SETTLEMENT OF PRIOR LIABILITIES

3 Months Ended

Nov. 30, 2011

Notes to Financial Statements

NOTE 3 - SETTLEMENT OF PRIOR LIABILITIES

We have settled certain payables to reflect the acceptance by these creditors of lesser amounts. Accordingly, amounts accrued with respect to these account holders have been reduced to $-0- from $508,457, and we have recognized other income in that amount in the consolidated statement of operations for the year ended August 31, 2011. No amounts have been recognized in income for the three months ended November 30, 2011 and 2010.