Restatement

9 Months Ended

Aug. 31, 2011

Restatement [Text Block]

22.	Restatement
	During the year ended November 30, 2010, the Company identified an error relating to the accounting for the convertible debt described in Note 8(a) in its financial statements included in the Company’s Form 10-K filed with the SEC on March 12, 2010. The Company had previously separately accounted for the liability and equity components of convertible debentures to reflect the fair value of the liability component based on the Company’s non-convertible borrowing cost at the issuance date. The value attributed to the conversion feature of the convertible note was included in additional paid-in capital on the consolidated balance sheet. Debt issuance costs of $7,500 and shares issued with the convertible debt valued at $80,000 were expensed in the statement of operations. After further review, the Company has determined that the proceeds should have been allocated based on the relative fair values of the convertible note and the shares at time of issuance, the resulting beneficial conversion of the convertible note recorded in additional paid-in capital, and debt issuance costs capitalized as deferred charges and amortized over the term of the convertible debt.
	The Company also identified an error related to the accounting for the convertible debt described in Note 8(a)(i) in its financial statements included in the Company’s Form 10-Q filed with the SEC on October 20, 2010. The Company had previously separately accounted for the liability and equity components of convertible debentures to reflect the fair value of the liability component based on the Company’s non-convertible borrowing cost at the issuance date. The value attributed to the conversion feature of the convertible note was included in additional paid-in capital on the consolidated balance sheet. After further review, the Company has determined that the conversion option should be separated from the host contract and accounted for as a derivative at time of issuance, the conversion feature classified as liability and measured at fair value with changes in fair value recorded in the statement of operations.

The Company also identified an error related to the accounting for the convertible debt described in Note 8(a)(ii) in its financial statements included in the Company’s Form 10-Q filed with the SEC on October 20, 2010. The Company had previously separately accounted for the liability and equity components of convertible debentures to reflect the fair value of the liability component based on the Company’s non-convertible borrowing cost at the issuance date. The value attributed to the conversion feature of the convertible note was included in additional paid-in capital on the consolidated balance sheet. Origination fee of $5,000 paid to the note holder and shares issued with the convertible debt valued at $61,100 were expensed in the statement of operations. After further review, the Company has determined that the proceeds should have been allocated based on the relative fair values of the convertible note and the shares at time of issuance, the resulting beneficial conversion of the convertible note recorded in additional paid-in capital, and origination fee recorded as a reduction to the proceeds received by the Company.

The Company also identified an error related to the accounting for the convertible debts described in Note 8(a)(iii) in its financial statements included in the Company’s Form 10-Q filed with the SEC on October 20, 2010. The Company had previously separately accounted for the liability and equity components of convertible debentures to reflect the fair value of the liability component based on the Company’s non-convertible borrowing cost at the issuance date. The value attributed to the conversion feature of the convertible note was included in additional paid-in capital on the consolidated balance sheet. Origination fee of $15,000 paid to the note holders were recorded as a reduction to the proceeds received by the Company. Shares issued to the note holders valued at $135,000 were expensed in the statement of operations. After further review, the Company has determined that the proceeds should have been allocated based on the relative fair values of the convertible note and the shares at time of issuance, and the resulting beneficial conversion of the convertible note recorded in additional paid-in capital.

The following table reflects the adjustment and restated amounts:

	For the Three Months Ended August 31, 2010
	As Reported			Adjustment		As Restated
Consolidated Statement of Operations	$			$		$
Operating expenses
Amortization of debt issuance costs	270,738		a), c)	(267,975	)	2,763
Total operating expenses	854,020			(267,975	)	586,045
Accretion of discount on convertible and promissory debentures	20,004		b)	48,891		68,895
Other interest expenses and bank charges	(50,358	)	c)	61,100		10,742
Penalty on convertible debt	–		d)	75,000		75,000
Loss on fair value of derivative liability	–		e)	38,583		38,583
Net Loss	823,666			(44,401	)	779,265

	For the Nine Months Ended August 31, 2010
	As Reported		Adjustment		As Restated
Consolidated Statement of Operations	$		$		$
Operating expenses
Amortization of debt issuance costs	271,100	a), c)	(264,275	)	6,825
Total operating expenses	2,917,997		(264,275	)	2,653,722
Accretion of discount on convertible and promissory debentures	40,714	b)	122,802		163,516
Penalty on convertible debt		d)	75,000		75,000
Loss on fair value of derivative liability	–	e)	100,026		100,026
Net Loss	2,997,914		33,553		3,031,467

a)	To amortize debt issuance costs.
b)	To record accretion of discount on convertible debts.
c)	To reverse fair value of shares expensed at the time of issuance of convertible debt.
d)	To reclassify penalty on convertible debt.
e)	To recognized change in fair value of derivative liability as at August 31, 2010.