Post Balance Sheet Events

6 Months Ended

May 31, 2013

Post Balance Sheet Events [Abstract]

Post Balance Sheet Events

Note 14 – Post Balance Sheet Events

From June 1, 2013 to July 19, 2013, we issued 91,465,000 shares of the Company’s common stock for payment on outstanding promissory notes of $181,314.

Effective June 19, 2013, the Company and 112359 Factor Fund, LLC (the “Fund”) signed an amended security agreement, amended exchange debentures, securities purchase agreement, and a new note for $665,000, due on December 31, 2014 with six percent annual interest (the “Financing”).  The securities purchase agreement requires the Fund to lend the Company $40,000 each month for the six-month period ending December 31, 2013, and incorporated other financings provided by the Fund prior to June 19, 2013, including the purchase of outstanding convertible debentures originally issued to Asher Enterprises Inc.

In conjunction with the Financing, the Company agreed to implement a salary deferral plan to reduce the cash expenditures for personnel, to limit its cash expenditures to certain pre-approved items, and to accrue an additional fee to the Fund of $150,000.  The Fund agreed to limit its sales of the Company’s common stock, to not engage in any short transactions involving the Company’s common stock, and to not require the Company to increase its authorized shares of common stock for a certain time period, even though the Financing documents require the Company to reserve authorized shares for issuance to the Fund, if the Fund desires to convert existing debt into shares of common stock.

The Financing includes funding of $25,000 a month that is designated for marketing expenditures.  The Fund has appointed a marketing executive to manage the marketing projects with the intention that the combination of the additional borrowings and marketing expenditures will have a significant impact on revenue growth for the remainder of the year.

On June 27, 2013, the Company sold to its Chief Executive Office a warrant to purchase 25,333,333 shares of common stock, and to its Chief Information Officer a warrant to purchase 20,000,000 shares of common stock in exchange for cash payments made to the Company in 2013 totaling $68,000.  The warrants have a ten-year life and an exercise price of $0.005.