0001504412-15-000124.txt : 20150714 0001504412-15-000124.hdr.sgml : 20150714 20150713174842 ACCESSION NUMBER: 0001504412-15-000124 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20150531 FILED AS OF DATE: 20150714 DATE AS OF CHANGE: 20150713 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAUER ENERGY, INC. CENTRAL INDEX KEY: 0001446152 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 263261559 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53598 FILM NUMBER: 15986158 BUSINESS ADDRESS: STREET 1: 2326 TELLER ROAD CITY: NEWBURY PARK STATE: CA ZIP: 91320 BUSINESS PHONE: 888 829 8748 MAIL ADDRESS: STREET 1: 2326 TELLER ROAD CITY: NEWBURY PARK STATE: CA ZIP: 91320 FORMER COMPANY: FORMER CONFORMED NAME: BCO HYDROCARBON LTD DATE OF NAME CHANGE: 20080925 10-Q 1 seny201510qq3_10q.htm FORM 10Q Converted by EDGARwiz


UNITED STATES


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended May 31, 2015,

 [   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from __________ to __________

000-53598

Commission File Number

SAUER ENERGY, INC.

(Name of small business issuer in its charter)  

                  Nevada                                                                                                   26-3261559

(State or other jurisdiction of incorporation or organization)                (I.R.S. Employer

                 Identification  No.) 

  

4670 Calle Carga, Unit A, Camarillo, CA 93012

                                                (Address of principal executive offices)

                                                                 888-829-8748

                                               (Registrant’s telephone number, including area code)

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.  Yes [X ] No [o]


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 (§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).

Yes       [X]          No [o]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.      Large accelerated filer [o]  Accelerated filer [o]  Non-accelerated Filer [o]  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 [o]  No [X] 


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 139,082,945 shares of common stock, par value $0.0001 per share, as of July 10, 2015.



Page 1 of 31


SAUER ENERGY, INC.

REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

  

 

 

 

 

 

Page

PART I – Financial Information

 

Item 1.  Financial Statements

3

Item 2.   Management’s Discussion and Analysis of

 

                Financial Condition and Results of Operations

22

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

24

Item 4T. Controls and Procedures

24

PART II – Other Information

 

Item 1.  Legal Proceedings

28

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

28

Item 3.  Defaults Upon Senior Securities

28

Item 4.  Mine Safety Disclosures

28

Item 5.  Other Information

28

Item 6.   Exhibits

29

 

 

Signatures

30




Page 2 of 31




SAUER ENERGY

 Condensed Balance Sheet

 

 

 

 

 

 

 

May 31,

 

August 31,

 

 

2015

 

2014

 

 

 

 

 

 ASSETS

 

 (Unaudited)

 

 

 Current Assets

 

 

 

 

Cash

$

27,068

$

460,863

Prepaid Expenses

 

                      -

 

                593

Total Current Assets

 

            27,068

 

         461,456

 

 

 

 

 

 Property and Equipment, net

 

          117,487

 

      146,704

 

 

 

 

 

 Other Assets

 

 

 

 

 Intangible Assets

 

       1,355,502

 

   1,410,973

 Security Deposit

 

            14,000

 

        14,000

Total Other Assets

 

       1,369,502

 

   1,424,973

 

 

 

 

 

 Total Assets

$

1,514,057

$

2,033,133

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 Current Liabilities

 

 

 

 

 Accrued Liabilities

$

4,932

$

21,516

  Loan Payable

 

          375,000

 

      600,000

 Derivative Liability

 

          406,250

 

   1,025,000

 Total Current Liabilities

 

          786,182

 

   1,646,516

 

 

 

 

 

 Commitments & Contingencies

 

                    -   

 

                -   

 

 

 

 

 

 

 

 

 

 

 Stockholders' Equity

 

 

 

 

Common Stock, $0.0001 par value; authorized

 

 

 

 

 650,000,000 shares; issued and outstanding

 

 

 

 

 115,150,246 shares on August 31, 2014

 

 

 

 

 130,359,505 shares on May 31, 2015

 

            13,036

 

        11,515

Additional Paid-In Capital

 

       8,888,172

 

   8,191,503

Shares to be issued

 

            25,000

 

-

Accumulated deficit

 

      (8,198,333)

 

(7,816,401)

 Total Stockholders' Equity

 

          727,875

 

      386,617

 

 

 

 

 

 Total Liabilities and Stockholders' Equity

$

1,514,057

$

2,033,133


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



Page 3 of 31



SAUER ENERGY, INC.

 Statement of Operations

 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the three months ended

 

 For the nine months ended

 

 

May 31

 

May 31

 

May 31

 

May 31

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

(Restated)

 

 

 

(Restated)

 General and Administrative Expenses:

 

 

 

 

 

 

 

 

 Professional Fees

$

46,060

$

 42,224

$

94,832

$

133,922

 Consulting

 

               155,920

 

                 49,375

 

               229,734

 

               101,578

 Research &
    Development Expense

 

               161,579

 

                 31,435

 

               295,274

 

                 84,469

 Other General and
    Administrative Expenses

 

               106,198

 

                 93,209

 

               321,038

 

               250,745

   Total Operating Expenses

 

               469,757

 

               216,243

 

               940,878

 

               570,714

 

 

 

 

 

 

 

 

 

  Loss from Operations

 

              (469,756)

 

              (216,243)

 

              (940,878)

 

              (570,714)

 

 

 

 

 

 

 

 

 

 Other Income (Expense)

 

 

 

 

 

 

 

 

 Settlement Expense

 

                           -

 

              (974,200)

 

                           -

 

           (1,101,685)

 Interest and Financing

 

                (59,805)

 

  -

 

                (59,805)

 

                  (1,667)

 Commitment Fees

 

                           -

 

  -

 

                           -

 

               325,000

 Changes in Derivative Liability

 

                (72,917)

 

              (101,217)

 

               618,750

 

                (49,655)

         Total Other Income (Expense)

 

              (132,722)

 

           (1,075,417)

 

               558,945

 

              (828,007)

 

 

 

 

 

 

 

 

 

 Loss before taxes

 

              (602,479)

 

           (1,291,660)

 

              (381,933)

 

           (1,398,721)

 

 

 

 

 

 

 

 

 

 Provision credit for income taxes

 

                           -

 

-

 

                           -

 

-

 

 

 

 

 

 

 

 

 

 Net Loss

$

     (602,479)

$

(1,291,660)

$

 (381,933)

$

(1,398,721)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Basic earnings (loss)
        per  common share,

 

 

 

 

 

 

 

 

 Basic and diluted:

$

(0.0)   

$

 (0.01)

$

(0.0)   

$

 (0.01)

 

 

 

 

 

 

 

 

 

 Weighted average
        number of common

 

 

 

 

 

 

 

 

 shares outstanding, basic

 

        122,118,859

 

          103,765,349

 

        117,780,618

 

          98,679,393


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



Page 5 of 31




SAUER ENERGY, INC.

Statement of Stockholders' Equity

 

For the period from August 31, 2013 to May 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Deficit

Total

 

 

Common Stock

 

Additional

during the

Shareholders'

 

 

Number of

 

Shares to be

Paid-In

Development

Equity

 

 

Shares

Amount

Issued

Capital

Stage

(Deficit)

 

 

 

 

 

 

 

 

Balances August 31, 2013

93,742,564 

$

9,374 

 

$

6,329,521 

$

(5,597,771)

$

741,124 

 

Shares issued to repay loan, interest and fees

110,375 

11 

 

9,989 

 

10,000 

 

Shares issued to repay loan, interest and fees

200,000 

20 

 

13,580 

 

13,600 

 

Shares issued to repay loan, interest and fees

500,000 

50 

 

27,950 

 

28,000 

 

Shares issued for cash pursuant to equity line of credit (LOC)

555,720 

56 

 

74,944 

 

75,000 

 

Shares issued to repay loan, interest and fees

300,000 

30 

 

20,130 

 

20,160 

 

Shares issued for cash per LOC

250,000 

25 

 

26,375 

 

26,400 

 

Shares issued for cash per LOC

300,000 

30 

 

30,834 

 

30,864 

 

Shares issued for cash per LOC

300,000 

30 

 

32,106 

 

32,136 

 

Outstanding warrant expense

 

 

 

18,094 

 

18,094 

 

Shares issued to repay loan

290,000 

29 

 

19,285 

 

19,314 

 

Shares issued for cash per LOC

300,000 

30 

 

29,634 

 

29,664 

 

Shares issued for cash per LOC

300,000 

30 

 

28,722 

 

28,752 

 

Shares issued to repay loan, interest and fees

300,000 

30 

 

18,150 

 

18,180 

 

Shares issued for cash per LOC

332,742 

33 

 

29,967 

 

30,000 

 

Shares returned to Treasury pursuant to settlement with Eclipse Advisors, LLC

(700,000)

(70)

 

(196,805)

 

(196,875)

 

Shares issued to repay loan, interest and fees

349,097 

35 

 

29,965 

 

30,000 

 

Shares issued to repay loan, interest and fees

310,000 

31 

 

15,035 

 

15,066 

 

Shares issued for cash per LOC

500,000 

50 

 

41,462 

 

41,512 

 

Shares issued to repay loan, interest and fees

500,741 

50 

 

24,286 

 

24,336 

 

Shares issued for cash per LOC

330,235 

33 

 

26,967 

 

27,000 

 

Shares issued for cash per LOC

312,500 

31 

 

24,969 

 

25,000 

 

Shares issued for cash per LOC

577,741 

58 

 

49,942 

 

50,000 

 

Shares issued for cash per LOC

371,645 

37 

 

34,963 

 

35,000 

 

Shares issued for cash per LOC

400,000 

40 

 

37,976 

 

38,016 

 

Shares issued for cash per LOC

352,936 

35 

 

34,965 

 

35,000 

 

Shares issued for cash per settlement

2,000,000 

200 

 

299,800 

 

300,000 

 

Shares issued per mediation settlement with St. George Investments

5,000,000 

500 

 

649,500 

 

650,000 

 

Shares issued for cash per LOC

320,000 

32 

 

32,301 

 

32,333 

 

Shares issued for cash per LOC

310,000 

31 

 

27,294 

 

27,325 

 

Shares issued for cash per LOC

310,000 

31 

 

25,582 

 

25,613 

 

Shares issued for services

500,000 

50 

 

24,950 

 

25,000 

 

Shares issued for cash per LOC

300,000 

30 

 

20,245 

 

20,275 

 

Share subscriptions

3,000,000 

300 

 

149,700 

 

150,000 

 

Share subscriptions

1,000,000 

100 

 

49,900 

 

50,000 

 

Shares issued for cash per LOC

323,950 

32 

 

19,970 

 

20,002 

 

Share subscriptions

500,000 

50 

 

24,950 

 

25,000 

 

Share subscriptions

500,000 

50 

 

24,950 

 

25,000 

 

Outstanding warrant expense

 

9,355 

 

9,355 

 

Miscellaneous adjustment

 

 

 

Net Loss

 

(2,218,630)

(2,218,630)

 

 

 

 

 

 

 

 

Balances August 31, 2014

115,150,246 

$

11,515 

 

$

8,191,503 

$

(7,816,401)

$

386,617 

 

 

 

 

 

 

 

 

 

Shares issued per convertible note

698,324 

70 

 

29,930 

 

30,000 

 

Shares issued per convertible note

476,190 

48 

 

19,952 

 

20,000 

 

Shares issued per convertible note

714,286 

71 

 

29,929 

 

30,000 

 

Shares issued per convertible note

476,190 

48 

 

19,952 

 

20,000 

 

Shares issued per convertible note

636,132 

64 

 

24,936 

 

25,000 

 

Shares issued per convertible note

694,444 

69 

 

24,931 

 

25,000 

 

Shares issued per convertible note

816,993 

82 

 

24,918 

 

25,000 

 

Shares issued for cash per LOC

989,861 

99 

 

49,394 

 

49,493 

 

Shares issued per convertible note

868,056 

87 

 

24,913 

 

25,000 

 

Shares issued for services rendered

75,000 

 

4,418 

 

4,426 

 

Shares issued for services rendered

75,000 

 

4,418 

 

4,426 

 

Shares issued for services rendered

1,000,000 

100 

 

58,900 

 

59,000 

 

Shares issued for services rendered

500,000 

50 

 

29,450 

 

29,500 

 

Shares issued for services rendered

1,000,000 

100 

 

58,900 

 

59,000 

 

Shares issued for services rendered

750,000 

75 

 

44,175 

 

44,250 

 

Shares issued for services rendered

1,000,000 

100 

 

58,900 

 

59,000 

 

Shares issued for cash per LOC

1,704,282 

170 

 

81,635 

 

81,805 

 

Shares issued per convertible note

905,797 

91 

 

24,909 

 

25,000 

 

Shares issued for cash per LOC

1,828,704 

183 

 

82,109 

 

82,292 

 

Shares to be Issued

 

 

25,000

 

 

25,000 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(381,933)

(381,933)

Balances for the nine months ended May 31, 2015 (Unaudited)

130,359,505 

$

13,036 

$

25,000

$

8,888,172 

$

(8,198,333)

$

727,875 


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



Page 7 of 31



SAUER ENERGY, INC.

  Statement of Cash Flows

 (Unaudited)

 

 

 

 

 

 

May 31,

May 31,

 

2015

2014

 Cash flows from operating activities:

 

(Restated)

 Net loss

 $           (381,933)

 $            (1,398,721)

 Adjustments to reconcile net loss to

 

 

 net cash used by operating activities:

 

 

 Amortization

                 55,472

                    55,472

 Depreciation

                 45,227

                    19,128

 Change in derivative liability

              (618,750)

                    49,655

 Allocated share based compensation expense

                 -  

                    18,094

 Terms of mediation settlement

                 -  

                1,102,325

 Shares issued for Services

               284,600

                    25,000

 Financing costs paid in shares

                 59,805

 

 Changes in operating assets and liabilities:

 

 

 Prepaid Expenses

                     593

                       (651)

 Accounts payable and accrued expenses

               (16,584)

                      1,242

 Net cash flows used by operating activities  

              (571,570)

                 (128,456)

 

 

 

 Cash flows from investing activities:

 

 

 Purchase of furniture and equipment

               (16,010)

                   (22,547)

 Net cash used by investing activities

               (16,010)

                   (22,547)

 Cash flows from financing activities:

 

 

 Repayment on loan

              (225,000)

                 (120,000)

 Proceeds from issuance of common stock, net of costs

               378,785

                   714,615

 Net cash provided by financing activities

               153,785

                   594,615

 

 

 

 Net increase (decrease) in cash

              (433,795)

                   443,612

 Cash, beginning of the period

               460,863

                    19,178

 

 

 

 Cash, end of the period

                 27,068

                   462,790

 Supplemental cash flow disclosure:

 

 

 Interest paid

 -  

                 (323,333)

 Taxes paid

 -  

 -  



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



Page 8 of 31



Sauer Energy, Inc.

Notes to the (Unaudited) Financial Statements

May 31, 2015

Note 1 - Organization and summary of significant accounting policies:


These unaudited interim financial statements as of and for the three months ended May 31, 2015, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end August 31, 2014 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine month period ended May 31, 2015, are not necessarily indicative of results for the entire year ending August 31, 2015.

Following is a summary of our organization and significant accounting policies:


Organization and nature of business – Sauer Energy, Inc. (formerly: BCO Hydrocarbon Ltd.) (identified in these footnotes as “we” or the “Company”) was incorporated in the State of Nevada, United States of America on August 19, 2008. It was a natural resource exploration stage company and anticipated acquiring, exploring, and if warranted and feasible, developing natural resource assets. BCO had the right to acquire a 50% working interest in an oil and gas lease in Alberta, Canada.


Sauer Energy, Inc. (the “Old Sauer”) was incorporated in California on August 7, 2008. The Company is a developing company engaged in the design and manufacture of vertical axis wind turbine (VAWT) systems.


On July 25, 2010, the Company, the president and sole director Malcolm Albery (“MA”) and Dieter Sauer, Jr. (“DS”) completed a closing (the “Closing”) under an Agreement and Plan of Reorganization, dated as of June 23, 2010 (the “Agreement”).  The Agreement provided: (a) for the purchase by DS of all of the 39,812,500 shares of the Company owned by MA for $55,200; (b) the contribution by DS of all of the shares of Old Sauer, a California corporation (“SEI”) to the Company; (c) the assignment of certain patent rights related to wind turbine technology held by DS to the Company; and (d) the election of DS to the Company’s board of directors.  In connection with the Closing, Mr. Sauer was elected President and CEO of the Company and two former shareholders of the Company agreed to (i) indemnify the Company against any claims resulting from breaches of representations and warranties by the Company in the Agreement; (ii) to acquire and cause to be returned for cancellation an aggregate of 67,437,500 shares of the Company’s common Stock, including all of the shares owned by former officer and director Daniel Brooks and; (3) assume all of the Company’s obligations in connection with certain oil and gas leases in Canada.


The agreement was executed on July 25, 2010. Sauer Energy, Inc. became a wholly-owned subsidiary of the Company. On August 29, Malcolm Albery resigned as President and was



Page 9 of 31


replaced by Dieter Sauer.  In the following month, the Company changed its name from BCO Hydrocarbon Ltd. to Sauer Energy, Inc.


The Company’s fiscal year-end is August 31.


Basis of presentation – Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to developing enterprises.


Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.


Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.

  

Fixed assets - Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed:


Vehicle & Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years


Furniture & Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Years


Fair Value of Financial Instruments - The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

 

 

- Level 1: Quoted prices in active markets for identical assets or liabilities.

 

- Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. 

 

- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


The carrying amounts of the Company’s financial instruments as of May, 31, 2015, reflect:

 

- Cash: Level One measurement based on bank reporting.

- Loan receivable and loans from Officers and related parties: Level 2 based on promissory notes.

- Derivative liability: Level two measurement based upon the relative fair market value of the Company’s free trading common stock.


Federal income taxes -The Company utilizes FASB ACS 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward.  A valuation allowance of 100% has been established.


Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

 

All taxes have been filed since inception and no taxes or penalties are assessed or owed.


Research and development costs - The Company expenses costs of research and development cost as incurred. Research and development costs for the three months ended May 31, 2015, and May 31, 2014, was $161,579 and $31,435 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $295,274 and $84,469 respectively.


Advertising.   Advertising and marketing expenses for the three months ended May, 31, 2015, and May, 31, 2014, was $7,429 and $2,540 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $18,042 and $5,316 respectively


Basic and Diluted Earnings (Loss) Per Share - Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company has potentially dilutive securities outstanding consisting of warrants to purchase common stock, (see Note 9) and the conversion of convertible loans (see Note 6).  For the three months ended May 31, 2015, the warrants would



Page 11 of 31


not have been exercised since they are priced significantly higher than the market value of the Company’s trading common stock, while the convertible loans would likely be converted due to the discount that would be applied to the market price. As of May 31, 2015, 15,625,000 possible shares under the convertible loan would be considered dilutive,  but, for the three months ended May 31, 2015, the exercise of warrants and conversion of debt would be anti-dilutive since the Company was in a loss position, and they are not counted in the calculation of loss per share. The total common stock equivalents on a fully diluted basis if all outstanding agreements were exercised at May 31, 2015, and 2014, which could have been exercised, were 15,625,000 and 12,500,000 shares, respectively.


Recent Accounting Pronouncements—Management has considered all recent accounting pronouncements.  The following pronouncement was deemed applicable to our financial statements.

In April of 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property Plant, and Equipment Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update affect an entity that has a component that is disposed of or held for sale. We are evaluating the inclusion of this information should it apply in the future. This pronouncement will be adopted should it become relevant.


In June of 2014, the FASB issued ASU 2014-10, “Development State Entities Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, the amendments in this Update affect entities that are development stage entities under U.S. GAAP. A development stage entity is defined in the Master Glossary of the Accounting Standards Codification as follows: An entity devoting substantially all of its efforts to establishing anew business and for which either of the following conditions exists:


a.  Planned principal operations have not commenced.

b. Planned principal operations have commenced, but there has been no significant revenue therefrom.


This update applies to the Company as no significant revenue has been received, although there will be no significant impact on the financial statements since the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This amendment will become effective as of December 15, 2014 for the Company, after which the presentation of the financial statements will be revised as noted above.


In August of 2014, the FASB issued ASU 2014-15,”Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update apply to all entities and will become effective as of the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will implement this Update if substantial doubt is ever raised about the Company’s ability to continue as a going



Page 12 of 31


concern within one year after the financial statements are issued or at the date the financial statements are available to be issue when applicable.

FASB ASU 2015-03: Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability, to be presented consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.  This will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The Company does not anticipate significant impact upon its financial statements at this time and will continue to evaluation the potential for such impact.

Share based payments and awards

The company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation, or Topic 718), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the “risk-free interest rate”, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly.  For the three months ended May 31, 2015, we recognized no expenses for share based expense due to the issuance of common stock warrants.


 Note 2 – Going Concern


The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $8,198,333 as of May, 31, 2015.



Page 13 of 31



In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company.  This would have a material adverse effect on the Company and raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities.


Note 3 – Property and Equipment


Property and Equipment consisted of the following at May, 31, 2015, and August 31, 2014

May, 31, 2015

August 31, 2014

Computer, equipment & truck

 $      269,290       

 $           253,280

Less: Accumulated depreciation

(151,803)

            (106,576)

Property and equipment, net

$       117,487

 $           146,704


Note 4 – Intangible Property

The Company has acquired intangible property in patents, patents pending and goodwill.  The patents are being amortized over their expected lives of not more than seventeen years.  The restrictive covenants were fully amortized as of August 31, 2014.  Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued.  If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial.  The balances as of May 31, 2015, and August 31, 2014 are as follows:

 

 

 

 

May 31, 2015

             August 31, 2014

Patents

 $                           109,092

 $                              109,092

Purchased Patents

                           1,467,500

                              1,467,500

Goodwill

                                5,000

                                     5,000

Less Amortization

    (226,090)

                               (170,619)

 

 $                         1,355,502

 $                           1,410,973


Note 5 – Convertible Loans and Interest Payable

The Company entered into note agreements and subsequent modifications and settlements on convertible notes.  These notes are convertible into the Company’s common stock and are due usually within one year.  The notes were issued with original issuance discounts of twelve percent which was immediately convertible into common stock and if the note was not repaid in ninety days the zero percent interest rate was replaced with an immediate prepaid interest charge at ten percent with was subject to conversion.  The Conversion terms were both fixed and variable if the trading prices did not meet the fix conversion price.  See the derivative discussion in Note 6 concerning these loans.



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May 31, 2015

August 31,2014

Convertible Loans and Accrued Interest:

 

 

St George Investments

 $        375,000

 $        600,000



Note 6 – Derivative Liabilities


The Company entered into certain convertible loan agreements during 2012 and 2013.  These agreements contained terms that allowed for the conversion of the debt into common stock.  The basic agreement was originally with $0.25 conversion prices unless the stock sold at less than $0.25.  If the trades were at less than original term, the debt holders could elect to convert their debt at sixty percent of the lowest trading price in the 25 trading days prior to the conversion notice.  Because of these terms, the debt conversion clause requires that the Company account for these note balances as derivatives valued at the fair market value of the Company’s common stock on the day of any financial reporting period.   At May 31, 2015 and 2014, the fully convertible shares would be 15,625,000 and 12,500,000 common shares, respectively.



 

May 31, 2015

August 31, 2014

Derivative Liabilities on Convertible Loans:

 

 

St. George Investments

 $        406,250

 $          1,025,000



Note 7  Commitments and Contingencies

Rental Agreement:

On August 17, 2012, the Company leased a 10,410 square foot “industrial condominium” in Camarillo, California, for three years for monthly lease payments of $7,000 per month. There are no common area costs. All company operations are concentrated at the site.  The current least terminates on August 31, 2015.

Lease Commitments – as of May 31, 2015, remaining for the fiscal year:

Fiscal year ended August 31, 2015                             $  21,000

Consulting Agreement:


On May 22, 2015, the Company entered into an agreement with Synergy Business Consultants, LLC, for investor relations consulting, with payments of $2,500 per month, for a term of six months, , with an immediate issuance of 500,000 shares of common stock, effective May 26, 2015.


Note 8– Federal Income Taxes


No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through



Page 15 of 31


the year 2034. The availability of the Company’s net operating loss carryforwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $8,198,333, which will expire in 2028 through 2034 if not utilized.  The Company uses 35% for a composite tax rate to estimate the value of net operating losses for deferred taxes.


No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.


For the year ended August 31, 2014 and 2013, no income tax expense has been realized as a result of operations and no income tax penalties and interest have been accrued related to uncertain tax positions.  The Company files income tax returns in the U.S. federal jurisdiction and in the State of California.  These filings are subject to a three year statute of limitations.  The Company’s evaluation of income tax positions included the years ended August 31, 2014, and 2013, could be subject to agency examinations.  No filings are currently under examination.  No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates.  Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.


Note 9 – Capital Stock


The Company engaged in the following stock transactions for the period beginning after August 31, 2013:


On September 16, 2013, the Company issued 110,375 shares of common stock for $10,000 at $0.0906 per share pursuant to a convertible note.


On October 1, 2013, the Company issued 200,000 shares of common stock for $13,600 at $0.06800 per share pursuant to a convertible note.


On October 9, 2013, the Company issued 500,000 shares of common stock for $28,000 at $0.0560 per share pursuant to a convertible note.


Some of the following disclosures are net of wire fees and expenses.


On October 16, 2013, the Company issued 555,720 shares of common stock for $74,915 at $0.16870 per share pursuant to an Equity Purchase Agreement to repay loan, interest and fees.


On November 6, 2013, the Company issued 250,000 shares of common stock for $26,355 at $0.1056 per share pursuant to an Equity Purchase Agreement.


On November 11, 2013, the Company issued 300,000 shares of common stock for $30,819 at $0.10288 per share pursuant to an Equity Purchase Agreement.


On November 14, 2013, the Company issued 300,000 shares of common stock for $20,160 at $0.0672 per share pursuant to a convertible note.




Page 16 of 31


On November 18, 2013, the Company issued 300,000 shares of common stock for $32,091 at $0.1071 per share pursuant to an Equity Purchase Agreement.


On December 2, 2013, the Company issued 290,000 shares of common stock for $19,314 at $0.06660 per share pursuant to a convertible note.


On December 2, 2013, the Company issued 300,000 shares of common stock for $29,619 at $0.09888 per share pursuant to an Equity Purchase Agreement.


On December 9, 2013, the Company issued 300,000 shares of common stock for $28,707 at $0.09584 per share pursuant to an Equity Purchase Agreement.


On January 6, 2014, the Company issued 300,000 shares of common stock for $18,180 at $0.06060 per share pursuant to a convertible note.


On January 9, 2014, the Company issued 332,742 shares of common stock for $29,955 at $0.0902 per share pursuant to an Equity Purchase Agreement.


On January 21, 2014, the Company issued 349,097 shares of common stock for $29,955 at $0.0857 per share pursuant to an Equity Purchase Agreement.


On January 29, 2014, the Company issued 310,000 shares of common stock for $15,066 at $0.0486 per share pursuant to a convertible note.


On February 14, 2014, the Company issued 500,741 shares of common stock for $24,336 at $0.0486 per share pursuant to a convertible note.


On March 3, 2014, the Company issued 330,235 shares of common stock for $26,980 at $0.08176 per share pursuant to an Equity Purchase Agreement.


On March 28, 2014, the Company issued 577,741 shares of common stock for $49,980 at $0.0900 per share pursuant to an Equity Purchase Agreement.


On April 1, 2014, the Company issued 371,645 shares of common stock for $34,980 at $0.0942 per share pursuant to an Equity Purchase Agreement.


On April 9, 2014, the Company issued 400,000 shares of common stock for $37,996 at $0.0950 per share pursuant to an Equity Purchase Agreement.


On April 15, 2014, the Company issued 352,936 shares of common stock for $34,954 at $0.0992 per share pursuant to an Equity Purchase Agreement.


On April 24, 2014, the Company issued 320,000 shares of common stock for $32,277 at $0.1010 per share pursuant to an Equity Purchase Agreement.


On May 7, 2014, the Company issued 310,000 shares of common stock for $27,280 at $0.0880 per share pursuant to an Equity Purchase Agreement.




Page 17 of 31


On May 23, 2014, the Company issued 310,000 shares of common stock for $25,567 at $0.0826 per share pursuant to an Equity Purchase Agreement.


On June 9, 2014, the Company issued 300,000 shares of common stock for $20,229 at $0.06758 per share pursuant to an Equity Purchase Agreement.


On June 23, 2014, the Company issued 323,950 shares of common stock for $19,956 at $0.06174 per share pursuant to an Equity Purchase Agreement.


On May 30, 2014, the Company issued 500,000 shares of common stock for $0.05 per share for consulting services of $25,000.


On July 7, 2014, the Company entered into a private placement agreement that involved issuing 5,000,000 units of securities at $0.05 per unit for a total amount of cash of $250,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrants for a total of 5,000,000 warrants with an exercise price of $0.30 each expiring January 31, 2016.


On January 7, 2015, the Company issued 698,324 shares of common stock for $30,000 at $0.04296 per share pursuant to a convertible note.


On January 29, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.


On February 11, 2015, the Company issued 714,286 shares of common stock for $30,000 at $0.042 per share pursuant to a convertible note.


On February 24, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.


On March 5, 2015, the Company authorized 636,132 shares of common stock at $0.0393 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.

  

On March 19, 2015, the Company authorized 694,444 shares of common stock at $0.036 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.   


On April 13, 2015, the Company authorized 816,993 shares of common stock at $0.0306 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On April 28, 2015, the Company authorized 989,861 shares of common stock to be issued for $35,635 at $0.03600 per share pursuant to an Equity Purchase Agreement.


On May 1, 2015, the Company authorized 4.4 million shares of common stock at $0.059 per share to be issued for services rendered.


On May 4, 2015, the Company authorized 868,056 shares of common stock at $0.228 to be issued in exchange for cancellation of $25,000 of the convertible loan.




Page 18 of 31


On May 5, 2015, the Company authorized 1,704,282 shares of common stock to be issued for $58,900 at $0.03456 per share pursuant to an Equity Purchase Agreement.


On May 18, 2015, the Company authorized 1,828,704 shares of common stock to be issued for $59,250 at $0.03240 per share pursuant to an Equity Purchase Agreement.


On May 20, 2015, the Company authorized 905,797 shares of common stock at $0.0276 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On May 26, 2015, the Company entered into a consulting agreement wherein 500,000 shares were due and payable.  On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.05 per share to be issued pursuant to the consulting agreement of May 26, 2015.


For the year ended August 31, 2014, the Company recognized two equity transactions in warrants which had a total Black-Scholes value of $27,449.


Note 10 – Warrants


A private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expiring July 31, 2015.


During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000.  The private placements of 5,000,000 units consist of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 and expiring January 31, 2016.  The Company also issued 1,000,000 warrants to an investor in consideration of a loan for $50,000. These warrants had an exercise price of $0.18 and expired on March 20, 2015.


During the three months ended May 31, 2015, the Company did not issue any additional warrants or other convertible securities.


The following table is a summary of information about the outstanding stock warrants as of May 31, 2015:


Shares Underlying \                                       Weighted Average Remaining              Weighted                  Exercise

Warrants Outstanding                                               Contractual Life                           Average                     Price

______________________________________________________________________________

800,000 Shares \ 800,000 Warrants.             .13 years                             $0.32                 $0.40


5,000,000 Shares \5,000,000 Warrants         .56 years                             $0.25                 $0.30

 

 

 

The following table is a summary of activity of outstanding stock warrants for the three months ended May 31, 2015: Activity

Number of Warrants

Weighted Average Exercise Price

Balance, August 31, 2014

6,800,000

$0.29

Warrants expired

(1,000,000)

.18

Warrants cancelled

-

-

Warrants Granted

-

-

Warrants exercised

-

-

Balance, May 31, 2015

5,800,000

$0.31



NOTE 11 - Contingencies, Litigation

There were no loss contingencies or legal proceedings against the Company with respect to matters arising in the ordinary course of business.


St. George Investment Settlement:

On October 23, 2013, the Company filed a complaint against St George Investments, LLC (“St. George") in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the Company’s May, 2012 purchase of the assets of Helix Wind from St. George for treasury stock then valued in excess of $1.8 Million and a subsequent February 2013 promissory note for $275,000 executed under the terms of an amendment to the May, 2012 asset purchase agreement.  The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in light of St. George’s failure to deliver all of the intellectual property of Helix Wind.

On February 3, 2014, the parties participated in a mediation session at the Federal Court and executed an agreement reflecting a settlement in principal (the “Settlement”) which becomes binding only if the parties are unable to come to terms on more formal settlement agreements.  The parties have since executed more formal settlement agreements which are included as an exhibit hereto.  The basic terms of the Settlement required the issuance of an additional 5,000,000 shares of our common stock to St George under the Helix APA; required St. George to purchase additional shares of our common stock for $300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights.  The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market.

As of May 31, 2015, the Company still owed St. George $375,000. See Note 5.

NOTE 12 – Equity Purchase Agreement and Registration Rights Agreement

As of February 27, 2015, the Registrant entered into two agreements with Beaufort Capital Partners, LLC, a New York limited liability corporation (“BCPLLC”), an Equity Purchase Agreement (the “EPA”) and a Registration Rights Agreement (the “RRA”).  


The agreements required the Registrant to file a registration statement for the common stock underlying the EPA. Subject to various limitations set forth in the EPA, BCPLLC, after effectiveness of such registration statement, was required to purchase up to $3,000,000 worth of the Registrant’s common stock at a price equal to 72% of the market price as determined under the EPA (prior ten trading days).  The EPA provides for volume limitations on the amount of shares that BVPLC must purchase at any time and provides that the Registrant will be paid for the common stock upon electronic delivery of the shares to BCPLLC.  BCPLLC bore the attorney fees relating to the Registration Statement and is not charging the Registrant any additional fees. The Registration Statement was filed by the Registrant on March 17, 2015.  It was deemed effective by the Sec on April 27, 2015.



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NOTE 13  Correction of an Error

The Company had previously entered into debt agreements, which included original issue discounts, in delayed prepaid interest, which were not recognized as part of derivative financial

instrument.  The Company also had previously acquired intangible property and had not assigned lives nor began amortization as appropriate.  

The difference in the loss for the three months May 31, 2014, is an increase of the loss of $69,642, and for the nine months a difference of $25,171 increase of the net loss.  These changes represent the net corrections to derivative valuation expense and interest expense, and amortization of patent costs for these time periods.  For the nine months ended, the increase of $25,171, increased accumulated deficit and decreased current year loss by the same amount and had no effect on periods after August 31, 2014.  It had no effect upon the earnings per share for the period then ended.


NOTE 14 – Subsequent Events

Management has reviewed and evaluated subsequent events and transactions occurring after the balance sheet date, May 31, 2015, through the filing of this Quarterly Report on Form 10-Q on July 13, 2015  and determined that only the following additional subsequent event has occurred:

Conversion of Settlement Debt—  On June 10, 2015, the Company authorized 992,063 shares of common stock to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.

 

On June 30, 2015, the Company authorized 1,402,918 shares of common stock at $0.01782 to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.


Contract Term--- On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.04 to be issued pursuant to a consulting contract.


Equity Purchases--- On June 5, 2015, the Company authorized 1,798,611 shares of common stock to be issued for $54,390 at $0.03024 per share pursuant to an Equity Purchase Agreement.


On June 23, 2015, the Company authorized 2,009,646 shares of common stock to be issued for $45,000 at $0.02239 per share pursuant to an Equity Purchase Agreement.


On July 6, 2015, the Company authorized 2,020,202 shares of common stock to be issued for $40,000 at $0.01980 per share pursuant to an Equity Purchase Agreement.


Item 2 – Management’s Discussion and Analysis or Plan of Operation

Overview


We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect.  In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and



Page 21 of 31


objectives or projected financial results referred to in any of the forward-looking statements.  We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.  Some of the factors that may cause actual results,

developments and business decisions to differ materially from those contemplated by such forward-looking statements include the following:


RESULTS OF OPERATIONS

Nine months ended May 31, 2015 v. Nine months ended May 31, 2014


We have not realized any revenue for the nine months through May 31, 2015.  Our operating expenses increased to $940,878 for the nine months ending May 31, 2015, from $570,714 for the nine months ending May 31, 2014, due to having proved our concept and devoting resources to calibrating our turbines to harmonize with peripheral components. Consulting expenses increased to $229,734 for the nine months ended May 31, 2015, from $101,578 for the nine months ended May 31, 2014.  These overall increases in expenses combined with the decreased financing costs, and again from the change in the derivative balance w resulted in our net loss of $381,933 for the nine months ended May 31, 2015, as compared to the net loss of $1,398,721 for the nine months ended May 31, 2014.We anticipate continued increased costs associated with increased levels of operation and our manufacturing and marketing processes which will begin in the current fiscal year.


LIQUIDITY AND CAPITAL RESOURCES


Net cash flows used in operating activities for the nine months ended May 31, 2015, was $571,570. There was $16,010 used in investing activities and $153,785 net cash flows provided by financing activities for the nine months ended May 31, 2015. We had cash resources of $27,068 at May 31, 2015, and we intend to rely on the sale of stock in private placements to increase liquidity to enable us to execute on our plan to manufacture and market vertical axis wind turbines.  As reported on a Current Report on Form 8-K filed on February 27, 2015, we have entered into an Equity Purchase Agreement from which we anticipate raising substantial additional cash resources, but there can be no assurance that this will occur.


As of February 27, 2015, the Registrant entered into two agreements with Beaufort Capital Partners, LLC, a New York limited liability corporation (“BCPLLC”), an Equity Purchase Agreement (the “EPA”) and a Registration Rights Agreement (the “RRA”).  The two agreements we filed as exhibits to the Registrant’s Current Report on Form 8-K dated March 17, 2015 and the Registrant’s Registration Statement on Form S-1 Number 333-202819, filed on March 17, 2015, and the following summary is qualified in its entirety by reference to such exhibits.


The agreements required the Registrant to file a registration statement for the common stock underlying the EPA. Subject to various limitations set forth in the EPA, BCPLLC, after effectiveness of such registration statement, was required to purchase up to $3,000,000 worth of the Registrant’s common stock at a price equal to 72% of the market price as determined under the EPA (prior ten trading days).  The EPA provides for volume limitations on the amount of shares that BVPLC must purchase at any time and provides that the Registrant will be paid for the common stock upon electronic delivery of the shares to BCPLLC.  BCPLLC bore the attorney fees relating to the Registration Statement and is not charging the Registrant any additional fees. The Registration Statement was filed by the Registrant on March 17, 2015.



Page 22 of 31



The Registration Statement was deemed effective by the SEC on April 27, 2015. To date we have realized $253,175 through the sale of 8,330,640 shares to BCPLLC.


This is not sufficient to fund our operations and we intend to rely on the sale of stock in private placements to increase liquidity.  If we are unable to raise cash through the sale of our stock, we may be required to severely restrict our operations.  



Contractual Obligations


On February 27, 2015, the Company entered into an Equity Purchase Agreement with Beaufort Capital Partners as outlined above in Note 11.


 The Company has a convertible note, with St George as the holder, under the terms outlined above in Note 12.


On May 22, 2015, the Company entered into an agreement with Synergy Business Consultants, LLC, for investor relations consulting, with payments of $2,500 per month, for a term of six months, effective May 26, 2015.


Critical Accounting Policies


Financial Reporting Release No. 60 of the SEC encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of the financial statements.


There are no current revenue-generating activities that give rise to significant assumptions or

estimates.  Our financial statements filed as part of our May 31, 2015, Quarterly Report on Form 10-Q includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.


Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


Item 3. - Quantitative and Qualitative Disclosures About Market Risk


The Company is a smaller reporting company and is not required to provide this information.


Item 4T. - Controls and Procedures


Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the



Page 23 of 31


issuer in the reports that it files or submits 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.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


We conducted an evaluation, with the participation of our Chief Executive Officer who is also our principal financial officer, of the effectiveness of our disclosure controls and procedures as

of May 31, 2015.  Based on that evaluation, our Chief Executive Officer has concluded that as of May 31, 2015, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.


In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles.  Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.


A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  Management has

identified the following two material weaknesses that have caused management to conclude that, as of May 31, 2015, our disclosure controls and procedures were not effective at the reasonable assurance level:


1.           We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ending August 31, 2014, and the quarter ended May 31, 2015. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our

disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.


2.           We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.




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To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.


Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of,


the issuer’s principal executive and principal financial officers and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


·  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;


·  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the issuer; and


·  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuers assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.


As of the end of our most recent fiscal quarter, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments.  Based on that evaluation, they concluded that, as of May 31, 2015, such internal control over financial reporting was not effective.  This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.



Page 25 of 31


 

The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions, the recording of transactions and the custody of assets.  The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of May 31, 2015.


Management believes that the material weaknesses set forth in items (1) and (2) above did not have an effect on our financial results.  However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.


This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this quarterly report.


Management's Remediation Initiatives


In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

We will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. First, we will create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets. Second, we will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. Although there is substantial uncertainty in any such estimate, we anticipate the costs of implementing these remediation initiatives will be approximately $50,000 to $100,000 a year in increased salaries, legal and accounting expenses.


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.



Page 26 of 31


We anticipate that these initiatives will be at least partially, if not fully, implemented by August 31, 2015.


Changes in Internal Control over Financial Reporting


There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during the quarter ended May 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II – OTHER INFORMATION


Item 1 – Legal Proceedings


On October 23, 2013, the Company filed a complaint against St George Investments, LLC (“St. George") in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the Company’s May, 2012 purchase of the assets of Helix Wind from St. George for treasury stock then valued in excess of $1.8 Million and a subsequent February 2013 promissory note for $275,000 executed under the terms of an amendment to the May, 2012 asset purchase agreement.  The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in light of St. George’s failure to deliver all of the intellectual property of Helix Wind. St. George interpreted the contracts and promissory note as entitling it to a windfall recovery above and beyond the asset purchase price and promissory note amount. On November 21, 2013, St George exercised its right as a non-California based entity to remove the action from the Ventura state court to the federal court sitting in Los Angeles, the United States District Court for the Central District of California.  On November 26, 2013, St. George filed its answer and counterclaim seeking to enforce its interpretation of the contracts and to thereby collect approximately $440,000 above and beyond what is otherwise due, plus costs and attorney’s fees. On February 3, 2014, the parties participated in a mediation session at the Federal Court and executed an agreement reflecting a settlement in principal (the “Settlement”) which becomes binding only if the parties are unable to come to terms on more formal settlement agreements.  The parties have since executed more formal settlement agreements which are included as an exhibit hereto.  The basic terms of the Settlement required the issuance of an additional 5,000,000 shares of our common stock to St George under the Helix APA; required St. George to purchase an additional shares of our common stock for $300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights.  The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market. The foregoing is a summary only and is qualified by reference to the settlement agreement included as an exhibit to the Company’s Form 10-K for the year ended August 31, 2014.


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

None.


Item 3 – Defaults Upon Senior Securities

None.



Page 27 of 31


Item 4.  Mine Safety Disclosures  

Not applicable


Item 5 – Other Information

None.



Item 6 – Exhibits

The following documents are filed as part of this Report.

31.1*  Certification of Chief Executive and Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).

32.1*  Certification pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101.INS** XBRL Instance Document


101.SCH** XBRL Taxonomy Extension Schema Document


101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document


101.LAB** XBRL Taxonomy Extension Label Linkbase Document


101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document


101.DEF** XBRL Taxonomy Extension Definition Linkbase Document

________________________


*Filed herewith.


**Furnished herewith.



Page 28 of 31



SIGNATURE


In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


SAUER ENERGY, INC.

 

Date: July 13, 2015


By:    /s/Dieter R. Sauer, Jr.

Name: Dieter R. Sauer, Jr., CEO

(Principal Executive, Accounting and Financial Officer)



Page 29 of 31





Page 30 of 31






Page 31 of 31


EX-31.1 2 exhibit31_ex31z1.htm EXHIBIT 31.1 Converted by EDGARwiz

EX-31 2 exhibit311_ex31.htm EXHIBIT 31

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Dieter R. Sauer, Jr., certify that:

 

1.         I have reviewed this Quarterly Report on Form 10-Q of Sauer Energy, Inc. for the quarter ended May 31, 2015;

 

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 registrant as of, and for, the periods presented in this report;

 

4.         The registrants 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)) for the registrant 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b) 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.         The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants ability to record, process, summarize and report financial information; and

(b)

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

 

Date:  July 13 , 2015                                 

 /s/ Dieter R. Sauer, Jr.                                           

     Dieter R. Sauer, Jr.

     CEO and President




EX-32.1 3 exhibit32_ex32z1.htm EXHIBIT 32.1 Converted by EDGARwiz

EX-32 3 exhibit32_ex32.htm EXHIBIT 32


Exhibit 32.1


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

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


The undersigned is the CEO and President (Principal Executive, Financial and Accounting Officer) of Sauer Energy, Inc.  This Certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  This Certification accompanies the Quarterly Report on Form 10-Q of Sauer Energy, Inc. for the quarter ended May 31, 2015.


The undersigned certifies that such 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of Sauer Energy, Inc. as of May 31, 2015.


This Certification is executed as of July 13, 2015.


/s/ Dieter R. Sauer, Jr.                                           

    Dieter R. Sauer, Jr.

    CEO and President





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EX-101.CAL 4 seny-20150531_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT EX-101.DEF 5 seny-20150531_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT EX-101.INS 6 seny-20150531.xml XBRL INSTANCE DOCUMENT -106576 -151803 -129047 -555579 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Advertising. &nbsp;&nbsp;</b>Advertising and marketing expenses for the three months ended May, 31, 2015, and May, 31, 2014, was $7,429 and $2,540 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $18,042 and $5,316 respectively</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> 18094 false 55472 55472 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Basis of presentation &#150; 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Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company has potentially dilutive securities outstanding consisting of warrants to purchase common stock, (see Note 9) and the conversion of convertible loans (see Note 6). &nbsp;For the three months ended May 31, 2015, the warrants would not have been exercised since they are priced significantly higher than the market value of the Company&#146;s trading common stock, while the convertible loans would likely be converted due to the discount that would be applied to the market price. As of May 31, 2015, 15,625,000 possible shares under the convertible loan would be considered dilutive, &nbsp;but, for the three months ended May 31, 2015, the exercise of warrants and conversion of debt would be anti-dilutive since the Company was in a loss position, and they are not counted in the calculation of loss per share. The total common stock equivalents on a fully diluted basis if all outstanding agreements were exercised at May 31, 2015, and 2014, which could have been exercised, were 15,625,000 and 12,500,000 shares, respectively.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> 0001446152 139082945 Yes Smaller Reporting Company SAUER ENERGY, INC. No No 49655 -618750 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Fair Value of Financial Instruments - </b>The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), &#147;Fair Value Measurements and Disclosures&quot; for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value: </p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="624" style='width:6.5in;padding:0'></td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 1: Quoted prices in active markets for identical assets or liabilities. </p> </td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> </tr> <tr style='height:52.65pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:52.65pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. </p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The carrying amounts of the Company&#146;s financial instruments as of May, 31, 2015, reflect:</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr style='height:4.0pt'> <td width="624" style='width:6.5in;padding:0;height:4.0pt'></td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Cash: Level One measurement based on bank reporting. </p> </td> </tr> <tr style='height:27.75pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:27.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:9.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:-9.0pt;line-height:normal'>- Loan receivable and loans from Officers and related parties: Level 2 based on promissory notes.</p> </td> </tr> <tr style='height:27.75pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:27.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:9.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:-9.0pt;line-height:normal'>- Derivative liability: Level two measurement based upon the relative fair market value of the Company&#146;s free trading common stock.</p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> -170619 -226090 1467500 1467500 250745 93209 321038 106198 5000 5000 -1398721 -1291660 -381933 -602479 -1398721 -1291660 -381933 -602479 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Federal income taxes </b>-The Company utilizes FASB ACS 740, <i>&#147;Income Taxes&#148;, </i>which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is&nbsp;&#147;more likely-than-not&#148;&nbsp;that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward. &nbsp;A valuation allowance of 100% has been established.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&#160;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>All taxes have been filed since inception and no taxes or penalties are assessed or owed.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> 1242 -16584 -651 593 1242 -16584 -651 593 828007 1075417 -558945 132722 1667 59805 59805 25000 344405 253280 269290 594615 153785 -22547 -16010 -128456 -571570 -1398721 -381933 -1398721 -1291660 -381933 -602479 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 1 - Organization and summary of significant accounting policies: </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:6.95pt;text-align:justify;line-height:normal'>These unaudited interim financial statements as of and for the three months ended May 31, 2015, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company&#146;s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:3.45pt;margin-right:0in;margin-bottom:3.45pt;margin-left:0in;text-align:justify;line-height:normal'>These unaudited interim financial statements should be read in conjunction with the Company&#146;s financial statements and notes thereto included in the Company&#146;s fiscal year end August 31, 2014 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine month period ended May 31, 2015, are not necessarily indicative of results for the entire year ending August 31, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Following is a summary of our organization and significant accounting policies: </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Organization and nature of business &#150; </b>Sauer Energy, Inc. <b>(</b>formerly: BCO Hydrocarbon Ltd.) (identified in these footnotes as &#147;we&#148; or the &#147;Company&#148;) was incorporated in the State of Nevada, United States of America on August 19, 2008. It was a natural resource exploration stage company and anticipated acquiring, exploring, and if warranted and feasible, developing natural resource assets. BCO had the right to acquire a 50% working interest in an oil and gas lease in Alberta, Canada. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Sauer Energy, Inc. (the &#147;Old Sauer&#148;) was incorporated in California on August 7, 2008. The Company is a developing company engaged in the design and manufacture of vertical axis wind turbine (VAWT) systems. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On July 25, 2010, the Company, the president and sole director Malcolm Albery (&#147;MA&#148;) and&nbsp;Dieter Sauer, Jr. (&#147;DS&#148;) completed a closing (the &#147;Closing&#148;) under an Agreement and Plan of Reorganization, dated as of June 23, 2010 (the &#147;Agreement&#148;).&nbsp;&nbsp;The Agreement provided: (a) for the purchase by DS of all of the 39,812,500 shares of the Company owned by MA for $55,200; (b) the contribution by DS of all of the shares of Old Sauer, a California corporation (&#147;SEI&#148;) to the Company; (c) the assignment of certain patent rights related to wind turbine technology held by DS to the Company; and (d) the election of DS to the Company&#146;s board of directors.&nbsp;&nbsp;In connection with the Closing, Mr. Sauer was elected President and CEO of the Company and two former shareholders of the Company agreed to (i) indemnify the Company against any claims resulting from breaches of representations and warranties by the Company in the Agreement; (ii) to acquire and cause to be returned for cancellation an aggregate of 67,437,500 shares of the Company&#146;s common Stock, including all of the shares owned by former officer and director Daniel Brooks and; (3) assume all of the Company&#146;s obligations in connection with certain oil and gas leases in Canada. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The agreement was executed on July 25, 2010. Sauer Energy, Inc. became a wholly-owned subsidiary of the Company. On August 29, Malcolm Albery resigned as President and was replaced by Dieter Sauer.&nbsp;&nbsp;In the following month, the Company changed its name from BCO Hydrocarbon Ltd. to Sauer Energy, Inc. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The Company&#146;s fiscal year-end is August 31. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Basis of presentation &#150; </b>Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to developing enterprises. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Use of estimates - </b>The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.&nbsp;&nbsp;Actual results could differ from those estimates. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Cash and cash equivalents - </b>For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Fixed assets - </b>Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed: </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Vehicle &amp; Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Furniture &amp; Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Years</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Fair Value of Financial Instruments - </b>The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), &#147;Fair Value Measurements and Disclosures&quot; for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value: </p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="624" style='width:6.5in;padding:0'></td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 1: Quoted prices in active markets for identical assets or liabilities. </p> </td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> </tr> <tr style='height:52.65pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:52.65pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. </p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The carrying amounts of the Company&#146;s financial instruments as of May, 31, 2015, reflect:</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr style='height:4.0pt'> <td width="624" style='width:6.5in;padding:0;height:4.0pt'></td> </tr> <tr align="left"> <td width="624" valign="top" style='width:6.5in;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>- Cash: Level One measurement based on bank reporting. </p> </td> </tr> <tr style='height:27.75pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:27.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:9.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:-9.0pt;line-height:normal'>- Loan receivable and loans from Officers and related parties: Level 2 based on promissory notes.</p> </td> </tr> <tr style='height:27.75pt'> <td width="624" valign="top" style='width:6.5in;background:white;padding:0;height:27.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:9.0pt;margin-bottom:.0001pt;text-align:justify;text-indent:-9.0pt;line-height:normal'>- Derivative liability: Level two measurement based upon the relative fair market value of the Company&#146;s free trading common stock.</p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Federal income taxes </b>-The Company utilizes FASB ACS 740, <i>&#147;Income Taxes&#148;, </i>which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is&nbsp;&#147;more likely-than-not&#148;&nbsp;that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward. &nbsp;A valuation allowance of 100% has been established.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&#160;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>All taxes have been filed since inception and no taxes or penalties are assessed or owed.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Research and development costs - </b>The Company expenses costs of research and development cost as incurred. Research and development costs for the three months ended May 31, 2015, and May 31, 2014, was $161,579 and $31,435 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $295,274 and $84,469 respectively.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Advertising. &nbsp;&nbsp;</b>Advertising and marketing expenses for the three months ended May, 31, 2015, and May, 31, 2014, was $7,429 and $2,540 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $18,042 and $5,316 respectively</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Basic and Diluted Earnings (Loss) Per Share - </b>Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company has potentially dilutive securities outstanding consisting of warrants to purchase common stock, (see Note 9) and the conversion of convertible loans (see Note 6). &nbsp;For the three months ended May 31, 2015, the warrants would not have been exercised since they are priced significantly higher than the market value of the Company&#146;s trading common stock, while the convertible loans would likely be converted due to the discount that would be applied to the market price. As of May 31, 2015, 15,625,000 possible shares under the convertible loan would be considered dilutive, &nbsp;but, for the three months ended May 31, 2015, the exercise of warrants and conversion of debt would be anti-dilutive since the Company was in a loss position, and they are not counted in the calculation of loss per share. The total common stock equivalents on a fully diluted basis if all outstanding agreements were exercised at May 31, 2015, and 2014, which could have been exercised, were 15,625,000 and 12,500,000 shares, respectively.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Recent Accounting Pronouncements</b>&#151;Management has considered all recent accounting pronouncements. &nbsp;The following pronouncement was deemed applicable to our financial statements.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In April of 2014, the FASB issued ASU 2014-08, &#147;Presentation of Financial Statements and Property Plant, and Equipment Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update affect an entity that has a component that is disposed of or held for sale. We are evaluating the inclusion of this information should it apply in the future. This pronouncement will be adopted should it become relevant.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In June of 2014, the FASB issued ASU 2014-10, &#147;Development State Entities Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, the amendments in this Update affect entities that are development stage entities under U.S. GAAP. A development stage entity is defined in the Master Glossary of the Accounting Standards Codification as follows: An entity devoting substantially all of its efforts to establishing anew business and for which either of the following conditions exists:</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:3.75pt;text-align:justify;text-indent:.5in;line-height:normal'><font style='background:white'>a.&#160; Planned principal operations have not commenced.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;line-height:normal'><font style='background:white'>b. Planned principal operations have commenced, but there has been no significant revenue therefrom.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>This update applies to the Company as no significant revenue has been received, although there will be no significant impact on the financial statements since the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This amendment will become effective as of December 15, 2014 for the Company, after which the presentation of the financial statements will be revised as noted above.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In August of 2014, the FASB issued ASU 2014-15,&#148;Presentation of Financial Statements&#151;Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity&#146;s Ability to Continue as a Going Concern. The amendments in this Update apply to all entities and will become effective as of the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will implement this Update if substantial doubt is ever raised about the Company&#146;s ability to continue as a going concern within one year after the financial statements are issued or at the date the financial statements are available to be issue when applicable.</font></p> <p style='text-align:justify'><font style='background:white'>FASB ASU 2015-03: Interest &#150; Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability, to be presented consistent with debt discounts.&#160; The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.&#160; This will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.&#160; The Company does not anticipate significant impact upon its financial statements at this time and will continue to evaluation the potential for such impact.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Share based payments and awards</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The company has adopted the use of Statement of Financial Accounting Standards No. 123R, &#147;Share-Based Payment&#148; (SFAS No.&nbsp;123R) (now contained in FASB Codification Topic 718, <i>Compensation-Stock Compensation, </i>or<i> </i>Topic 718), which supersedes APB Opinion No. 25, &#147;Accounting for Stock Issued to Employees&#148;, and its related implementation guidance and eliminates the alternative to use Opinion 25&#146;s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the &#147;risk-free interest rate&#148;, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. &nbsp;<font style='background:white'>For the three months ended May 31, 2015, we recognized no expenses for share based expense due to the issuance of common stock warrants.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:5.25pt;line-height:normal'><b>NOTE 11 - Contingencies, Litigation</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>There were no loss contingencies or legal proceedings against the Company with respect to matters arising in the ordinary course of business. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:9.75pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'><b>St. George Investment Settlement:</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>On October 23, 2013, the Company filed a complaint against St George Investments, LLC (&#147;St. George&quot;) in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the Company&#146;s May, 2012 purchase of the assets of Helix Wind&nbsp;from St. George for treasury stock then valued in excess of $1.8 Million and a subsequent February 2013 promissory note for $275,000 executed under the terms of an amendment to the May, 2012 asset purchase agreement.&nbsp; The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in light of St. George&#146;s failure to deliver all of the intellectual property of Helix Wind.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>On February 3, 2014, the parties participated in a mediation session at the Federal Court and executed an agreement reflecting a settlement in principal (the &#147;Settlement&#148;) which becomes binding only if the parties are unable to come to terms on more formal settlement agreements. &nbsp;The parties have since executed more formal settlement agreements which are included as an exhibit hereto. &nbsp;The basic terms of the Settlement required the issuance of an additional 5,000,000 shares of our common stock to St George under the Helix APA; required St. George to purchase additional shares of our common stock for $300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights. &nbsp;The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>As of May 31, 2015, the Company still owed St. George $375,000. See Note 5.</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b><font style='background:white'>NOTE 12 &#150; Equity Purchase Agreement and Registration Rights Agreement</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>As of February 27, 2015, the Registrant entered into two agreements with Beaufort Capital Partners, LLC, a New York limited liability corporation (&#147;BCPLLC&#148;), an Equity Purchase Agreement (the &#147;EPA&#148;) and a Registration Rights Agreement (the &#147;RRA&#148;). &nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The agreements required the Registrant to file a registration statement for the common stock underlying the EPA. Subject to various limitations set forth in the EPA, BCPLLC, after effectiveness of such registration statement, was required to purchase up to $3,000,000 worth of the Registrant&#146;s common stock at a price equal to 72% of the market price as determined under the EPA (prior ten trading days). &nbsp;The EPA provides for volume limitations on the amount of shares that BVPLC must purchase at any time and provides that the Registrant will be paid for the common stock upon electronic delivery of the shares to BCPLLC. &nbsp;BCPLLC bore the attorney fees relating to the Registration Statement and is not charging the Registrant any additional fees. The Registration Statement was filed by the Registrant on March 17, 2015.&#160; It was deemed effective by the Sec on April 27, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b><font style='background:white'> </font></b></p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'><b><font style='background:white'>NOTE 13&nbsp;</font></b><b><font style='background:white'>&#150;</font></b><b><font style='background:white'>&nbsp;Correction of an Error</font></b> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:4.5pt;text-align:justify;line-height:normal'><font style='background:white'>The Company had previously entered into debt agreements, which included original issue discounts, in delayed prepaid interest, which were not recognized as part of derivative financial </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:4.5pt;text-align:justify;line-height:normal'><font style='background:white'>instrument. &nbsp;The Company also had previously acquired intangible property and had not assigned lives nor began amortization as appropriate. &nbsp;</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:5.25pt;text-align:justify;line-height:normal'><font style='background:white'>The difference in the loss for the three months May 31, 2014, is an increase of the loss of $69,642, and for the nine months a difference of $25,171 increase of the net loss. &nbsp;These changes represent the net corrections to derivative valuation expense and interest expense, and amortization of patent costs for these time periods. &nbsp;For the nine months ended, the increase of $25,171, increased accumulated deficit and decreased current year loss by the same amount and had no effect on periods after August 31, 2014. &nbsp;It had no effect upon the earnings per share for the period then ended.</font> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>NOTE 14 &#150; Subsequent Events</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>Management has reviewed and evaluated subsequent events and transactions occurring after the balance sheet date, May 31, 2015, through the filing of this Quarterly Report on Form 10-Q on July 13, 2015 &#160;and determined that only the following additional subsequent event has occurred:</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b><font style='background:white'>Conversion of Settlement Debt</font></b><font style='background:white'>&#151; &nbsp;On June 10, 2015, the Company authorized 992,063 shares of common stock to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&#160;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On June 30, 2015, the Company authorized 1,402,918 shares of common stock at $0.01782 <font style='background:white'>to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Contract Term---</b> On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.04 to be issued pursuant to a consulting contract.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Equity Purchases---</b> On June 5, 2015, the Company authorized 1,798,611 shares of common stock to be issued for $54,390 at $0.03024 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On June 23, 2015, the Company authorized 2,009,646 shares of common stock to be issued for $45,000 at $0.02239 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>On July 6, 2015, the Company authorized 2,020,202 shares of common stock to be issued for $40,000 at $0.01980 per share pursuant to an Equity Purchase Agreement.</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;<b>Note 2 &#150; Going Concern </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $8,193,333 as of May, 31, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company&#146;s ability to raise additional capital, obtain financing and to succeed in its future operations. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. &nbsp;This would have a material adverse effect on the Company and raises substantial doubt about the Company&#146;s ability to continue as a going concern. &nbsp;The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 3 &#150; Property and Equipment </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Property and Equipment consisted of the following at May, 31, 2015, and August 31, 2014</p> </td> <td width="119" valign="bottom" style='width:89.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:5.25pt;margin-bottom:.0001pt;text-align:center;text-indent:-13.5pt;line-height:normal'>May, 31, 2015</p> </td> <td width="111" valign="bottom" style='width:83.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>August 31, 2014</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Computer, equipment &amp; truck</p> </td> <td width="119" valign="bottom" style='width:89.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;269,290&nbsp;&nbsp;&nbsp;&nbsp;&#160;&#160; </p> </td> <td width="111" valign="bottom" style='width:83.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#160; &nbsp;253,280</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Less: Accumulated depreciation</p> </td> <td width="119" valign="bottom" style='width:89.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>(151,803)</p> </td> <td width="111" valign="bottom" style='width:83.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(106,576)</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Property and equipment, net</p> </td> <td width="119" valign="bottom" style='width:89.0pt;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>$ &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;117,487</p> </td> <td width="111" valign="bottom" style='width:83.0pt;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;146,704</p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 4 &#150; Intangible Property</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>The Company has acquired intangible property in patents, patents pending and goodwill. &nbsp;The patents are being amortized over their expected lives of not more than seventeen years. &nbsp;The restrictive covenants were fully amortized as of August 31, 2014. &nbsp;Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued. &nbsp;If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial. &nbsp;The balances as of&nbsp;May 31, 2015, and&nbsp;August 31, 2014 are as follows:</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="278" style='width:208.5pt;padding:0'></td> <td width="130" style='width:97.5pt;padding:0'></td> <td width="229" style='width:171.75pt;padding:0'></td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="130" valign="bottom" style='width:97.5pt;border:none;border-bottom:solid windowtext 1.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>May 31, 2015</p> </td> <td width="229" valign="bottom" style='width:171.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; August 31, 2014</p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Patents</p> </td> <td width="130" valign="top" style='width:97.5pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109,092 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109,092 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Purchased Patents</p> </td> <td width="130" valign="top" style='width:97.5pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,467,500 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,467,500 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Goodwill</p> </td> <td width="130" valign="top" style='width:97.5pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,000 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,000 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Less Amortization </p> </td> <td width="130" valign="top" style='width:97.5pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;(226,090)</p> </td> <td width="229" valign="bottom" style='width:171.75pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(170,619)</p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="130" valign="bottom" style='width:97.5pt;border-top:solid black 1.0pt;border-left:none;border-bottom:double black 2.25pt;border-right:none;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'><u>&nbsp;</u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,355,502</p> </td> <td width="229" valign="bottom" style='width:171.75pt;border-top:solid black 1.0pt;border-left:none;border-bottom:double black 2.25pt;border-right:none;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,410,973 </p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 5 &#150; Convertible Loans and Interest Payable</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>The Company entered into note agreements and subsequent modifications and settlements on convertible notes. &nbsp;These notes are convertible into the Company&#146;s common stock and are due usually within one year. &nbsp;The notes were issued with original issuance discounts of twelve percent which was immediately convertible into common stock and if the note was not repaid in ninety days the zero percent interest rate was replaced with an immediate prepaid interest charge at ten percent with was subject to conversion. &nbsp;The Conversion terms were both fixed and variable if the trading prices did not meet the fix conversion price. &nbsp;See the derivative discussion in Note 6 concerning these loans.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='line-height:115%;width:100.0%;border-collapse:collapse'> <tr style='height:15.75pt'> <td width="54%" valign="bottom" style='width:54.2%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.9%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>May 31, 2015</p> </td> <td width="22%" valign="bottom" style='width:22.9%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>August 31,2014</p> </td> </tr> <tr style='height:31.5pt'> <td width="54%" valign="bottom" style='width:54.2%;padding:0in 5.4pt 0in 5.4pt;height:31.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Convertible Loans and Accrued Interest:</b></p> </td> <td width="22%" valign="bottom" style='width:22.9%;padding:0in 5.4pt 0in 5.4pt;height:31.5pt'></td> <td width="22%" valign="bottom" style='width:22.9%;padding:0in 5.4pt 0in 5.4pt;height:31.5pt'></td> </tr> <tr style='height:16.5pt'> <td width="54%" valign="bottom" style='width:54.2%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>St George Investments </p> </td> <td width="22%" valign="top" style='width:22.9%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160; 375,000 </p> </td> <td width="22%" valign="bottom" style='width:22.9%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160; 600,000 </p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Note 6 &#150; Derivative Liabilities</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The Company entered into certain convertible loan agreements during 2012 and 2013. &nbsp;These agreements contained terms that allowed for the conversion of the debt into common stock. &nbsp;The basic agreement was originally with $0.25 conversion prices unless the stock sold at less than $0.25. &nbsp;If the trades were at less than original term, the debt holders could elect to convert their debt at sixty percent of the lowest trading price in the 25 trading days prior to the conversion notice. &nbsp;Because of these terms, the debt conversion clause requires that the Company account for these note balances as derivatives valued at the fair market value of the Company&#146;s common stock on the day of any financial reporting period. &nbsp;&nbsp;At May 31, 2015 and 2014, the fully convertible shares would be 15,625,000 and 12,500,000 common shares, respectively.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='line-height:115%;width:100.0%;border-collapse:collapse'> <tr style='height:15.75pt'> <td width="55%" valign="bottom" style='width:55.52%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="20%" valign="bottom" style='width:20.16%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>May 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.3%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>August 31, 2014</p> </td> </tr> <tr style='height:16.5pt'> <td width="55%" valign="bottom" style='width:55.52%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Derivative Liabilities on Convertible Loans:</b></p> </td> <td width="20%" valign="bottom" style='width:20.16%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'></td> <td width="24%" valign="bottom" style='width:24.3%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'></td> </tr> <tr style='height:16.5pt'> <td width="55%" valign="bottom" style='width:55.52%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>St. George Investments</p> </td> <td width="20%" valign="bottom" style='width:20.16%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160; 406,250 </p> </td> <td width="24%" valign="bottom" style='width:24.3%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 1,025,000 </p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:5.25pt;line-height:normal'><b>Note 7&nbsp;</b><b>&#150;</b><b>&nbsp;Commitments and Contingencies</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;line-height:normal'><b>Rental Agreement:</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>On August 17, 2012, the Company leased a 10,410 square foot&nbsp;&#147;industrial condominium&#148;&nbsp;in Camarillo, California, for three years for monthly lease payments of $7,000 per month. There are no common area costs. All company operations are concentrated at the site.&#160; The current least terminates on August 31, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>Lease Commitments&nbsp;&#150;&nbsp;as of May 31, 2015, remaining for the fiscal year:</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;text-indent:.5in;line-height:normal'>Fiscal year ended August 31, 2015 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$ &nbsp;21,000</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><b>Consulting Agreement: </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 22, 2015, the Company entered into an agreement with Synergy Business Consultants, LLC, for investor relations consulting, with payments of $2,500 per month, for a term of six months, , with an immediate issuance of 500,000 shares of common stock, effective May 26, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 8&#150; Federal Income Taxes</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through the year 2034. The availability of the Company&#146;s net operating loss carryforwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company&#146;s stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $8,198,333, which will expire in 2028 through 2034 if not utilized. &nbsp;The Company uses 35% for a composite tax rate to estimate the value of net operating losses for deferred taxes.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>For the year ended August 31, 2014 and 2013, no income tax expense has been realized as a result of operations and no income tax penalties and interest have been accrued related to uncertain tax positions. &nbsp;The Company files income tax returns in the U.S. federal jurisdiction and in the State of California. &nbsp;These filings are subject to a three year statute of limitations. &nbsp;The Company&#146;s evaluation of income tax positions included the years ended August 31, 2014, and 2013, could be subject to agency examinations. &nbsp;No filings are currently under examination. &nbsp;No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates. &nbsp;Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles<i>.</i></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 9 &#150; Capital Stock </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The Company engaged in the following stock transactions for the period beginning after August 31, 2013:</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On September 16, 2013, the Company issued 110,375 shares of common stock for $10,000 at $0.0906 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On October 1, 2013, the Company issued 200,000 shares of common stock for $13,600 at $0.06800 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On October 9, 2013, the Company issued 500,000 shares of common stock for $28,000 at $0.0560 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Some of the following disclosures are net of wire fees and expenses.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On October 16, 2013, the Company issued 555,720 shares of common stock for $74,915 at $0.16870 per share pursuant to an Equity Purchase Agreement to repay loan, interest and fees.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On November 6, 2013, the Company issued 250,000 shares of common stock for $26,355 at $0.1056 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On November 11, 2013, the Company issued 300,000 shares of common stock for $30,819 at $0.10288 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On November 14, 2013, the Company issued 300,000 shares of common stock for $20,160 at $0.0672 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On November 18, 2013, the Company issued 300,000 shares of common stock for $32,091 at $0.1071 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On December 2, 2013, the Company issued 290,000 shares of common stock for $19,314 at $0.06660 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On December 2, 2013, the Company issued 300,000 shares of common stock for $29,619 at $0.09888 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On December 9, 2013, the Company issued 300,000 shares of common stock for $28,707 at $0.09584 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 6, 2014, the Company issued 300,000 shares of common stock for $18,180 at $0.06060 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 9, 2014, the Company issued 332,742 shares of common stock for $29,955 at $0.0902 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 21, 2014, the Company issued 349,097 shares of common stock for $29,955 at $0.0857 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 29, 2014, the Company issued 310,000 shares of common stock for $15,066 at $0.0486 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On February 14, 2014, the Company issued 500,741 shares of common stock for $24,336 at $0.0486 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On March 3, 2014, the Company issued 330,235 shares of common stock for $26,980 at $0.08176 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On March 28, 2014, the Company issued 577,741 shares of common stock for $49,980 at $0.0900 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On April 1, 2014, the Company issued 371,645 shares of common stock for $34,980 at $0.0942 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On April 9, 2014, the Company issued 400,000 shares of common stock for $37,996 at $0.0950 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On April 15, 2014, the Company issued 352,936 shares of common stock for $34,954 at $0.0992 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On April 24, 2014, the Company issued 320,000 shares of common stock for $32,277 at $0.1010 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 7, 2014, the Company issued 310,000 shares of common stock for $27,280 at $0.0880 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 23, 2014, the Company issued 310,000 shares of common stock for $25,567 at $0.0826 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On June 9, 2014, the Company issued 300,000 shares of common stock for $20,229 at $0.06758 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On June 23, 2014, the Company issued 323,950 shares of common stock for $19,956 at $0.06174 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 30, 2014, the Company issued 500,000 shares of common stock for $0.05 per share for consulting services of $25,000.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On July 7, 2014, the Company entered into a private placement agreement that involved issuing 5,000,000 units of securities at $0.05 per unit for a total amount of cash of $250,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrants for a total of 5,000,000 warrants with an exercise price of $0.30 each expiring January 31, 2016.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 7, 2015, the Company issued 698,324 shares of common stock for $30,000 at $0.04296 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On January 29, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On February 11, 2015, the Company issued 714,286 shares of common stock for $30,000 at $0.042 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On February 24, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>On March 5, 2015, the Company authorized 636,132 shares of common stock at $0.0393 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>&#160;&nbsp;</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>On March 19, 2015, the Company authorized 694,444 shares of common stock at $0.036 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.&#160; &nbsp;</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>On April 13, 2015, the Company authorized 816,993 shares of common stock at $0.0306 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On April 28, 2015, the Company authorized 989,861 shares of common stock to be issued for $35,635 at $0.03600 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 1, 2015, the Company authorized 4.4 million shares of common stock at $0.059 per share to be issued for services rendered.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>On May 4, 2015, the Company authorized 868,056 shares of common stock at $0.228 to be issued in exchange for cancellation of $25,000 of the convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 5, 2015, the Company authorized 1,704,282 shares of common stock to be issued for $58,900 at $0.03456 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 18, 2015, the Company authorized 1,828,704 shares of common stock to be issued for $59,250 at $0.03240 per share pursuant to an Equity Purchase Agreement.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>On May 20, 2015, the Company authorized 905,797 shares of common stock at $0.0276 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>On May 26, 2015, the Company entered into a consulting agreement wherein 500,000 shares were due and payable.&#160; On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.05 per share to be issued pursuant to the consulting agreement of May 26, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>For the year ended August 31, 2014, the Company recognized two equity transactions in warrants which had a total Black-Scholes value of $27,449.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Note 10 &#150; Warrants </b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>A private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expiring July 31, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000. &nbsp;The private placements of 5,000,000 units consist of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 and expiring January 31, 2016. &nbsp;The Company also issued 1,000,000 warrants to an investor in consideration of a loan for $50,000. These warrants had an exercise price of $0.18 and expired on March 20, 2015.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>During the three months ended <font style='background:white'>May 31</font>, 2015, the Company did not issue any additional warrants or other convertible securities. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The following table is a summary of information about the outstanding stock warrants as of <font style='background:white'>May 31</font>, 2015: </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Shares Underlying \ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted Average Remaining&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;Weighted&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Exercise </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Warrants Outstanding &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contractual Life &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Average &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Price</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><u>______________________________________________________________________________</u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>800,000 Shares \ 800,000 Warrants.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; .13 years&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; $0.32&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; $0.40</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>5,000,000 Shares \5,000,000 Warrants&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; .56 years&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;$0.25&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; $0.30</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='line-height:115%;width:100.0%'> <tr align="left"> <td style='padding:0'> </td> <td width="128" style='width:96.0pt;padding:0'></td> <td width="107" style='width:80.25pt;padding:0'></td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>The following table is a summary of activity of outstanding stock warrants for the three months ended May 31, 2015: <u>Activity</u></p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'><u>Number of Warrants</u></p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'><u>Weighted Average Exercise Price</u></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Balance, August 31, 2014</p> </td> <td width="128" valign="bottom" style='width:96.0pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>6,800,000</p> </td> <td width="107" valign="bottom" style='width:80.25pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>$0.29</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants expired</p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>(1,000,000)</p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>.18</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants cancelled</p> </td> <td width="128" valign="bottom" style='width:96.0pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants Granted</p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants exercised</p> </td> <td width="128" valign="bottom" style='width:96.0pt;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Balance, May 31, 2015</p> </td> <td width="128" valign="bottom" style='width:96.0pt;border:none;border-bottom:double black 2.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>5,800,000</p> </td> <td width="107" valign="bottom" style='width:80.25pt;border:none;border-bottom:double black 2.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>$0.31</p> </td> </tr> </table> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> 570714 216243 940878 469757 -570714 -216243 -940878 -469757 1102325 109092 109092 -22547 -16010 -120000 -225000 714615 378785 133922 42224 94832 46060 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Property and Equipment consisted of the following at May, 31, 2015, and August 31, 2014</p> </td> <td width="119" valign="bottom" style='width:89.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:5.25pt;margin-bottom:.0001pt;text-align:center;text-indent:-13.5pt;line-height:normal'>May, 31, 2015</p> </td> <td width="111" valign="bottom" style='width:83.0pt;border:none;border-bottom:solid black 1.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>August 31, 2014</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Computer, equipment &amp; truck</p> </td> <td width="119" valign="bottom" style='width:89.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;269,290&nbsp;&nbsp;&nbsp;&nbsp;&#160;&#160; </p> </td> <td width="111" valign="bottom" style='width:83.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#160; &nbsp;253,280</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Less: Accumulated depreciation</p> </td> <td width="119" valign="bottom" style='width:89.0pt;background:#CCFFCC;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>(151,803)</p> </td> <td width="111" valign="bottom" style='width:83.0pt;background:#CCFFCC;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(106,576)</p> </td> </tr> <tr align="left"> <td width="395" valign="bottom" style='width:296.0pt;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Property and equipment, net</p> </td> <td width="119" valign="bottom" style='width:89.0pt;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>$ &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;117,487</p> </td> <td width="111" valign="bottom" style='width:83.0pt;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;background:white;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;146,704</p> </td> </tr> </table> <!--egx--> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Fixed assets - </b>Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed: </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Vehicle &amp; Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>Furniture &amp; Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Years</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> 146704 117487 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Recent Accounting Pronouncements</b>&#151;Management has considered all recent accounting pronouncements. &nbsp;The following pronouncement was deemed applicable to our financial statements.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In April of 2014, the FASB issued ASU 2014-08, &#147;Presentation of Financial Statements and Property Plant, and Equipment Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update affect an entity that has a component that is disposed of or held for sale. We are evaluating the inclusion of this information should it apply in the future. This pronouncement will be adopted should it become relevant.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In June of 2014, the FASB issued ASU 2014-10, &#147;Development State Entities Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, the amendments in this Update affect entities that are development stage entities under U.S. GAAP. A development stage entity is defined in the Master Glossary of the Accounting Standards Codification as follows: An entity devoting substantially all of its efforts to establishing anew business and for which either of the following conditions exists:</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:3.75pt;text-align:justify;text-indent:.5in;line-height:normal'><font style='background:white'>a.&#160; Planned principal operations have not commenced.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;line-height:normal'><font style='background:white'>b. Planned principal operations have commenced, but there has been no significant revenue therefrom.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>This update applies to the Company as no significant revenue has been received, although there will be no significant impact on the financial statements since the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This amendment will become effective as of December 15, 2014 for the Company, after which the presentation of the financial statements will be revised as noted above.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'><font style='background:white'>In August of 2014, the FASB issued ASU 2014-15,&#148;Presentation of Financial Statements&#151;Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity&#146;s Ability to Continue as a Going Concern. The amendments in this Update apply to all entities and will become effective as of the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will implement this Update if substantial doubt is ever raised about the Company&#146;s ability to continue as a going concern within one year after the financial statements are issued or at the date the financial statements are available to be issue when applicable.</font></p> <p style='text-align:justify'><font style='background:white'>FASB ASU 2015-03: Interest &#150; Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability, to be presented consistent with debt discounts.&#160; The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.&#160; This will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.&#160; The Company does not anticipate significant impact upon its financial statements at this time and will continue to evaluation the potential for such impact.</font></p> 84469 31435 295274 161579 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Research and development costs - </b>The Company expenses costs of research and development cost as incurred. Research and development costs for the three months ended May 31, 2015, and May 31, 2014, was $161,579 and $31,435 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $295,274 and $84,469 respectively.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='line-height:115%;width:100.0%;border-collapse:collapse'> <tr style='height:15.75pt'> <td width="55%" valign="bottom" style='width:55.52%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="20%" valign="bottom" style='width:20.16%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>May 31, 2015</p> </td> <td width="24%" valign="bottom" style='width:24.3%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>August 31, 2014</p> </td> </tr> <tr style='height:16.5pt'> <td width="55%" valign="bottom" style='width:55.52%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Derivative Liabilities on Convertible Loans:</b></p> </td> <td width="20%" valign="bottom" style='width:20.16%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'></td> <td width="24%" valign="bottom" style='width:24.3%;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'></td> </tr> <tr style='height:16.5pt'> <td width="55%" valign="bottom" style='width:55.52%;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>St. George Investments</p> </td> <td width="20%" valign="bottom" style='width:20.16%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160; 406,250 </p> </td> <td width="24%" valign="bottom" style='width:24.3%;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:#B7FFB7;padding:0in 5.4pt 0in 5.4pt;height:16.5pt'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 1,025,000 </p> </td> </tr> </table> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:8.25pt;text-align:justify;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="278" style='width:208.5pt;padding:0'></td> <td width="130" style='width:97.5pt;padding:0'></td> <td width="229" style='width:171.75pt;padding:0'></td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="130" valign="bottom" style='width:97.5pt;border:none;border-bottom:solid windowtext 1.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>May 31, 2015</p> </td> <td width="229" valign="bottom" style='width:171.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; August 31, 2014</p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Patents</p> </td> <td width="130" valign="top" style='width:97.5pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109,092 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109,092 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Purchased Patents</p> </td> <td width="130" valign="top" style='width:97.5pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,467,500 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,467,500 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Goodwill</p> </td> <td width="130" valign="top" style='width:97.5pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,000 </p> </td> <td width="229" valign="bottom" style='width:171.75pt;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,000 </p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;background:#B7FFB7;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>Less Amortization </p> </td> <td width="130" valign="top" style='width:97.5pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;(226,090)</p> </td> <td width="229" valign="bottom" style='width:171.75pt;background:#B7FFB7;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(170,619)</p> </td> </tr> <tr align="left"> <td width="278" valign="bottom" style='width:208.5pt;padding:0'> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> </td> <td width="130" valign="bottom" style='width:97.5pt;border-top:solid black 1.0pt;border-left:none;border-bottom:double black 2.25pt;border-right:none;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'><u>&nbsp;</u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,355,502</p> </td> <td width="229" valign="bottom" style='width:171.75pt;border-top:solid black 1.0pt;border-left:none;border-bottom:double black 2.25pt;border-right:none;padding:0'> <p align="right" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:right;line-height:normal'>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,410,973 </p> </td> </tr> </table> <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='line-height:115%;width:100.0%'> <tr align="left"> <td style='padding:0'> </td> <td width="128" style='width:96.0pt;padding:0'></td> <td width="107" style='width:80.25pt;padding:0'></td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>The following table is a summary of activity of outstanding stock warrants for the three months ended May 31, 2015: <u>Activity</u></p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'><u>Number of Warrants</u></p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'><u>Weighted Average Exercise Price</u></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Balance, August 31, 2014</p> </td> <td width="128" valign="bottom" style='width:96.0pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>6,800,000</p> </td> <td width="107" valign="bottom" style='width:80.25pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>$0.29</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants expired</p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>(1,000,000)</p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>.18</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants cancelled</p> </td> <td width="128" valign="bottom" style='width:96.0pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants Granted</p> </td> <td width="128" valign="bottom" style='width:96.0pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Warrants exercised</p> </td> <td width="128" valign="bottom" style='width:96.0pt;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> <td width="107" valign="bottom" style='width:80.25pt;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>-</p> </td> </tr> <tr align="left"> <td valign="bottom" style='background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>Balance, May 31, 2015</p> </td> <td width="128" valign="bottom" style='width:96.0pt;border:none;border-bottom:double black 2.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>5,800,000</p> </td> <td width="107" valign="bottom" style='width:80.25pt;border:none;border-bottom:double black 2.25pt;background:#B7FFB7;padding:0'> <p align="center" style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:center;line-height:normal'>$0.31</p> </td> </tr> </table> 1101685 974200 <!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Share based payments and awards</b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>The company has adopted the use of Statement of Financial Accounting Standards No. 123R, &#147;Share-Based Payment&#148; (SFAS No.&nbsp;123R) (now contained in FASB Codification Topic 718, <i>Compensation-Stock Compensation, </i>or<i> </i>Topic 718), which supersedes APB Opinion No. 25, &#147;Accounting for Stock Issued to Employees&#148;, and its related implementation guidance and eliminates the alternative to use Opinion 25&#146;s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the &#147;risk-free interest rate&#148;, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. &nbsp;<font style='background:white'>For the three months ended May 31, 2015, we recognized no expenses for share based expense due to the issuance of common stock warrants.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> <!--egx--> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>Use of estimates - </b>The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.&nbsp;&nbsp;Actual results could differ from those estimates. </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:8.0pt;margin-left:0in;line-height:107%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;line-height:normal'>&nbsp;</p> 98679393 103765349 117780618 122118859 98679393 103765349 117780618 122118859 27068 460863 593 27068 461456 117487 146704 1355502 1410973 14000 14000 1486989 1571677 1514057 2033133 4932 21516 375000 600000 406250 1025000 786182 1646516 786182 1646516 13036 11515 8888172 8191503 25000 -8198333 -7816401 727875 386617 1514057 2033133 0001446152 2014-09-01 2015-05-31 0001446152 2015-05-31 0001446152 2014-08-31 0001446152 2015-03-01 2015-05-31 0001446152 2014-03-01 2014-05-31 0001446152 2013-09-01 2014-05-31 0001446152 2013-08-31 0001446152 2014-05-31 iso4217:USD shares iso4217:USD shares EX-101.LAB 7 seny-20150531_lab.xml XBRL TAXONOMY EXTENSION LABELS LINKBASE DOCUMENT Basis of Presentation Policies Increase (Decrease) in Operating Capital {1} Increase (Decrease) in Operating Capital Earnings Per Share, Diluted Common Stock, Shares Issued Interest and Dividends Payable, Current Assets, Noncurrent {1} Assets, Noncurrent Convertible Notes Payable, Noncurrent Schedule of Carrying Values and Estimated Fair Values of Debt Instruments Schedule of Intangible Assets and Goodwill Note 1 - 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Note 5 - Convertible Loans and Interest Payable: Schedule of Carrying Values and Estimated Fair Values of Debt Instruments (Tables)
9 Months Ended
May. 31, 2015
Tables/Schedules  
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

 

 

May 31, 2015

August 31, 2014

Derivative Liabilities on Convertible Loans:

St. George Investments

 $        406,250

 $          1,025,000

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Note 1 - Organization and Summary of Significant Accounting Policies: Research, Development, and Computer Software, Policy (Policies)
9 Months Ended
May. 31, 2015
Policies  
Research, Development, and Computer Software, Policy

Research and development costs - The Company expenses costs of research and development cost as incurred. Research and development costs for the three months ended May 31, 2015, and May 31, 2014, was $161,579 and $31,435 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $295,274 and $84,469 respectively.

 

XML 14 R37.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 5 - Convertible Loans and Interest Payable: Convertible Debt (Details) - USD ($)
May. 31, 2015
Aug. 31, 2014
Details    
Convertible Notes Payable, Noncurrent $ 375,000 $ 600,000
XML 15 R9.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 4 - Intangible Property
9 Months Ended
May. 31, 2015
Notes  
Note 4 - Intangible Property

Note 4 – Intangible Property

The Company has acquired intangible property in patents, patents pending and goodwill.  The patents are being amortized over their expected lives of not more than seventeen years.  The restrictive covenants were fully amortized as of August 31, 2014.  Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued.  If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial.  The balances as of May 31, 2015, and August 31, 2014 are as follows:

 

 

May 31, 2015

             August 31, 2014

Patents

 $                           109,092

 $                              109,092

Purchased Patents

                           1,467,500

                              1,467,500

Goodwill

                                5,000

                                     5,000

Less Amortization

    (226,090)

                               (170,619)

 

 $                         1,355,502

 $                           1,410,973

 

XML 16 R29.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Share Based Payments and Awards (Policies)
9 Months Ended
May. 31, 2015
Policies  
Share Based Payments and Awards

Share based payments and awards

The company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation, or Topic 718), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the “risk-free interest rate”, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly.  For the three months ended May 31, 2015, we recognized no expenses for share based expense due to the issuance of common stock warrants.

 

XML 17 R28.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies)
9 Months Ended
May. 31, 2015
Policies  
Recent Accounting Pronouncements

Recent Accounting Pronouncements—Management has considered all recent accounting pronouncements.  The following pronouncement was deemed applicable to our financial statements.

In April of 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property Plant, and Equipment Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update affect an entity that has a component that is disposed of or held for sale. We are evaluating the inclusion of this information should it apply in the future. This pronouncement will be adopted should it become relevant.

 

In June of 2014, the FASB issued ASU 2014-10, “Development State Entities Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, the amendments in this Update affect entities that are development stage entities under U.S. GAAP. A development stage entity is defined in the Master Glossary of the Accounting Standards Codification as follows: An entity devoting substantially all of its efforts to establishing anew business and for which either of the following conditions exists:

 

a.  Planned principal operations have not commenced.

b. Planned principal operations have commenced, but there has been no significant revenue therefrom.

 

This update applies to the Company as no significant revenue has been received, although there will be no significant impact on the financial statements since the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This amendment will become effective as of December 15, 2014 for the Company, after which the presentation of the financial statements will be revised as noted above.

 

In August of 2014, the FASB issued ASU 2014-15,”Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update apply to all entities and will become effective as of the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will implement this Update if substantial doubt is ever raised about the Company’s ability to continue as a going concern within one year after the financial statements are issued or at the date the financial statements are available to be issue when applicable.

FASB ASU 2015-03: Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability, to be presented consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.  This will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The Company does not anticipate significant impact upon its financial statements at this time and will continue to evaluation the potential for such impact.

XML 18 R30.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 3 - Property and Equipment: Property, Plant and Equipment (Tables)
9 Months Ended
May. 31, 2015
Tables/Schedules  
Property, Plant and Equipment

 

Property and Equipment consisted of the following at May, 31, 2015, and August 31, 2014

May, 31, 2015

August 31, 2014

Computer, equipment & truck

 $      269,290      

 $           253,280

Less: Accumulated depreciation

(151,803)

            (106,576)

Property and equipment, net

$       117,487

 $           146,704

XML 19 R31.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 4 - Intangible Property: Schedule of Intangible Assets and Goodwill (Tables)
9 Months Ended
May. 31, 2015
Tables/Schedules  
Schedule of Intangible Assets and Goodwill

 

 

May 31, 2015

             August 31, 2014

Patents

 $                           109,092

 $                              109,092

Purchased Patents

                           1,467,500

                              1,467,500

Goodwill

                                5,000

                                     5,000

Less Amortization

    (226,090)

                               (170,619)

 

 $                         1,355,502

 $                           1,410,973

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 3 - Property and Equipment
9 Months Ended
May. 31, 2015
Notes  
Note 3 - Property and Equipment

Note 3 – Property and Equipment

 

Property and Equipment consisted of the following at May, 31, 2015, and August 31, 2014

May, 31, 2015

August 31, 2014

Computer, equipment & truck

 $      269,290      

 $           253,280

Less: Accumulated depreciation

(151,803)

            (106,576)

Property and equipment, net

$       117,487

 $           146,704

 

XML 21 R32.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 5 - Convertible Loans and Interest Payable: Convertible Debt (Tables)
9 Months Ended
May. 31, 2015
Tables/Schedules  
Convertible Debt

 

 

May 31, 2015

August 31,2014

Convertible Loans and Accrued Interest:

St George Investments

 $        375,000

 $        600,000

XML 22 R2.htm IDEA: XBRL DOCUMENT v3.2.0.727
Statement of Financial Position - USD ($)
May. 31, 2015
Aug. 31, 2014
Assets, Current    
Cash and Cash Equivalents, at Carrying Value $ 27,068 $ 460,863
Prepaid Expense, Current   593
Assets, Current 27,068 461,456
Assets, Noncurrent    
Property, Plant and Equipment, Gross 117,487 146,704
Indefinite-Lived Intangible Assets (Excluding Goodwill) 1,355,502 1,410,973
Other Assets, Noncurrent 14,000 14,000
Assets, Noncurrent 1,486,989 1,571,677
Assets 1,514,057 2,033,133
Liabilities, Current    
Accrued Liabilities, Current 4,932 21,516
Loans Payable, Current 375,000 600,000
Derivative Instruments and Hedges, Liabilities 406,250 1,025,000
Liabilities, Current 786,182 1,646,516
Liabilities, Noncurrent    
Liabilities 786,182 1,646,516
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest    
Common Stock, Value, Issued 13,036 11,515
Additional Paid in Capital, Common Stock 8,888,172 8,191,503
CommonStockOtherValueOutstanding 25,000  
Retained Earnings (Accumulated Deficit) (8,198,333) (7,816,401)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 727,875 386,617
Liabilities and Equity $ 1,514,057 $ 2,033,133
XML 23 R6.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies
9 Months Ended
May. 31, 2015
Notes  
Note 1 - Organization and Summary of Significant Accounting Policies:

Note 1 - Organization and summary of significant accounting policies:

 

These unaudited interim financial statements as of and for the three months ended May 31, 2015, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end August 31, 2014 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine month period ended May 31, 2015, are not necessarily indicative of results for the entire year ending August 31, 2015.

Following is a summary of our organization and significant accounting policies:

 

Organization and nature of business – Sauer Energy, Inc. (formerly: BCO Hydrocarbon Ltd.) (identified in these footnotes as “we” or the “Company”) was incorporated in the State of Nevada, United States of America on August 19, 2008. It was a natural resource exploration stage company and anticipated acquiring, exploring, and if warranted and feasible, developing natural resource assets. BCO had the right to acquire a 50% working interest in an oil and gas lease in Alberta, Canada.

 

Sauer Energy, Inc. (the “Old Sauer”) was incorporated in California on August 7, 2008. The Company is a developing company engaged in the design and manufacture of vertical axis wind turbine (VAWT) systems.

 

On July 25, 2010, the Company, the president and sole director Malcolm Albery (“MA”) and Dieter Sauer, Jr. (“DS”) completed a closing (the “Closing”) under an Agreement and Plan of Reorganization, dated as of June 23, 2010 (the “Agreement”).  The Agreement provided: (a) for the purchase by DS of all of the 39,812,500 shares of the Company owned by MA for $55,200; (b) the contribution by DS of all of the shares of Old Sauer, a California corporation (“SEI”) to the Company; (c) the assignment of certain patent rights related to wind turbine technology held by DS to the Company; and (d) the election of DS to the Company’s board of directors.  In connection with the Closing, Mr. Sauer was elected President and CEO of the Company and two former shareholders of the Company agreed to (i) indemnify the Company against any claims resulting from breaches of representations and warranties by the Company in the Agreement; (ii) to acquire and cause to be returned for cancellation an aggregate of 67,437,500 shares of the Company’s common Stock, including all of the shares owned by former officer and director Daniel Brooks and; (3) assume all of the Company’s obligations in connection with certain oil and gas leases in Canada.

 

The agreement was executed on July 25, 2010. Sauer Energy, Inc. became a wholly-owned subsidiary of the Company. On August 29, Malcolm Albery resigned as President and was replaced by Dieter Sauer.  In the following month, the Company changed its name from BCO Hydrocarbon Ltd. to Sauer Energy, Inc.

 

The Company’s fiscal year-end is August 31.

 

Basis of presentation – Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to developing enterprises.

 

 

Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.

  

 

Fixed assets - Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed:

 

Vehicle & Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years

 

Furniture & Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Years

 

Fair Value of Financial Instruments - The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

 

- Level 1: Quoted prices in active markets for identical assets or liabilities.

 

- Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. 

 

- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying amounts of the Company’s financial instruments as of May, 31, 2015, reflect:

- Cash: Level One measurement based on bank reporting.

- Loan receivable and loans from Officers and related parties: Level 2 based on promissory notes.

- Derivative liability: Level two measurement based upon the relative fair market value of the Company’s free trading common stock.

 

Federal income taxes -The Company utilizes FASB ACS 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward.  A valuation allowance of 100% has been established.

 

Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

 

All taxes have been filed since inception and no taxes or penalties are assessed or owed.

 

Research and development costs - The Company expenses costs of research and development cost as incurred. Research and development costs for the three months ended May 31, 2015, and May 31, 2014, was $161,579 and $31,435 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $295,274 and $84,469 respectively.

 

Advertising.   Advertising and marketing expenses for the three months ended May, 31, 2015, and May, 31, 2014, was $7,429 and $2,540 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $18,042 and $5,316 respectively

 

Basic and Diluted Earnings (Loss) Per Share - Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company has potentially dilutive securities outstanding consisting of warrants to purchase common stock, (see Note 9) and the conversion of convertible loans (see Note 6).  For the three months ended May 31, 2015, the warrants would not have been exercised since they are priced significantly higher than the market value of the Company’s trading common stock, while the convertible loans would likely be converted due to the discount that would be applied to the market price. As of May 31, 2015, 15,625,000 possible shares under the convertible loan would be considered dilutive,  but, for the three months ended May 31, 2015, the exercise of warrants and conversion of debt would be anti-dilutive since the Company was in a loss position, and they are not counted in the calculation of loss per share. The total common stock equivalents on a fully diluted basis if all outstanding agreements were exercised at May 31, 2015, and 2014, which could have been exercised, were 15,625,000 and 12,500,000 shares, respectively.

 

Recent Accounting Pronouncements—Management has considered all recent accounting pronouncements.  The following pronouncement was deemed applicable to our financial statements.

In April of 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property Plant, and Equipment Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update affect an entity that has a component that is disposed of or held for sale. We are evaluating the inclusion of this information should it apply in the future. This pronouncement will be adopted should it become relevant.

 

In June of 2014, the FASB issued ASU 2014-10, “Development State Entities Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, the amendments in this Update affect entities that are development stage entities under U.S. GAAP. A development stage entity is defined in the Master Glossary of the Accounting Standards Codification as follows: An entity devoting substantially all of its efforts to establishing anew business and for which either of the following conditions exists:

 

a.  Planned principal operations have not commenced.

b. Planned principal operations have commenced, but there has been no significant revenue therefrom.

 

This update applies to the Company as no significant revenue has been received, although there will be no significant impact on the financial statements since the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This amendment will become effective as of December 15, 2014 for the Company, after which the presentation of the financial statements will be revised as noted above.

 

In August of 2014, the FASB issued ASU 2014-15,”Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update apply to all entities and will become effective as of the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will implement this Update if substantial doubt is ever raised about the Company’s ability to continue as a going concern within one year after the financial statements are issued or at the date the financial statements are available to be issue when applicable.

FASB ASU 2015-03: Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability, to be presented consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.  This will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The Company does not anticipate significant impact upon its financial statements at this time and will continue to evaluation the potential for such impact.

Share based payments and awards

The company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation, or Topic 718), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the “risk-free interest rate”, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly.  For the three months ended May 31, 2015, we recognized no expenses for share based expense due to the issuance of common stock warrants.

 

XML 24 R35.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 3 - Property and Equipment: Property, Plant and Equipment (Details) - USD ($)
May. 31, 2015
Aug. 31, 2014
Details    
Machinery and Equipment, Gross $ 269,290 $ 253,280
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment (151,803) (106,576)
Property, Plant, and Equipment, Owned, Net $ 117,487 $ 146,704
XML 25 R22.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Property, Plant, and Equipment and Intangible Assets (Policies)
9 Months Ended
May. 31, 2015
Policies  
Property, Plant, and Equipment and Intangible Assets

Fixed assets - Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed:

 

Vehicle & Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years

 

Furniture & Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Years

 

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Note 4 - Intangible Property: Schedule of Intangible Assets and Goodwill (Details) - USD ($)
May. 31, 2015
Aug. 31, 2014
Details    
Patents $ 109,092 $ 109,092
Finite-Lived Patents, Gross 1,467,500 1,467,500
Goodwill, Gross 5,000 5,000
Finite-Lived Intangible Assets, Accumulated Amortization $ (226,090) $ (170,619)
XML 28 R24.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Income Tax, Policy (Policies)
9 Months Ended
May. 31, 2015
Policies  
Income Tax, Policy

Federal income taxes -The Company utilizes FASB ACS 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward.  A valuation allowance of 100% has been established.

 

Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

 

All taxes have been filed since inception and no taxes or penalties are assessed or owed.

 

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Note 2 - Going Concern
9 Months Ended
May. 31, 2015
Notes  
Note 2 - Going Concern

 Note 2 – Going Concern

 

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $8,193,333 as of May, 31, 2015.

 

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company.  This would have a material adverse effect on the Company and raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities.

 

XML 31 R3.htm IDEA: XBRL DOCUMENT v3.2.0.727
Statement of Financial Position - Parenthetical - $ / shares
May. 31, 2015
Aug. 31, 2014
Balance Sheets    
Common Stock, Par Value $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 650,000,000 650,000,000
Common Stock, Shares Issued 130,359,505 115,150,246
Common Stock, Shares Outstanding 130,359,505 115,150,246
XML 32 R17.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 14 - Subsequent Events
9 Months Ended
May. 31, 2015
Notes  
Note 14 - Subsequent Events

NOTE 14 – Subsequent Events

Management has reviewed and evaluated subsequent events and transactions occurring after the balance sheet date, May 31, 2015, through the filing of this Quarterly Report on Form 10-Q on July 13, 2015  and determined that only the following additional subsequent event has occurred:

Conversion of Settlement Debt—  On June 10, 2015, the Company authorized 992,063 shares of common stock to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.

 

On June 30, 2015, the Company authorized 1,402,918 shares of common stock at $0.01782 to be issued in exchange for cancellation of $25,000 of the St. George convertible loan.

 

Contract Term--- On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.04 to be issued pursuant to a consulting contract.

 

Equity Purchases--- On June 5, 2015, the Company authorized 1,798,611 shares of common stock to be issued for $54,390 at $0.03024 per share pursuant to an Equity Purchase Agreement.

 

On June 23, 2015, the Company authorized 2,009,646 shares of common stock to be issued for $45,000 at $0.02239 per share pursuant to an Equity Purchase Agreement.

 

On July 6, 2015, the Company authorized 2,020,202 shares of common stock to be issued for $40,000 at $0.01980 per share pursuant to an Equity Purchase Agreement.

XML 33 R1.htm IDEA: XBRL DOCUMENT v3.2.0.727
Document and Entity Information - May. 31, 2015 - shares
Total
Document and Entity Information:  
Entity Registrant Name SAUER ENERGY, INC.
Document Type 10-Q
Document Period End Date May 31, 2015
Amendment Flag false
Entity Central Index Key 0001446152
Current Fiscal Year End Date --08-31
Entity Common Stock, Shares Outstanding 139,082,945
Entity Filer Category Smaller Reporting Company
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Entity Well-known Seasoned Issuer No
Document Fiscal Year Focus 2015
Document Fiscal Period Focus Q3
XML 34 R18.htm IDEA: XBRL DOCUMENT v3.2.0.727
Compensation Related Costs, General
9 Months Ended
May. 31, 2014
USD ($)
Compensation Related Costs, General:  
Allocated Share Based Compensation Expense $ 18,094
XML 35 R4.htm IDEA: XBRL DOCUMENT v3.2.0.727
Statement of Income - USD ($)
3 Months Ended 9 Months Ended
May. 31, 2015
May. 31, 2014
May. 31, 2015
May. 31, 2014
Operating Expenses        
Professional Fees $ 46,060 $ 42,224 $ 94,832 $ 133,922
Consulting 155,920 49,375 229,734 101,578
Research and Development Expense 161,579 31,435 295,274 84,469
General and Administrative Expense 106,198 93,209 321,038 250,745
Operating Expenses 469,757 216,243 940,878 570,714
Operating Income (Loss) (469,757) (216,243) (940,878) (570,714)
Interest and Debt Expense        
Interest Expense 59,805   59,805 1,667
Settlement Expense   974,200   1,101,685
Commitment Fees       (325,000)
Derivative Loss On Derivative 72,917 101,217 (618,750) 49,655
Interest and Debt Expense 132,722 1,075,417 (558,945) 828,007
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest (602,479) (1,291,660) (381,933) (1,398,721)
IncomeTaxExpenseBenefitContinuingOperationsAbstract        
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest (602,479) (1,291,660) (381,933) (1,398,721)
Net Income (Loss) Attributable to Parent (602,479) (1,291,660) (381,933) (1,398,721)
OtherComprehensiveIncomeLossNetOfTaxPortionAttributableToParentAbstract        
ComprehensiveIncomeNetOfTax $ (602,479) $ (1,291,660) $ (381,933) $ (1,398,721)
Earnings Per Share        
Earnings Per Share, Basic $ (0.00) $ (0.01) $ (0.00) $ (0.01)
Weighted Average Number of Shares Outstanding, Basic 122,118,859 103,765,349 117,780,618 98,679,393
Earnings Per Share, Diluted $ (0.00) $ (0.01) $ (0.00) $ (0.01)
Weighted Average Number of Shares Outstanding, Diluted 122,118,859 103,765,349 117,780,618 98,679,393
XML 36 R12.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 8- Federal Income Taxes
9 Months Ended
May. 31, 2015
Notes  
Note 8- Federal Income Taxes

Note 8– Federal Income Taxes

 

No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through the year 2034. The availability of the Company’s net operating loss carryforwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $8,198,333, which will expire in 2028 through 2034 if not utilized.  The Company uses 35% for a composite tax rate to estimate the value of net operating losses for deferred taxes.

 

No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.

 

For the year ended August 31, 2014 and 2013, no income tax expense has been realized as a result of operations and no income tax penalties and interest have been accrued related to uncertain tax positions.  The Company files income tax returns in the U.S. federal jurisdiction and in the State of California.  These filings are subject to a three year statute of limitations.  The Company’s evaluation of income tax positions included the years ended August 31, 2014, and 2013, could be subject to agency examinations.  No filings are currently under examination.  No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates.  Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.

 

XML 37 R11.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 7 - Commitments and Contingencies
9 Months Ended
May. 31, 2015
Notes  
Note 7 - Commitments and Contingencies

Note 7  Commitments and Contingencies

Rental Agreement:

On August 17, 2012, the Company leased a 10,410 square foot “industrial condominium” in Camarillo, California, for three years for monthly lease payments of $7,000 per month. There are no common area costs. All company operations are concentrated at the site.  The current least terminates on August 31, 2015.

Lease Commitments – as of May 31, 2015, remaining for the fiscal year:

Fiscal year ended August 31, 2015                             $  21,000

Consulting Agreement:

 

On May 22, 2015, the Company entered into an agreement with Synergy Business Consultants, LLC, for investor relations consulting, with payments of $2,500 per month, for a term of six months, , with an immediate issuance of 500,000 shares of common stock, effective May 26, 2015.

 

XML 38 R23.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Fair Value Measurement, Policy (Policies)
9 Months Ended
May. 31, 2015
Policies  
Fair Value Measurement, Policy

Fair Value of Financial Instruments - The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

 

- Level 1: Quoted prices in active markets for identical assets or liabilities.

 

- Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. 

 

- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying amounts of the Company’s financial instruments as of May, 31, 2015, reflect:

- Cash: Level One measurement based on bank reporting.

- Loan receivable and loans from Officers and related parties: Level 2 based on promissory notes.

- Derivative liability: Level two measurement based upon the relative fair market value of the Company’s free trading common stock.

 

XML 39 R19.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Basis of Presentation (Policies)
9 Months Ended
May. 31, 2015
Policies  
Basis of Presentation

Basis of presentation – Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to developing enterprises.

 

XML 40 R15.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 12 - Equity Purchase Agreement and Registration Rights Agreement
9 Months Ended
May. 31, 2015
Notes  
Note 12 - Equity Purchase Agreement and Registration Rights Agreement

NOTE 12 – Equity Purchase Agreement and Registration Rights Agreement

As of February 27, 2015, the Registrant entered into two agreements with Beaufort Capital Partners, LLC, a New York limited liability corporation (“BCPLLC”), an Equity Purchase Agreement (the “EPA”) and a Registration Rights Agreement (the “RRA”).  

 

The agreements required the Registrant to file a registration statement for the common stock underlying the EPA. Subject to various limitations set forth in the EPA, BCPLLC, after effectiveness of such registration statement, was required to purchase up to $3,000,000 worth of the Registrant’s common stock at a price equal to 72% of the market price as determined under the EPA (prior ten trading days).  The EPA provides for volume limitations on the amount of shares that BVPLC must purchase at any time and provides that the Registrant will be paid for the common stock upon electronic delivery of the shares to BCPLLC.  BCPLLC bore the attorney fees relating to the Registration Statement and is not charging the Registrant any additional fees. The Registration Statement was filed by the Registrant on March 17, 2015.  It was deemed effective by the Sec on April 27, 2015.

XML 41 R13.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 9 - Capital Stock
9 Months Ended
May. 31, 2015
Notes  
Note 9 - Capital Stock

Note 9 – Capital Stock

 

The Company engaged in the following stock transactions for the period beginning after August 31, 2013:

 

On September 16, 2013, the Company issued 110,375 shares of common stock for $10,000 at $0.0906 per share pursuant to a convertible note.

 

On October 1, 2013, the Company issued 200,000 shares of common stock for $13,600 at $0.06800 per share pursuant to a convertible note.

 

On October 9, 2013, the Company issued 500,000 shares of common stock for $28,000 at $0.0560 per share pursuant to a convertible note.

 

Some of the following disclosures are net of wire fees and expenses.

 

On October 16, 2013, the Company issued 555,720 shares of common stock for $74,915 at $0.16870 per share pursuant to an Equity Purchase Agreement to repay loan, interest and fees.

 

On November 6, 2013, the Company issued 250,000 shares of common stock for $26,355 at $0.1056 per share pursuant to an Equity Purchase Agreement.

 

On November 11, 2013, the Company issued 300,000 shares of common stock for $30,819 at $0.10288 per share pursuant to an Equity Purchase Agreement.

 

On November 14, 2013, the Company issued 300,000 shares of common stock for $20,160 at $0.0672 per share pursuant to a convertible note.

 

On November 18, 2013, the Company issued 300,000 shares of common stock for $32,091 at $0.1071 per share pursuant to an Equity Purchase Agreement.

 

On December 2, 2013, the Company issued 290,000 shares of common stock for $19,314 at $0.06660 per share pursuant to a convertible note.

 

On December 2, 2013, the Company issued 300,000 shares of common stock for $29,619 at $0.09888 per share pursuant to an Equity Purchase Agreement.

 

On December 9, 2013, the Company issued 300,000 shares of common stock for $28,707 at $0.09584 per share pursuant to an Equity Purchase Agreement.

 

On January 6, 2014, the Company issued 300,000 shares of common stock for $18,180 at $0.06060 per share pursuant to a convertible note.

 

On January 9, 2014, the Company issued 332,742 shares of common stock for $29,955 at $0.0902 per share pursuant to an Equity Purchase Agreement.

 

On January 21, 2014, the Company issued 349,097 shares of common stock for $29,955 at $0.0857 per share pursuant to an Equity Purchase Agreement.

 

On January 29, 2014, the Company issued 310,000 shares of common stock for $15,066 at $0.0486 per share pursuant to a convertible note.

 

On February 14, 2014, the Company issued 500,741 shares of common stock for $24,336 at $0.0486 per share pursuant to a convertible note.

 

On March 3, 2014, the Company issued 330,235 shares of common stock for $26,980 at $0.08176 per share pursuant to an Equity Purchase Agreement.

 

On March 28, 2014, the Company issued 577,741 shares of common stock for $49,980 at $0.0900 per share pursuant to an Equity Purchase Agreement.

 

On April 1, 2014, the Company issued 371,645 shares of common stock for $34,980 at $0.0942 per share pursuant to an Equity Purchase Agreement.

 

On April 9, 2014, the Company issued 400,000 shares of common stock for $37,996 at $0.0950 per share pursuant to an Equity Purchase Agreement.

 

On April 15, 2014, the Company issued 352,936 shares of common stock for $34,954 at $0.0992 per share pursuant to an Equity Purchase Agreement.

 

On April 24, 2014, the Company issued 320,000 shares of common stock for $32,277 at $0.1010 per share pursuant to an Equity Purchase Agreement.

 

On May 7, 2014, the Company issued 310,000 shares of common stock for $27,280 at $0.0880 per share pursuant to an Equity Purchase Agreement.

 

On May 23, 2014, the Company issued 310,000 shares of common stock for $25,567 at $0.0826 per share pursuant to an Equity Purchase Agreement.

 

On June 9, 2014, the Company issued 300,000 shares of common stock for $20,229 at $0.06758 per share pursuant to an Equity Purchase Agreement.

 

On June 23, 2014, the Company issued 323,950 shares of common stock for $19,956 at $0.06174 per share pursuant to an Equity Purchase Agreement.

 

On May 30, 2014, the Company issued 500,000 shares of common stock for $0.05 per share for consulting services of $25,000.

 

On July 7, 2014, the Company entered into a private placement agreement that involved issuing 5,000,000 units of securities at $0.05 per unit for a total amount of cash of $250,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrants for a total of 5,000,000 warrants with an exercise price of $0.30 each expiring January 31, 2016.

 

On January 7, 2015, the Company issued 698,324 shares of common stock for $30,000 at $0.04296 per share pursuant to a convertible note.

 

On January 29, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.

 

On February 11, 2015, the Company issued 714,286 shares of common stock for $30,000 at $0.042 per share pursuant to a convertible note.

 

On February 24, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.

 

On March 5, 2015, the Company authorized 636,132 shares of common stock at $0.0393 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.

  

On March 19, 2015, the Company authorized 694,444 shares of common stock at $0.036 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.   

 

On April 13, 2015, the Company authorized 816,993 shares of common stock at $0.0306 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.

 

On April 28, 2015, the Company authorized 989,861 shares of common stock to be issued for $35,635 at $0.03600 per share pursuant to an Equity Purchase Agreement.

 

On May 1, 2015, the Company authorized 4.4 million shares of common stock at $0.059 per share to be issued for services rendered.

 

On May 4, 2015, the Company authorized 868,056 shares of common stock at $0.228 to be issued in exchange for cancellation of $25,000 of the convertible loan.

 

On May 5, 2015, the Company authorized 1,704,282 shares of common stock to be issued for $58,900 at $0.03456 per share pursuant to an Equity Purchase Agreement.

 

On May 18, 2015, the Company authorized 1,828,704 shares of common stock to be issued for $59,250 at $0.03240 per share pursuant to an Equity Purchase Agreement.

 

On May 20, 2015, the Company authorized 905,797 shares of common stock at $0.0276 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.

 

On May 26, 2015, the Company entered into a consulting agreement wherein 500,000 shares were due and payable.  On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.05 per share to be issued pursuant to the consulting agreement of May 26, 2015.

 

For the year ended August 31, 2014, the Company recognized two equity transactions in warrants which had a total Black-Scholes value of $27,449.

 

Note 10 – Warrants

 

A private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expiring July 31, 2015.

 

During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000.  The private placements of 5,000,000 units consist of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 and expiring January 31, 2016.  The Company also issued 1,000,000 warrants to an investor in consideration of a loan for $50,000. These warrants had an exercise price of $0.18 and expired on March 20, 2015.

 

During the three months ended May 31, 2015, the Company did not issue any additional warrants or other convertible securities.

 

The following table is a summary of information about the outstanding stock warrants as of May 31, 2015:

 

Shares Underlying \                                       Weighted Average Remaining              Weighted                  Exercise

Warrants Outstanding                                               Contractual Life                           Average                     Price

______________________________________________________________________________

800,000 Shares \ 800,000 Warrants.             .13 years                             $0.32                 $0.40

 

5,000,000 Shares \5,000,000 Warrants         .56 years                             $0.25                 $0.30

 

The following table is a summary of activity of outstanding stock warrants for the three months ended May 31, 2015: Activity

Number of Warrants

Weighted Average Exercise Price

Balance, August 31, 2014

6,800,000

$0.29

Warrants expired

(1,000,000)

.18

Warrants cancelled

-

-

Warrants Granted

-

-

Warrants exercised

-

-

Balance, May 31, 2015

5,800,000

$0.31

 

XML 42 R14.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 11 - Contingencies, Litigation
9 Months Ended
May. 31, 2015
Notes  
Note 11 - Contingencies, Litigation

NOTE 11 - Contingencies, Litigation

There were no loss contingencies or legal proceedings against the Company with respect to matters arising in the ordinary course of business.

 

St. George Investment Settlement:

On October 23, 2013, the Company filed a complaint against St George Investments, LLC (“St. George") in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the Company’s May, 2012 purchase of the assets of Helix Wind from St. George for treasury stock then valued in excess of $1.8 Million and a subsequent February 2013 promissory note for $275,000 executed under the terms of an amendment to the May, 2012 asset purchase agreement.  The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in light of St. George’s failure to deliver all of the intellectual property of Helix Wind.

On February 3, 2014, the parties participated in a mediation session at the Federal Court and executed an agreement reflecting a settlement in principal (the “Settlement”) which becomes binding only if the parties are unable to come to terms on more formal settlement agreements.  The parties have since executed more formal settlement agreements which are included as an exhibit hereto.  The basic terms of the Settlement required the issuance of an additional 5,000,000 shares of our common stock to St George under the Helix APA; required St. George to purchase additional shares of our common stock for $300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights.  The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market.

As of May 31, 2015, the Company still owed St. George $375,000. See Note 5.

XML 43 R16.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 13 - Correction of An Error
9 Months Ended
May. 31, 2015
Notes  
Note 13 - Correction of An Error

NOTE 13  Correction of an Error

The Company had previously entered into debt agreements, which included original issue discounts, in delayed prepaid interest, which were not recognized as part of derivative financial

instrument.  The Company also had previously acquired intangible property and had not assigned lives nor began amortization as appropriate.  

The difference in the loss for the three months May 31, 2014, is an increase of the loss of $69,642, and for the nine months a difference of $25,171 increase of the net loss.  These changes represent the net corrections to derivative valuation expense and interest expense, and amortization of patent costs for these time periods.  For the nine months ended, the increase of $25,171, increased accumulated deficit and decreased current year loss by the same amount and had no effect on periods after August 31, 2014.  It had no effect upon the earnings per share for the period then ended.

 

XML 44 R34.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 9 - Capital Stock: Schedule of Stockholders Equity (Tables)
9 Months Ended
May. 31, 2015
Tables/Schedules  
Schedule of Stockholders Equity

 

The following table is a summary of activity of outstanding stock warrants for the three months ended May 31, 2015: Activity

Number of Warrants

Weighted Average Exercise Price

Balance, August 31, 2014

6,800,000

$0.29

Warrants expired

(1,000,000)

.18

Warrants cancelled

-

-

Warrants Granted

-

-

Warrants exercised

-

-

Balance, May 31, 2015

5,800,000

$0.31

XML 45 R21.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies)
9 Months Ended
May. 31, 2015
Policies  
Cash and Cash Equivalents

Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.

  

XML 46 R26.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 1 - Organization and Summary of Significant Accounting Policies: Advertising (Policies)
9 Months Ended
May. 31, 2015
Policies  
Advertising

Advertising.   Advertising and marketing expenses for the three months ended May, 31, 2015, and May, 31, 2014, was $7,429 and $2,540 respectively and for the nine months ended May 31, 2015 and May 31, 2014 was $18,042 and $5,316 respectively

 

XML 47 R5.htm IDEA: XBRL DOCUMENT v3.2.0.727
Statement of Cash Flows - USD ($)
9 Months Ended
May. 31, 2015
May. 31, 2014
Net Cash Provided by (Used in) Operating Activities    
Net Income (Loss) $ (381,933) $ (1,398,721)
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities    
Depreciation 45,227 19,128
Amortization 55,472 55,472
Fair Value Change of Derivative Liability (618,750) 49,655
Allocated Share Based Compensation Expense   18,094
Issuance of Stock and Warrants for Services or Claims 344,405 25,000
Other Noncash Income (Expense)   1,102,325
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities (555,579) (129,047)
Increase (Decrease) in Operating Assets    
Increase (Decrease) in Prepaid Expense and Other Assets 593 (651)
Increase (Decrease) in Other Operating Assets    
Increase (Decrease) in Operating Assets 593 (651)
Increase (Decrease) in Operating Liabilities    
Increase (Decrease) in Accounts Payable and Accrued Liabilities (16,584) 1,242
Increase (Decrease) in Operating Capital (16,584) 1,242
Net Cash Provided by (Used in) Operating Activities (571,570) (128,456)
Net Cash Provided by (Used in) Investing Activities    
Payments to Acquire Property, Plant, and Equipment (16,010) (22,547)
Net Cash Provided by (Used in) Investing Activities (16,010) (22,547)
Net Cash Provided by (Used in) Financing Activities    
Proceeds from (Repayments of) Notes Payable (225,000) (120,000)
Proceeds from Issuance of Common Stock 378,785 714,615
Net Cash Provided by (Used in) Financing Activities 153,785 594,615
Cash and Cash Equivalents, Period Increase (Decrease) (433,795) 443,612
Cash and Cash Equivalents, at Carrying Value 460,863 19,178
Cash and Cash Equivalents, at Carrying Value $ 27,068 $ 462,790
XML 48 R10.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note 5 - Convertible Loans and Interest Payable
9 Months Ended
May. 31, 2015
Notes  
Note 5 - Convertible Loans and Interest Payable

Note 5 – Convertible Loans and Interest Payable

The Company entered into note agreements and subsequent modifications and settlements on convertible notes.  These notes are convertible into the Company’s common stock and are due usually within one year.  The notes were issued with original issuance discounts of twelve percent which was immediately convertible into common stock and if the note was not repaid in ninety days the zero percent interest rate was replaced with an immediate prepaid interest charge at ten percent with was subject to conversion.  The Conversion terms were both fixed and variable if the trading prices did not meet the fix conversion price.  See the derivative discussion in Note 6 concerning these loans.

 

 

May 31, 2015

August 31,2014

Convertible Loans and Accrued Interest:

St George Investments

 $        375,000

 $        600,000

 

 

Note 6 – Derivative Liabilities

 

The Company entered into certain convertible loan agreements during 2012 and 2013.  These agreements contained terms that allowed for the conversion of the debt into common stock.  The basic agreement was originally with $0.25 conversion prices unless the stock sold at less than $0.25.  If the trades were at less than original term, the debt holders could elect to convert their debt at sixty percent of the lowest trading price in the 25 trading days prior to the conversion notice.  Because of these terms, the debt conversion clause requires that the Company account for these note balances as derivatives valued at the fair market value of the Company’s common stock on the day of any financial reporting period.   At May 31, 2015 and 2014, the fully convertible shares would be 15,625,000 and 12,500,000 common shares, respectively.

 

 

 

May 31, 2015

August 31, 2014

Derivative Liabilities on Convertible Loans:

St. George Investments

 $        406,250

 $          1,025,000

 

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Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)
9 Months Ended
May. 31, 2015
Policies  
Earnings Per Share, Policy

Basic and Diluted Earnings (Loss) Per Share - Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company has potentially dilutive securities outstanding consisting of warrants to purchase common stock, (see Note 9) and the conversion of convertible loans (see Note 6).  For the three months ended May 31, 2015, the warrants would not have been exercised since they are priced significantly higher than the market value of the Company’s trading common stock, while the convertible loans would likely be converted due to the discount that would be applied to the market price. As of May 31, 2015, 15,625,000 possible shares under the convertible loan would be considered dilutive,  but, for the three months ended May 31, 2015, the exercise of warrants and conversion of debt would be anti-dilutive since the Company was in a loss position, and they are not counted in the calculation of loss per share. The total common stock equivalents on a fully diluted basis if all outstanding agreements were exercised at May 31, 2015, and 2014, which could have been exercised, were 15,625,000 and 12,500,000 shares, respectively.

 

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Note 5 - Convertible Loans and Interest Payable: Schedule of Carrying Values and Estimated Fair Values of Debt Instruments (Details) - USD ($)
May. 31, 2015
Aug. 31, 2014
Details    
Derivative Instruments and Hedges, Liabilities $ 406,250 $ 1,025,000
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Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies)
9 Months Ended
May. 31, 2015
Policies  
Use of Estimates, Policy

Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.