted Average Intrinsic Value		Weighted Average Remaining Contactual Life (in years)
Outstanding at August 31, 2012		-	$	-	$	-		-
Options granted		23,830,000		0.11		-		-
Options exercised		-		-		-		-
Options forfeited		-		-		-		-
Options cancelled		-		-		-		-
Outstanding at May 31, 2013		23,830,000		0.11		7,015,650		4.77
Options vested and expected to vest		23,830,000		0.11		7,015,650		4.77
Options vested and exercisable		23,230,000	$	0.11	$	6,944,150		4.77

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SUBSEQUENT EVENTS

9 Months Ended

May 31, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

9. SUBSEQUENT EVENTS

Subsequent to May 31, 2013, the Board of Directors of the Company unanimously resolved that in light of the Company’s ongoing development activities occurring in Israel, the Company should form a wholly owned Israeli subsidiary, and undertake such activities and expend such funds of the Company as may be necessary in connection therewith. In furtherance thereof, on June 30, 2013, the Company formed a wholly owned Israeli subsidiary, Infinity Augmented Reality Israel Ltd.

On June 17, 2013, a consultant exercised 50,000 options at an exercise price of $0.10 per share. The Company received cash proceeds of $5,000 on exercise of those options.

Effective June 30, 2013, the Company terminated its services agreement with Infinity Advanced Technologies, Ltd.

Effective June 30, 2013, the Company terminated its rental lease agreement with its landlord. The loss on lease termination was approximately $531. EffectiveJuly 1, 2013, the Company subleased space from another tenant in the same building.

On July 2, 2013, the Company issued Convertible Debentures and received aggregate proceeds of $250,000.

On July 9, 2013, a consultant exercised 50,000 options at an exercise price of $0.10 per share. The Company received cash proceeds of $5,000 on exercise of those options.

On July 11, 2013, the Company entered into a Subscription Agreement with a certain seller pursuant to which the Company purchased a Convertible Promissory Note for an aggregate principal amount of $50,000. The Convertible Promissory Note has an interest rate of 5% per annum and a maturity date of July 31, 2014. 

The Company evaluates events that have occurred after the balance sheet date through the date the financial statements were publicly available. Based upon the evaluation, the Company did not identify any other recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.

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DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended		9 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013	May 31, 2012	Aug. 31, 2012
Sales, general and administrative expenses	$ 0	$ (418,327)	$ (204,200)	$ (1,303,100)
Other income (expense)
Realized gain on life settlement contracts held under investment method	0	0	0	319,843
Realized loss on extinguishment of debt	0	0	(8,438,584)	0
Change in fair value of life settlement contracts net of premiums paid	0	(25,625,608)	2,055,438	(34,854,768)
Interest expense	0	0	(1,610,571)	0
Loss from discontinued operations before income tax	0	(26,043,935)	(8,197,917)	(35,838,025)
Income tax benefit	0	11,549,712	3,879,477	15,369,126
Net loss from discontinued operations	0	(14,494,223)	(4,318,440)	(20,468,899)
ASSETS
Cash and cash equivalents	0		0		228,165
Investment in life settlement contracts at investment method	0		0		4,334,012
Total current assets of discontinued operations	0		0		4,562,177
Investment in life settlement contracts at fair value	0		0		64,667,124
Deferred income taxes	145,781		145,781		0
Total noncurrent assets of discontinued operations	145,781		145,781		64,667,124
LIABILITIES
Interest payable	0		0		626,710
Loans payable	0		0		59,450,000
Income and other taxes payable	775,000		775,000		0
Total current liabilities of discontinued operations	775,000		775,000		60,076,710
Deferred income taxes	0		0		4,243,044
Total long-term liabilities of discontinued operations	$ 0		$ 0		$ 4,243,044

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INCOME TAXES (Tables)

9 Months Ended

May 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax expense (benefit) consists of the following components at May 31, 2013 and 2012:

	2013		2012
Current tax expense	$	-	$	19,426
Deferred tax expense (benefit)		190,652		(15,388,552)
Total income tax expense (benefit)	$	190,652	$	(15,369,126)

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Document And Entity Information	9 Months Ended
	May 31, 2013	Jul. 14, 2013
Document Information [Line Items]
Entity Registrant Name	Infinity Augmented Reality, Inc.
Entity Central Index Key	0001421538
Current Fiscal Year End Date	--08-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	also
Entity Common Stock, Shares Outstanding		92,529,291
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 31, 2013
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013

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SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)	3 Months Ended			9 Months Ended
	Nov. 14, 2012	Aug. 31, 2012	May 31, 2012	May 31, 2013	May 31, 2012
Operating Expenses	$ 179,279	$ 143,753
Warrants Exercisable Effects On Earnings Per Share				6,000,000
Warrants Exercisable Per Share Effects On Earnings Per Share				$ 0.01
Investment Warrants, Exercise Price			$ 2.00		$ 4.00
Convertible Preferred Stock, Shares Issued upon Conversion			55,400,000		55,400,000
Common Stock, Conversion Basis				30,450,344
Debt Instrument, Convertible, Conversion Price				$ 0.25
Antidilutive Options Excluded From Computation Of Earnings Per Share				23,830,000
Series Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion			55,400		55,400
Series B Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion			55,400		55,400
Warrant [Member]
Stock Issued During Period, Shares, Conversion of Convertible Securities			27,700,000		28,142,500
Class of Warrant or Right, Outstanding				3,310,172
Warrants Exercise Price				$ 0.50