Stockholders' Equity

12 Months Ended

Aug. 31, 2013

Equity [Abstract]

Stockholders' Equity

NOTE 8 - STOCKHOLDERS' EQUITY

PREFERRED STOCK:

Series A Convertible Preferred Stock.

The Company is authorized to issue up to 10,000,000 shares of preferred stock, in one or more series, and to determine the price, rights, preferences and privileges of the shares of each such series without any further vote or action by the stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any shares of preferred stock that may be issued in the future.

In January 2003, our Board of Directors authorized up to 4,500,000 shares of Series A Convertible Preferred Stock.  Each share of Series A Convertible Preferred stock has a par value of $0.001 and is convertible into one-half share of common stock in upon a cash payment by the holder to the Company of $0.40 per common share.  The Series A Convertible Preferred Stock is entitled to receive, in preference to the common stock, of noncumulative dividends, if declared by the Board of Directors, and a claim on the Company's assets upon any liquidation of the Company senior to the common stock.  These preferred shares are not entitled to voting rights. There are presently outstanding 129,062 shares of Series A Preferred Stock.

On March 30, 2003, the Company completed the private placement of Units pursuant to the terms of a Unit Purchase Agreement (the “Units”) with accredited investors. Each Unit consists of the following underlying securities: (i) three shares of the Company’s common stock; (ii) one share of Series A Convertible Preferred Stock, par value $.001 per share; and (iii) one three-year warrant to purchase one share of common stock at a per share price of $0.30. The warrants expired on March 31, 2006. Each share of Series A Convertible Preferred Stock is convertible into one half share of the Company’s common stock in exchange for $0.40 per common share ($.20 for each Series A Convertible Preferred share converted). The securities underlying the Units are not to be separately tradable or transferable apart from the Units until such time as determined by the Company’s Board of Directors. A total of 4,032,743 Units were issued. As of August 31, 2013 and August 31, 2012, there were 129,062 and 129,062 Units outstanding that had not been separated, respectively. These units are presented as their underlying securities on our balance sheet and consist of 64,531 shares of Series A Preferred Stock and 96,797 shares of common stock which is included in the issued and outstanding shares.

Below is a table detailing the outstanding Series A Convertible Preferred Stock shares outstanding during the last two fiscal years:

	Preferred	Number of				Weighted Avg.
	Shares	Common Shares		Proceeds if		Per Common Sh.
	Outstanding	Convertible		Converted		Exercise Price
Outstanding, August 31, 2011	129,062	64,531	$	25,812	$	0.40
Expired/Retired	—	—		—	$	—
Converted	—	—		—	$	0.40
Issued	—	—		—	$	—
Outstanding, August 31, 2012	129,062	64,531	$	25,812	$	0.40
Expired/Retired	—	—		—	$	0.40
Converted	—	—		—	$	—
Issued	—	—		—	$	—
Outstanding, August 31, 2013	129,062	64,531	$	25,812	$	0.40

Series D Convertible Preferred Stock

In March 2013, our Board of Directors authorized up to 60,000 shares of Series D Convertible Preferred Stock. Each share of Series D Convertible stock has a par value of $0.001 and is convertible into 1,000 shares of common stock beginning after March 1, 2014. Each share of Series D Convertible Preferred Stock has a stated liquidation value of $80.25. Each shares of Series D Convertible Preferred Stock shall have voting rights as stated below:

March 1, 2013 to February 28, 2014, 400 votes per share;

March 1, 2014 to February 28, 2015, 800 votes per share;

March 1, 2015 to February 28, 2016, 1,200 votes per share;

March 1, 2016 to February 28, 2017, 1,600 votes per share;

March 1, 2017 and after, 2,000 votes per share;

On March 22, 2013, the Company issued 58,564 shares of Series D Convertible Preferred Stock to acquire 100% of the outstanding common stock of Dotolo. On March 22, 2013 the issued shares had a fair market value of $585,640 based on the fair market value of the underlying common stock shares.

Below is a table detailing the outstanding Series D Convertible Preferred Stock shares outstanding during the last two fiscal years:

	Preferred	Number of		Weighted Avg.
	Shares	Common Shares	Proceeds if	Per Common Sh.
	Outstanding	Convertible	Converted	Exercise Price
Outstanding, August 31, 2011	-	-	$                    -	$                       -
Expired/Retired	-	-	-	$                       -
Converted	-	-	-	$                       -
Issued	-	-	-	$                       -
Outstanding, August 31, 2012	-	-	$                    -	$                       -
Expired/Retired	-	-	-	$                       -
Converted	-	-	-	$                       -
Issued	58,564	58,564,000	-	$                 80.25
Outstanding, August 31, 2013	58,564	58,564,000	$                    -	$                 80.25

Our Board of Directors authorized the separation of the Units into their component parts (Series A Convertible Preferred Stock only) in July 2004, February 2005, April 2008, March 2010 and July 2011. The table below describes the proceeds received for the conversion of preferred shares into common stock:

Date of Conversion	Proceeds from Conversion	Further Description and Remarks
July-August 2004	$487,523	During July and August 2004, holders of 2,437,614 Units contributed $487,523 to convert 2,437,614 shares of Series A. Convertible Preferred stock into 4,875,228 shares of common stock.
February 2005	$230,393	During February 2005, holders of 1,151,967 Units contributed $230,393 to convert 1,151,967 shares of Series A. Convertible Preferred stock into 2,303,934 shares of common stock.
April/June 2008	$29,460	During April and June 2008, holders of 147,300 Units contributed $29,460 to convert 147,300 shares of Series A. Convertible Preferred stock into 294,600 shares of common stock.
March/April 2010	$6,820	During March and April 2010, holders of 34,100 Units contributed $6,820 to convert 34,100 shares of Series A. Convertible Preferred stock into 68,200 shares of common stock.
July 2011	$0	During July 2011, holders of 132,700 Units elected to relinquish conversion of 132,700 shares of Convertible Preferred stock as part of splitting their Units.

SUBSCRIBED COMMON STOCK:

As of August 31, 2013 and August 31, 2012, there were no shares of subscribed stock issuable.

COMMON STOCK:

Below are recent sales of unregistered securities:

Date	Securities		Underwriters/
Sold	Sold	Consideration	Purchasers *	Notes
10/6/2011	1,778,193	$                     -	Anthony Silverman, former CEO	Anthony Silverman, our former President and CEO, converted a promissory note in the amount of $71,128 in principal and interest into 1,778,193 shares of common stock at $0.04 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act.
10/6/2011	635,069	$                     -	Accredited Investor	A non-affiliated accredited investor converted a promissory note in the amount of $25,403 in principal and interest into 635,069 shares of common stock at $0.04 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act.
10/16/2011	625,000	$             25,000	Accredited Investor	The Company sold 625,000 shares of common stock to a non-related accredited investor at $0.04 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
1/26/2012	1,000,000	$             40,000	Accredited Investor	The Company sold 1,000,000 shares of common stock to a non-related accredited investor at $0.04 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
4/26/2012	250,000	$             10,000	Accredited Investor	The Company sold 250,000 shares of common stock to a non-related accredited investor at $0.04 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
8/24/2012	2,276,182	$                     -	Anthony Silverman, former CEO	Anthony Silverman, our former President and CEO, converted a promissory note in the amount of $45,524 in principal and interest into 2,276,182 shares of common stock at $0.02 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act.
10/15/2012	1,000,000	$             20,000	Accredited Investor	The Company sold 1,000,000 shares of common stock to a non-related accredited investor at $0.02 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
1/6/2013	2,000,000	$             20,000	Accredited Investor	The Company sold 2,000,000 shares of common stock to a non-related accredited investor at $0.01 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
2/8/2013	1,024,164	$                     -	Anthony Silverman, former CEO	Anthony Silverman, our former President and CEO, converted a promissory note in the amount of $10,242 in principal and interest into 1,024,164 shares of common stock at $0.01 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act.
6/17/2013	2,000,000	$             10,000	Accredited Investor	The Company sold 2,000,000 shares of common stock to a non-related accredited investor at $0.005 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
7/17/2013	4,000,000	$             20,000	Accredited Investor	The Company sold 4,000,000 shares of common stock to a non-related accredited investor at $0.005 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
8/8/2013	6,000,000	$             36,000	Accredited Investor	The Company sold 6,000,000 shares of common stock to a non-related accredited investor at $0.006 per share.  These shares were exempt from registration under Section 4(2) of the Securities Act
	20,175,346	$           181,000
*  There were no underwriters associated with any of our Sales of Unregistered Securities.

NON-CONTROLLING INTEREST

On February 27, 2009, in connection with the Technology Agreement we entered into with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that the Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary. As of February 27, 2009, the value of the non-controlling interest was $212. It was determined at August 31, 2010 the value of the investment in IUTM was impaired. Accordingly, we recorded an impairment loss in the amount of $3,186 for the year ended August 31, 2010. As of August 31, 2013, $3,701 cumulative net loss was attributable to the non-controlling interest.

WARRANTS:

The following table summarizes warrant activity in fiscal 2013 and 2012:

		Weighted Avg.
	Number	Exercise Price
Outstanding, August 31, 2011	-	-
Expired/Retired	-	-
Exercised	-	-
Issued	-	-
Outstanding, August 31, 2012	-	-
Expired/Retired	-	-
Exercised	-	-
Issued	7,000,000	0.012
Outstanding, August 31, 2013	7,000,000	0.012

The fair value of warrants granted is estimated using the Black-Scholes option pricing model. This model utilizes the following factors to calculate the fair value of options granted: (i) annual dividend yield, (ii) weighted-average expected life, (iii) risk-free interest rate and (iv) expected volatility. The warrants were expensed and accounted for under ASC 718.

The fair value for these warrants was estimated as of the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	Year Ended August 31,
	2013			2012
Volatility	97.2% - 97.9%			-
Risk free rate		0.38	%		0.00	%
Expected dividends		None			None
Expected term (in years)		3 to 4 years			—
No warrants were issued in Fiscal 2012

Details relative to the 7,000,000 immediately exercisable outstanding warrants at August 31, 2013 are as follows:

			Weighted
			Average
Date of	Number		Exercise		Remaining	Expiration
Grant	of Shares		Price		Exercise Life	Date
Fourth quarter of fiscal 2013		7,000,000	$	0.012	3 to 4 years		July-17
Outstanding, August 31, 2013		7,000,000

STOCK OPTIONS:

ASC 718 requires the estimation of forfeitures when recognizing compensation expense and that this estimate of forfeitures be adjusted over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods.

ASC 718 requires that modification of the terms or conditions of an equity award is to be treated as an exchange of the original award for a new award. This event is accounted for as if the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value.

1997 Stock Incentive Plan

The Company is authorized to issue up to 4,600,000 shares of common stock under its 1997 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years. We have 4,525,000 shares of common available for future issuance under our 1997 Stock Incentive Plan as of August 31, 2013. Under the 1997 Stock Incentive Plan the price of the granted common stock options are equal to the fair market value of such shares on the date of grant. This plan has been approved by our shareholders.

 2000 Stock Incentive Plan

The Company is authorized to issue up to 7,500,000 shares of common stock under its 2000 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years. The 2000 Stock Incentive Plan also provides for an annual grant of options to members of our Board of Directors. For fiscal years ended August 31, 2012, 2011, 2010, 2009 and 2008, our Board of Directors elected to waive the grant of these annual options. We have 6,417,418 shares of common available for future issuance under our 2000 Stock Incentive Plan as of August 31, 2013. Under the 2000 Stock Incentive Plan the price of the granted common stock options are equal to the fair market value of such shares on the date of grant. This plan has been approved by our shareholders.

During the years ended August 31, 2013 and 2012, we granted nil and nil options from the stock incentive plan described above, respectively. During the years ended August 31, 2013 and 2012, nil and nil options were exercised, respectively. During the years ended August 31, 2013 and 2012, 80,000 and nil options expired, respectively. During the years ended August 31, 2013 and 2012, $0 and $0 was expensed as stock based compensation, respectively.

					Weighted Average
	Number of		Option Price		Exercise Price
	Options Granted		Per Share		Per Share
Outstanding, August 31, 2011	297,085		$0.12 - $5.16	$	1.43
Granted	—		—		—
Exercised	—		—		—
Cancelled	—				—
Outstanding, August 31, 2012	297,085		$0.12 - $5.16	$	1.43
Granted
Exercised	—		—		—
Cancelled	(55,000	)	$1.60 - $5.16		2.79
Outstanding, August 31, 2013	242,085		$0.12 - $2.00	$	1.12

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of the fourth quarter of fiscal 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on August 31, 2013.

Expected volatility is based primarily on historical volatility. Historical volatility is computed using weekly average pricing observations for an applicable historic period. We believe this method produces an estimate that is representative of our expectations of the future volatility over the expected term of our options. We currently have no reason to believe future volatility over the expected life of these options is likely to differ materially from historical volatility. The weighted-average expected life is based upon share option exercises, pre and post vesting terminations and share option term expirations. The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant.

	Options	Options
	Outstanding	Exercisable
Number of options	242,085	242,085
Aggregate intrinsic value of options	$                           -	$                           -
Weighted average remaining contractual term (years)	1.29	1.29
Weighted average exercise price	$                     1.12	$                     1.12

2013 Omnibus Incentive Plan

The Company is authorized to issue up to 10,000,000 shares of common stock under its 2013 Omnibus Incentive Plan to employees, officers, directors and consultants. The issuance adoption of this plan has been approved by the Company’s Board of Directors on May 20, 2013. This plan has not been approved by the Company’s shareholders and consequently, we cannot issue Incentive Stock Options to employees at this time. Any options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years. We have 10,000,000 shares of common available for future issuance under our 2013 Omnibus Incentive Plan as of August 31, 2013. Under the 2013 Omnibus Incentive Plan the price of the granted common stock options are equal to the fair market value of such shares on the date of grant.