10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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, 2014
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to __________
	Commission File Number:  333-177518

IDS Industries, Inc.

(Exact name of registrant as specified in its charter)

Nevada	45-2758994
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
533 Birch Street, Lake Elsinore, CA 92530
(Address of principal executive offices)
(714) 733-1412
(Registrant’s telephone number)
IDS Solar Technologies, Inc.
(Former name, former address and former fiscal year, if changed since last report)

Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[ ] Large accelerated filer [ ] Non-accelerated filer [ ] Accelerated filer [X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 121,184,334 common shares as of July 11, 2014.

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 (§ 229.405 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 [ ]

	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	14
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4:	Controls and Procedures	18
PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	19
Item 1A:	Risk Factors	19
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3:	Defaults Upon Senior Securities	19
Item 4:	Mine Safety Disclosures	19
Item 5:	Other Information	19
Item 6:	Exhibits	19

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited financial statements included in this Form 10-Q are as follows:

TABLE OF CONTENTS

Consolidated Balance Sheets as of May 31, 2014 and August 31, 2013 (unaudited)	4
Consolidated Statements of Operations for the Three and Nine Months ended May 31, 2014 and 2013 (unaudited)	5
Consolidated Statements of Cash Flows for the Nine Months ended May 31, 2014 and 2013 (unaudited)	6
Notes to Consolidated Financial Statements (unaudited)	7

3

IDS INDUSTRIES, INC.

(FORMERLY IDS SOLAR TECHNOLOGIES, INC.)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	May 31, 2014			August 31, 2013
ASSETS
Current Assets:
Cash	$	28,794		$	1,960
Accounts receivable, net of allowance of $4,950		15,737			4,950
Prepaid expenses and other current assets		23,161			80,196
Inventory		24,954			32,682
Other receivable, related party		37,543			77,307
Interest receivable,  related party		5,429			2,612
Total Assets	$	135,618		$	199,707
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES:
Current Liabilities:
Cash overdraft	$	—		$	12,413
Accounts payable		151,568			159,596
Derivative liability		221,767			148,870
Accrued compensation		49,167			—
Accrued expenses		30,409			10,159
Accrued interest		43,069			19,990
Convertible notes payable, net of discount of $116,131 and $93,858, respectively		357,534			265,992
Notes payable – related party		287,948			290,098
Other notes payable		28,100			30,000
Total Current Liabilities		1,169,562			937,118
Total Liabilities		1,169,562			937,118
STOCKHOLDERS’ DEFICIT:
Preferred stock, par value $.001, 10,000,000 authorized, no shares issued and outstanding		—			—
Common stock, $.001 par value, 500,000,000 common shares authorized, 102,401,393 and 34,313,114 shares issued and outstanding, respectively		102,402			34,313
Additional paid in capital		1,388,148			639,889
Deferred stock compensation		(108,318	)		—
Accumulated deficit		(2,416,176	)		(1,411,613	)
Total Stockholders’ Deficit		(1,033,944	)		(737,411	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	135,618		$	199,707

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

F-1

IDS INDUSTRIES, INC.

(FORMERLY IDS SOLAR TECHNOLOGIES, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended May 31,						For the Nine Months Ended May 31,
	2014			2013			2014			2013
Revenue	$	12,839		$	17,899		$	16,213		$	34,729
Cost of revenue		11,275			26,772			11,275			64,151
Gross margin		1,564			(8,873	)		4,938			(29,422	)
Operating expenses:
Professional fees		14,804			17,054			60,387			96,103
Stock-based compensation expense		50,730			—			174,790			—
Salaries and wages		55,021			77,331			250,308			184,935
Marketing and advertising		3,441			—			41,176			—
General and administrative		78,934			194,506			123,097			691,347
Total operating expenses		202,930			288,891			649,758			972,385
Loss from operations		(201,366	)		(297,764	)		(644,820	)		(1,001,807	)
Other income and (expense):
Interest expense		(22,449	)		(9,847	)		(58,551	)		(15,715	)
Amortization of debt discount		(123,289	)		—			(304,035	)		—
Change in fair value of derivative liability		924,095			—			574,743			—
Derivative expense		(143,232	)		—			(381,640	)		—
Loss on extinguishment of debt		(176,006	)		—			(194,577	)		—
Other income		—			50			—			50
Interest income		757			—			4,317			—
Total other income (expense)		459,876			(9,797	)		(359,743	)		(15,665	)
Income (loss) before provision for income taxes		258,510			(307,561	)		(1,004,563	)		(1,017,472	)
Provision for income taxes		—			—			—			—
Net Income (Loss)	$	258,510		$	(307,561	)	$	(1,004,563	)	$	(1,017,472	)
Income (loss) per share:
Basic	$	0.00		$	(0.01	)	$	(0.02	)	$	(0.06	)
Diluted		0.00			—			—			—
Weighted average shares outstanding:
Basic		60,319,311			33,575,364			58,651,342			17,564,093
Diluted		112,856,787			—			—			—

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

F-2

IDS INDUSTRIES, INC.

(FORMERLY IDS SOLAR TECHNOLOGIES, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended May 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(1,004,563	)	$	(1,017,472	)
Adjustments to reconcile net loss to net cash used in operations:
Stock-based compensation		174,790			455,647
Deemed dividend		—			51,621
Treasury stock		—			20,351
Change in fair value of derivatives		(574,743	)		—
Loss on conversion of debt		194,577			—
Amortization of debt discount		304,035			—
Derivative expense		381,640			—
Change in assets and liabilities:
Increase in accounts receivable		(10,787	)		(12,004	)
(Increase) / decrease in inventory		7,728			(30,023	)
(Increase) / decrease in prepaid expenses and other current assets		71,817			(24,167	)
Increase in interest receivable - related party		(2,817	)		(104,771	)
Increase / (decrease) in accounts payable		(20,441	)		174,358
Increase (decrease) in accrued expenses		115,384			(58,435	)
Net cash used in operating activities		(363,380	)		(544,895	)
Cash flows from investing activities
Increase / (decrease) in note receivable – related party		39,764			—
Property and equipment		—			10,080
Net cash provided by (used) in investing activities		39,764			10,080
Cash flows from financing activities:
Proceeds from convertible debt		352,000			—
Payments on convertible debt		(17,500	)		—
Loan / repayment of shareholder loan		—			(2,100	)
Increase in note payable – related party		(2,150	)		290,098
Increase in other notes payable		(1,900	)		232,403
Proceeds from the sale of common stock		20,000			15,998
Net cash provided by financing activities		350,450			536,399
Net increase (decrease) in cash		26,834			1,584
Cash at beginning of period		1,960			15,140
Cash at end of period	$	28,794		$	16,724
Supplemental Cash Flow Information:
Cash paid for interest	$	500		$	—
Cash paid for taxes	$	—		$	—
Non-Cash Investing and Financing Information:
Common stock issued for conversion of debt	$	461,584		$	—
Issuance of common stock warrants in connection with debt	$	11,763		$	—

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

F-3

IDS INDUSTRIES, INC.

(FORMERLY IDS SOLAR TECHNOLOGIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business  

IDS Industries, Inc. (“IDS” or the “Company”) is a GIIRS-rated “green” energy company that designs and develops solar and power management technologies and incorporates these into its manufacturing and distribution of solar-based portable power stations and other solar-based products for consumer, business, government, and disaster relief applications. We also offer a line of ‘Stationary” Energy Storage systems for residential, commercial and light industrial applications. Both the stationary and portable solar power generators will be under our Company brand name, Charge! Energy Storage.

The Company was formed as Step Out, Inc., a Nevada corporation on May 2, 2011. On July 18, 2011 Step Out issued 10,000,000 common shares to acquire 100% membership interest in SOI Nevada, LLC, a Nevada limited liability corporation from the sole shareholder. The membership interest was acquired at book value from the shareholder. SOI Nevada, LLC became a wholly-owned subsidiary of Step Out, Inc.

On September 19, 2012, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests and Assumption of Obligations (the “Agreement”) with our sole officer and director, Sterling Hamilton. Pursuant to the Agreement, the Company transferred all membership interests in our operating subsidiary, SOI Nevada, LLC, to Mr. Hamilton. In exchange for this assignment of membership interests, Mr. Hamilton agreed to assume and cancel all liabilities relating to our former business of developing a chain of flotation tank therapy spas. In addition, Mr. Hamilton agreed to release all liability under a promissory note due and owing to him in the amount of $2,000.

As a result of the Agreement, the Company is no longer pursuing its former business plan. Under the direction of our newly appointed officers and directors, as set forth below, we intend to develop a business focused on the design, development, manufacturing and distribution of renewable-energy based portable and mobile electrical generators and power stations under our own brand name, IDS Solar TechnologiesÔ.

Effective October 12, 2012, the Board of Directors approved a merger with our wholly-owned subsidiary, IDS Acquisition, Inc., pursuant to NRS 92A.180. IDS Acquisition was incorporated in the state of Nevada on September 25, 2012. As part of the merger with our wholly-owned subsidiary, our board authorized a change in the name of the company to “IDS Solar” Technologies, Inc.”

On January 7, 2013 we launched our planned new product line on a limited basis; with the initial model, the Solar Survivor. The Company continues to design and development other models of electric generators and power stations based on customer input and feedback.

Effective February 7, 2013, the board of directors approved a twelve for one forward split of the Company’s common stock. All shares throughout these financial statement and Form 10-Q have been retroactively restated to reflect the forward split.

Effective May 29, 2013, the board of directors authorized a change in the name of the company to “IDS Industries, Inc.” The new name reflects the direction and focus of the Company more accurately given the full slate of products in advanced development including the battery management and energy storage fields.

On February 6, 2014, the board of directors approved the launch of Propel Management Group, Inc. (PMG) a new wholly owned subsidiary. The core competency of this consulting service includes developing and implementing Program Management in product development, service industry, distribution and logistics. The addition of PMG has already proven to translate in-house core competencies in to additional revenue stream opportunities for IDS Industries.

On March 10, 2014, the board of directors approved the launch of Charge! Energy Storage, Inc. (Charge!) a new wholly owned subsidiary.

F-4

Basis of Presentation

The accompanying interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ deficit or cash flows.

It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended May 31, 2014 are not necessarily indicative of the results for the full fiscal year. For further information refer to the financial statements and notes included in the Company’s Form 10-K for the year ended August 31, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of IDS Industries, Inc. and its wholly-owned subsidiary Propel Management Group, Inc. and Charge! Energy Storage, Inc. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. There were no cash equivalents as of May 31, 2014 and August 31, 2013.

Basic Loss per Share

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method; market value is based upon estimated replacement costs.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, we consider the probability of recoverability of accounts receivable based on past experience. Accounts receivable may also be fully reserved for when specific collection issues are known to exist. The analysis of receivables is performed quarterly, and the allowances are adjusted accordingly.

Fair Value of Financial Instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, prepaids, inventory, accounts payable, accrued liabilities, and notes payable, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

· Level 1. Observable inputs such as quoted prices in active markets;

· Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

· Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following presents the gross value of assets and liabilities that were measured and recognized at fair value, as of May 31, 2014.

	Level I		Level II		Level III		Total
Derivative liability	$	—	$	221,767	$	—	$	221,767

F-5

Stock-Based Compensation

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the Company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument. During the year ended August 31, 2013, the Company issued 3,157,750 shares of common stock valued at $467,448 to non-employees. As of May 31, 2014 a total of $461,719 has been expensed, and $5,729 remains in deferred stock compensation expense. During the nine months ended May 31, 2014, the Company issued 6,120,000 shares of common stock valued at $137,035 to non-employees. As of May 31, 2014 a total of $34,447 has been expensed, and $102,588 remains in deferred stock compensation expense.

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation - Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. During the nine months ended May 31, 2014, the Company issued 6,500,000 shares of common stock valued at $81,250 to its CEO.

Income Taxes

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at May 31, 2014 and August 31, 2013.

The Company accounts for its income taxes using the Income Tax topic of the FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Revenue Recognition

Sales of products or services and related costs of products or services sold are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable, and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing, and shipment of products.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued, that might have a material impact on its financial position or results of operations.

F-6

NOTE 2 – NOTE RECEIVABLE

On August 15, 2013, the Company executed a Note Receivable for $77,307 for funds that it had advanced to another company owned by the former CEO. The note bears interest at 8% and was to mature in ninety days. During the nine months ended May 31, 2014, $39,764 and $1,500 was paid back on the principal and interest, respectively on this loan. As of May 31, 2014, the note has accrued $5,429 in interest. The repayment terms on this note are currently being renegotiated.

NOTE 3 – PREPAIDS AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at:

	May 31, 2014		August 31,2013
Prepaid consulting	$	—	$	64,824
Other assets		7,007		—
Unamortized original issue discount		8,581		6,762
Deferred financing costs		7,573		8,610
Total prepaid expenses and other current assets	$	23,161	$	80,196

NOTE 4 – CONVERTIBLE NOTES PAYABLE

On October 12, 2012, the Company executed a promissory note with Argent Offset, LLC for $20,000. The note bears interest at 18% and was due on or before January 10, 2013. On February 27, 2013, a new convertible promissory note was executed for $33,850. The note bears interest at 18% compounded monthly and is due August 26, 2013. The new note amends and replaces in its entirety the note dated October 12, 2012. Pursuant to the terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a conversion rate of $0.11. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be $18,464. This amount has been recorded as a discount against the outstanding balance of the note. The discount was amortized to interest expense over the life of the debt using the effective interest method. Interest charged to operations relating to the amortization of the debt discount for the year ended August 31, 2013 amounted to $18,464. In addition, the note included one warrant giving the holder the right to purchase 50,000 shares of common stock at a price of $0.20 per share for a period of three years. As required by ASC 470-20 the Company valued the warrant and recorded a debt discount to additional paid in capital in the amount of $3,690 based on the discount to market available at the time of issuance. The discount was to be amortized over the life of the loan to interest expense. As of August 31, 2013, $3,690 has been amortized to interest expense. On November 26, 2013, an agreement of temporary forbearance was executed in which for a $1,000 fee the lender agreed to waive any default until December 15, 2013. On January 10, 2014, another agreement of temporary forbearance was executed in which for a $500 fee the lender agreed to waive any default until March 20, 2014. On February 4, 2014, $2,500 was repaid on the note and on February 20, 2014, $20,000 of the principal was converted into 2,857,143 shares of common stock at $.007 per share which resulted in a loss on conversion of debt of $18,571. On March 10, 2014 the remaining principal and interest totaling $21,923 was converted into 3,131,792 shares of common stock at $.0632 per share which resulted in a loss on conversion of debt of $176,006.

On December 3, 2012, the Company executed a convertible promissory note with Steven J. Caspi (“Caspi”) for $125,000. The note bears interest at 5% and was due on or before November 30, 2013. Pursuant to the terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a conversion rate of $1.25. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be $60,000. This amount has been recorded as a discount against the outstanding balance of the note. The discount is being amortized to interest expense over the life of the debt using the effective interest method. The note also issued one warrant giving the holder the right to purchase 15,625 shares of common stock at a price of $2.00 per share for a period of five years. As required by ASC 470-20 the Company recorded a debt discount to additional paid in capital in the amount of $16,455 based on the discount to market available at the time of issuance. The discount has been fully amortized to interest expense. On March 10, 2014, the Company executed a forbearance agreement with the lender modifying the terms of the original agreement. Per the new agreement the conversion price was changed to $0.005 per share and the due date was extended to November 30, 2014. As a result to the new conversion price the Company recorded an additional debt discount of $48,539. The additional discount will be amortized over the remaining term of the note. On March 21, 2014, $25,000 of the note was converted into 5,000,000 shares of common stock. The note is shown net of a debt discount of $23,228 and the note has accrued interest of $9,411.

F-7

On March 20, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before December 26, 2013. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $49,939 based on the Black Scholes Merton pricing model. During the nine months ended May 31, 2014, the total principal of $32,500 and accrued interest of $1,300 was converted into 6,143,590 shares of common stock. As a result of the conversion $8,125 of the remaining debt discount was expensed and the company recognized a gain on derivative liability of $35,600.

On April 4, 2013, the Company executed a convertible promissory note for $15,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before January 8, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. The Company recorded a debt discount in the amount of $15,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $21,610 based on the Black Scholes Merton pricing model. During the nine months ended May 31, 2014, the total principal of $15,500 and accrued interest of $620 was converted into 3,526,087 shares of common stock. As a result of the conversion $6,045 of the remaining debt discount was expensed and the Company recognized a gain on derivative liability of $17,286.

On June 3, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before March 5, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $34,945 based on the Black Scholes Merton pricing model. On February 25, 2014, principal of $14,200 was converted into 3,086,957 shares of common stock. During the nine months ended May 31, 2014, the total principal of $32,500 and accrued interest of $1,300 was converted into 7,347,826 shares of common stock. As a result of the conversion $2,865 of the remaining debt discount was expensed and the Company recognized a gain on derivative liability of $78,028.

On June 19, 2013, the Company executed a Convertible Promissory Note (the “note”) with JMJ Financial (“JMJ”). The nominal principal sum of the Note is $300,000, with an original issue discount of ten percent (10%). The note matures one year from the effective date of each payment, which is made at the sole discretion of JMJ. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 40% discount to the lowest trade price in the twenty five trading days prior to conversion.

The Company received its first payment from JMJ towards the loan of $55,000 on June 19, 2013. The Company recorded a debt discount in the amount of $60,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $75,507 based on the Black Scholes Merton pricing model using the following attributes: .13% risk free rate, 134% volatility and a one year term to maturity. During the nine months ended May 31, 2014, principal of $11,351 and accrued interest of $7,944 was converted into 4,200,000 shares of common stock. As a result of the conversion $3,452 of the debt discount was accelerated and expensed. On March 19, 2014; the remaining principal of $20,900 was converted into 3,800,000 shares of common stock. As a result of the conversion the remaining $14,614 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $241,878.

On August 5, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before May 7, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. During March 2014 the principal of $32,500 and $1,300 of accrued interest was converted into 6,830,508 shares of common stock. As a result of the conversion the remaining $23,400 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $138,269.

The Company received its second payment from JMJ towards the loan of $25,000 on August 14, 2013. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $62,569 based on the Black Scholes Merton pricing model using the following attributes: .12% risk free rate, 144% volatility and a one year term to maturity. During the nine months ended May 31, 2014 the principal of $27,500 and $3,611 of accrued interest was converted into 7,000,000 shares of common stock. As a result of the conversion the remaining $6,932 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $126,070.

F-8

On September 16, 2013, the Company executed a convertible promissory note for $10,000 with Robert Hendrickson. The note bears interest at 10% per annum and is due on or before September 15, 2014. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 49% discount to the VWAP price for the ten trading days prior to conversion. The Company recorded a debt discount in the amount of $10,000 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $18,300 based on the Black Scholes Merton pricing model. As of February 28, 2014, $4,521 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $25,266 resulting in a loss on the change in fair value of the derivative. The note is shown net of a debt discount of $5,479 at February 28, 2014. On March 10, 2014, the original note of $10,000 plus a $1,000 OID was purchased by GCEF Opportunity Fund, LLC.

The Company received its third payment from JMJ towards the loan of $25,000 on September 30, 2013. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $70,390 based on the Black Scholes Merton pricing model using the following attributes: .10% risk free rate, 261% volatility and a one year term to maturity. As of May 31, 2014; $18,384 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $33,714 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $9,116 at May 31, 2014 and has accrued interest of $3,611.

On January 22, 2014, we obtained short term financing from Finiks Capital, LLC under a Promissory Note in the amount of $100,000 (the “Note”). The Note features an original issue discount of ten percent (10%) and has a face amount of $100,000. We will initially receive $20,000 from the Lender and will receive additional funds at the Lender’s sole discretion. The Note accrues no interest if the principal sum due is repaid within ninety days. The Note incurs interest one time at a rate of ten percent (10%) on the principal sum due, with all principal and interest due in full on the maturity date of one hundred eighty days from the date of issue. At any time, the Note may be converted, in whole or in part at the option of the holder, at a price per share of fifty-one percent (51%) of the average of the three lowest bid side prices in the ten trading days previous to the conversion. The Company recorded a debt discount in the amount of $22,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $34,965 based on the Black Scholes Merton pricing model using the following attributes: ..13% risk free rate, 134% volatility and a six month term to maturity. As of May 31, 2014, $15,889 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $40,583 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $6,111 at May 31, 2014. Subsequent to May 31, 2014, the full amount of the note and accrued interest was converted to common stock.

On February 4, 2014, we obtained short term financing from GCEF Opportunity Fund, LLC under a Promissory Note in the amount of $33,000. The Note features an original issue discount of ten percent (10%) and we will therefore receive $30,000 in actual funding. The Note is due within forty-five days, with an additional fifteen day grace period. As an additional loan fee, we have agreed to issue the Lender 2,000,000 shares of our common stock. These shares were valued at $0.0188, the closing market price on the day of issuance for total non-cash expense of $37,600. If the Note is not repaid by the maturity date, it shall be converted into 3,465,000 shares of our common stock, representing conversion of the principal, the original issue discount, and an interest at the rate of fifteen percent (15%) into common stock at a price of $0.01 per share. On March 31, 2014, $15,000 was repaid on the note. Subsequent to May 31, 2014, the remaining principal and interest on the note was converted to common stock.

On February 26, 2014, The Company received an additional $20,000 from Finiks Capital. The Company recorded a debt discount in the amount of $22,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $47,295 based on the Black Scholes Merton pricing model using the following attributes: .08% risk free rate, 212% volatility and a six month term to maturity. As of May 31, 2014, $11,489 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $33,247 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $10,511 at May 31, 2014. Subsequent to May 31, 2014, the full amount of the note and accrued interest was converted to common stock.

On March 7, 2014, the Company executed a convertible promissory note for $73,000 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before December 3, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $1,376.

F-9

On March 19, 2014, the Company executed a convertible promissory note for $53,000 with KBM Worldwide, Inc. The note bears interest at 8% per annum and is due on or before December 26, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $802.

On May 20, 2014, the Company executed a convertible promissory note for $53,000 with KBM Worldwide, Inc. The note bears interest at 8% per annum and is due on or before December 26, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $360.

The Company received its fourth payment from JMJ towards the loan of $40,000 on April 17, 2014. The Company recorded a debt discount in the amount of $44,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $104,127 based on the Black Scholes Merton pricing model using the following attributes: .11% risk free rate, 214% volatility and a one year term to maturity. As of May 31, 2014; $5,304 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $66,695 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $38,696 at May 31, 2014.

On March 5, 2014, the Company executed a Convertible Promissory Note (the “note”) with Black Mountain Equities, Inc. (“Black Mountain”). The nominal principal sum of the Note is $250,000, with an original issue discount of ten percent (10%). The note matures one year from the effective date of each payment, which is made at the sole discretion of Black Mountain. The Note is convertible into common stock in whole or in part at a variable conversion price equal to the lessor of $0.025 or a 60% discount to the lowest trade price in the twenty five trading days prior to conversion. The Company received its first payment towards the loan of $25,000. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $110,515 based on the Black Scholes Merton pricing model using the following attributes: .13% risk free rate, 193% volatility and a one year term to maturity. As of May 31, 2014; $6,555 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $36,409 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $20,945 at May 31, 2014.

A summary of the status of the Company’s debt discounts, derivative liabilities and original issue discounts, and changes during the periods is presented below:

Debt Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Asher – 3/20/13	$	—	$	32,500		(32,500	)	$	—
Asher – 4/4/13		—		15,500		(15,500	)		—
Asher – 6/3/13		—		32,500		(32,500	)		—
Asher – 8/5/13		—		32,500		(32,500	)		—
Black Mountain – 3/5/14		—		27,500		(6,555	)		20,945
Caspi		19,480		48,539		(42,769	)		25,250
Finiks – 1/21/14		—		22,000		(15,888	)		6,112
Finiks – 2/26/14		—		22,000		(11,488	)		10,512
GCEF Opportunity		—		11,769		(11,769	)		—
Hendrickson – 9/16/13		—		10,000		(10,000	)		—
JMJ – 6/19/13		48,234		—		(48,234	)		—
JMJ – 8/14/13		26,144		—		(20,644	)		5,500
JMJ – 9/30/13		—		27,500		(18,384	)		9,116
JMJ – 4/17/14		—		44,000		(5,304	)		38,696
	$	93,858	$	326,308	$	(304,035	)	$	116,131

F-10

Derivative Liabilities	August 31, 2013		Initial Valuation		Revaluation on 5/31/14		Change in fair value of Derivative
Asher – 3/20/13	$	—	$	49,939	$	—	$	(49,939	)
Asher – 4/4/13		—		21,610		—		(21,610	)
Asher – 6/3/13		—		34,945		—		(34,945	)
Asher – 8/5/13		—		155,554		—		(155,554	)
Black Mountain – 3/5/14		—		110,515		36,409		(74,106	)
Finiks – 1/21/14		—		34,965		40,583		5,618
Finiks – 2/26/14		—		47,295		33,247		(14,048	)
Hendrickson – 9/16/13		—		18,300		—		(18,300	)
JMJ – 6/19/13		102,245		—		—		(102,245	)
JMJ – 8/14/13		46,625		—		11,119		(35,506	)
JMJ – 9/30/13		—		70,390		33,714		(36,676	)
JMJ - 4/17/14		—		104,127		66,695		(37,432	)
	$	148,870	$	647,640	$	221,767	$	574,743

Original Issue Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Black Mountain – 3/5/14		$	$	2,500	$	(465	)	$	2,035
Finiks – 1/21/14		—		2,000		(1,444	)		556
Finiks – 2/26/14		—		2,000		(1,044	)		956
GCEF Opportunity		—		3,000		(3,000	)		—
JMJ – 6/19/13		4,385		—		(4,159	)		226
JMJ – 8/14/13		2,377		—		(1,890	)		487
JMJ – 9/30/13		—		2,500		(1,685	)		815
JMJ – 4/17/14		—		4,000		(493	)		3,507
	$	6,762	$	16,000	$	(14,180	)	$	8,582

NOTE 5 – NOTES PAYABLE

On June 12, 2013, the Company executed a promissory note for $15,000. The loan was due August 12, 2013. The note does not bear interest but its principal balance includes a loan fee of $5,000. Subsequent to May 31, 2014, the loan was extended with no specific terms of repayment.

On June 15, 2013, the Company executed a promissory note for $15,000 with a shareholder. The note bears interest at 10% and was due within ninety days. As of May 31, 2014 this note is still outstanding, is now past due and has accrued interest of $1,434. On October 15, 2013 the shareholder loaned the Company an additional $8,755. Accrued interest on this loan as of May 31, 2014 is $544.

As of May 31, 2014, the Company owed various shareholders $13,100 for advances made to cover certain operating costs. The loans accrue interest at 8% per annum and are due on demand.

F-11

NOTE 6 – STOCK WARRANTS

Pursuant to the terms and conditions of the convertible promissory note dated February 27, 2013, the Company issued a warrant to purchase 50,000 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $2,044 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.20, 1.30% risk free rate, 64% volatility and expected life of the warrants of 3 years.

Pursuant to the terms and conditions of the convertible promissory note dated November 30, 2012, the Company issued a warrant to purchase 15,625 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $16,455 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $2.00, .63% risk free rate, 85.9% volatility and expected life of the warrants of 5 years.

Pursuant to the terms and conditions of the convertible promissory note dated February 4, 2014, the Company issued a warrant to purchase 1,000,000 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $11,769 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.02, 1.46% risk free rate, 197.6% volatility and expected life of the warrants of 5 years.

A summary of the status of the Company’s outstanding warrants and changes during the periods is presented below:

	Shares available to purchase with warrants		Weighted Average Price		Weighted Average Fair Value
Outstanding, August 31, 2013		65,625	$	0.06	$	0.03
Issued		1,000,000		—		0.018
Exercised		—		—		—
Forfeited		—		—		—
Expired		—		—		—
Outstanding, May 31, 2014		1,065,625	$	0.06	$	0.03
Exercisable, May 31, 2014		1,065,625	$	0.06	$	0.03

Range of Exercise Prices		Number Outstanding at 5/31/14		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
	$0.20 - $2.00		1,065,625		5.3 years	$	0.06

NOTE 7 –COMMON STOCK TRANSACTIONS

On May 8, 2013, the Company issued 99,996 shares of common stock to its former CFO, for services. The shares were valued using the closing stock price on the day of issuance of $0.093, for a total expense of $9,250.

On December 10, 2013, the company sold 1,333,333 shares of common stock to its CEO for total cash proceeds of $20,000.

During the nine months ended May 31, 2014, the Company issued a total of 5,988,935 shares of common stock to Argent Offset, LLC in conversion of total principal and interest of $41,923, (see Note 4). The conversions resulted in a total loss on conversion of debt of $194,577.

On February 7, 2014, the Company issued 6,500,000 shares of common stock to its CEO, for services. The shares were valued using the closing stock price on the day of issuance of $0.0125, for a total expense of $81,250.

On March 18, 2014, the Company issued 2,298,000 shares of common stock to GCEF Opportunity Fund in conversion of total principal and interest of $11,490.

On March 21, 2014, the Company issued 5,000,000 shares of common stock to Steven Caspi in conversion of $25,000 of the $125,000 note held by him.

During the nine months ended May 31, 2014, the Company issued a total of 23,848,014 shares of common stock to Asher Enterprises, Inc. in conversion of total principal and interest of $117,520 (see Note 4).

During the nine months ended May 31, 2014, the Company issued a total of 15,000,000 shares of common stock to JMJ Financial in conversion of total principal and interest of $89,645 (see Note 4).

During the nine months ended May 31, 2014, the Company issued a total of 8,120,000 shares of common stock for services. The shares were valued using the closing stock price on the day of issuance, for a total expense of $72,047.

F-12

NOTE 8- RELATED PARTY TRANSACTIONS

On May 8, 2013, the Company issued 99,996 shares of common stock to its former CFO, for services. The shares were valued using the closing stock price on the day of issuance of $0.093, for a total expense of $9,250.

On December 10, 2013, the Company sold 1,333,333 shares of common stock to its CEO for total cash proceeds of $20,000.

On February 7, 2014, Company issued 6,500,000 shares of common stock to its CEO, for services. The shares were valued using the closing stock price on the day of issuance of $0.0125, for a total expense of $81,250.

Notes Payable

On May 31, 2013, the Company’s former CEO, Bruce Knoblich and the Company executed a promissory note for $289,998, $2,150 of which has been repaid. The note bears interest at 5% and was due November 30, 2013. As of May 31, 2014 the due date on the note was extended with no specific terms. Total accrued interest on the note is $17,885.

NOTE 9 – SIGNIFICANT EVENTS

On February 6, 2014, our newly-formed subsidiary, Propel Management Group, Inc., entered into a Master Services Agreement (the “Agreement”) with Californians for Marijuana Legalization and Control (CMLC). Under the Agreement, we will be responsible for overseeing a fundraising effort through telemarketing, e-mail and online to support passage in California of the proposed Marijuana Control, Legalization, and Revenue Act of 2014. In addition, we shall coordinate the gathering of signatures for petitions to place the proposed Act on the ballot in California. We are to be compensated at a rate of $2.75 per petition signature gathered before March 24, 2014 and $3.75 per signature gathered thereafter. In addition, we shall be compensated at a rate of 80% of all contributions generated up to $100,000, 60% of the second $100,000 in contributions, and 43% of contributions generated thereafter.

In mid-April 2014 CMLC made a decision to postpone the pursuit of the target of 800,000 signatures by April 24, 2014 to qualify the proposed Act for the California ballot for this November. Instead they will focus on the higher volume and younger age turnout that is associated with the Presidential election terms like this next November 2016 elections. Furthermore, negotiations are proceeding as planned to retain Propel Management Group for the California legalization 2016 initiative which would be a contract allowing PMG to expand the service of coordinating through multiple Call Centers and raising funds through November of 2016 at the levels defined for the previous 2014 initiative.

.

In June 2014, Propel Management Group was again retained on a subsequent contract by this same group for the education, rallying voters and raising funds for Medical Marijuana Dispensaries initiative in San Jose, CA referred to as Control & Regulation San Jose (CRSJ).

On March 31, Propel Management Group (PMG) engaged in discussion with Aja Cannafacturing (AJA), to develop and launch one of the first licensed medical marijuana processors in the state of Nevada. Upon the successful licensing and launch of the facility it is under consideration that AJA would become a subsidiary of IDST as a term of the contract. If the signing of this agreement proceeds, PMG would discontinue pursuing the acquisition of MiCannaLabs.com which was publicly announced on March 11, 2014. Due to legal technicalities, principals of any cannabis or hemp testing facility must not have any interest in any growing and manufacturing facility according to Nevada state law. (Update): Given the short window of time for application submission and the exorbitant cost the IDST Board decided to not pursue licensing in Clark County at this time however, we will continue to pursue such opportunities as they arise in other NV Counties.

NOTE 10 - GOING CONCERN

As of May 31, 2014, the Company has a working capital deficit of $1,033,944, limited revenue and an accumulated deficit of $2,416,176. The 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. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The Company’s management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, upon achieving profitable operations through its business activities.

F-13

NOTE 11 - SUBSEQUENT EVENTS

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2014 through the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described below.

Subsequent to May 31, 2014, the Company issued 3,930,000 shares of common stock to GCEF Opportunity Fund in conversion of $19,650 of principal and accrued interest.

Subsequent to May 31, 2014, the Company issued 4,500,000 shares of common stock to JMJ Financial in conversion of $20,250 of principal and accrued interest.

Subsequent to May 31, 2014, the Company issued 10,352,942 shares of common stock to Finiks Capital, LLC in conversion of $48,400 of principal and accrued interest.

On July 10, 2014 the company Board of Directors decided to purchase the name and the URL for Aja Cannafacturing. It has been decided to change the business model and business name to focus on the medicinal marijuana technology industry.

F-14

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

IDS Industries is restructuring as a family of companies attending niche market opportunities.

CHARGE! Energy Storage Inc.

Our business focuses on the design and development of solar and power management technologies. We incorporate these technologies into the manufacturing and distribution of solar-based portable and mobile power stations and devices. We also plan to offer a line of ‘Stationary” Energy Storage systems that will be adapted for residential and commercial applications allowing customers to reduce their utility costs their dependency on the utility grid.

Going forward, we plan to market our products under the brand name Charge! Energy Storage Inc. Our image is a renewable driven product developer creating energy storage solutions for portable, mobile and stationary applications for every American household. Our industry changing technology will be our lead in to expanding into Stationary Energy Storage for residential, commercial and light industrial based on the development of a patent-pending integrated battery management and control system. We believe this development will allow Charge! Energy Storage customers the ability to optimize electric utility savings through the use of power storage systems based on Lithium-ion based chemistries.

We have continued to develop a sales and distribution network through selected manufacturers, contracted dealers, energy system integrators, and OEMs nationwide to support our planned sales growth vertically and horizontally as our new Lithium-ion chemistry based units emerge.

Products

Each product model features our innovative storage and charge design, with the overall product line marketed as the economical, sturdy and reliable choice for portable solar energy as part of an emergency/disaster preparedness plan or for those seeking an off-grid, odorless, noiseless and non-flammable safer source of power.

Production on the lead acid based Solar Survivor has been discontinued and replaced with a private label program on the re-tool to switch from the old technology of lead acid to our newly developed lithium-ion product suite This portable product suite includes the long-lasting Lithium-ion chemistry in a 2.5kWh and a 1.25kWh both of which became available to the Market at the end of May 2014.

Beyond the change to the industry leading technology of Lithium-ion battery system, our new generation of products have all been ergonomically redesigned to feature a customized metallic or Pelican case with two inline wheels and telescoping handle that provide users extra easy mobility and our 75kWh utilizes our own in-house developed, patent-pending Battery Management System (BMS) technology.

4

Suppliers and Manufacturers

In May 2014 IDS Charge! Energy Storage, Inc. (Charge!) has entered into a contract manufacturing and marketing agreement with Ultralife Corporation (NASDAQ:ULBI) for the Charge! Energy branded line of portable and stationary power systems. Charge! Energy Storage Inc has a suite of 5 different products through this business partnership.

Plans to enter into an agreement utilizing the efforts of a call center to begin to promote the Charge! Energy Storage solar generator product suite were delayed until July. The call center will be mandated to create specific portable product sales opportunities in niche portable product markets

Our patent pending Battery Management System technology, known as project Eclipse, is presently focused on the 12V system for the portable product suite and presently in a beta test stage with an electronics specialist (independent contractor).

This technology would first launch in our in house design and build as a price point sensitive .75kWh unit and has nearly completed its re-design. It was slated for production in June 2014 but has been postponed until the fall of 2014 so to allow focus on the sales development of the two larger units in our product suite.

Expansion and Development Plan

Our portable and stationary energy producing and storage products will be marketed through our developed distributor channels nationwide. Our strategy includes initially building an independent dealer base throughout the U.S. for which we already have over thirty-five dealers signed up.

In April 2014 we signed a one year consulting agreements with a team of reputable sales & marketing experts who are defining market opportunity for quickly maturing eastern seaboard, most notably New Jersey and New York. This developmental market work will be in both the Portable and Stationary energy storage markets.

This will be augmented with the recent partnership of a call center focused on targeted niche markets that we believe will be readily receptive to our product line, including the off-road vehicle community and hiking, RV, camping, boating and other recreational activities where a clean, quiet and portable electrical energy supply is needed in a remote or off-grid location. Other potential marketplaces include first responders and others that provide disaster relief or emergency services and the cannabis and hemp industries. Many consumers and businesses cannot utilize fossil-fuel based solutions. With our product line, they will have a choice for safe and “green” electricity from solar power generation and our energy storage products.

In addition to our portable solar power business, we have launched a consulting for Program Management and performance improvement in manufacturing, services, logistics and quality systems. On February 6, 2014, our newly-formed subsidiary, Propel Management Group, Inc., entered into a Master Services Agreement (the “Agreement”) with Californians for Marijuana Legalization and Control (CMLC). Under the Agreement, we will be responsible for overseeing a fundraising effort through telemarketing, e-mail and online to support passage in California of the proposed Marijuana Control, Legalization, and Revenue Act of 2014. In addition, we shall coordinate the gathering of 800,000 signatures on petitions to place the proposed Act on the November ballot in California. We are to be compensated at a rate of $2.75 per petition signature gathered before March 24, 2014 and $3.75 per signature gathered thereafter. In addition, we shall be compensated at a rate of 80% of all contributions generated up to $100,000, 60% of the second $100,000 in contributions, and 43% of contributions generated thereafter.

In mid-April 2014 CMLC made a decision to postpone the pursuit of the target of 800,000 signatures by April 24, 2014 to qualify the proposed Act for the California ballot for November 2014. Instead they will focus on the higher volume and younger age turnout that is associated with the Presidential election terms like this next November 2016 elections. Furthermore, negotiations are proceeding as planned to retain Propel Management Group for the California legalization 2016 initiative which would be a contract allowing PMG to expand the service of coordinating through multiple Call Centers and raising funds through November of 2016 at the levels defined for the previous 2014 initiative.

In June 2014, Propel Management Group was again retained on a subsequent contract by this same group for the education, rallying voters and raising funds for Medical Marijuana Dispensaries initiative in San Jose, CA referred to as Control & Regulation San Jose (CRSJ).

5

On March 31, Propel Management Group (PMG) with Aja Cannafacturing (AJA), to develop and launch one of the first licensed medical marijuana processors in the state of Nevada. Upon the successful licensing and launch of the facility it is under consideration that AJA would become a subsidiary of IDST as a term of the contract. If the signing of this agreement proceeds, PMG would discontinued in pursuing the acquisition of MiCannaLabs.com which was publicly announced on March 11, 2014. Due to legal technicalities, principals of any cannabis or hemp testing facility must not have any interest in any growing and manufacturing facility according to Nevada state law. (Update): Given the short window of time for application submission and the exorbitant cost the IDST Board decided to not pursue licensing in Clark County at this time however, we will continue to pursue such opportunities as they arise in other NV Counties. Furthermore it is still the intention of IDS Industries to advance further in to the Medicinal Indoor Growers Market through acquiring & distributing advanced technology and equipment to the industry.

Results of Operations for the Three Months ended May 31, 2014 compared to the Three Months Ended May 31, 2013.

Revenue

During the three months ended May 31, 2014, revenue was $12,839 compared to $17,899 for the three months ended May 31, 2013. There were no sales for the parent company IDS Industries in the current quarter because we discontinued production of lead acid products. As a renewable focused-company it became apparent that lead acid technology did not align with our company mission. More compelling was that lead acid performance was inferior and not robust enough to support our requirements for portable generators. This also allowed us to focus all resources on expediting the transformation to Lithium-ion technologies. The $12,839 of revenue was generated by our new subsidiary Propel Management Group, Inc.

Operating Expenses

Professional fees for the three months ended May 31, 2014 were $14,804, as compared to $17,054 for the three months ended May 31, 2013, a decrease of $2,250 or 13%.  Professional fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings and year end audit. The decrease in the current period is attributed to a decrease in legal fees that were incurred.

Stock based compensation was $50,730 for the three months ended May 31, 2014, as compared to $0 for the three months ended May 31, 2013.  This non-cash compensation expense consisted of stock issued for various consulting and marketing services.

Salaries and wage expense for the three months ended May 31, 2014 increased $22,310 or 28% to $55,021, as compared to $77,331 for the prior comparable period.

Marketing and advertising expense for the three months ended May 31, 2014 was $3,441, as compared to $0 for the three months ended May 31, 2013. The increase is in conjunction with marketing our new products.

General and administrative expense for the three months ended May 31, 2014 decreased $44,163 to $78,934 as compared to $194,506 for the prior comparable period.

Overall there was an $85,961 decrease in operating expenses for the comparable periods ended May 31.

Other income and expense

During the three months ended May 31, 2014 we incurred $123,289 of expense for amortization of debt discount and had a gain on the change in fair value of our derivative liability of $924,095, neither of which we had in the prior year. These new gains and losses are a result of the derivative accounting required for the issuance of convertible debt. We also had an increase in interest expense of $12,602 to $22,449 from $9,847 in the prior period and had an increase in interest income of $757.

Net Loss

Overall we recorded a net gain of $258,510 for the three months ended May 31, 2014, as compared to a net loss of $307,561 for the three months ended May 31, 2013, an increase of $566,071. The gain for the three months is solely attributed to the gain in derivative liability.

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Results of Operations for the Nine Months ended May 31, 2014 compared to the Nine Months Ended May 31, 2013.

Revenue

IDS Industries was a pre-revenue status for Q1 2014 as it migrated away from the lead acid technology and developed Lithium-ion chemistry products. During this emergence and development phase Propel Management Group Inc., was launched to raise revenues via providing services with existing core competencies within its existing staff. During the nine months ended May 31, 2014, revenue was $16,213 compared to $34,729 for the nine months ended May 31, 2013. There were no sales for the parent company IDS Industries in the current period because we discontinued production of lead acid products. As a renewable focused-company it became apparent that lead acid technology did not align with our company mission. More compelling was that lead acid performance was inferior and not robust enough to support our requirements for portable generators. This also allowed us to focus all resources on expediting the transformation to Lithium-ion technologies. The $16,213 of revenue was generated by our new subsidiary Propel Management Group, Inc.

Operating Expenses

Professional fees for the nine months ended May 31, 2014 were $60,387, as compared to $96,103 for the nine months ended May 31, 2013, a decrease of $35,716 or 37%.  Professional fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings and year end audit. The decrease in the current period is attributed to a decrease in legal fees that were incurred.

Stock based compensation was $174,790 for the nine months ended May 31, 2014, as compared to $0 for the nine months ended May 31, 2013.  This non-cash compensation expense consisted of stock issued for various consulting and marketing services as well as stock valued at $81,250 for shares issued to the CEO.

Salaries and wage expense for the nine months ended May 31, 2014 increased $65,373 or 35% to $250,308, as compared to $184,935 for the prior comparable period. The trend is now tracking at lower than previous YTD trends with recent re-structuring in Operations, Engineering and Finance.

Marketing and advertising expense for the nine months ended May 31, 2014 was $41,176, as compared to $0 for the nine months ended May 31, 2013. The increase is in conjunction with marketing our new products.

General and administrative expense for the nine months ended May 31, 2014 decreased $568,250 to $123,097, as compared to $691,347 for the prior comparable period.  In the prior period we had accounted for stock based compensation in G&A expense. We have since changed our policy and now account for stock based compensation in its own separate account.

Overall there was a $322,627 decrease in operating expenses for the comparable period ended May 31, 2013 as a result of restructuring by the Company.

Other income and expense

During the nine months ended May 31, 2014 we incurred $304,035 of expense for amortization of debt discount and had a gain on the change in fair value of our derivative liability of $574,743, neither of which we had in the prior year. These new gains and losses are a result of the derivative accounting required for the issuance of convertible debt. We also had an increase in interest expense of $42,836 to $58,551 from $15,715 in the prior period and had an increase interest income of $4,317.

Net Loss

Overall we recorded a net loss of $1,004,563 for the nine months ended May 31, 2014, as compared to a net loss of $1,017,472 for the nine months ended May 31, 2013.

As we go forward with the development of our portable solar generator business during the current fiscal year, we expect that our operating expenses will continue to increase and that we will also begin to generate increasing revenues from the sale of our products.

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Liquidity and Capital Resources

As of May 31, 2014, we had an accumulated deficit of $2,416,176 and a working capital deficit of $1,033,944. For the nine months ended May 31, 2014, net cash used in operating activities was $363,380 and we received $350,450 from financing activities.

We have received short term loan financing to fund operations under various promissory notes. Our promissory note obligations currently issued and outstanding are as follows:

We owe the principal sum of $100,000 to Steven J. Caspi under the terms of a Forbearance Agreement issued March 10, 2014 which modified the terms of the original Convertible Promissory Note and Security Agreement (the “Note”) issued November 19, 2012. The Forbearance Agreement bears interest at an annual rate of five percent (5%), with all principal and interest being due on or before November 30, 2014. The Note is convertible to shares of our common stock, in whole or in part at the option of Mr. Caspi, at a conversion price of $0.005 per share. As of May 31, 2014, this note is still outstanding and has accrued interest of $9,411.

On May 31, 2013, the Company’s former CEO, Bruce Knoblich and the Company executed a promissory note for $289,998, $2,150 of which has been repaid. The note bears interest at 5% and was due November 30, 2013. As of November 30, 2013 the due date on the note was extended with no specific terms. Total accrued interest on the note is $17,885.

On June 19, 2013, we entered into a Promissory Note (the “Note”) with JMJ Financial (“JMJ”). The nominal principal sum of the Note is $300,000 with an original issue discount of ten percent (10%). Upon closing, JMJ loaned the Company the sum of $55,000 under the Note, with any additional advances up to the total principal sum to be made in the future and at the sole discretion of JMJ. All unpaid principal and interest due under the Note must be paid within one (1) year of the effective date of each advance made by JMJ under the Note. As of May 31, 2014, the total principal and interest due under this note is $85,022.

We have received financing under a series of Convertible Promissory Notes (the “Notes”) issued to Asher Enterprises, Inc. (“Asher”). The Notes bear interest at an annual rate of 8%, with principal and interest coming due approximately nine months from the respective dates of issue. The Notes may be converted in whole or in part, at the option of the holder, to shares of our common stock, par value $0.001, at any time following 180 days after the issuance dates of the Notes. The conversion price under the Note is 51% of the Market Price of our common stock on the conversion dates. For purposes of the Notes, “Market Price” is defined as the average of the 3 lowest closing prices for our common stock on the 30 trading days immediately preceding the conversion dates. As of May 31, 2014, the total principal and interest due under these notes is $73,000 and $1,376, respectively.

On January 22, 2014, we obtained short term financing from Finiks Capital, LLC under a Promissory Note in the amount of $100,000 (the “Note”). The Note features an original issue discount of ten percent (10%) and has a face amount of $100,000. We will initially receive $20,000 from the Lender and will receive additional funds at the Lender’s sole discretion. The Note accrues no interest if the principal sum due is repaid within ninety days. The Note incurs interest one time at a rate of ten percent (10%) on the principal sum due, with all principal and interest due in full on the maturity date of one hundred eighty days from the date of issue. At any time, the Note may be converted, in whole or in part at the option of the holder, at a price per share of fifty-one percent (51%) of the average of the three lowest bid side prices in the ten trading days previous to the conversion. As of May 31, 2014, the total principal and interest due under this note is $48,400.

We have received financing under a series of Convertible Promissory Notes (the “Notes”) issued to KBM Worldwide, Inc. (“KBM”). The Notes bear interest at an annual rate of 8%, with principal and interest coming due approximately nine months from the respective dates of issue. The Notes may be converted in whole or in part, at the option of the holder, to shares of our common stock, par value $0.001, at any time following 180 days after the issuance dates of the Notes. The conversion price under the Note is 51% of the Market Price of our common stock on the conversion dates. For purposes of the Notes, “Market Price” is defined as the average of the 3 lowest closing prices for our common stock on the 30 trading days immediately preceding the conversion dates. As of May 31, 2014, the total principal and interest due under these notes is $106,000 and $1,162, respectively.

On March 5, 2014, the Company executed a Convertible Promissory Note (the “note”) with Black Mountain Equities, Inc. (“Black Mountain”). The nominal principal sum of the Note is $250,000, with an original issue discount of ten percent (10%). The note matures one year from the effective date of each payment, which is made at the sole discretion of Black Mountain. The Note is convertible into common stock in whole or in part at a variable conversion price equal to the lessor of $0.025 or a 60% discount to the lowest trade price in the twenty five trading days prior to conversion. The Company received its first payment towards the loan of $25,000. As of May 31, 2014, the total principal and interest due under these notes is $27,500 and $2,750, respectively.

We will require significant additional financing in order to move forward effectively with the development of our new portable solar power generator business and our battery management and charge controller products line. We intend to fund the development of our new business through debt and/or equity financing arrangements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, in amounts sufficient to fund our planned acquisitions and other activities, or at all.

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Going Concern

As discussed in the notes to our financial statements, we have minimal revenue and an accumulated deficit of $2,416,176.   This has raised substantial doubt for our auditors about our ability to continue as a going concern.  Without realization of additional capital, it would be unlikely for us to continue as a going concern.

Our activities to date have been supported by equity and debt financing.  Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan.

Off Balance Sheet Arrangements

As of May 31, 2014, there were no off balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item. 

Item 4. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of November 30, 2013. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of May 31, 2014, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the period ended May 31, 2014.

Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

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

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Effective December 1, 2013, Pamela McKeown resigned as our Chief Financial Officer. Going forward, our current President and CEO, Scott Plantinga, will also serve as our Chief Financial Officer. Ms. McKeown will continue to serve the company as Controller.

Item 6. Exhibits

Exhibit Number	Description
10.1	Promissory Note KBM Worldwide $53,000 3/19/14/14
10.2	SPA KBM Worldwide $53,000 5/20/14
10.3	Black Mountain Equities Note 3/5/14
10.4	CRSJ contract with Propel
10.5	Ultralife contract with Charge!
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following materials from the Company’s Annual Report on Form 10-K for the quarter ended May 31, 2014 formatted in Extensible Business Reporting Language (XBRL)

*Filed herewith

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SIGNATURES

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

	IDS Industries, Inc.
Date:	July 21, 2014
By:	/s/ Scott Plantinga Scott Plantinga
Title:	Chief Executive Officer and Chief Financial Officer

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EX-10.1

IDS INDUSTRIES, INC.

FKA IDS SOLAR TECHNOLOGIES, INC

PROPOSED TERM SHEET - 1ST TRANCHE

CONVERTIBLE NOTE

Issuer	IDS INDUSTRIES, INC., FKA IDS SOLAR TECHNOLOGIES INC., (the ''Company").
Instrument	$53,000.00 Convertible Debenture due nine (9) months after issuance (the "Note").
Interest	8% per annum.
Conversion	At any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note and ending on the complete satisfaction of the Note (by payment or conversion), the Note is convertible into shares of common stock of the Company ("Common Stock"). The conversion price ( the "Conversion Price") shall equal the Variable Conversion Price defined herein subject to equitable adjustments for stock split, stock dividends or rights offerings by the Company relating to the Company's securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassification, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 51% multiplied by the Market Pri e (as defined herein) (representing a discount rate of 49%). "Market Price" means the average of the lowest three (3) Trading Prices ( defined below) for the Common Stock during the thirty (3) trading day period ending one trading day prior to the date the Conversion Notice is sent by the Holder to the Company facsimile (the "Conversion Date"). "Trading Price" means, for security as of any date, the closing bid price on the Overthe-Counter Bulletin Board, or applicable trading market (the "OTCBB"). The investor will be limited to convert no more th 4.99% of the issued and outstanding Common Stock at time conversion at any one time.
Default	For default events the Note is immediately due and payable. The minimum amount due is 150% x (outstanding principal + unpaid interest). Investor can request payment in shares.
Prepayment	At any time for the period beginning on the date of the Note and ending on the date which is ninety (90) days following the date the Note, the Note may be prepaid by the Company upon payment to the investor of an amount equal to the outstanding principal amount of the Note multiplied by 135% together with accrued and unpaid interest thereon. At any time during the period beginning on the ninety first (91) day from the date of the Note and ending and the date which is one hundred twenty (120) days following the date of this Note, the company may prepay the Note to the invest upon payment of an amount equal to the outstanding principal amount of the Note multiplied by 145% together with accrued unpaid interest thereon. At any time during the period beginning on the date which is one hundred twenty one (121) days from date of the Note and ending on one hundred eighty (180) following the date of this Note, the company may prepay the Note to the investor upon payment of an amount equal to the outstanding principal amount of the Note multiplied by 150 % together with accrued and unpaid interest thereon. After the expiration of one hundred eighty (180) days following the date the Note, the company shall have no right of prepayment.
Additional Costs/Fees	The sum of $3,000.00 to be paid by the Company to investor’s counsel for the preparation of documentation related to proposed transaction which sum shall be paid upon signing definitive investment agreements, and will be deducted from gross proceeds of the loan.
Documentation	The definitive documentation shall contain such additional provisions, including without limitation representations, warranties, covenants, agreements and remedies, as the investor may reasonably request. Documents may include some or all of the following: -Convertible Note Instrument -Convertible Note Purchase Agreement -Irrevocable Transfer Agent Instructions -Instructions and Authorization to Transfer Agent -Officer's Certificate -Board Resolutions
Confidentiality	The Company and all of their control persons, agree that it will disclose, and will not include in any public announcement, the name of the investor, unless expressly agreed to by the investor unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement
Legal Fees and Expenses	The Company and the investor shall each bear their own legal other expenses with respect to the proposed financing, except stated above
Governing Law and Jurisdiction	New York law, New York Courts (Nassau County).
Closing Date	On or about March 24, 2014. This term sheet expires at 5 PM, March 20, 2014.

This proposed preliminary term sheet constitutes an indication of interest for discussion purposes and preparation of definitive agreements only, and is not binding until and unless definitive agreements are executed by the parties.

Accepted and Agreed

IDS INDUSTRIES, INC.

FKA IDS SOLAR TECHNOLOGIES, INC.

By: /s/ Scott Plantinga

Name: Scott Plantinga

Title: CHIEF EXECUTIVE OFFICER

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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURIlTIES A OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITlES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SO PURSUANT TO RULE 144 OR RULE l44A UNDER SAID ACT NOTWlTIISTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Principal Amount: $53,000.00	Issue Date: March 19, 2014
Purchase Price: $53,000,000

COVERTIBILE PROMISSORY NOTE

FOR VALUE RECEIVED IDS INDUSTRIES, INC., a Nevada corporation (hereinafter called the Borrower) hereby promises to pay to the order or KBM WORLDWIDE, INC., a New York corporation, or registered assigns (the "Holder") the sum or $53.000.00 together with any interest as set forth herein on December 26, 2014 (the ''Maturity Date.) and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the "interest Rate") per annum from the date hereof (the Issue Date) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise expicitly set forth in herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid ("Default Interest"). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days lapsed. All payments due hereunder (to the extent not converted into common stock. $0.001 par value per share (the "common Stock") in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day the same shall instead be due on the next succeeding day which is a business day and. in the case of any interest payment date which is not the date on which this Note is paid in full the extension of the due date thereof shall not be taken in account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business day'' shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof: pursuant to which this Note was originally issued (the ''Purchase Agreement'").

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1 Conversion Right. The Holder shall have th e ri ght from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined i n Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of th is Note into fully paid and non-asscssable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion Price'') determind as provided herein (a "Conversion"): provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversin of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexcrcised r unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance wit h Section l3(d) of the Securities Exchange Act or 1934, as amended (the '"Exchange Act"') and Regulations 13D-G thereunder except as otherwise provided in clause (1) of such provision provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than days· prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder. as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion'") delivered the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m.. New York, New York time on such conversion date (the·"Conversion Date"). The term ''Conversion Amount" means, with respect to any conversion of this Note. the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if a, on such principal amount at the interest rates provided in this Note to the Conversion Date plus (3) at the Holder's option. Default Interest if any, on the amounts referred to in the immediatly preceding clauses (1) and/or (2) plus (4) at the Holder's option any amounts owed to the Holder pursuant to Sections 1.3 and l .4(g) hereof.

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1.2 Conversion Price.

(a)Calculation of Conversion Price. The conversion price (the Conversion Price") shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits. stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities or any subsidiary of the Borrower combinations. recapitialization, reclassifications. extraordinary distributions and similar event). The "Variable Conversion Price" shall mean 51% multiplied by the Market Price (as defined herein) (representing a discount rate of 49%). "Market Price" means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the thirty (30) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price"·means for any security as of any date the closing bid price on the Over-the-Counter Bulletin Hoard or applicable trading market (the ''OTCBB") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or if no closing bid price of such security is available in any of the foregoing manners the average of the closing bid prices of any market makers for such security that are listed in the ''pink sheets" by the National Quotation Bureau. Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value s mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. "Trading Day'' shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

(b)Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary. in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock, is unchanged) or sell or transfer all or substantially all or the assers or the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a lender after to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is here inafter referred to as the Announcement Date), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below) be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section l.2(a). For purposes hereof Adjusted Conversion Price Termination Date"' shall mean, with respect to any proposed transaction or tender offer or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) as been made the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender after (or takeover scheme) which caused this Section 1.2(b) to become operative.

1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number or shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"'). The Reserved Amount shall be increased from time to time in accordance with the Borrower's obligations hereunder, the Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change its capital structure which would change the number or shares of Common Stock into which Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number or share of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

If at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4 Method of Conversion.

(a)Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date. By (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reason means of co munication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (8) subject to Section 1.4(b), surrendering this Note at the principal office of he Borrower.

(b)Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion or this Note in accordance with the terms hereof, he Holder shall not be required to physically surrender this Note to the Borrower unless the en ire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversion, or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as no to require physical surrender of this Note upon each such conversion. In the event of any dispuet or discrepancy, such records of the Borrower shall, prima facie, be controlling and detenninativ in the absence of manifest error. Notwithstanding the foregoing, if any port ion of this Note is converted as aforesaid, the Holder may no transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee. by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph , following conversion of a portion of this Note, the unpaid and unconverted principal amount or this Note represented by this Note may be less than the amount stated on the face hereof.

(c)Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of share of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holders account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

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(d)Delivery of Common Stock Upon Conversion. Upon receipt by he Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4. the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the Deadline) (and. solely in the case f con version or the entire unpaid principal amount hereto surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

(e)Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion. the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to recevied the Common Stock or other securities, cash or other asset, as herein provided on such conversion. If the Holder shall have given a Notice or Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same any waiver or consent with respect to any provision thereof: the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation or the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so longs the Notice of Conversion is received by the Borrower before 6:00 p.m. New York, New York time, on such date.

(f)Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion provided the Borrower is participating in the Depository Trust Company ("DTC') Fast Automated Securities Transfer ("FAST") program upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4 the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stcok issuable upon conversion to the Holder by crediting the account of Holder’s "Prime Broker" with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.

(g)Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies. including actual damages an or equitable relief the parties agree that if delivery of the Common Stock issuable upon conversion or this Note is not delivered by the Deadline (other than a failure due to the circumstanes described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails 10 deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interests shall accrue thereon in accordance with the terms or·this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages result g from a failure attempt to frustrate. interference with such conversion right are difficult if ot im possible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section l.4(g) are justified.

1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant an effective registration statement under the Act or (ii) the Borrower or its transfer agents have been furnished with an opinion of counsel (which opinion shall be in form substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act ( a successor rule) ("'Rule l44") or (iv) such shares arc transferred to an "affiliate" (as defined in Rule l44) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediatly sold each certificate for shares of Common Stock issuable upon conversion of this Note that as not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall b ar a legend substantially in the following form as appropriate:

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WllICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGE IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form substance and scope customary or opinions of counsel in com parable transactions. to the effect that a pubI ic sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of th is Note such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can the be immediately sold. In the event that the Company does not accept the opinion of cour el provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S. at the Deadline, it will be considered an Even of Default pursuant to Section 3.2 of the Note.

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1.6Effect of Certain Events.

(a)Effect of Merger. Consolidation. Etc. At the option of the Holder, he sale, conveyance or disposition of all or substantially all of the assets of the Borrower the effectuation by the Borrower of a transaction or series of related transactions i n which more than 50% or the voting power of the Borrower is disposed of, or the consolidation. merger or o er business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Even of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to he Holder upon the consummation of and as a condition to such transaction an amount equal to he Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof "Person" shall mean any individual, corporation limited liability company partnership association trust or other entity or organization.

(b)Adjustment Due to Merger. Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger. Consolidation, exchange of shares, recapitalization, reorganization, or other simliar event. as a result of which shares or Common Stock of the Borrower shall be changed into he same or a different number of shares of another class or classes of stock or securities of he Borrower or another entity, or in case of' any sale or conveyance of all or substantially all or he assets or the Borrower other than in connection with a plan of' complete liquidation of the Borrower. then the Holder of' this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of he shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein). and in any such case appropriate provisions shall be made with respect lo the rights and interests of the Holder or this Note to the end that the provisions hereof (including. without limitation provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives to the extent practicable thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) or the record date or the special meeting of shareholders to approve, or if there is no such record date, the consummation of such merger consolidation exchange of share recapitalization reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations mergers sales transfers or share exchanges.

(c)Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend stock repurchase by way of return of capital or otherwise (including any dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock or a subsidiary (i.e., a spin-off)) (a '"Distribution) then the Holdcr of this Note shall be entitled, upon any conversion or this Note after the date of record for determinig shareholders entitled to such Distribution, to receive the amount or such assets which would have been payable to the Holder with respect to the shares or Common Stock issuable upon such conversion had such Holder been the holder or such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

(d)Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding the Borrower issues or sells, or in accordance with this Section 1.6 (d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or or a consideration per share (before deduction of reasonable expenses or commissions or underwriting discount or allowances in connection therewith) less than the Conversion Price in effect on the date or such issuance (or deemed issuance) of such shares of Common Stock, (a "Dilutive Issuance"), then immediately upon the Dilutive Issuance the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable to subscribe or or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock ('"Convertible Securities'') (such warrants rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options'') and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the 'price per share for which Common Stock is issuable upon the exercise of such Options'' is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as considerat ion for the issuance or granting of all such Options plus the minimum aggregate amount of additional consideration, if any payable to the Borrower upon the exercise of all such Options plus in the case or Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise or such Options or upon the conversion or exchange or Convertible Securities issuable upon exercise of such Options.

Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes or the preceding sentence, the·"price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount, if any received or receivable by the Borrowers consideration for the issuance or sale of all such Convertible Securities plus the minimum aggregate amount of additional consideration, if any payable to the Borrower upon the conversion or exchange thereof at the time such Converitble Securities first become convertible or exchangeable by (ii) the maximum total number of shares or Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

(e)Purchase Rights. It: at any time when any Notes are issued and outstanding the Borrower issues any convertible securities or rights to purchase stock, warrant, securities or other property (the Purchase Rights'') pro rata to the record holders of any class of Common Stock. then the Holder of this Note will be entitled to acquire, upon the l applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holder of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(f)Notice of Adjustments. Upon the occurrence of each adjustment readjustment of the Conversion Price as a result of the events described in this Section 1.6, Borrower at its expense, shall promptly compute such adjustment or readjustment and pre and furnish to the Holder a certificate setting setting such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time or the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to is Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock split stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount as been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess or the Maximum Share Amount in lieu of any furthter right to convert this Note this will be considered an Event or Default under Section 3.3 of the Note.

1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) e Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as so as practicable, return such unconverted Note to the Holder or, if the Note has not be surrendered, adjust its records to reflect that such portion of this Note has not been converted all cases. the Holder shall retain all of its rights and remedies (including, without limitation, the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent require thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this Note.

1.9 Prepayment, Notwithstanding anything to the contrary contained in this Note at any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional Prepayment Notice'") shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the·”Optional Prepayment Date''), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount") equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due lo the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is ninety-one (91) days following the Issue Date and ending on the date which is one hundred twenty (120) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment

Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Second Optional Prepayment Amount”) equal to 145%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is one hundred twenty-one (121) days following the Issue Date and ending on the date which is one hundred eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Third Optional Prepayment Amount") equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

After the expiration of one hundred eighty (180) following the date or the Note, the Borrower shall have no right of prepayment.

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ARTICLE II. CERTAIN COVENANTS

2.2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securiries) on shares of capital stock other than dividends on shares of Common Stock solely in the form or additional shares or Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders·rights plan which is approved by a majority of the Borrower's disinterested directors.

2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership , joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note .

2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, lend money, give credit or make advances to any person , firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

ARTICLE III. EVENTS OF DEFAULT

If any of the following events of default (each, an "Event of Default") shall occur:

3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs , and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement , statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion . It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower's transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hour s of a demand from the Holder.

3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (I0) days after written notice thereof to the Borrower from the Holder.

3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

3.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

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3.8 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq Small Cap Market, the New York Stock Exchange, or the American Stock Exchange.

3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirement s of the Exchange Act.

3.10 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its debts as they become due.

3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

3.15 Replacement of Transfer Agent. In the event that the Borrower propose s to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

3.16 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents , a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreement s, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between , among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation , promissory notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED TN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER , IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration) , 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1 .3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or (ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice , all of which hereby are expressly waived, together with all costs, including , without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice , to immediately issue, in lieu of the Default Amount , the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

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ARTICLE IV. MISCELLANEOUS

4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein , shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested , postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:

IDS INDUSTRIES, INC. (f/k/a/ IDS Solar Technologies, Inc.)

533 Birch Street

Lake Elsinore, CA 92530

Attn: SCOTT PLANTINGA, Chief Executive Officer

facsimile:

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

If to the Holder:

KBM WORLDWIDE, INC.

80 Cuttermill Road - Suite 207 Great Neck, NY. 11021

Attn:Seth Kramer , President

email: info@kbmworkdwide.com

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birbaum & Maday, LLP

Att: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

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4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note" and all reference thereto, as used throughout this instrument , shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented , then as so am ended or supplemented.

4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined in Rule 501 (a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.

4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportion ate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent to shareholder s). In the event of any taking by the Borrower of a record of its shareholder s for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution , right or other event, and a brief statement regarding the amount and character of such dividend , distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled , in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this March 19, 2014.

IDS INDUSTRIES, INC.

(f/k/a/ IDS Solar Technologies)

By: /s/ Scott Plantinga

Scott Plantinga

Chief Executive Officer

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EXHIBIT A

NOTICE OF CONVERSION

The undersigned hereby elects to convert $ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below , of IDS INDUSTRIES, INC. (f/k/a/ IDS Solar Technologies, Inc.), a Nevada corporation (the "Borrower") according to the conditions of the convertible note of the Borrower dated as of March 19, 2014 (the "Note"), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

[ ] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").

Name of DTC Prime Broker: Account Number:

[ ] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder's calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

KMB WORLDWIDE, INC.

80 Cuttermill Road - Suite 410

Great Neck, NY. 11021

Attention: Certificate Delivery (516) 498-9890

Date of Conversion:

Applicable Conversion Price: $

Number of Shares of Common Stock to be Issued

Pursuant to Conversion of the Notes

Amount of Principal Balance Due remaining

Under the Note after this conversion:

KMB WORLDWIDE, INC.

By:

Name: Seth Kramer

Title: President Date:

80 Cuttermill Road - Suite 410 Great Neck, NY. 11021

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EX-10.2

SECURITIES PURCHASEAGREEMENT

This SECURITIES PURCHASE AGREEMENT (the"Agreement"), datedas of May 20, 2014, byand between IDSINDUSTRIES, INC., a Nevada corporation, with headquarters located at 533 Birch Street, Lake Elsinore, CA 92530 (the "Company"), and WORLDWIDE, INC., a New Yorkcorporation, with itsaddress at 80 Cuttermill Road, 410, Great Neck, NY 11021 (the "Buyer").

WHEREAS:

A.                   TheCompanyandthe Buyer are executing anddelivering this Agreement relianceupontheexemptionfromsecuritiesregistrationaffordedbytherulesandregulation promulgated by the United States Securities and Exchange Commission (the "SEC") und Securities Act of 1933,as amended (the "1933 Act");

B.                   Buyer desires to purchase and the Company desires to issue and sell, up terms and conditions set forth in this Agreement an 8% convertible note of the Company, form attached hereto as Exhibit A, in the aggregate principal amount of $53,000.00 (to with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the "Note"), convertible into shares of common stock, $0.001 par value per share, of the Company (the "Common Stock"), upon the term and subject to the limitations and conditions set forth in such Note.

C.                   The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement , such principal amount of Note as is set forth immediately below its name the signature pages hereto; and

NOW THEREFORE, the Company and the Buyer severally (and not jointly) agree as follows:

1.                   Purchase and Sale of Note.

a.                   Purchase of Note. On the Closing Date (as defined below Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer's name signature pages hereto.

b.                  Form of Payment. On the Closing Date (as defined below), ( the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the "Purchase Price") by wire transfer of immediately available funds to the Company, in accordance with the Company's written wiring instructions , against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer's name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

c.                   Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the "Closing Date") shall be 12:00 noon, Eastern Standard Time on or about May 23, 2014, or such other mutually agreed upon time The closing of the transactions contemplated by this Agreement (the "Closing") shall occur the Closing Date at such location as may be agreed to by the parties.

2.                   Buyer's Representations and Warranties. The Buyer represent and warrants to the Company that:

a.                   Investment Purpose. As of the date hereof, the Bu purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common St k, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Co on Stock being collectively referred to herein as the "Conversion Shares" and, collectively with the Note, the "Securities") for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration un r the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

b.                  Accredited Investor Status. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D (an "Accredited Investor").

c.                   Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth he order to determine the availability of such exemptions and the eligibility of the Buyer to the Securities, securities laws or to comply with the terms and conditions of any exemption thereunder (in case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or lending arrangement.

g. Legends. The Buyer understands that the Note and, until sue time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale un effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that t sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus

d.                  Information. The Buyer and its advisors, if any, have been, a for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or pro following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, am affect Buyer's right to rely on the Company's representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach any of the Company's representations and warranties made herein.

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e.                   Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

f.                   Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Sec are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall form, substance and scope customary for opinions of counsel in comparable transactions effect that the Securities to be sold or transferred may be sold or transferred pursuant exemption from such registration , which opinion shall be accepted by the Company,) the Securities are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated und r the 1933 Act (or a successor rule) ("Rule 144")) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) ("Regulation S"), and the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said not applicable, any re-sale of such Securities under circumstances in which the seller ( person through whom the sale is made) may be deemed to be an underwriter (as that term defined in the 1933 Act) may require compliance with some other exemption under the 19 or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or an state delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be consider an Event of Default pursuant to Section 3.2 of the Note.

g.                   Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable accordance with its terms.

h.                  Residency. The Buyer is a resident of the jurisdiction set immediately below the Buyer's name on the signature pages hereto.

3.                   Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:

a.                   Organization and Qualification. The Company and each Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing good standing under the laws of the jurisdiction in which it is incorporated, with full pow authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule 3 (a sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its owners use of property or the nature of the business conducted by it makes such qualification nee except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. "Subsidiaries" means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

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b.                  Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note consummate the transactions contemplated hereby and thereby and to issue the Securities accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated and thereby (including without limitation, the issuance of the Note and the issuance reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (ii ) this Agreement has been duly executed and delivered by the Company by its authorize representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution delivery by the Company of the Note, each of such instruments will constitute, a legal, valid binding obligation of the Company enforceable against the Company in accordance with its terms.

c.                   Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 490,000,000 shares of Common Stock, $0.001 par value per share, of which 95,051,393 shares are issued and outstanding; and (ii) 10,000,000 authorized shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company's stock option no shares are reserved for issuance pursuant to securities (other than the Note and a nor convertible promissory note in favor of the Buyer dated March 19, 2014 in the amount of $53,000.00 for which 42,500,000 shares of Common Stock are presently reserved) exercisable for, or convertible into or exchangeable for shares of Common Stock and 52,500,000 shares are reserved for issuance upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under the Company or any of its Subsidiaries is obligated to register the sale of any of its o their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof ("Certificate of Incorporation "), the Company s By laws, as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive on behalf of the Company as of the Closing Date.

d.                  Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

e.                   Acknowledgment of Dilution. The Company understand and acknowledges the potentially dilutive effect to the Common Stock upon the issuance the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

f.                   No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellation violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could Company or any of its Subsidiaries in default) under, and neither the Company nor any Subsidiaries has taken any action or failed to take any action that would give to others any of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement , the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion Note. All consents, authorizations, orders, filings and registrations which the Company required to obtain pursuant to the preceding sentence have been obtained or effected on or to the date hereof. The Company is not in violation of the listing requirements of the Over Counter Bulletin Board (the "OTCBB") and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future. The Company a Subsidiaries are unaware of any facts or circumstances which might give rise to any foregoing.

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g.                   SEC Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by I the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the "SEC Documents "). Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied in all material re with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time were filed with the SEC, contained any untrue statement of a material fact or omitted to ate a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the state made in any such SEC Documents is, or has been, required to be amended or updated applicable law (except for such statements as have been amended or updated in subs filings prior the date hereof) As of their respective dates, the financial statements Company included in the SEC Documents complied as to form in all material respect applicable accounting requirements and the published rules and regulations of the SEC respect thereto. Such financial statements have been prepared in accordance with United generally accepted accounting principles, consistently applied, during the periods involve fairly present in all material respects the consolidated financial position of the Company consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to year-end audit adjustments). Except as set forth in the financial statements of the Co included in the SEC Documents, the Company has no liabilities, contingent or otherwise other than (i) liabilities incurred in the ordinary course of business subsequent to February 28, 2014, and (ii) obligations under contracts and commitments incurred in the ordinary course of b and not required under generally accepted accounting principles to be reflected in such fi statements, which, individually or in the aggregate, are not material to the financial condition operating results of the Company. The Company is subject to the reporting requirements 1934 Act.

h.                  Absence of Certain Changes. Since February 28, 2014, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 193 Act reporting status of the Company or any of its Subsidiaries.

i.                    Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their offices or directors in their capacity as such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company a d its Subsidiaries are unaware of any facts or circumstances which might give rise to any the foregoing.

j.                    Patents, Copyrights, etc. The Company and each its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, applications, patent rights, inventions, know-how, trade secrets, trademarks, trade applications, service marks, service names, trade names and copyrights ("Intellectual Property") necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pe1iaining to, or proceeding pending, or to the Company's knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company's knowledge, the Company's or its Subsidiaries' current and intended products, services and processes do not infringe on any Intellectual Property or other right held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

k.                  No Materially Adverse Contracts, Etc. Neither the Comp nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, judgment, decree, order, rule or regulation which in the judgment of the Company's office or is expected in the future to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to any contract or agreement which in the judgment of the Com officers has or is expected to have a Material Adverse Effect.

l.                    Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a with respect to the statute of limitations relating to the assessment or collection of any foreign federal, state or local tax. None of the Company's tax returns is presently being audited by taxing authority.

m.                Certain Transactions. Except for arm's length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary of business upon terms no less favorable than the Company or any of its Subsidiaries obtain from third parties and other than the grant of stock options disclosed on Schedule none of the officers, directors, or employees of the Company is presently a party t transaction with the Company or any of its Subsidiaries (other than for services as employees officers and directors), including any contract, agreement or other arrangement providing furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, the knowledge of the Company, any corporation, partnership, trust or other entity in which officer, director, or any such employee has a substantial interest or is an officer, director, or partner.

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n.                  Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated her by is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties , prospects, operations or financial conditions, which, under applicable law, r le or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company's report filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

o.                  Acknowledgment Regarding Buyer' Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer' purchase the Securities. The Company further represents to the Buyer that the Company's decision to into this Agreement has been based solely on the independent evaluation of the Company representatives.

p.                  No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance the Company's securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

q.                  No Brokers. The Company has taken no action which would rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

r.                    Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the "Company Permits"), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Co Permits, except for any such conflicts, defaults or violations which, individually or aggregate, would not reasonably be expected to have a Material Adverse Effect. Since Fe 28, 2014, neither the Company nor any of its Subsidiaries has received any notification respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

s.                   Environmental Matters.

(i)                   There are, to the Company's knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or violations of Environmental Laws (as defined below), releases of any material in environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company's knowledge, threatened in connection with any of the foregoing. The term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing, distribution use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, lie notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated approved thereunder.

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(ii)                 Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about an real property currently owned, leased or used by the Company or any of its Subsidiaries, a d no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, or used by the Company or any of its Subsidiaries, except in the normal course of the Company's or any of its Subsidiaries' business.

(iii)                There are no underground storage tanks on or und real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

t.                    Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company d its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such s are described in Schedule 3(t) or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

u.                  Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors' and officers' liability coverage, errors and omissions coverage and commercial general liability coverage.

v.                  Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment Company's board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transaction are recorded as necessary to permit preparation of financial statements in conformity with gen rally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (I the recorded accountability for assets is compared with the existing assets at reasonable interval and appropriate action is taken with respect to any differences.

w.                 Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Co any, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment t any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment , kickback or other unlawful payment t any foreign or domestic government official or employee.

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x.                  Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year.

y.                  No Investment Company. The Company is not, and up the issuance and sale of the Securities as contemplated by this Agreement will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an "Investment Company"). The Company is not controlled by an Investment Company.

z.                   Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement , it will be considered an Event of default under Section 3.4 of the Note.

4.                   COVENANTS.

a.                   Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

b.                  Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior the Closing Date.

c.                   Use of Proceeds. The Company shall use the proceeds for general working capital purposes.

d.                  Right of First Refusal. Unless it shall have first delivered the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering ("ROFR Notice"), including the terms and conditions thereof, identity of the proposed purchaser and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the "Right of First Refusal") (and subject to the exceptions described below Company will not conduct any equity (or debt with an equity component) financing in an a less than $100,000 ("Future Offering(s) ") during the period beginning on the Closing Da ending six (6) months following the Closing Date. Notwithstanding anything contained he in to the contrary, the Company shall not consummate any Future Offering with an investor, or an affiliate of such investor (collectively "Prospective Investor"), identified on an ROFR Notice whereby the Buyer exercised its Right of First Refusal for a period of forty (45) days following such exercise; and any subsequent offer by a Prospective Investor is subject to this Section 4(d) and the Right of First Refusal. In the event the terms and conditions of a proposed future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery of such new no ice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to such amendments to the terms and conditions of any proposed Future Offering. The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a commitment underwritten public offering (excluding a continuous offering pursuant to Rule under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidate purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition acquisition of a business, product or license by the Company. The Right of First Refuse shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company.

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e.                   Expenses. At the Closing, the Company shall reimburse Bu r for expenses incurred by them in connection with the negotiation, preparation , execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith ("Documents "), including, without limitation, reasonable attorneys' and consultants' fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and co restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice y the Buyer or the submission of an invoice by the Buyer. The Company's obligation with respect to this transaction is to reimburse Buyer' expenses shall be $3,000.

f.                   Financial Information. Upon written request the Company to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Rep s on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued the Company or any of its Subsidiaries; and (iii) contemporaneously with the making avail le or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders.

g.                   [INTENTIONALLY DELETED]

h.                  Listing. The Company shall promptly secure the listing Conversion Shares upon each national securities exchange or automated quotation system, upon which shares of Common Stock are then listed (subject to official notice of issuance so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTC or any equivalent replacement exchange, the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange ("NYSE"), the American Stock Exchange ("AMEX") and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority ("FINRA") and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

i.                    Corporate Existence. So long as the Buyer beneficially o Note, the Company shall maintain its corporate existence and shall not sell all or substantia of the Company's assets, except in the event of a merger or consolidation or sale of substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the agreement and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NY E or AMEX.

j.                    No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

k.                  Breach of Covenants. If the Company breaches any the covenants set forth in this Section 4, and in addition to any other remedies available to the pursuant to this Agreement, it will be considered an event of default under Section 3.4 Note.

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l.                    Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

m.                Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company and the Buyer agree that it shall not, that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.

5.                   Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the "Irrevocable Transfer Agent Instructions"). In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion otherwise pursuant to the Note as and when required by the Note and this Agreement; and will not fail to remove (or directs its transfer agent not to remove or impairs, delays, hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note a this Agreement. Nothing in this Section shall affect in any way the Buyer's obligation and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, t the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions , to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected r (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Co acknowledges that the remedy at law for a breach of its obligations under this Section 5 inadequate and agrees, in the event of a breach or threatened breach by the Company provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

6.                   Conditions to the Company's Obligation to Sell. The obligation the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Comp y at any time in its sole discretion: same to the Company.

a.                   The Buyer shall have executed this Agreement and delivered the same to the Company.

b.                   The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

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c.                    The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date , and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed , satisfied or complied with by the Buyer at or prior to the Closing Date.

d.                   No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7.                  Conditions to The Buyer's Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer's sole benefit and may be waived by the Buyer at any time in its sole discretion:

a.                   The Company shall have this Agreement and delivered the same to the Buyer.

b.                   The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section l (b) above.

c.                    The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the Company's Transfer Agent.

d.                   The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed , satisfied and complied in all material respect with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to ce1iificates with respect to the Com Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to transactions contemplated hereby.

e.                    No litigation, statute, rule, regulation , executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

f.                    No event shall have occurred which could reasonably be ex to have a Material Adverse Effect on the Company including but not limited to a change 1934 Act reporting status of the Company or the failure of the Company to be timely in it Act reporting obligations.

g.                    The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

h.                   The Buyer shall have received an officer's certificate described in Section 3(c) above, dated as of the Closing Date.

8.                  Governing Law; Miscellaneous.

a.                   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or have based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and cost. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which prove invalid or unenforceable under any law shall not affect the validity or enforceability other provision of any agreement. Each party hereby irrevocably waives personal service process and consents to process being served in any suit, action or proceeding in connection this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

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b.                   Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

c.                    Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d.                   Severability. In the event that any provision of this Agree invalid or unenforceable under any applicable statute or rule of law, then such provisions deemed inoperative to the extent that it may conflict therewith and shall be deemed modified conform with such statute or rule of law. Any provision hereof which may proves invalid unenforceable under any law shall not affect the validity or enforceability of any other pro hereof.

e.                    Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect matters covered herein and therein and, except as specifically set forth herein or therein, either the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

f.                    Notices. All notices, demands, requests, consents, approval , and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested , postage prepaid , (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed s set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated bel w (if delivered on a business day during normal business hours where such notice is to be received ), or the first business day following such delivery (if delivered other than on a business day ring normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid , addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The address s for such communications shall be:

If to the Company, to:

IDS INDUSTRIES, INC.

533 Birch Street

Lake Elsinore, CA 92530

Attn: SCOTT PLANTINGA, Chief Executive Officer

facsimile: [enter fax number]

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

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If to the Buyer:

KBM WORLDWIDE, INC.

80 Cuttermill Road –

Suite 410 Great Neck, NY 11021

Attn: Seth Kramer, President

e-mail: info@kwbmlaw.com

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday LLP

Attn: Bernard S. Feldman, Esq.

acsimile: 516-466-3555

e-mail: dyork@nwbmlaw.com

Each party shall provide notice to the other party of any change in address.

g.                    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its "affiliates," as that term is defined under the 1934 Act, without the consent of the Company.

h.                   Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is t for the benefit of, nor may any provision hereof be enforced by, any other person.

i.                     Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing here notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

j.                     Publicity. The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however , that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

k.                   Further Assurances. Each party shall do and perform, or case to be done and performed, all such further acts and things, and shall execute and deliver al such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement d the consummation of the transactions contemplated hereby.

l.                     No Strict Construction. The language used in this Agreement be deemed to be the language chosen by the parties to express their mutual intent, and no les of strict construction will be applied against any party.

m.                 Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically terms and provisions hereof, without the necessity of showing economic loss and without bond or other security being required.

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IN WITNESS WHEREOF, the undersigned Buyer and the Company have cause this Agreement to be duly executed as of the date first above written.

IDS INDUSTRIES, INC.

By: /s/ Scott Plantinga

Scott Plantinga

Chief Executive Officer

KBM WORLDWIDE, INC.

By: /s/ Seth Kramer

Seth Kramer

President

80 Cuttermill Road – Suite 410

Great Neck, NY 11021

AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note:	$53,000.00
Aggregate Purchase Price:	$53,000.00

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EX-10.3

NEITHER THISNOTENORTHESECURITIESINTOWHICH THISNOTIS CONVERTIBLEHAVEBEENREGISTEREDWITH THE SECURITIES AND EXCHANGECOMMISSIONORTHESECURITIESCOMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD INRELIANCE UPON AN EXEMPION FROM REGISTRATION UNDER THESECURITIES ACT OF 1933, AS AME (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERE SOLD EXCEPT PURSUANTTO ANEFFECTIVE REGISTRATION STATE UNDER THE SECURITIES ACTOR PURSUANT TO AN AVAILABLE EXEMP FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRA REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE APPLICABLE STATE SECURITIES LAWS.

IDS INDUSTRIES,INC.

CONVERTIBLE NOTE

Issuance Date: March 5, 2014	Original Principal Amount: $250,00
Note No. IDST-1	Consideration Paid at Cost: $25,000

FOR VALUERECEIVED,IDSIndustries,Inc.,aNevadacorporation(the "Company"), herebypromisestopaytothe orderofBlack MountainEquities, Inc. or registeredassigns (the"Holder") the amount set out above as the Original Principal Amount(as reducedpursuant to the terms hereof pursuanttoredemption,conversion or otherwise, the "Principal") when due,whether upon theMaturityDate (as defined below), acceleration, redemption or otherwise (in each casein accordancewith theterms hereof)andto payinterest ("Interest") on anyoutstanding Principal at the applicableInterest Rate from the date st out above as the Issuance Date (the "Issuance Date") untilthe same becomes due and payable upon the Maturity Dateor acceleration, conversion,redemptionor otherwise (ineach casein accordance with the terms hereof).

The OriginalPrincipalAmountis$250.000 (twohundredfiftythousandaccruedandunpaidinterest and any other fees. The Consideration is $225,000 (two h twenty fivethousand) payable by wire transfer (there exists a $25,000 original issue discount (the '"OID)). TheHolder shall pay$25.000 of Consideration uponclosing of this Note Holder maypay additional Consideration to the Company in such amounts and at such d Holder may choose in its sole discretion. For purposes hereof the term "OutstandingBalancemeans the Original Principal Amountasreducedor increased as the casemay be, pursuant theterms hereof forconversion breach hereof or otherwise plus anyaccrued but unpaid interest collection and enforcements costs, and any other fees or charges incurred under this Not. The Principal Sum due to Holder shall be prorated based on the Consideration paid by Holder(plus an approximate10% Original Issue Discount that is prorated based on the Consideration p id bythe Holder as well asany other interest or fees)such that the Company is only required to repay theamount funded and the Company is not required torepay any unfunded portion of this Note.

(1) GENERAL TERMS

(a)                Payment of Principal. The "Maturity Date" shall be one year from the date of each payment of Consideration as may be extended at the option of the Holder in the event that and for so long as. an Event of Default (as defined below) shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section l) or any shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to cure would result in an Event of Default.

(b)                   Interest. A one-time interest charge of ten percent (10%) ("Interest Rate") shall be applied on the Issuance Date to the Original Principal Sum. Interest her shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee whose name this Note is registered on the records of the Company regarding registration transfers of Notes in cash or converted into Common Stock at the Conversion Price provided the Equity Conditions are satisfied.

(c)                    Security. This Note shall not be secured by any collateral or any assets pledged to the Holder

(2)                   EVENT S OF DEFAULT

(a)                   An "Event of Default", wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment. decree or order of any court, order. rule or regulation of any administrative or governmental body):

(i)                    The Company's failure to pay to the Holder any am Principal. Interest, or other amounts when and as due under this Note (including, limitation, the Company's failure to pay any redemption payments or amounts hereunder) other Transaction Document;

(ii)                  A Conversion Failure as defined in section 3(b)(ii)

(iii)                 The Company or any subsidiary of the Company commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect successor thereto or the Company or any subsidiary of the Company commences an proceeding under any reorganization, arrangement, adjustment of debt relief of debtors, dissolution insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days: or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief o other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed period of sixty one (61) days; or the Company or any subsidiary of the Company makes general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructure its debts; or the Company or any subsidiary of the Company shall by any act or failure act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

(iv)                The Company or any subsidiary of the Company shall default in any of its obligations under any other Note or any mortgage, credit agreement or other facility indenture agreement factoring agreement or other instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company o any subsidiary of the Company in an amount exceeding $100.000, whether such indebtedness now exists or shall hereafter be created; and

(v)                  The Common Stock is suspended or delisted for trading on the Over the Counter Bulletin Board market (the "Primary Market").

(vi)                The Company loses its ability to deliver shares via "OWAC/FAST' electronic transfer.

(vii)              The Company loses its status as DTC Eligible.'·

(viii)             The Company shall become late or delinquent in its fi ·ng requirements as a fully-reporting issuer registered with the Securities & Exchange Commission.

(b)                  Upon the occurrence of any Event of Default the Outstanding Balance shall immediately increase to 120% of the Outstanding Balance immediately prior to the occurrence of the Event of Default (the ..Default Effect"). The Default Effect shall automatically apply upon the occurrence of an Event of Default without the need for any party to give any notice or take any other action.

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(3)                   CONVERSION OF NOTE. This Note shall be convertible into shares the Company's Common Stock on the te1ms and conditions set forth in this Section 3.

(a)                   Conversion Right. Subject to the provisions of Section 3(c) time or times on or after the Issuance Date the Holder shall be entitled to convert any portion the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(b) at the Conversion Price (as defined below). The number of shares of Common Stock issuable upon conversion f any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock the Company shall round such fraction of a s e of Common Stock up to the nearest whole share. The Company shall pay any and all transfer fees legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common Stock to the Holder arising out relating to the conversion of this Note.

(i)           "Conversion Amount" means the portion of the Or Principal Amount and Interest to be converted plus any penalties redeemed or otherwise respect to which this determination is being made.

(ii)         "Conversion Price" shall equal the lesser of (a) $0.025 or (b) 60% of the lowest trade occurring during the twenty five (25) consecutive Trading days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.

(b)                                Mechanics of Conversion.

(i)                 Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by email facsimile (or otherwise deliver) for receipt on or prior to 11:59 p.m. New York, NY Time on such date a copy of an executed notice of conversion in the form attached her to as Exhibit A (the "Conversion Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the ·"Share Delivery Date"), the Co shall (A)'.if legends are not required to be placed on certificates 'of Common Stock pursuant the then existing provisions of Rule 144 of the Securities Act of 1933 (Rule 144) and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program. credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with OTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer A not participating in the OTC Fast Automated Securities Transfer Program , issue and deli the address as specified in the Conversion Notice a certificate. registered in the name Holder or its designee, for the number of shares of Common Stock to which the Holder s entitled which certificates shall not bear any restrictive legends unless required pursuant the 144. If this Note is physically surrendered for conversion and the outstanding Principal Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall. upon request of the Holder, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon transmission of a Conversion Notice.

(ii)               Company's Failure to Timely Convert. If within two (2) Trading Days after the Company's receipt of the facsimile or email copy of a Conversion Notice the Company shall fail to issue and deliver to Holder via "DWAC/FAST" electronic transfer the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), the Original Principal Amount of the Note shall increase by $2.000 per day until the Company issues and delivers a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (under Holder’s and Company's expectation that any penalty amounts will tack the Issuance Date). Company will not be subject to any penalties once its transfer agent processes the shares to the DWAC system. If the Company fails to deliver shares in accordance with the timeframe stated in this Section, resulting in a Conversion Failure, the Holder, any time prior to selling all of those shares, may rescind any portion. in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion a returned to the Principal Sum with the rescinded conversion shares returned to the Co any (under Holder’s and Company’s expectations that any returned conversion amounts will tack back to the original date of the Note).

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(iii)             DWAC/FAST Eligibility. If the Company fails for reason to deliver to the Holder the Shares by DWAC/FAST electronic transfer (such delivering a physical stock certificate), or if there is a Conversion Failure as defined in S 3(b)(ii) and if the Holder incurs a Market Price Loss then at any time subsequent to incurring the loss the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the Company must make the Holder while by either of the following options at Holder's election:

Market Price Loss = [(High trade price for the period between the day of conversion and the day the shares clear in the Holders brokerage account) x (Number of shares receivable from the conversion)] - [(Net Sales price realized by Holder) x (Number of shares receivable from the conversion)].

Option A - Pay Market Price Loss in Cash. The Company must pay the Market Price Loss by cash payment. and any such cash payment must be made by the third business day from the time of the Holders written notice to the Company.

Option B -Add Market Price Loss to Principal Sum. The Company must pay the Market Price Loss by adding the Market Price Loss to the balance of the Principal Sum (under Holder's and the Company's expectation that any Market Price Loss amounts will tack back to the Issuance Date).

In the case that conversion shares are not deliverable by DWAC/FAST electronic transfer an additional 5% discount to the Conversion Price will apply.

(iv)             DTC Eligibility. If the Company fails to maintain its status as DTC Eligible'' for any reason the Principal Amount of the Note shall increase y ten thousand dollars ($15.000) (under Holders and company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition the Conversion Price s II be redefined to equal the lesser of (a) $0.020 or (b) 50% of the lowest trade occurring during twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.

(v)               Book-Entry. Notwithstanding anything to the contrary set forth herein. upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) t e full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder the Company shall maintain records showing the Principal and Interest converted and the da s of such conversions or shall use such other method, reasonably satisfactory to the Holder the Company, so as not to require physical surrender of this Note upon conversion.

(c)                                  Limitations on Conversions or Trading.

                                                                                  Beneficial Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the right to convert any portion ·this Note or receive shares of Common Stock as payment of interest hereunder to the extent that giving effect to such conversion or receipt of such interest payment, the Holder together any affiliate thereof, would beneficially own (as determined in accordance with Section 13 the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the sum shares of Common Stock outstanding immediately after giving effect to such conversion receipt of shares as payment of interest. Since the Holder will not be obligated to report Company the number of shares of Common Stock it may hold at the time of a conversion hereunder unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to other shares which may be beneficially owned by the Holder or an affiliate thereof, the shall have the authority and obligation to determine whether the restriction contained in Section will limit any particular conversion hereunder and to the extent that the determines that the limitation contained in this Section applies, the determination of portion of the principal amount of this Note is convertible shall be the responsibility obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the max um principal amount permitted to be converted on such Conversion Date in accordance with Section 3(a) and, any principal amount tendered for conversion in excess or the permitted a hereunder shall remain outstanding under this Note. The provisions of this Section may waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 prior notice to the Company Other Holders shall be unaffected by any such waiver.

4

(d)                                 Other Provisions.

(i)              Share Reservation. The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note; and within five (5) Business Days following the receipt by the Company of a Holder's notice that such minimum number of Underlying Shares is not so reserved, the Company shall promptly res e a sufficient number of shares of Common Stock to comply with such requirement. The Company will at all times reserve at least 50,000,000 shares of Common Stock for conversion.

(ii)            Prepayment. At any time within the 90 day immediately following the Issuance Date, the Company shall have the option, upon 10 business days' notice to Holder, to pre-pay the entire remaining outstanding principal amount of this Note in cash, provided that (i) the Company shall pay the Holder l50% of the Outstanding Balance (ii) such amount must be paid in cash on the next business day following such 10 business day notice period and (iii) the Holder may still convert this Note pursuant to the terms hereof at all times until such prepayment amount has been received in full. Except as set forth in this Section the Company may not prepay this Note in whole or in part.

(iii)           Terms of Future Financings. So long as this Note is outstanding upon any issuance by the Company or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note then the Company shall notify the Holder of such additional or more favorable tem1 and such term, at Holder's option shall become a part of the transaction documents with the Holder. The types of terms contained in another security that may be more favorable to the holder of such security include, but a not limited to, terms addressing conversion discounts conversion lookback periods, interest original issue discounts stock sale price, private placement price per share, and warrant coverage.

(iv)           All calculations under this Section 3 shall be rounded the nearest $0.0000 l or whole share.

(v)             Nothing herein shall limit a Holder's right to pursue damages or declare an Event of Default pursuant to Section 2 herein for the Company's fail deliver ce11ificates representing shares of Common Stock upon conversion within the specified herein and such Holder shall have the right to pursue all remedies available to it law or in equity including without limitation a decree of specific performance and/or injunctive relief in each case without the need to post a bond or provide other security. The exercise such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any Section hereof or under applicable law.

(4)                  SECTION 3(A)(9) OR 3(A)(10) TRANSACTION. So long as this N e is outstanding, the Company shall not enter into any transaction or arrangement structure in accordance with based upon or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act (a "3(a)(9) Transaction") or Section 3(a)(10) of the Securities Act (a ''3(a)(l 0) Transaction"). In the event that the Company does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10) Transaction while this n e is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note but not less than $25.000, will be assessed and will become immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.

5

(5)                  PIGGYBACK REGISTRATION RIGHTS. The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note but not less than $25,000 being immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.

(6)                  REISSUANCE OF THIS NOTE.

(a)                Assignability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company's approval.

(b)                Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking the Holder to the Company in customary form and, in the case of mutilation, upon surrender cancellation of this Note the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.

(7)                NOTICES. Any notices, consents waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically gen rated and kept on file by the sending party) (iii) upon receipt when sent by email; or (iv) one (l) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numb s for such communications shall be those set fo11h in the communications and documents that each party has provided the other immediately preceding the issuance of this Note or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days p or to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice consent waiver or other communication (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

The addresses for such communications shall be:

If to the Company to:

Brian Barthlow

Empire Stock Transfer

1859 Whitney Mesa Dr.

Henderson, NV 89014

Telephone (702) 818-5895

Facsimile (702) 974-1444

Cane Clark LLP

3273 E Warm Springs Rd

Las Vegas, NV 89120

Attn: Joe Laxague

Email:

If to the Holder:

Black Mountain Equities, Inc.

13366 Greenstone Ct

San Diego, CA 92131

Attn: Adam Baker

Email:

6

(8)                  APPLICABLE LAW AND VENUE. This Note shall be governed b and construed in accordance with the laws of the State of California, without giving effect to conflicts of laws thereof. Any action brought by either pa11y against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city and county of San Diego, in the St e of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such com1s.

(a)                 WAIVER. Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

[Signature Page Follows]

7

IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.

COMPANY:

IDS INDUSTRIES, INC.

By: /s/ Scott Plantinga

Name: Scott Plantinga

Title: Chief Executive Officer

HOLDER:

BLACK MOUNTAIN EQUITIES, INC.

By: /s/ Adam Baker

Name: Adam Baker

Title: President

8

EXHIBIT A

NOTICE OF CONVERSION

IDS Industries, Inc,

c/o: Pam Mckeown, Controller

533 Birch Street

Lake Elsinore, CA 92540

pmckeown@idsindustries.com

The undersigned hereby elects to convert a portion of the $________ Convertible Note ________ issued to Black Mountain Equities, Inc. on ________ into Shares of Common Stock of _________ according to the conditions set forth in such Note as of the date written below.

By accepting this notice of conversion, you arc acknowledging that the number of shares to be delivered represents less than 5% (five percent) of the common stock outstanding. If the number of shares to be delivered represents more than 4.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and debenture Holder must be immediately notified.

Date of Conversion

Conversion Amount:

Conversion Price:

Shares to be Delivered:

Shares delivered in name of:

BLACK MOUNTAIN EQUITIES, INC.

By:

Title:

Black Mountain Equities, Inc

Signature:

9

EX-10.4

QUOTATION 6/30/14

We are confident we can be instrumental in the San Jose initiative. We are pleased to quote you the following services over the next 30 days:

1.Financial Fund Raising would remain at the standard of 45% of donations generated by PMG Call Center(s).

2.PMG will raise funds for the initiative while simultaneously granting education and support throughout the community. $2.00/successful call (defined as a connection that lasts >60 seconds). Call results can be submitted daily or weekly.

3.Our CSR's will rally people to fill out petition supplied by you on line and bring in to a local shop. $2.00 I per person signing.

4.Obtain Call List and subsequent modeling for best performance for San Jose, CA voters and surrounding county for fund raising support .

This would be at 10% above costs.

Submitted by:	/s/ Scott Plantinga
	Scott Plantinga: President, PMG Inc.
Accepted by:	/s/ Dave Hodges
	Dave Hodges: Director, Control & Regulate San Jose

EX-10.5

1   INTRODUCTIONANDPARTIES

This MemorandumofUnderstanding("MOU ") ismadebyandbetweenUltralifeCorporation, a Delaware corporation with an addressat 2000 Technology Parkway, Newark, New York 14513 (hereinafter referred to as "Ultralife") and IDS Industries, Inc., aNevada Corporation doing business as Charge! Energy Storage with an addressat533Birch Street, Lake Elsinore, CA 92530(hereinafter referred to as "Company "), on thisdate ofJanuary 22, 2014 ("Effective Date"). Ultralife and Company are eacha "Party," and together, the "Parties".

The Partiescurrentlyintendthattheirorganizationsshallcollaborateinaspiritofpartnershipforthepurposes and inaccordance with thisMOU, and therefore nowagreeasfollows:

2   PURPOSE

The purpose of this MOU is to summarize the general concepts, understandings and anticipated business terms that will serve as a framework within which Ultralife and Company will explore a potential collaboration between them (the "Transaction "). This MOU evidences the current mutual intention of Ultralife and Company to continue their initial discussions and proceed negotiating a potential written definitive agreement concerning the Transaction. Except as provided in Section 8: Scope of Obligations, this MOU shall not constitute a binding agreement or obligation between the Parties with respect to the Transaction or any subject encompassed within this MOU, but shall only express the current thoughts and considered expectations of the Parties. Any agreement or binding obligation between the Parties shall be created and evidenced by a definitive agreement or agreements executed by authorized representatives of Ultralife and Company ("Definitive Agreement "). The Transaction is more fully described as follows:

·                                  SALES

o                                                   Jointly engage in selling and marketing, in accordance with the marketing and sales policies and practices of Ultralife, an "Ultralife Portable Power System" product to Company's current and future customer base, including Company targets within the consumer market for portable power solutions and residential commercial and industrial markets for stationary power solutions. Ultralife will not knowingly engage directly with Company's customers to the extent they are not: (i) current or prior customers of Ultralife or (ii) identified or targeted as prospective customers by Ultralife, unless directed by Company.

o                                                   Ultralife and Company will jointly develop a simple business map to outline both marketing strategies and growth expectations.

o                                                   The contemplated collaboration will be for coverage of the North American Market with targeted focus in California for the portable and stationary energy storage products.

o                                                   Ultral ife will provide reasonable levels of marketing collateral and resources to support these efforts, including a video clip(s) featuring the portable power solutions' features/benefits/applications n multiple markets.

·                                 PRODUCT CUSTOMIZATION & PURCHASE COMMITTMENT

o                                                  Ultralife currently intends to develop customized products in accordance with a product priority roadmap for: a) private label portable power solution (I Q14 initial execution) and b) turnkey energy storage solutions for residential/commercial/industrial applications (2Q 14 initial execution).

o                                                  Company will make a committed minimum initial purchase of the private label portable power solution of ten (I0) units in the first calendar quarter of 2014, and ten (10) additional units in the second calendar quarter of 2014 PO's must be issued by March l, 2014 for first calendar quarter delivery and by June 1, 2014 for second calendar quarter delivery. Note any trigger the release of the second calendar quarter Purchase Order.

3  COSTS

Each Party shall be responsible for meeting its own costs incurred in fulfilling its own responsibilities unless subsequently expressly agreed otherwise in writing in particular instances. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisors or other similar fee or commission in connection with the Transaction or other agreements contemplated bythisMOU.

4 PROPRIETARY RIGHTS;LOANEDEQUIPMENT

Each Partywillretainallright, title, andinterest inandtoits own products, technology, collateral, inventions, hardware, software, other equipment, documentation anddataused or generated bysuch Party inthe performance of this MOU, including, with respect to Ultralife, alloff-the-shelf andcustomizedpower solution technology. WherethePartiesagree that anysuchitemsshould bereviewedloaned or otherwise employed inany fashion by oneParty to orby theotherParty tofacilitate thecontemplated collaboration (e.g. items neededtodevelop ademonstration system) then theseshall be so reviewed, loaned or otherwise employed without charge, and ownership of sameshallat all timescontinuetoreside with theParty which contributed the said items.ThePartywhichborrows any itemsfromtheother Partyshall beobliged to exercise all duecare of loaned items while in its possession orunder its control, and to return said items promptlyupon receiptof written request by the Party which loaned saiditems.

5  NON-EXCLUSIVITY

Ultralife andCompanyacknowledgeandacceptthatintheparticularcaseofpromotinganddelivering solutionsinthemarketplacebasedonthescopeofcollaboration described herein,and inothermoregeneral areasofcommerce, eitherParty may collaborate in any way with othercompanies ororganizations aslongas suchcollaboration does not infringe on therights and ownership issuesof theotherParty. NeitherParty herebyformsor hasanyintention offorming an exclusive relationship withthe other Party.

6  TERM &TERMINATION

This MOUiseffectivefortwelve(12) monthsfromtheEffectiveDate.EitherPartymayearlierterminatethis MOU or any p011ion of thecollaborationwhich is described inthis MOU, by giving written noticeto the other Pai1y inaccordance with Section 9below.In theevent that, for any reason whatsoever, aDefinitive Agreement is not executed onor prior toexpiration or termination ofthisMOU, this MOUshall become void uponthe expiration or terminationdate shallbe noliability orfurther obligation hereunderon the part of either Party (or to the extentapplicabletheir respective shareholders, officers, employees or directors), except asset forth in Section 8: ScopeofObligations and the NDA,which obligations shallcontinue for theterm stated, or inthe absence ofsame, the applicablestatute oflimitations.

7 CONFIDENTIALITY

The PartieshaveexecutedaMutualNon-Disclosure Agreement datedOctober29, 2013("NOA "). The Partiesagree that this MOU and all communications between thePartiesand other disclosures in connection

with theTransactionshallbecoveredbytheNOAandundernocircumstancesdoesthisMOUlimittheeffect oftheNDA.

8   SCOPE ofOBLIGATIONS

The intentoftheMOUistoprovideacommonframeworkofunderstandingwithinwhichthePartiescan pursue collaborativeefforts, andeach mayi nitsown discretion determine the extent towhich it believes same is to be of mutualbenefit. Therefore this documentdoes not createany binding obligationsupon either Party, including without limitation, the execution ofany Definitive Agreement, and neither Party shall have any liability to theother Patty under thisdocument, except however, that Company's minimum purchase commitment inSection2, and Sections 3, 4, 7, 9, and 10 aremutually accepted asobligatory uponand binding between the Parties.

9  COMMUNICATION

o                                    Exceptto theextentrequiredbylaw, withoutthe priorapproval ofboth Parties, neither Partywillmake any publicannouncement ordisclosure concerning this MOUortheTransaction unless and until a Definitive Agreement is concluded, and at such time, the Parties shall reasonably cooperate with one anotherregarding anypublic announcement, which cooperation may bemore particularly described in the Definitive Agreement.If a Partyis required by law tomake any such disclosure, such Partyshall first provide to the other the content of the proposed disclosure (to the extent legally permitted), the reasons that such disclosure is required by law, and the time and place that the disclosure willbemade, and eitherPatty may seek confidential treatmentof same. The Patties agree to cooperate witheach other to issue a joint press release regarding the Transaction contemporaneous with the closing of such Transaction.

o                                   Communication betweentheParties shallbe conductedprimarilythroughthosenamedbelowormembersof their respective organizations whichtheunder-named nominatefor this purpose. Any notices given hereunder shall be inwriting and shall be addressed tothe intended Party atthe address set out below or to such other addressas shallbe given to the otherPartybynotice in compliance with this Section, and: (i)delivered in person;or (ii) mailed by U.S.certified mail, postage prepaid , return receiptrequested; or (iii) forwarded by reputable express courier, providing written receipt of delivery. Notice shall be deemed given when actually delivered orwhen delivery is refused.

2

Ultralife Corporation		Company Name
Contact	Mike Morse	George Rodriguez
Job Title	OEM Account Executive	VP Operations
Address	2000 Technology Parkway; Newark, NY 14513	833 Birch Street, Lake Elsinore, CA 92530
Email Address	mike.morse@ulbi.com	George.rodriguez@idssolartech.com
Company URL	www.ultralifecorp.com	www.chargeenergystorage.com
Phone #:	503-686-5171	951-814-1231
Fax #:	315-331-7800	951-674-5091

10 GENERAL

·                     The MOU and the Definitive Agreement will be governed by and construed in accordance with the laws of the State of New York. The Parties will first attempt to resolve any dispute between them amicably and pursuant to good faith negotiations. To the extent resolution is not reached by such efforts, either Party may submit its claim to the exclusive jurisdiction and venue of a court of competent jurisdiction located in the State of New York.

·                     To the extent this MOU constitutes a binding agreement between the Parties, this MOU shall be binding upon and inure to the benefit of their respective successors, and is the sole agreement of the Parties regarding the subject matter hereof, and supersedes all prior agreements and understandings, written or oral, between the Parties as to such subject matter.

·                     Neither Party may assign its rights or obligations under this MOU without the prior written consent of the other Party.

·                     This MOU may not be amended or supplemented except by written agreement of the Parties hereto.

Agreed and Accepted:
Ultralife Corporation:	IDS Industries d/b/a Charge! Energy Storage
/s/ Steve Szamocki	/s/ Scott Plantinga
Steve Szamocki – EVP Global Sales	Scott Plantinga – President & CEO

3

EX-31.1

CERTIFICATIONS

I, Scott Plantinga, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended May 31, 2014 of IDS Industries, Inc (the “registrant”);

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 registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s 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 registrant’s internal control over financial reporting.

Date: July 21, 2014

/s/ Scott Plantinga

By: Scott Plantinga

Title: Chief Executive Officer

EX-31.2

CERTIFICATIONS

I, Scott Plantinga, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended May 31, 2014 of IDS Industries, Inc (the “registrant”);

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 registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s 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 registrant’s internal control over financial reporting.

Date: July 21, 2014

/s/ Scott Plantinga

By: Scott Plantinga

Title: Chief Financial Officer

EX-32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly Report of IDS Industries, Inc (the “Company”) on Form 10-Q for the quarter ended May 31, 2014 filed with the Securities and Exchange Commission (the “Report”), I, Scott Plantinga, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

By:	/s/ Scott Plantinga
Name:	Scott Plantinga
Title:	Principal Executive Officer, Principal Financial Officer and Director
Date:	July 21, 2014

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XML

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	May 31, 2014	Aug. 31, 2013	May 31, 2013	Jul. 18, 2011	Feb. 07, 2014 CFO	May 08, 2010 CFO	Dec. 10, 2013 CEO
Common stock, issued	102,401,393	34,313,114		10,000,000	6,500,000	99,996	1,333,333
Common stock, par value	$ 0.001	$ 0.001			$ 0.0125	$ 0.093
Common stock, expense					$ 81,250	$ 9,250
Common stock, cash proceeds							20,000
Promissory Note, amount			289,998
Promissory Note, repaid			2,150
Promissory Note, interest rate			5.00%
Accrued interest	$ 43,069	$ 19,990	$ 17,885

XML

CONVERTIBLE NOTES PAYABLE - Changes in Derivative Liabilities (Details) (USD $)			9 Months Ended														12 Months Ended		12 Months Ended
	May 31, 2014	Aug. 31, 2013	May 31, 2014 Asher Loan	May 31, 2014 Asher Loan 2	May 31, 2014 Asher Loan 3	May 31, 2014 Asher Loan 4	May 31, 2014 Black Mountain	May 31, 2014 Finiks Loan	May 31, 2014 Finiks Loan 2	May 31, 2014 Convert Prom Hendrickson	May 31, 2014 JMJ Loan 1	May 31, 2014 JMJ Loan 2	May 31, 2014 JMJ Loan 3	May 31, 2014 JMJ Loan 4	May 31, 2014 Derivative Liabilities Totals	Aug. 31, 2013 Asher Loan	Aug. 31, 2013 JMJ Loan 1	Jun. 19, 2013 JMJ Loan 1	Aug. 31, 2013 JMJ Loan 2	Sep. 30, 2013 JMJ Loan 2	Aug. 31, 2013 Derivative Liabilities Totals
Derivative liability	$ 221,767	$ 148,870	$ 49,939	$ 21,610	$ 34,945	$ 155,554	$ 110,515	$ 34,965	$ 47,295		$ 126,070		$ 70,390	$ 104,127	$ 647,640			$ 62,569		$ 70,390	$ 148,870
Derivative liability, fair value							36,409	40,583	33,247	25,266		33,714	33,714	66,695	221,767
Gain (loss) on derivative liability			$ (49,939)	$ (21,610)	$ (34,945)	$ (155,554)	$ (74,106)	$ 5,618	$ (14,048)	$ (18,300)	$ (102,245)	$ (35,506)	$ (36,676)	$ (37,432)	$ 574,743		$ 102,245		$ 46,625

XML

CONVERTIBLE NOTES PAYABLE

9 Months Ended

May 31, 2014

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE

On October 12, 2012, the Company executed a promissory note with Argent Offset, LLC for $20,000. The note bears interest at 18% and was due on or before January 10, 2013. On February 27, 2013, a new convertible promissory note was executed for $33,850. The note bears interest at 18% compounded monthly and is due August 26, 2013. The new note amends and replaces in its entirety the note dated October 12, 2012. Pursuant to the terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a conversion rate of $0.11. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be $18,464. This amount has been recorded as a discount against the outstanding balance of the note. The discount was amortized to interest expense over the life of the debt using the effective interest method. Interest charged to operations relating to the amortization of the debt discount for the year ended August 31, 2013 amounted to $18,464. In addition, the note included one warrant giving the holder the right to purchase 50,000 shares of common stock at a price of $0.20 per share for a period of three years. As required by ASC 470-20 the Company valued the warrant and recorded a debt discount to additional paid in capital in the amount of $3,690 based on the discount to market available at the time of issuance. The discount was to be amortized over the life of the loan to interest expense. As of August 31, 2013, $3,690 has been amortized to interest expense. On November 26, 2013, an agreement of temporary forbearance was executed in which for a $1,000 fee the lender agreed to waive any default until December 15, 2013. On January 10, 2014, another agreement of temporary forbearance was executed in which for a $500 fee the lender agreed to waive any default until March 20, 2014. On February 4, 2014, $2,500 was repaid on the note and on February 20, 2014, $20,000 of the principal was converted into 2,857,143 shares of common stock at $.007 per share which resulted in a loss on conversion of debt of $18,571. On March 10, 2014 the remaining principal and interest totaling $21,923 was converted into 3,131,792 shares of common stock at $.0632 per share which resulted in a loss on conversion of debt of $176,006.

On December 3, 2012, the Company executed a convertible promissory note with Steven J. Caspi (“Caspi”) for $125,000. The note bears interest at 5% and was due on or before November 30, 2013. Pursuant to the terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a conversion rate of $1.25. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be $60,000. This amount has been recorded as a discount against the outstanding balance of the note. The discount is being amortized to interest expense over the life of the debt using the effective interest method. The note also issued one warrant giving the holder the right to purchase 15,625 shares of common stock at a price of $2.00 per share for a period of five years. As required by ASC 470-20 the Company recorded a debt discount to additional paid in capital in the amount of $16,455 based on the discount to market available at the time of issuance. The discount has been fully amortized to interest expense. On March 10, 2014, the Company executed a forbearance agreement with the lender modifying the terms of the original agreement. Per the new agreement the conversion price was changed to $0.005 per share and the due date was extended to November 30, 2014. As a result to the new conversion price the Company recorded an additional debt discount of $48,539. The additional discount will be amortized over the remaining term of the note. On March 21, 2014, $25,000 of the note was converted into 5,000,000 shares of common stock. The note is shown net of a debt discount of $23,228 and the note has accrued interest of $9,411. 

On March 20, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before December 26, 2013. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $49,939 based on the Black Scholes Merton pricing model. During the nine months ended May 31, 2014, the total principal of $32,500 and accrued interest of $1,300 was converted into 6,143,590 shares of common stock. As a result of the conversion $8,125 of the remaining debt discount was expensed and the company recognized a gain on derivative liability of $35,600.

On April 4, 2013, the Company executed a convertible promissory note for $15,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before January 8, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. The Company recorded a debt discount in the amount of $15,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $21,610 based on the Black Scholes Merton pricing model. During the nine months ended May 31, 2014, the total principal of $15,500 and accrued interest of $620 was converted into 3,526,087 shares of common stock. As a result of the conversion $6,045 of the remaining debt discount was expensed and the Company recognized a gain on derivative liability of $17,286.

On June 3, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before March 5, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $34,945 based on the Black Scholes Merton pricing model. On February 25, 2014, principal of $14,200 was converted into 3,086,957 shares of common stock. During the nine months ended May 31, 2014, the total principal of $32,500 and accrued interest of $1,300 was converted into 7,347,826 shares of common stock. As a result of the conversion $2,865 of the remaining debt discount was expensed and the Company recognized a gain on derivative liability of $78,028.

On June 19, 2013, the Company executed a Convertible Promissory Note (the “note”) with JMJ Financial (“JMJ”). The nominal principal sum of the Note is $300,000, with an original issue discount of ten percent (10%). The note matures one year from the effective date of each payment, which is made at the sole discretion of JMJ. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 40% discount to the lowest trade price in the twenty five trading days prior to conversion.

The Company received its first payment from JMJ towards the loan of $55,000 on June 19, 2013. The Company recorded a debt discount in the amount of $60,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $75,507 based on the Black Scholes Merton pricing model using the following attributes: ..13% risk free rate, 134% volatility and a one year term to maturity. During the nine months ended May 31, 2014, principal of $11,351 and accrued interest of $7,944 was converted into 4,200,000 shares of common stock. As a result of the conversion $3,452 of the debt discount was accelerated and expensed. On March 19, 2014; the remaining principal of $20,900 was converted into 3,800,000 shares of common stock. As a result of the conversion the remaining $14,614 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $241,878.

On August 5, 2013, the Company executed a convertible promissory note for $32,500 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before May 7, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. During March 2014 the principal of $32,500 and $1,300 of accrued interest was converted into 6,830,508 shares of common stock. As a result of the conversion the remaining $23,400 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $138,269.

The Company received its second payment from JMJ towards the loan of $25,000 on August 14, 2013. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $62,569 based on the Black Scholes Merton pricing model using the following attributes: ..12% risk free rate, 144% volatility and a one year term to maturity. During the nine months ended May 31, 2014 the principal of $27,500 and $3,611 of accrued interest was converted into 7,000,000 shares of common stock. As a result of the conversion the remaining $6,932 of debt discount was expensed to interest expense and the Company recognized a gain on derivative liability of $126,070.

On September 16, 2013, the Company executed a convertible promissory note for $10,000 with Robert Hendrickson. The note bears interest at 10% per annum and is due on or before September 15, 2014. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 49% discount to the VWAP price for the ten trading days prior to conversion. The Company recorded a debt discount in the amount of $10,000 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $18,300 based on the Black Scholes Merton pricing model. As of February 28, 2014, $4,521 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $25,266 resulting in a loss on the change in fair value of the derivative. The note is shown net of a debt discount of $5,479 at February 28, 2014. On March 10, 2014, the original note of $10,000 plus a $1,000 OID was purchased by GCEF Opportunity Fund, LLC.

The Company received its third payment from JMJ towards the loan of $25,000 on September 30, 2013. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $70,390 based on the Black Scholes Merton pricing model using the following attributes: ..10% risk free rate, 261% volatility and a one year term to maturity. As of May 31, 2014; $18,384 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $33,714 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $9,116 at May 31, 2014 and has accrued interest of $3,611.

On January 22, 2014, we obtained short term financing from Finiks Capital, LLC under a Promissory Note in the amount of $100,000 (the “Note”). The Note features an original issue discount of ten percent (10%) and has a face amount of $100,000. We will initially receive $20,000 from the Lender and will receive additional funds at the Lender’s sole discretion. The Note accrues no interest if the principal sum due is repaid within ninety days. The Note incurs interest one time at a rate of ten percent (10%) on the principal sum due, with all principal and interest due in full on the maturity date of one hundred eighty days from the date of issue. At any time, the Note may be converted, in whole or in part at the option of the holder, at a price per share of fifty-one percent (51%) of the average of the three lowest bid side prices in the ten trading days previous to the conversion. The Company recorded a debt discount in the amount of $22,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $34,965 based on the Black Scholes Merton pricing model using the following attributes: .13% risk free rate, 134% volatility and a six month term to maturity. As of May 31, 2014, $15,889 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $40,583 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $6,111 at May 31, 2014. Subsequent to May 31, 2014, the full amount of the note and accrued interest was converted to common stock.

On February 4, 2014, we obtained short term financing from GCEF Opportunity Fund, LLC under a Promissory Note in the amount of $33,000. The Note features an original issue discount of ten percent (10%) and we will therefore receive $30,000 in actual funding. The Note is due within forty-five days, with an additional fifteen day grace period. As an additional loan fee, we have agreed to issue the Lender 2,000,000 shares of our common stock. These shares were valued at $0.0188, the closing market price on the day of issuance for total non-cash expense of $37,600. If the Note is not repaid by the maturity date, it shall be converted into 3,465,000 shares of our common stock, representing conversion of the principal, the original issue discount, and an interest at the rate of fifteen percent (15%) into common stock at a price of $0.01 per share. On March 31, 2014, $15,000 was repaid on the note. Subsequent to May 31, 2014, the remaining principal and interest on the note was converted to common stock.

On February 26, 2014, The Company received an additional $20,000 from Finiks Capital. The Company recorded a debt discount in the amount of $22,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $47,295 based on the Black Scholes Merton pricing model using the following attributes: .08% risk free rate, 212% volatility and a six month term to maturity. As of May 31, 2014, $11,489 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $33,247 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $10,511 at May 31, 2014. Subsequent to May 31, 2014, the full amount of the note and accrued interest was converted to common stock.

On March 7, 2014, the Company executed a convertible promissory note for $73,000 with Asher Enterprises, Inc. The note bears interest at 8% per annum and is due on or before December 3, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $1,376.

On March 19, 2014, the Company executed a convertible promissory note for $53,000 with KBM Worldwide, Inc . The note bears interest at 8% per annum and is due on or before December 26, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $802.

On May 20, 2014, the Company executed a convertible promissory note for $53,000 with KBM Worldwide, Inc. The note bears interest at 8% per annum and is due on or before December 26, 2014. The note is convertible at a 49% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of May 31, 2014 is $360.

The Company received its fourth payment from JMJ towards the loan of $40,000 on April 17, 2014. The Company recorded a debt discount in the amount of $44,000 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $104,127 based on the Black Scholes Merton pricing model using the following attributes: ..11% risk free rate, 214% volatility and a one year term to maturity. As of May 31, 2014; $5,304 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $66,695 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $38,696 at May 31, 2014.

On March 5, 2014, the Company executed a Convertible Promissory Note (the “note”) with Black Mountain Equities, Inc. (“Black Mountain”). The nominal principal sum of the Note is $250,000, with an original issue discount of ten percent (10%). The note matures one year from the effective date of each payment, which is made at the sole discretion of Black Mountain. The Note is convertible into common stock in whole or in part at a variable conversion price equal to the lessor of $0.025 or a 60% discount to the lowest trade price in the twenty five trading days prior to conversion. The Company received its first payment towards the loan of $25,000. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $110,515 based on the Black Scholes Merton pricing model using the following attributes: .13% risk free rate, 193% volatility and a one year term to maturity. As of May 31, 2014; $6,555 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative at $36,409 resulting in a gain on the change in fair value of the derivative. The note is shown net of a debt discount of $20,945 at May 31, 2014.

A summary of the status of the Company’s debt discounts, derivative liabilities and original issue discounts, and changes during the periods is presented below:

Debt Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Asher – 3/20/13	$	—	$	32,500		(32,500	)	$	—
Asher – 4/4/13		—		15,500		(15,500	)		—
Asher – 6/3/13		—		32,500		(32,500	)		—
Asher – 8/5/13		—		32,500		(32,500	)		—
Black Mountain – 3/5/14		—		27,500		(6,555	)		20,945
Caspi		19,480		48,539		(42,769	)		25,250
Finiks – 1/21/14		—		22,000		(15,888	)		6,112
Finiks – 2/26/14		—		22,000		(11,488	)		10,512
GCEF Opportunity		—		11,769		(11,769	)		—
Hendrickson – 9/16/13		—		10,000		(10,000	)		—
JMJ – 6/19/13		48,234		—		(48,234	)		—
JMJ – 8/14/13		26,144		—		(20,644	)		5,500
JMJ – 9/30/13		—		27,500		(18,384	)		9,116
JMJ – 4/17/14		—		44,000		(5,304	)		38,696
	$	93,858	$	326,308	$	(304,035	)	$	116,131

Derivative Liabilities	August 31, 2013		Initial Valuation		Revaluation on 5/31/14		Change in fair value of Derivative
Asher – 3/20/13	$	—	$	49,939	$	—	$	(49,939	)
Asher – 4/4/13		—		21,610		—		(21,610	)
Asher – 6/3/13		—		34,945		—		(34,945	)
Asher – 8/5/13		—		155,554		—		(155,554	)
Black Mountain – 3/5/14		—		110,515		36,409		(74,106	)
Finiks – 1/21/14		—		34,965		40,583		5,618
Finiks – 2/26/14		—		47,295		33,247		(14,048	)
Hendrickson – 9/16/13		—		18,300		—		(18,300	)
JMJ – 6/19/13		102,245		—		—		(102,245	)
JMJ – 8/14/13		46,625		—		11,119		(35,506	)
JMJ – 9/30/13		—		70,390		33,714		(36,676	)
JMJ - 4/17/14		—		104,127		66,695		(37,432	)
	$	148,870	$	647,640	$	221,767	$	574,743

Original Issue Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Black Mountain – 3/5/14		$	$	2,500	$	(465	)	$	2,035
Finiks – 1/21/14		—		2,000		(1,444	)		556
Finiks – 2/26/14		—		2,000		(1,044	)		956
GCEF Opportunity		—		3,000		(3,000	)		—
JMJ – 6/19/13		4,385		—		(4,159	)		226
JMJ – 8/14/13		2,377		—		(1,890	)		487
JMJ – 9/30/13		—		2,500		(1,685	)		815
JMJ – 4/17/14		—		4,000		(493	)		3,507
	$	6,762	$	16,000	$	(14,180	)	$	8,582

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STOCK WARRANTS - Schedule Of Stockholders Equity Warrants (Details) (USD $)	9 Months Ended
	May 31, 2014
Notes to Financial Statements
Beginning Balance, Shares available to purchase with warrants	65,625
Beginning Balance, Weighted Average Price	$ 0.06
Beginning Balance, Weighted Average Fair Value	$ 0.03
Issued, Weighted Average Price	$ 1,000,000
Issued, Weighted Average Fair Value	$ 0.018
Ending Balance, Shares available to purchase with warrants	1,065,625
Ending Balance, Weighted Average Price	$ 0.06
Ending Balance, Weighted Average Fair Value	$ 0.03

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NOTES PAYABLE (Details Narrative) (USD $)				9 Months Ended
	May 31, 2014	Aug. 31, 2013	May 31, 2013	May 31, 2014 Promissory Note	May 31, 2014 Promissory Note 2	Oct. 15, 2013 Promissory Note 2	May 31, 2014 Various Shareholders
Promissory Note, amount			$ 289,998	$ 15,000	$ 15,000	$ 8,755	$ 13,100
Promissory Note, interest rate			5.00%		10.00%		8.00%
Loan fee				5,000
Promissory Note, due date				Aug. 12, 2013	Sep. 15, 2013
Accrued interest	$ 43,069	$ 19,990	$ 17,885		$ 1,434	$ 544

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STOCK WARRANTS - Schedule Of Stockholders Equity Warrants Changes (Details) (USD $)	9 Months Ended
	May 31, 2014
Notes to Financial Statements
Range of Exercise Prices, low	$ 0.20
Range of Exercise Prices, high	$ 2.00
Number Outstanding	1,065,625
Weighted Average Remaining Contractual Life	5 years 4 months
Weighted Average Exercise Price	$ 0.06

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STOCK WARRANTS (Details Narrative) (USD $)	Feb. 04, 2014	Feb. 27, 2013	Nov. 30, 2012
Notes to Financial Statements
Warrants, issued	1,000,000	50,000	15,625
Aggregate fair value	$ 11,769	$ 2,044	$ 16,455

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PREPAIDS AND OTHER CURRENT ASSETS

9 Months Ended

May 31, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAIDS AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at:

	May 31, 2014		August 31,2013
Prepaid consulting	$	—	$	64,824
Other assets		7,007		—
Unamortized original issue discount		8,581		6,762
Deferred financing costs		7,573		8,610
Total prepaid expenses and other current assets	$	23,161	$	80,196

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COMMON STOCK TRANSACTIONS (Details Narrative) (USD $)	9 Months Ended
	May 31, 2014	May 31, 2013	Aug. 31, 2013	Jul. 18, 2011	Feb. 07, 2014 CFO	May 08, 2010 CFO	Dec. 10, 2013 CEO	May 31, 2014 Argent Offset, LLC	May 31, 2014 Asher Enterprises	May 31, 2014 JMJ Financial	May 31, 2014 Stock Issued for Services	Mar. 18, 2014 Caspi
Common stock, issued	102,401,393		34,313,114	10,000,000	6,500,000	99,996	1,333,333	5,988,935	23,848,014	15,000,000	8,120,000	5,000,000
Common stock, par value	$ 0.001		$ 0.001		$ 0.0125	$ 0.093
Common stock, expense					$ 81,250	$ 9,250					$ 72,047
Common stock, cash proceeds							20,000
Principal and interest expense								41,923	117,520	89,645		25,000
Loss on conversion of debt	194,577
Promissory Note, amount		$ 289,998										$ 125,000

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Balance Sheets (USD $)	May 31, 2014	Aug. 31, 2013
Current Assets:
Cash	$ 28,794	$ 1,960
Accounts receivable, net of allowance of $4,950	15,737	4,950
Prepaid expenses and other current assets	23,161	80,196
Inventory	24,954	32,682
Other receivable, related party	37,543	77,307
Interest receivable, related party	5,429	2,612
Total Assets	135,618	199,707
Current Liabilities:
Cash overdraft		12,413
Accounts payable	151,568	159,596
Derivative liability	221,767	148,870
Accrued compensation	49,167
Accrued expenses	30,409	10,159
Accrued interest	43,069	19,990
Convertible notes payable, net of discount of $116,131 and $93,858, respectively	357,534	265,992
Notes payable related party	287,948	290,098
Other notes payable	28,100	30,000
Total Current Liabilities	1,169,562	937,118
Total Liabilities	1,169,562	937,118
STOCKHOLDERS DEFICIT:
Preferred stock, par value $.001, 10,000,000 authorized, no shares issued and outstanding
Common stock, $.001 par value, 500,000,000 common shares authorized, 102,401,393 and 34,313,114 shares issued and outstanding, respectively	102,402	34,313
Additional paid in capital	1,388,148	639,889
Deferred stock compensation	(108,318)
Accumulated deficit	(2,416,176)	(1,411,613)
Total Stockholders Deficit	(1,033,944)	(737,411)
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT	$ 135,618	$ 199,707

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

May 31, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business  

IDS Industries, Inc. (“IDS” or the “Company”) is a GIIRS-rated “green” energy company that designs and develops solar and power management technologies and incorporates these into its manufacturing and distribution of solar-based portable power stations and other solar-based products for consumer, business, government, and disaster relief applications. We also offer a line of ‘Stationary” Energy Storage systems for residential, commercial and light industrial applications. Both the stationary and portable solar power generators will be under our Company brand name, Charge! Energy Storage.

The Company was formed as Step Out, Inc., a Nevada corporation on May 2, 2011. On July 18, 2011 Step Out issued 10,000,000 common shares to acquire 100% membership interest in SOI Nevada, LLC, a Nevada limited liability corporation from the sole shareholder. The membership interest was acquired at book value from the shareholder. SOI Nevada, LLC became a wholly-owned subsidiary of Step Out, Inc.

On September 19, 2012, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests and Assumption of Obligations (the “Agreement”) with our sole officer and director, Sterling Hamilton. Pursuant to the Agreement, the Company transferred all membership interests in our operating subsidiary, SOI Nevada, LLC, to Mr. Hamilton. In exchange for this assignment of membership interests, Mr. Hamilton agreed to assume and cancel all liabilities relating to our former business of developing a chain of flotation tank therapy spas. In addition, Mr. Hamilton agreed to release all liability under a promissory note due and owing to him in the amount of $2,000.

As a result of the Agreement, the Company is no longer pursuing its former business plan. Under the direction of our newly appointed officers and directors, as set forth below, we intend to develop a business focused on the design, development, manufacturing and distribution of renewable-energy based portable and mobile electrical generators and power stations under our own brand name, IDS Solar TechnologiesÔ.

Effective October 12, 2012, the Board of Directors approved a merger with our wholly-owned subsidiary, IDS Acquisition, Inc., pursuant to NRS 92A.180. IDS Acquisition was incorporated in the state of Nevada on September 25, 2012. As part of the merger with our wholly-owned subsidiary, our board authorized a change in the name of the company to “IDS Solar” Technologies, Inc.”

On January 7, 2013 we launched our planned new product line on a limited basis; with the initial model, the Solar Survivor. The Company continues to design and development other models of electric generators and power stations based on customer input and feedback.

Effective February 7, 2013, the board of directors approved a twelve for one forward split of the Company’s common stock. All shares throughout these financial statement and Form 10-Q have been retroactively restated to reflect the forward split.

Effective May 29, 2013, the board of directors authorized a change in the name of the company to “IDS Industries, Inc.” The new name reflects the direction and focus of the Company more accurately given the full slate of products in advanced development including the battery management and energy storage fields.

On February 6, 2014, the board of directors approved the launch of Propel Management Group, Inc. (PMG) a new wholly owned subsidiary. The core competency of this consulting service includes developing and implementing Program Management in product development, service industry, distribution and logistics. The addition of PMG has already proven to translate in-house core competencies in to additional revenue stream opportunities for IDS Industries.

On March 10, 2014, the board of directors approved the launch of Charge! Energy Storage, Inc. (Charge!) a new wholly owned subsidiary.

Basis of Presentation

The accompanying interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ deficit or cash flows.

It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended May 31, 2014 are not necessarily indicative of the results for the full fiscal year. For further information refer to the financial statements and notes included in the Company’s Form 10-K for the year ended August 31, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of IDS Industries, Inc. and its wholly-owned subsidiary Propel Management Group, Inc. and Charge! Energy Storage, Inc. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. There were no cash equivalents as of May 31, 2014 and August 31, 2013.

Basic Loss per Share

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method; market value is based upon estimated replacement costs.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, we consider the probability of recoverability of accounts receivable based on past experience. Accounts receivable may also be fully reserved for when specific collection issues are known to exist. The analysis of receivables is performed quarterly, and the allowances are adjusted accordingly.

Fair Value of Financial Instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, prepaids, inventory, accounts payable, accrued liabilities, and notes payable, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

· Level 1. Observable inputs such as quoted prices in active markets;

· Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

· Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following presents the gross value of assets and liabilities that were measured and recognized at fair value, as of May 31, 2014.

	Level I		Level II		Level III		Total
Derivative liability	$	—	$	221,767	$	—	$	221,767

Stock-Based Compensation

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the Company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument. During the year ended August 31, 2013, the Company issued 3,157,750 shares of common stock valued at $467,448 to non-employees. As of May 31, 2014 a total of $461,719 has been expensed, and $5,729 remains in deferred stock compensation expense. During the nine months ended May 31, 2014, the Company issued 6,120,000 shares of common stock valued at $137,035 to non-employees. As of May 31, 2014 a total of $34,447 has been expensed, and $102,588 remains in deferred stock compensation expense.

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation - Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. During the nine months ended May 31, 2014, the Company issued 6,500,000 shares of common stock valued at $81,250 to its CEO.

Income Taxes

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at May 31, 2014 and August 31, 2013.

The Company accounts for its income taxes using the Income Tax topic of the FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Revenue Recognition

Sales of products or services and related costs of products or services sold are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable, and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing, and shipment of products.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued, that might have a material impact on its financial position or results of operations.

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GOING CONCERN (Details Narrative) (USD $)	May 31, 2014	Aug. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Total Stockholders Deficit	$ (1,033,944)	$ (737,411)
Accumulated deficit	$ 2,416,176	$ 1,411,613

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NOTE RECEIVABLE (Details Narrative) (USD $)	9 Months Ended
	May 31, 2014	May 31, 2013	Aug. 31, 2013
Receivables [Abstract]
Other receivable related party	$ 37,543		$ 77,307
Date entered into Note	2013-08-15
Interest Rate			8.00%
Maturity Date	90 days
Amount paid back	39,764
Interest receivable related party	5,429		2,612
Interest repaid	$ 1,500

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SUBSEQUENT EVENTS (Details Narrative) (USD $)	May 31, 2013	May 31, 2014 GCEF Oppurtunity Promissory Note	Feb. 04, 2014 GCEF Oppurtunity Promissory Note	May 31, 2014 JMJ Loan 4	May 31, 2014 Finiks Promissory Note	Jan. 22, 2014 Finiks Promissory Note
Common Shares Converted, Shares		3,930,000		4,500,000	10,352,942
Common Shares Converted, Amount		$ 19,650		$ 20,250	$ 48,400
Promissory Note, amount	$ 289,998		$ 33,000			$ 100,000
Promissory Note, interest rate	5.00%					10.00%

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CONVERTIBLE NOTES PAYABLE - Changes in Debt Discount (Details) (USD $)	May 31, 2014	Aug. 31, 2013
Debt Discount, unamortized	$ 116,131	$ 93,858
Asher Loan
Debt Discount, unamortized	32,500
Promissory Note, interest expense	(32,500)
Debt Discount, amortized
Asher Loan 2
Debt Discount, unamortized	15,500
Promissory Note, interest expense	(15,500)
Debt Discount, amortized
Asher Loan 3
Debt Discount, unamortized	32,500
Promissory Note, interest expense	(32,500)
Debt Discount, amortized
Asher Loan 4
Debt Discount, unamortized	32,500
Promissory Note, interest expense	(32,500)
Debt Discount, amortized
Black Mountain
Debt Discount, unamortized	27,500
Promissory Note, interest expense	(6,555)
Debt Discount, amortized	20,945
Caspi
Debt Discount, unamortized	48,539
Promissory Note, interest expense	(42,769)
Debt Discount, amortized	25,250	19,480
Finiks Loan
Debt Discount, unamortized	22,000
Promissory Note, interest expense	(15,888)
Debt Discount, amortized	6,112
Finiks Loan 2
Debt Discount, unamortized	22,000
Promissory Note, interest expense	(11,488)
Debt Discount, amortized	10,512
GCEF Oppurtunity
Debt Discount, unamortized	11,769
Promissory Note, interest expense	(11,769)
Debt Discount, amortized
Convert Prom Hendrickson
Debt Discount, unamortized	5,479
Promissory Note, interest expense	(10,000)
Debt Discount, amortized	4,521
JMJ Loan 1
Debt Discount, unamortized	6,932
Promissory Note, interest expense	(48,234)
Debt Discount, amortized		48,234
JMJ Loan 2
Debt Discount, unamortized	9,116
Promissory Note, interest expense	(20,664)
Debt Discount, amortized	18,384	26,144
JMJ Loan 3
Debt Discount, unamortized	27,500
Promissory Note, interest expense	(18,384)
Debt Discount, amortized	9,116
JMJ Loan 4
Debt Discount, unamortized	44,000
Promissory Note, interest expense	(5,304)
Debt Discount, amortized	38,696
Debt Discount Totals
Debt Discount, unamortized	326,308
Promissory Note, interest expense	(304,035)
Debt Discount, amortized	$ 116,131	$ 93,858

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NOTE RECEIVABLE

9 Months Ended

May 31, 2014

Receivables [Abstract]

NOTE RECEIVABLE

On August 15, 2013, the Company executed a Note Receivable for $77,307 for funds that it had advanced to another company owned by the former CEO. The note bears interest at 8% and was to mature in ninety days. During the nine months ended May 31, 2014, $39,764 and $1,500 was paid back on the principal and interest, respectively on this loan. As of May 31, 2014, the note has accrued $5,429 in interest. The repayment terms on this note are currently being renegotiated.

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Balance Sheets (Parenthetical) (USD $)	May 31, 2014	Aug. 31, 2013
Statement of Financial Position [Abstract]
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	500,000,000	500,000,000
Common Stock, Issued	102,401,393	34,313,114
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Issued	0	0
Accounts receivable, allowance	$ 4,950	$ 4,950
Convertible notes payable, discount	$ 116,131	$ 93,858

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

May 31, 2014

Accounting Policies [Abstract]

Nature of Business

IDS Industries, Inc. (“IDS” or the “Company”) is a GIIRS-rated “green” energy company that designs and develops solar and power management technologies and incorporates these into its manufacturing and distribution of solar-based portable power stations and other solar-based products for consumer, business, government, and disaster relief applications. We also offer a line of ‘Stationary” Energy Storage systems for residential, commercial and light industrial applications. Both the stationary and portable solar power generators will be under our Company brand name, Charge! Energy Storage.

The Company was formed as Step Out, Inc., a Nevada corporation on May 2, 2011. On July 18, 2011 Step Out issued 10,000,000 common shares to acquire 100% membership interest in SOI Nevada, LLC, a Nevada limited liability corporation from the sole shareholder. The membership interest was acquired at book value from the shareholder. SOI Nevada, LLC became a wholly-owned subsidiary of Step Out, Inc.

On September 19, 2012, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests and Assumption of Obligations (the “Agreement”) with our sole officer and director, Sterling Hamilton. Pursuant to the Agreement, the Company transferred all membership interests in our operating subsidiary, SOI Nevada, LLC, to Mr. Hamilton. In exchange for this assignment of membership interests, Mr. Hamilton agreed to assume and cancel all liabilities relating to our former business of developing a chain of flotation tank therapy spas. In addition, Mr. Hamilton agreed to release all liability under a promissory note due and owing to him in the amount of $2,000.

As a result of the Agreement, the Company is no longer pursuing its former business plan. Under the direction of our newly appointed officers and directors, as set forth below, we intend to develop a business focused on the design, development, manufacturing and distribution of renewable-energy based portable and mobile electrical generators and power stations under our own brand name, IDS Solar TechnologiesÔ.

Effective October 12, 2012, the Board of Directors approved a merger with our wholly-owned subsidiary, IDS Acquisition, Inc., pursuant to NRS 92A.180. IDS Acquisition was incorporated in the state of Nevada on September 25, 2012. As part of the merger with our wholly-owned subsidiary, our board authorized a change in the name of the company to “IDS Solar” Technologies, Inc.”

On January 7, 2013 we launched our planned new product line on a limited basis; with the initial model, the Solar Survivor. The Company continues to design and development other models of electric generators and power stations based on customer input and feedback.

Effective February 7, 2013, the board of directors approved a twelve for one forward split of the Company’s common stock. All shares throughout these financial statement and Form 10-Q have been retroactively restated to reflect the forward split.

Effective May 29, 2013, the board of directors authorized a change in the name of the company to “IDS Industries, Inc.” The new name reflects the direction and focus of the Company more accurately given the full slate of products in advanced development including the battery management and energy storage fields.

On February 6, 2014, the board of directors approved the launch of Propel Management Group, Inc. (PMG) a new wholly owned subsidiary. The core competency of this consulting service includes developing and implementing Program Management in product development, service industry, distribution and logistics. The addition of PMG has already proven to translate in-house core competencies in to additional revenue stream opportunities for IDS Industries.

On March 10, 2014, the board of directors approved the launch of Charge! Energy Storage, Inc. (Charge!) a new wholly owned subsidiary.

Basis of Presentation

The accompanying interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ deficit or cash flows.

It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended May 31, 2014 are not necessarily indicative of the results for the full fiscal year. For further information refer to the financial statements and notes included in the Company’s Form 10-K for the year ended August 31, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of IDS Industries, Inc. and its wholly-owned subsidiary Propel Management Group, Inc. and Charge! Energy Storage, Inc. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. There were no cash equivalents as of May 31, 2014 and August 31, 2013.

Basic Loss per Share

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method; market value is based upon estimated replacement costs.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, we consider the probability of recoverability of accounts receivable based on past experience. Accounts receivable may also be fully reserved for when specific collection issues are known to exist. The analysis of receivables is performed quarterly, and the allowances are adjusted accordingly.

Fair Value of Financial Instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, prepaids, inventory, accounts payable, accrued liabilities, and notes payable, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

· Level 1. Observable inputs such as quoted prices in active markets;

· Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

· Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following presents the gross value of assets and liabilities that were measured and recognized at fair value, as of May 31, 2014.

	Level I		Level II		Level III		Total
Derivative liability	$	—	$	221,767	$	—	$	221,767

Stock-Based Compensation

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the Company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument. During the year ended August 31, 2013, the Company issued 3,157,750 shares of common stock valued at $467,448 to non-employees. As of May 31, 2014 a total of $461,719 has been expensed, and $5,729 remains in deferred stock compensation expense. During the nine months ended May 31, 2014, the Company issued 6,120,000 shares of common stock valued at $137,035 to non-employees. As of May 31, 2014 a total of $34,447 has been expensed, and $102,588 remains in deferred stock compensation expense.

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation - Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. During the nine months ended May 31, 2014, the Company issued 6,500,000 shares of common stock valued at $81,250 to its CEO.

Income Taxes

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at May 31, 2014 and August 31, 2013.

The Company accounts for its income taxes using the Income Tax topic of the FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Revenue Recognition

Sales of products or services and related costs of products or services sold are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable, and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing, and shipment of products.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued, that might have a material impact on its financial position or results of operations.

XML

Document and Entity Information	9 Months Ended
	May 31, 2014	Jul. 11, 2014
Document And Entity Information
Entity Registrant Name	IDS Industries, Inc.
Entity Central Index Key	0001533455
Document Type	10-Q
Document Period End Date	May 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--08-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		121,184,334
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014

XML

PREPAIDS AND OTHER CURRENT ASSETS (Tables)

9 Months Ended

May 31, 2014

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaids and Other Current Assets

	May 31, 2014		August 31,2013
Prepaid consulting	$	—	$	64,824
Other assets		7,007		—
Unamortized original issue discount		8,581		6,762
Deferred financing costs		7,573		8,610
Total prepaid expenses and other current assets	$	23,161	$	80,196

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Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	May 31, 2014	May 31, 2013	May 31, 2014	May 31, 2013
Income Statement [Abstract]
Revenue	$ 12,839	$ 17,899	$ 16,213	$ 34,729
Cost of revenue	11,275	26,772	11,275	64,151
Gross margin	1,564	(8,873)	4,938	(29,422)
Operating expenses:
Professional fees	14,804	17,054	60,387	96,103
Stock-based compensation expense	50,730		174,790
Salaries and wages	55,021	77,331	250,308	184,935
Marketing and advertising	3,441		41,176
General and administrative	78,934	194,506	123,097	691,347
Total operating expenses	202,930	288,891	649,758	972,385
Loss from operations	(201,366)	(297,764)	(644,820)	(1,001,807)
Other income and (expense):
Interest expense	(22,449)	(9,847)	(58,551)	(15,715)
Amortization of debt discount	(123,289)		(304,035)
Change in fair value of derivative liability	924,095		574,743
Derivative expense	(143,232)		(381,640)
Loss on extinguishment of debt	(176,006)		(194,577)
Interest income	757		4,317
Total other income (expense)	459,876	(9,797)	(359,743)	(15,665)
Income (loss) before provision for income taxes	258,510	(307,561)	(1,004,563)	(1,017,472)
Provision for income taxes
Net Income (Loss)	$ 258,510	$ (307,561)	$ (1,004,563)	$ (1,017,472)
Income (loss) per share Basic	$ 0.00	$ (0.01)	$ (0.02)	$ (0.06)
Income (loss) per share Diluted	$ 0.00
Weighted average shares outstanding Basic	60,319,311	33,575,364	58,651,342	17,564,093
Weighted average shares outstanding Diluted	112,856,787

XML

COMMON STOCK TRANSACTIONS

9 Months Ended

May 31, 2014

Equity [Abstract]

COMMON STOCK TRANSACTIONS

On May 8, 2013, the Company issued 99,996 shares of common stock to its former CFO, for services. The shares were valued using the closing stock price on the day of issuance of $0.093, for a total expense of $9,250.

On December 10, 2013, the company sold 1,333,333 shares of common stock to its CEO for total cash proceeds of $20,000.

During the nine months ended May 31, 2014, the Company issued a total of 5,988,935 shares of common stock to Argent Offset, LLC in conversion of total principal and interest of $41,923, (see Note 4). The conversions resulted in a total loss on conversion of debt of $194,577.

On February 7, 2014, the Company issued 6,500,000 shares of common stock to its CEO, for services. The shares were valued using the closing stock price on the day of issuance of $0.0125, for a total expense of $81,250.

On March 18, 2014, the Company issued 2,298,000 shares of common stock to GCEF Opportunity Fund in conversion of total principal and interest of $11,490.

On March 21, 2014, the Company issued 5,000,000 shares of common stock to Steven Caspi in conversion of $25,000 of the $125,000 note held by him.

During the nine months ended May 31, 2014, the Company issued a total of 23,848,014 shares of common stock to Asher Enterprises, Inc. in conversion of total principal and interest of $117,520 (see Note 4).

During the nine months ended May 31, 2014, the Company issued a total of 15,000,000 shares of common stock to JMJ Financial in conversion of total principal and interest of $89,645 (see Note 4).

During the nine months ended May 31, 2014, the Company issued a total of 8,120,000 shares of common stock for services. The shares were valued using the closing stock price on the day of issuance, for a total expense of $72,047.

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STOCK WARRANTS

9 Months Ended

May 31, 2014

Notes to Financial Statements

STOCK WARRANTS

Pursuant to the terms and conditions of the convertible promissory note dated February 27, 2013, the Company issued a warrant to purchase 50,000 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $2,044 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.20, 1.30% risk free rate, 64% volatility and expected life of the warrants of 3 years.

Pursuant to the terms and conditions of the convertible promissory note dated November 30, 2012, the Company issued a warrant to purchase 15,625 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $16,455 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $2.00, .63% risk free rate, 85.9% volatility and expected life of the warrants of 5 years.

Pursuant to the terms and conditions of the convertible promissory note dated February 4, 2014, the Company issued a warrant to purchase 1,000,000 shares of the Company’s common stock. The aggregate fair value of the warrants totaled $11,769 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.02, 1.46% risk free rate, 197.6% volatility and expected life of the warrants of 5 years.

A summary of the status of the Company’s outstanding warrants and changes during the periods is presented below:

	Shares available to purchase with warrants		Weighted Average Price		Weighted Average Fair Value
Outstanding, August 31, 2013		65,625	$	0.06	$	0.03
Issued		1,000,000		—		0.018
Exercised		—		—		—
Forfeited		—		—		—
Expired		—		—		—
Outstanding, May 31, 2014		1,065,625	$	0.06	$	0.03
Exercisable, May 31, 2014		1,065,625	$	0.06	$	0.03

Range of Exercise Prices		Number Outstanding at 5/31/14		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
	$0.20 - $2.00		1,065,625		5.3 years	$	0.06

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PREPAIDS AND OTHER CURRENT ASSETS - Prepaids and Other Current Assets (Details) (USD $)	May 31, 2014	Aug. 31, 2013
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid consulting		$ 64,824
Other assets	7,007
Unamortized original issue discount	8,581	6,762
Deferred financing costs	7,573	8,610
Total prepaids and other current assets	$ 23,161	$ 80,196

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CONVERTIBLE NOTES PAYABLE (Tables)

9 Months Ended

May 31, 2014

Debt Disclosure [Abstract]

Changes in Debt Discount

Debt Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Asher – 3/20/13	$	—	$	32,500		(32,500	)	$	—
Asher – 4/4/13		—		15,500		(15,500	)		—
Asher – 6/3/13		—		32,500		(32,500	)		—
Asher – 8/5/13		—		32,500		(32,500	)		—
Black Mountain – 3/5/14		—		27,500		(6,555	)		20,945
Caspi		19,480		48,539		(42,769	)		25,250
Finiks – 1/21/14		—		22,000		(15,888	)		6,112
Finiks – 2/26/14		—		22,000		(11,488	)		10,512
GCEF Opportunity		—		11,769		(11,769	)		—
Hendrickson – 9/16/13		—		10,000		(10,000	)		—
JMJ – 6/19/13		48,234		—		(48,234	)		—
JMJ – 8/14/13		26,144		—		(20,644	)		5,500
JMJ – 9/30/13		—		27,500		(18,384	)		9,116
JMJ – 4/17/14		—		44,000		(5,304	)		38,696
	$	93,858	$	326,308	$	(304,035	)	$	116,131

Changes in Derivative Liabilities

Derivative Liabilities	August 31, 2013		Initial Valuation		Revaluation on 5/31/14		Change in fair value of Derivative
Asher – 3/20/13	$	—	$	49,939	$	—	$	(49,939	)
Asher – 4/4/13		—		21,610		—		(21,610	)
Asher – 6/3/13		—		34,945		—		(34,945	)
Asher – 8/5/13		—		155,554		—		(155,554	)
Black Mountain – 3/5/14		—		110,515		36,409		(74,106	)
Finiks – 1/21/14		—		34,965		40,583		5,618
Finiks – 2/26/14		—		47,295		33,247		(14,048	)
Hendrickson – 9/16/13		—		18,300		—		(18,300	)
JMJ – 6/19/13		102,245		—		—		(102,245	)
JMJ – 8/14/13		46,625		—		11,119		(35,506	)
JMJ – 9/30/13		—		70,390		33,714		(36,676	)
JMJ - 4/17/14		—		104,127		66,695		(37,432	)
	$	148,870	$	647,640	$	221,767	$	574,743

Changes In Original Issue Discounts

Original Issue Discount	August 31, 2013		Additions		Amortization			May 31, 2014
Black Mountain – 3/5/14		$	$	2,500	$	(465	)	$	2,035
Finiks – 1/21/14		—		2,000		(1,444	)		556
Finiks – 2/26/14		—		2,000		(1,044	)		956
GCEF Opportunity		—		3,000		(3,000	)		—
JMJ – 6/19/13		4,385		—		(4,159	)		226
JMJ – 8/14/13		2,377		—		(1,890	)		487
JMJ – 9/30/13		—		2,500		(1,685	)		815
JMJ – 4/17/14		—		4,000		(493	)		3,507
	$	6,762	$	16,000	$	(14,180	)	$	8,582

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GOING CONCERN

9 Months Ended

May 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN

As of May 31, 2014, the Company has a working capital deficit of $1,033,944, limited revenue and an accumulated deficit of $2,416,176. The 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. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The Company’s management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, upon achieving profitable operations through its business activities.

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RELATED PARTY TRANSACTIONS

9 Months Ended

May 31, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

On May 8, 2013, the Company issued 99,996 shares of common stock to its former CFO, for services. The shares were valued using the closing stock price on the day of issuance of $0.093, for a total expense of $9,250.

On December 10, 2013, the Company sold 1,333,333 shares of common stock to its CEO for total cash proceeds of $20,000.

On February 7, 2014, Company issued 6,500,000 shares of common stock to its CEO, for services. The shares were valued using the closing stock price on the day of issuance of $0.0125, for a total expense of $81,250.

Notes Payable

On May 31, 2013, the Company’s former CEO, Bruce Knoblich and the Company executed a promissory note for $289,998, $2,150 of which has been repaid. The note bears interest at 5% and was due November 30, 2013. As of May 31, 2014 the due date on the note was extended with no specific terms. Total accrued interest on the note is $17,885.

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SIGNIFICANT EVENTS

9 Months Ended

May 31, 2014

Subsequent Events [Abstract]

SIGNIFICANT EVENTS

On February 6, 2014, our newly-formed subsidiary, Propel Management Group, Inc., entered into a Master Services Agreement (the “Agreement”) with Californians for Marijuana Legalization and Control (CMLC). Under the Agreement, we will be responsible for overseeing a fundraising effort through telemarketing, e-mail and online to support passage in California of the proposed Marijuana Control, Legalization, and Revenue Act of 2014. In addition, we shall coordinate the gathering of signatures for petitions to place the proposed Act on the ballot in California. We are to be compensated at a rate of $2.75 per petition signature gathered before March 24, 2014 and $3.75 per signature gathered thereafter. In addition, we shall be compensated at a rate of 80% of all contributions generated up to $100,000, 60% of the second $100,000 in contributions, and 43% of contributions generated thereafter.

In mid-April 2014 CMLC made a decision to postpone the pursuit of the target of 800,000 signatures by April 24, 2014 to qualify the proposed Act for the California ballot for this November. Instead they will focus on the higher volume and younger age turnout that is associated with the Presidential election terms like this next November 2016 elections. Furthermore, negotiations are proceeding as planned to retain Propel Management Group for the California legalization 2016 initiative which would be a contract allowing PMG to expand the service of coordinating through multiple Call Centers and raising funds through November of 2016 at the levels defined for the previous 2014 initiative.

.

In June 2014, Propel Management Group was again retained on a subsequent contract by this same group for the education, rallying voters and raising funds for Medical Marijuana Dispensaries initiative in San Jose, CA referred to as Control & Regulation San Jose (CRSJ).

On March 31, Propel Management Group (PMG) engaged in discussion with Aja Cannafacturing (AJA), to develop and launch one of the first licensed medical marijuana processors in the state of Nevada. Upon the successful licensing and launch of the facility it is under consideration that AJA would become a subsidiary of IDST as a term of the contract. If the signing of this agreement proceeds, PMG would discontinue pursuing the acquisition of MiCannaLabs.com which was publicly announced on March 11, 2014. Due to legal technicalities, principals of any cannabis or hemp testing facility must not have any interest in any growing and manufacturing facility according to Nevada state law. (Update): Given the short window of time for application submission and the exorbitant cost the IDST Board decided to not pursue licensing in Clark County at this time however, we will continue to pursue such opportunities as they arise in other NV Counties.

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SUBSEQUENT EVENTS

9 Months Ended

May 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2014 through the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described below.

Subsequent to May 31, 2014, the Company issued 3,930,000 shares of common stock to GCEF Opportunity Fund in conversion of $19,650 of principal and accrued interest.

Subsequent to May 31, 2014, the Company issued 4,500,000 shares of common stock to JMJ Financial in conversion of $20,250 of principal and accrued interest.

Subsequent to May 31, 2014, the Company issued 10,352,942 shares of common stock to Finiks Capital, LLC in conversion of $48,400 of principal and accrued interest.

On July 10, 2014 the company Board of Directors decided to purchase the name and the URL for Aja Cannafacturing. It has been decided to change the business model and business name to focus on the medicinal marijuana technology industry.

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SIGNIFICANT EVENTS (Details Narrative) (USD $)	May 31, 2014	Feb. 06, 2014 Interger
Subsequent Events [Abstract]
Compensated rate per petition		2.75
Compensated rate per signature		3.75
Contributions	60.00%	80.00%
Gross funding		$ 100,000
Additional gross funding	$ 100,000
Targeted number of signatures		800,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $)	9 Months Ended	12 Months Ended
	May 31, 2014	Aug. 31, 2013	Jul. 18, 2011
Date of Incorporation	May 02, 2011
Fiscal Year End	--08-31
Common Stock, Issued	102,401,393	34,313,114	10,000,000
Membership Interest Acquired in SOI Nevada, LLC			100.00%
Forward Split Ratio		112
Cash	$ 0	$ 0
Derivative liability	221,767	148,870
Common shares issued for services, shares	6,120,000	3,157,750
Common shares issued for services, amount	137,035	467,448
Prepaid consulting expense	34,447	461,719
Deferred stock compensation expense	102,588	5,729
Common shares issued to CEO, shares	6,500,000
Common shares issued to CEO, value	81,250
Level II
Derivative liability	221,767
Fair Value
Derivative liability	$ 221,767

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CONVERTIBLE NOTES PAYABLE - Changes In Original Issue Discounts (Details) (USD $)	May 31, 2014	Aug. 31, 2013
Black Mountain
Original Issue Discount	10.00%
Original Issue Discount, value	$ 2,500
Original Issue Discount, amortization	(465)
Gain (loss) on original issue discount	2,035
Finiks Loan
Original Issue Discount	10.00%
Original Issue Discount, value	2,000
Original Issue Discount, amortization	(1,444)
Gain (loss) on original issue discount	556
Finiks Loan 2
Original Issue Discount	10.00%
Original Issue Discount, value	2,000
Original Issue Discount, amortization	(1,044)
Gain (loss) on original issue discount	956
GCEF Oppurtunity
Original Issue Discount	10.00%	10.00%
Original Issue Discount, value	3,000
Original Issue Discount, amortization	(3,000)
Gain (loss) on original issue discount
JMJ Loan 1
Original Issue Discount	10.00%	10.00%
Original Issue Discount, amortization	(4,159)
Gain (loss) on original issue discount	226	4,385
JMJ Loan 2
Original Issue Discount	10.00%	10.00%
Original Issue Discount, amortization	(1,890)
Gain (loss) on original issue discount	487	2,377
JMJ Loan 3
Original Issue Discount	10.00%
Original Issue Discount, value	2,500
Original Issue Discount, amortization	(1,685)
Gain (loss) on original issue discount	815
Original Issue Discounts Totals
Original Issue Discount, value	16,000
Original Issue Discount, amortization	(14,180)
Gain (loss) on original issue discount	$ 8,582	$ 6,762

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Statements of Cash Flows (USD $)	9 Months Ended
	May 31, 2014	May 31, 2013
Cash flows from operating activities:
Net loss	$ (1,004,563)	$ (1,017,472)
Adjustments to reconcile net loss to net cash used in operations:
Stock-based compensation	174,790	455,647
Deemed dividend		51,621
Treasury stock		20,351
Change in fair value of derivatives	(574,743)
Loss on conversion of debt	194,577
Amortization of debt discount	304,035
Derivative expense	381,640
Change in assets and liabilities:
Increase in accounts receivable	(10,787)	(12,004)
(Increase) decrease in inventory	7,728	(30,023)
(Increase) decrease in prepaid expenses and other current assets	71,817	(24,167)
Increase in interest receivable - related party	(2,817)	(104,771)
Increase (decrease) in accounts payable	(20,441)	174,358
Increase (decrease) in accrued expenses	115,384	(58,435)
Net cash used in operating activities	(363,380)	(544,895)
Cash flows from investing activities
Increase (decrease) in note receivable related party	39,764
Property and equipment		10,080
Net cash provided by (used) in investing activities	39,764	10,080
Cash flows from financing activities:
Proceeds from convertible debt	352,000
Payments on convertible debt	(17,500)
Loan/repayment of shareholder loan		(2,100)
Increase in note payable related party	(2,150)	290,098
Increase in other notes payable	(1,900)	232,403
Proceeds from the sale of common stock	20,000	15,998
Net cash provided by financing activities	350,450	536,399
Net increase (decrease) in cash	26,834	1,584
Cash at beginning of period	1,960	15,140
Cash at end of period	28,794	16,724
Supplemental Cash Flow Information:
Cash paid for interest	500
Cash paid for taxes
Non-Cash Investing and Financing Information:
Common stock issued for conversion of debt	$ 461,584
Issuance of common stock warrants in connection with debt	11,763

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NOTES PAYABLE

9 Months Ended

May 31, 2014

Debt Disclosure [Abstract]

NOTES PAYABLE

On June 12, 2013, the Company executed a promissory note for $15,000. The loan was due August 12, 2013. The note does not bear interest but its principal balance includes a loan fee of $5,000. Subsequent to May 31, 2014, the loan was extended with no specific terms of repayment.

On June 15, 2013, the Company executed a promissory note for $15,000 with a shareholder. The note bears interest at 10% and was due within ninety days. As of May 31, 2014 this note is still outstanding, is now past due and has accrued interest of $1,434. On October 15, 2013 the shareholder loaned the Company an additional $8,755. Accrued interest on this loan as of May 31, 2014 is $544.

As of May 31, 2014, the Company owed various shareholders $13,100 for advances made to cover certain operating costs. The loans accrue interest at 8% per annum and are due on demand.

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CONVERTIBLE NOTES PAYABLE (Details Narrative) (USD $)	3 Months Ended		9 Months Ended																			9 Months Ended
	May 31, 2014	May 31, 2013	May 31, 2014	May 31, 2013	Aug. 31, 2013	Mar. 10, 2014 Promissory Note Argent Offset LLC	Feb. 20, 2014 Promissory Note Argent Offset LLC	Feb. 04, 2014 Promissory Note Argent Offset LLC	Jan. 10, 2014 Promissory Note Argent Offset LLC	Aug. 31, 2013 Promissory Note Argent Offset LLC	Mar. 21, 2014 Promissory Note Individual 2	Mar. 10, 2014 Promissory Note Individual 2	May 31, 2014 JMJ Loan 1	Aug. 31, 2013 JMJ Loan 1	May 31, 2014 JMJ Loan 2	Aug. 31, 2013 JMJ Loan 2	May 31, 2014 Convert Prom Hendrickson	May 31, 2014 Finiks Promissory Note	Jan. 22, 2014 Finiks Promissory Note	Feb. 04, 2014 GCEF Oppurtunity Promissory Note	Feb. 26, 2014 Finiks Promissory Note 2	May 31, 2014 Promissory Note Argent Offset LLC	Nov. 26, 2013 Promissory Note Argent Offset LLC	Feb. 27, 2013 Promissory Note Argent Offset LLC	Oct. 12, 2012 Promissory Note Argent Offset LLC	Dec. 03, 2012 Promissory Note Individual 2	May 31, 2014 Promissory Note Investor	Mar. 20, 2013 Promissory Note Investor	May 31, 2014 Promissory Note Investor 2	Apr. 04, 2013 Promissory Note Investor 2	May 31, 2014 Promissory Note Investor 3	Feb. 25, 2014 Promissory Note Investor 3	Jun. 03, 2013 Promissory Note Investor 3	May 31, 2014 Convert Prom Note JMJ	Mar. 19, 2014 Convert Prom Note JMJ	Jun. 19, 2013 Convert Prom Note JMJ	May 31, 2014 Promissory Note Investor 4	Aug. 05, 2013 Promissory Note Investor 4	Jun. 19, 2013 JMJ Loan 1	Sep. 30, 2013 JMJ Loan 2	Sep. 16, 2013 Convert Prom Hendrickson	Mar. 07, 2014 Asher Loan 5	Mar. 20, 2014 KMB Worldwide, Inc.	Mar. 19, 2014 KMB Worldwide, Inc.	Apr. 14, 2014 JMJ Loan 5	Mar. 31, 2014 Black Mountain Equities, Inc.	Mar. 05, 2014 Black Mountain Equities, Inc.
Promissory Note, amount		$ 289,998		$ 289,998															$ 100,000	$ 33,000	$ 20,000			$ 33,850	$ 20,000	$ 125,000		$ 32,500		$ 15,500			$ 32,500			$ 300,000		$ 32,500			$ 10,000	$ 73,000	$ 53,000	$ 53,000	$ 40,000		$ 250,000
Promissory Note, interest rate		5.00%		5.00%															10.00%					18.00%	18.00%	5.00%		8.00%		8.00%			8.00%					8.00%			10.00%	8.00%	8.00%	8.00%
Promissory Note, initial amount																			20,000
Promissory Note, interest expense													(48,234)		(20,664)		(10,000)										24,375		17,286
Warrant, right to purchase, amount																								50,000		15,625
Warrant, right to purchase, par value																								$ 0.20		$ 2
Additional paid in capital	1,388,148		1,388,148		639,889																			3,690		16,455
Amortization of debt discount	(123,289)		(304,035)																			18,464
Accrued interest	43,069	17,885	43,069	17,885	19,990					3,690	9,411		3,611		3,611												1,300		620		1,300			7,944			13,000					1,376	360	802
Debt Discount	116,131		116,131		93,858						23,228	48,539	6,932		9,116		5,479	6,111	22,000		10,511						8,125		6,045	15,500	2,865		32,500	60,500	14,614		234,000		27,500	27,500	10,000				38,696	20,945	27,500
Debt Discount, amortized														48,234	18,384	26,144	4,521	15,889			11,489							32,500						45,885											5,304	6,555
Promissory Note, conversion feature value																								18,464		60,000
Promissory Note, conversion rate												$ 0.005												$ 0.11		$ 1.25																					$ 0.025
Promissory Note, convertible feature discount																												49.00%		49.00%			49.00%			40.00%		49.00%			49.00%	49.00%	49.00%	49.00%
Lender Fee paid									500														1,000
Promissory Note, Loan payment																																							25,000	25,000
Promissory Note, original issue discount																				10.00%	10.00%															10.00%			10.00%	10.00%					10.00%		10.00%
Derivative liability	221,767		221,767		148,870								126,070						34,965		47,295						35,600	49,939	17,286	21,610			34,945	75,507			138,269		62,569	70,390	18,300				104,127
Derivative liability, fair value															33,714		25,266	10,583			33,247										78,028			241,878											66,695	36,409	110,515
Repayment on note		2,150		2,150				2,500												15,000														55,000													25,000
Promissory Note, principal amount						21,923	20,000				25,000		27,500														32,500		15,550		32,500	14,200		11,351	20,900		32,500
Promissory Note, common shares, issued						3,131,792	2,857,143				5,000,000		7,000,000							2,000,000							6,143,590		3,526,087		7,347,826	3,086,957		4,200,000	3,800,000		6,830,508
Promissory Note, common shares, par value						$ 0.0632	$ 0.007													$ 0.0188
Promissory Note, common shares, non cash expense																				37,600
Promissory Note, common shares, issued, if not repaid by maturity date																				3,465,000
Promissory Note, common shares, par value, if not repaid by maturity date																				$ 0.01
Promissory Note, Interest rate, if not repaid by maturity date																				15.00%							812500.00%
Loss on conversion of debt			194,577
Promissory Note, Purchase																	$ 11,000

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STOCK WARRANTS (Tables)

9 Months Ended

May 31, 2014

Notes to Financial Statements

Schedule Of Stockholders Equity Warrants

	Shares available to purchase with warrants		Weighted Average Price		Weighted Average Fair Value
Outstanding, August 31, 2013		65,625	$	0.06	$	0.03
Issued		1,000,000		—		0.018
Exercised		—		—		—
Forfeited		—		—		—
Expired		—		—		—
Outstanding, May 31, 2014		1,065,625	$	0.06	$	0.03
Exercisable, May 31, 2014		1,065,625	$	0.06	$	0.03

Schedule Of Stockholders Equity Warrants Changes

Range of Exercise Prices		Number Outstanding at 5/31/14		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
	$0.20 - $2.00		1,065,625		5.3 years	$	0.06