Related Party Transactions

3 Months Ended

May 31, 2012

Notes to Financial Statements

Related Party Transactions

Note 12 – Related Party Transactions

In connection with software development costs, we paid fees to a third-party intellectual property development firm (the “Consultant”) for the six-month and three-month periods ended May 31, 2012 and May 31, 2011, of $96,000 and $48,000, respectively.  One of our officers performed work for the Consultant, including the function of distributing such funds to appropriate vendors, for which he was not compensated.  The fees for software development services performed by the Consultant were deemed to be operating costs.

At May 31, 2012, we owed our chief executive officer approximately $652,000 for loans he provided to the Company, unpaid salary and unpaid business expenses.  During the quarter ended February 29, 2012, we converted debt owed to our chief executive officer of $9,800 into 200,000 shares of our common stock, or $0.049 per share, and $23,000 into 1,150,000 shares of our common stock at a price of $0.02 per share, no debt was converted during the quarter ended May 31, 2012.  During the quarter ended February 29, 2012, we converted debt owed to our chief information officer of $9,800 into 200,000 shares of our common stock, or $0.049 per share, and $20,000 into 200,000 shares of our common stock at a price of $0.10 per share, no debt was converted in during the quarter ended May 31, 2012.