Restatement

3 Months Ended

Feb. 28, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Restatement

Note 15 – Restatement

During 2014, the Company determined that it should have recorded and valued tainted derivatives that had not previously been identified as derivatives. As a result, the Company has restated its previously issued financial statements for the three-month period ended February 28, 2013 and has recorded additional debt discounts of $646,310 and derivative liabilities of $5,252,428 in such three-month period. As a result, for the three-month period ended February 28, 2013, interest expense increased by $952,859, from $163,570, to $1,116,429 and a loss for a mark-to-market adjustment of derivative liabilities increased by $3,382,032, from $54,087 to $3,436,119. The restatement resulted in a loss of $1,874,714 for the three months ended February 28, 2013, as compared to a gain of $2,312,699 that had previously been reported.

The Company restated the consolidated financial statements as of and for the three-months ended February 28, 2013 as follows:

	Three Months Ended February 28, 2013
		As Originally
		Reported			Adjustments				As Restated
Long-term debt – less current portion			2,027,142			(646,310	)	(1)		1,380,832
Interest expense			(163,570	)		(952,859	)	(1)		(1,116,429	)
Derivative liabilities			601,953			5,175,368		(2)		5,777,321
Capital in excess of par value			39,496,765			(169,224	)	(2)		39,327,541
Accumulated deficit			(49,314,059	)		(4,539,834	)	(2)		(53,673,893	)
Gain (loss) on settlement of liabilities			68,750			147,478		(3)		216,228
Gain (loss) on value of derivative liabilities			(54,087	)		(3,382,032	)	(2)		(3,436,119	)

Adjustments to consolidated financial statements:

(1) To record debt discount on convertible debentures.

(2) To record derivative liabilities for tainted options and warrants.

(3) To adjust gain on conversion of derivative liabilities to common stock.