Note 6. Commitments and Contingencies

6 Months Ended

Feb. 28, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 6.  Commitments and Contingencies

Legal Matters   - We have settled all prior legal matters.  We may occasionally become involved in various lawsuits and legal proceedings arising in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters that may arise from time to time could have an adverse effect on our business, financial condition or operating results. We are currently not involved in any litigation nor are we aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

Agreement with Placement Agent – In 2012, we entered into an agreement with a firm to provide placement agent services in connection with our fund-raising activities.  Pursuant to terms of the agreement, among other things, we agreed to pay the firm a fee upon financing transaction closings equal to a percentage of  transaction values (as defined) and shares of our common stock and ten-year warrants to purchase shares of our common stock.  As of February 28, 2014, we have issued the firm warrants to purchase 7,960,233 shares of our common stock at a weighted average exercise price of $0.11, and have agreed to issue 7,224,070 shares of our common stock, and warrants to purchase 1,918,750 shares of our common stock at an exercise price of $0.05 per share.  During the six months ended February 28, 2014, we recorded debt issue costs of approximately $21,000, comprised of fees and fair value of warrants issuable.  

Arrearages in payment of employment and other taxes – The Company is in arrears in payment of employment and other taxes.  We have created a payment plan with the State, and are taking measures to obtain additional funds to remedy the arrearages.