SETTLEMENT OF PRIOR LIABILITIES

6 Months Ended

Feb. 29, 2012

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. $-0- and $12 has been recognized in income for the six months ended February 29, 2012 and 2011 and $508,457 for the period from inception (January 31, 2007) through February 29, 2012.