XML 34 R14.htm IDEA: XBRL DOCUMENT

Accounting Policies, by Policy (Policies)

6 Months Ended

Feb. 28, 2014

Fund raising activities and restructuring of debt – Our Chief Executive Officer together with our financial advisors at Finance 500, continue to raise capital and have also negotiated restructured payment terms for most prior indebtedness and settlement of prior litigation. During the past twelve months, we received proceeds of over $2 million from equity and debt financings, and over $4 million since 2010. We have restructured the secured convertible debt into a new senior credit facility and signed loan extensions from all secured creditors. The majority of our debt is subject to conversion to common stock at a near term financing benchmark.

Liquidity Disclosure [Policy Text Block]

Going concern - The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. Our net loss was approximately $2.3 million during the six months ended February 28, 2014 and $3.6 million and $4.0 million during the years ended August 31, 2013 and 2012, respectively, and our operating activities used cash of approximately $622,000 during the six months ended February 28, 2014 and $1.3 million during the year ended August 31, 2013. We expect losses to continue in the near future as we grow and further develop operations. At February 28, 2014, we had a working capital deficit of approximately $6.4 million and a stockholders’ deficit of $6.2 million. We have funded our operations, business development and growth through sales of common stock and short-term borrowings. We require additional funds to further develop our business, execute our business strategy and satisfy our working capital needs. Our operating expenses will consume a material amount of our cash resources. We intend to raise capital through debt and/or equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be available on a timely basis, on terms favorable to us or obtained in sufficient amounts necessary to meet our needs. In the event that we cannot obtain additional funds on a timely basis or our operations do not generate sufficient cash flow, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

Use of Estimates, Policy [Policy Text Block]

Use of estimates in the preparation of financial statements - Preparation of financial statements in conformity with generally accepted accounting principles in the United States of American (GAAP) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The more significant accounting estimates inherent in the preparation of our financial statements include estimates as to the valuation and recoverability of inventories, recoverability of long-lived assets and classification and valuation of equity related instruments.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations - All of our operations are located in the greater Seattle, Washington area. As a result, we could be particularly susceptible to adverse trends and economic conditions in the area, including labor markets and other occurrences such as local strikes, earthquakes or other natural disasters. In addition, as we are a retailer of meat and related merchandise, adverse publicity and/or trends with respect to the meat industry in general could have a material effect on our operations and financial condition.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents - We consider all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Our cash is maintained with high credit quality financial institutions. At times, such balances may be in excess of the FDIC insurance limit. At February 28, 2014, no amounts exceeded the limit.

Fair Value Measurement, Policy [Policy Text Block]

Fair value measurements – In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices for similar asset or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair value of financial instruments – The fair value of our financial instruments, including accounts payable, certain accrued liabilities and notes payable, and approximate carrying amounts due to short maturities are valued primarily using Level 3 inputs.

Inventory, Policy [Policy Text Block]

Merchandise inventories – Merchandise inventories, which consist of meat and nonperishable products, are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.

Deferred Financing Costs Policy [Text Block]

Deferred financing costs – We record fees paid relating to offerings of debt securities as deferred financing costs included in other assets. Costs relating to debt are deferred and amortized to interest expense over the term of the related debt.

Debt Discount Policy [Text Block]

Debt discount – We record the fair value of common stock or warrants issued with debt securities as a debt discount, which is presented net of related borrowings on the condensed consolidated balance sheets and amortized as an adjustment to interest expense over the borrowing term.

Revenue Recognition, Policy [Policy Text Block]

Revenue recognition - Revenues are recognized at point of sale at retail locations. Retail store revenues are reported net of sales, use or other transaction taxes collected from customers and remitted to taxing authorities.

Cost of Sales, Policy [Policy Text Block]

Cost of goods sold - Cost of goods sold includes the cost of meat and nonperishable products sold.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based compensation - We use the Black-Scholes-Merton option pricing model as our method of valuation for stock-based awards. The Black-Scholes-Merton option pricing model requires the input of assumptions, and other reasonable assumptions could provide differing results. Our determination of the fair value of stock-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the award term. Stock-based compensation expense is recognized on a straight-line basis over vesting periods, if any, based on the grant date fair value.

Earnings Per Share, Policy [Policy Text Block]

Net loss per share - Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Common stock issuable is treated as outstanding for per share calculations. Common stock equivalents are excluded as the effect would be anti-dilutive. Shares excluded from loss per share computations for the interim periods ended in February were as follows:

	2014		2013
Convertible notes payable		56,101,680		12,401,680
Warrants		20,800,924		6,476,674
Options		375,000		375,000
		77,277,604		19,253,354

Contingent Liability Reserve Estimate, Policy [Policy Text Block]

Contingencies - Conditions may exist as of the date financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events do or do not occur. Company management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable, would be disclosed.