Notes Payable

12 Months Ended

Aug. 31, 2014

Payables and Accruals [Abstract]

Notes Payable

NOTE 10 — NOTES PAYABLE

CONVERTIBLE NOTES PAYABLE:

Convertible notes payable consist of the following as of August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
8.0% convertible note due August 31, 2014	$	100,000	$	125,000
6.0% convertible note due September 2014		189,025		235,025
12% convertible note due March 19, 2015 (net of discount)		11,980
12% convertible note due April 8, 2015 (net of discount)		19,863
12% convertible note due October 25, 2015 (net of discount)		21,260
10% convertible note due February 21, 2015 (net of discount)		90,840
12% convertible note due July 16, 2015 (net of discount)		3,340
Total unsecured convertible notes payable		436,308		360,025
Less:  Long-Term portion		—		—
Current portion	$	436,308	$	360,025

The following is a summary of future minimum payments on convertible notes payable as of August

31, 2014:

	Convertible
Fiscal Year Ending August 31,	Notes Payable
2015	$ 436,308

During May and June 2007, we issued nine Convertible Promissory Notes in an aggregate principal amount of $700,000. Eight of these notes we-+re converted into common stock in fiscal 2009. The remaining Convertible Promissory Note, in the principal amount of $125,000, was extended on January 28, 2010 initially to March 31, 2012, where the conversion rate was reduced to $.60, and then extended to September 30, 2013. In October 2013, the investor sold $25,000 of principal in the note to another accredited investor and currently holds a note representing the remaining $100,000 in principal. At that time, the note was extended to August 31, 2014 and was further extended to February 28, 2015. We are currently working with the investor to extend the note. As of August 31, 2014, the Company has accrued interest in the amount of $60,723.

On April 1, 2009, we issued to Ms. Lindstrom, our former Chief Executive Officer, a convertible promissory note in lieu of payment of $235,025 in accrued salary owed to Ms. Lindstrom. This note accrues interest at a rate of 6% per annum and was originally due on March 31, 2012. On March 16, 2012, Ms. Lindstrom agreed to extend the due date of the note to September 30, 2013. There was no beneficial conversion feature recognized upon the issuance of this note. This note is currently past due. As of August 31, 2014, the Company has accrued interest in the amount of $75,927. An outside party has entered into an assignment and settlement agreement with Ms. Lindstrom to purchase the note. In connection with this Assignment agreement, the purchaser has agreed to extend the note to December 1, 2016. During fiscal 2014, the Assignee has converted $46,000 of principal into 8,788,171 shares of stock.

On October 2, 2013 we issued a convertible promissory note in the principal amount of $25,000. This promissory note bears interest at a rate of 8% per annum and is due on October 2, 2013. The note is convertible at a 45% discount of the average of the three lowest closing bid prices in the twenty days preceding the date of conversion. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $25,000. On April 6, 2014 the holder elected to convert $17,074 in principal plus $690 in accrued interest into 5,383,007 shares of common stock at a conversion price of $.0033. In August 1, 2014 the remaining principal of $7,926 plus accrued interest of $530 was converted into 3,416,764 shares of common stock at a conversion rate of $.002475.

On October 2, 2013, the Company entered into a securities transfer agreement with an accredited investor as well as a current convertible note holder. The agreement called for the accredited investor to purchase $25,000 of the current convertible note holder note. The Company issued to the accredited investor a convertible promissory note bearing interest at 8% and convertible at a 45% discount into shares of the Company’s common stock using a three-day average of the lowest closing bid prices for the twenty trading days immediately preceding the conversion date. On October 3, 2013, the investor converted $15,620 into 4,000,000 shares of the Company’s common stock at a rate of $.003905 per share. On December 3, 2013, the investor converted the remaining principal of $9,380 into 2,008,559 shares of the Company’s common stock at a rate of $0.00467 per share.

On March 19, 2014 we issued a convertible promissory note in the principal amount of $26,500 to an unrelated accredited investor. This promissory note bears interest at a rate of 12% per annum and is due on March 19, 2015. The note is convertible at a 38% discount of the lowest closing bid prices in the thirty days preceding the date of conversion. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $26,500. As of August 31, 2014, the Company has accrued interest in the amount of $958.

On April 8, 2014 we issued a convertible promissory note in the principal amount of $50,000 to an unrelated accredited investor. This promissory note bears interest at a rate of 12% per annum and is due on April 8, 2015. The note is convertible at a 35% discount of the average 4 lowest closing bid prices in the twenty days preceding the date of conversion. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $50,000. As of August 31, 2014, the Company has accrued interest in the amount of $2,384. We paid off this note on October 2, 2014.

On April 25, 2014 we issued a convertible promissory note in the principal amount of $25,000 to an unrelated accredited investor. This promissory note bears interest at a rate of 12% per annum and is due on October 25, 2015. The note is convertible at a 35% discount of the average 4 lowest closing bid prices in the thirty days preceding the date of conversion. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $25,000. As of August 31, 2014, the Company has accrued interest in the amount of $1,052.

On May 21, 2014 we issued a convertible promissory note in the principal amount of $115,000 to an unrelated accredited investor. This promissory note bears interest at a rate of 10% per annum. This principal includes a 10% OID in the amount of $10,000, which is being amortized over the term of the note. The note is due in 4 equal installments beginning on the 180^th day after the execution of the note. The company may make the payments in common stock. The note is convertible at a $.009 per share. As additional consideration, the Company issued 9,583,333 5 year warrants with an exercise price of $.009. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $38,322 related to the issuance of the warrants. As of August 31, 2014, the Company has accrued interest in the amount of $3,239.

On July 16, 2014 we issued a convertible promissory note in the principal amount of $26,500 to an unrelated accredited investor. This promissory note bears interest at a rate of 12% per annum and is due on July 26, 2015. The note is convertible at a 38% discount of the lowest closing bid prices in the thirty days preceding the date of conversion. At no time may the holder of the note convert the note into shares exceeding 4.99% of the Company’s then outstanding common stock shares. We recorded a beneficial conversion feature of $26,500. As of August 31, 2014, the Company has accrued interest in the amount of $267.

CONVERTIBLE RELATED PARTY NOTES PAYABLE:

As of August 31, 2014, there are currently no related party convertible notes payable outstanding. The note related to our former CEO is now classified as non-related convertible debt for all comparable periods.

RELATED PARTY NOTES PAYABLE:

	August 31,		August 31,
	2014		2013
6.0% line of credit (2)	$	51,600	$	56,200
				—
Outstanding unsecured related party notes payable	$	51,600	$	56,200
(1)  Note payable to current CEO.

During the last two years, Wayne Erwin, our President and CEO, has advanced a total of $51,600 directly to Dotolo in an open advance account. Interest is being accrued at a rate of 6% per annum. As of August 31, 2014 we have accrued interest in the amount of $6,342. There is no specific due date on this note.

During April 2013, Wayne Erwin, our President and CEO, had advanced a total of $10,675 to Oncologix Tech, Inc. This note bore interest at 6%. This note was paid in full in September 2013 together with accrued interest of $223.

The following is a summary of future minimum payments on related party notes payable as of August 31, 2014:

	Related Conv.
Fiscal Year Ending August 31,	Notes Payable
2015	$ 51,600

OTHER NOTES PAYABLE:

	August 31,			August 31,
	2014			2013
12% note payable due May 2014	$	—		$	15,000
6% note payable due August 2015		—			111,500
Time Lease Payment due January 2014		—			3,311
Note payable		15,600			60,600
Note payable - fee reimbursement		—			59,583
18% note payable due January 2015		30,000			30,000
18% note payable due January 2015		20,000			20,000
18% note payable due January 2015		63,640			100,000
6% note payable due October 2017		478,207			550,000
14.5% note payable due January 2015		328,028			-
Bank line of credit loan		43,885			-
Merchant Loan due December 2014		82,737			-
Merchant Loan due January 2015		78,400			-
Merchant Loan due January 2015		150,545			-
18% note payable due November 2014 (net of discount)		8,617			-
18% note payable due November 2014 (net of discount)		8,648			-
4% note payable due November 2014		8,473			-
18% note payable due December 2014 (net of discount)		71,348			-
6% note payable due December 2014		8,500			-
10% note payable due December 2014 (net of discount)		9,644			-
6% note payable due February 2015 (net of discount)		2,742			-
6% note payable due August 2015 (net of discount)		15,297
Subtotal		1,424,311			949,994
Less:  Long-Term portion		(395,675	)		(811,500)
Current portion	$	1,028,636		$	138,494

On May 23, 2013, the Company issued a one year note in the amount of $20,000. The note bore interest at a rate of 12% per annum. The Company is required to repay the note at a rate of $1,867 per month, which includes interest, on the 15^th day of each month. The note is secured by certain collateral of our CEO. This note was paid in full in May 2014.

On August 1, 2011 our subsidiary Dotolo, entered into a note payable agreement to provide funding to its subsidiary in the principal amount of $111,500. In December 2013, this note was assumed by Oncologix Tech, Inc. The note bore interest at 6% and matures on August 31, 2015. During January through August 2014, the Board of Directors authorized the conversions of the entire principal and accrued interest amount. During that time frame, the $111,500 in principal was converted into 18,716,229 shares of the Company’s common stock and is considered paid in full.

On September 16, 2013, the Company obtained a merchant loan for additional working capital in the amount of $80,000. The merchant loan bores interest at a rate of 15% and calls for 130 daily payments of $861 for a total repayment amount of $112,000. Out of the net proceeds, the company also paid $20,000 in broker fees and loan fees of $750. This loan was paid in full on January 3, 2014.

On October 1, 2013, the Company borrowed 10,000 in principal from an unrelated investor. The note was due January 2, 2014 and bore interest at 22%. Monthly interest payments of $183.33 are due on the first of each month beginning on November 1, 2013. This note was paid in full on January 3, 2014.

On November 27, 2013, the Company obtained a merchant loan for additional working capital in the amount of $51,000. This loan requires 180 daily payments in the amount of $306 for a total repayment amount of $55,021. We netted gross proceeds of $46,032 after paying loan fees. This note was paid off March 11, 2014.

On December 18, 2013, the Company obtained a merchant loan for additional working capital in the amount of $72,000. This loan requires 82 daily payments in the amount of $888 for a total repayment amount of $72,500. We netted gross proceeds of $49,301 after fees of $699. This note was paid off March 11, 2014.

During April 2012, our subsidiary Dotolo, entered into a financing agreement to provide up to $150,000 in funding for the subsidiary. The financing agreement was due in January 2013. We entered into a settlement agreement whereby we paid $45,000 from amounts held in reserve by our senior lender and are required to make 10 monthly payments of $1,500.

On August 1, 2013, in connection with our acquisition of Angels of Mercy, Inc. we entered into a promissory note to pay $65,000 of broker’s fees incurred in the acquisition. Monthly payments of $5,417 are due and payable beginning on August 15, 2013. This note bears no interest. This was paid in full in July 2014.

On February 27, 2013 our subsidiary Dotolo, entered into a note payable agreement to provide funding to its subsidiary in the principal amount of $30,000. The note bears interest at 18% payable monthly on the 15th and is due in full in January 2015. For the year ended August 31, 2014, we made interest payments in the amount of $5,400. As of August 31, 2014, we have accrued interest of $1,365.

On March 17, 2013 our subsidiary Dotolo, entered into a note payable agreement to provide funding to its subsidiary in the principal amount of $20,000. The note bears interest at 18% payable monthly on the 15th and is due in full in January 2015. For the year ended August 31, 2014, we made interest payments in the amount of $3,600. As of August 31, 2014, we have accrued interest of $990.

On July 26, 2013 the Company issued an 18 month promissory note in the principal amount of $100,000. These funds were used for the cash down payment for the Angels acquisition. The note bears interest at 18% and requires monthly interest payments of $1,200 beginning on September 26, 2013. In December 2013, we modified the loan agreement to make monthly payments of $6,200. As of August 31, 2014 the outstanding balance was $63,640.

On August 1, 2013, in connection with our acquisition of Angels of Mercy, Inc. we entered into a promissory note to pay $550,000 for the purchase of Angels of Mercy, Inc. Monthly payments of $9,115 are due and payable beginning on November 1, 2013 with a final balloon payment of $205,705 due on October 1, 2017. This note bears interest at a rate of 6%. As of August 31, 2014, the outstanding balance of the note is $478,207.

On January 3, 2014, the Company closed on a 4 million dollar line of credit facility, with an initial draw of $500,000. The Company must meet specific monthly reporting and collateral requirements to further draw on the revolving credit facility. The $500,000 initial draw is secured by a 14.5% promissory note, which is convertible ONLY upon default by the Company. In July 2014, we borrowed an additional $75,000 from the principal we repaid. This note is due in six months with an automatic option to renew after six months. As of August 31, 2014, the outstanding balance is $328,028.

During fiscal 2014 we borrowed $45,000 from our line of open line of credit with our bank. As of August 31, 2014 the outstanding balance of the line of credit loan was $43,885.

On March 11, 2014, the Company obtained a merchant loan for additional working capital in the amount of $150,000. This loan requires 209 daily payments in the amount of $940 for a total repayment amount of $196,500. We netted gross proceeds of $146,750 after paying loan fees.

On April 18, 2014, the Company obtained a merchant loan for additional working capital in the amount of $120,000. This loan requires 189 daily payments in the amount of $800 for a total repayment amount of $151,200. We netted gross proceeds of $119,301 after paying loan fees.

On July 10, 2014, the Company obtained a merchant loan for additional working capital in the amount of $150,000. This loan requires 132 daily payments in the amount of $1,568 for a total repayment amount of $207,000. We netted gross proceeds of $149,120 after paying loan fees.

On November 5, 2013 and November 8, 2013, the Company entered into two, one-year promissory notes with accredited investors to borrow a total principal amount of $20,000. Each promissory note is $10,000 in principal balance, bears interest at 18% and requires monthly interest payments of $150 each. The company also issued 3,000,000 in cashless warrants as finder’s fees for these funds. The Company recorded a discount of $14,805 for the issuance of the warrants.

On November 1, 2013, the Company entered into a Settlement Agreement with its former legal counsel. The current balance owed to prior counsel is $145,523. Pursuant to the settlement agreement, the Company agreed to pay $50,000 in the form of a one year promissory note and transfer its 90% ownership interest and all marketing rights of Oncologix Corporation, one of its subsidiaries as full settlement of the current balance owed. The promissory note bears interest of 4% and requires monthly payment of $4,257 beginning on December 1, 2013. As of August 31, 2014 the outstanding balance was $8,473.

On December 3, 2013, The Company entered into a twelve month promissory note with an accredited investor to borrow a total principal amount of $75,000. The note bears interest of 18% per annum and calls for monthly payments of principal and interest of $1,375 beginning on January 15, 2014 with a balloon payment due December 15, 2014. The Company also issued as additional finders’ fees to the investor, 3,500,000 shares of common stock and 1,000,000 cashless warrants with an exercise price of $.025. As of August 31, 2014, the balance was $72,892. The Company recorded a discount of $5,992 for the issuance of the warrants.

In connection with the acquisition of Amian Health Services, the Company entered into a twelve month promissory note in the total principal amount of $25,000. The note bears interest at $6% and requires monthly payments of $2,152. As of August 31, 2014, the balance is $8,500.

On December 20, 2013, the Company issued a 1-year promissory note to a non-related accredited investor. This note bears interest at 10% per annum and matures in December 2014. As additional consideration for the operating capital loan, the company issued 3,000,000 cashless two-year warrants with an exercise price of $0.02. The Company recorded a discount of $7,746 for the issuance of the warrants. As of August 31, 2014 the Company has accrued interest of $837.

On February 7, 2014, the Company issued a 1-year promissory note in the principal amount of $15,000 to a non-related accredited investor. This note bears interest at 6% per annum and matures in February 2015. As additional consideration for the operating capital loan, the company issued 1,500,000 two-year warrants with an exercise price of $0.15 and 1,000,000 shares of common stock. The Company recorded an expense of $9,000 for the issuance of the common stock. The Company recorded a discount of $5,151 for the issuance of the warrants. On August 1, 2014 this investor used $10,000 to purchase 1,200,000 shares of common stock. As of August 31, 2014 the Company has accrued interest of $453.

 On August 15, 2014 the Company issued a 1-year promissory note to a non-related accredited investor. This note bears interest at 10% per annum and matures in August 2015. As additional consideration for the operating capital loan, the company issued 4,000,000 cashless two-year warrants with an exercise price of $0.065. The Company recorded a discount of $10,177 for the issuance of the warrants. As of August 31, 2014 the Company has accrued interest of $118.

The following is a summary of future minimum payments on r notes payable as of August 31, 2014:

	Related Conv.
Fiscal Year Ending August 31,	Notes Payable
2015	1,038,997
2016	87,623
2017	314,743