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EX-32 - CERTIFICATION - Novation Holdings Incexhibit32.htm
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10-K - FORM 10-K - Novation Holdings Incf10k8312012.htm
Organization, Consolidation and Presentation of Financial Statements
12 Months Ended
Aug. 31, 2012
Organization, Consolidation and Presentation of Financial Statements:  
Nature of Operations

Novation Holdings, Inc., Allezoe Medical Holdings, Inc., formerly Stanford Management, Ltd. (the “Company”), was incorporated under the laws of the State of Delaware on September 24, 2008.  Effective October 25, 2012, the Company amended its Articles of Incorporation to change its name to Novation Holdings, Inc., increased its authorized capital to 500 million shares of common stock, par value $0.001, and 10 million shares of preferred stock, par value $0.001, and changed its place of incorporation from Delaware to Florida.


The Company was organized for the purpose of acquiring and developing mineral properties.  On February 18, 2011, all of the mineral properties and related development and exploration activities were disposed of as part of a series of transactions resulting in the Company moving into the medical technology industry.


On February 18, 2011, the Company acquired all of the outstanding shares of Organ Transport Systems, Inc. (“OTS”), a Nevada corporation, and simultaneously disposed of the assets relating to its former activities in mining exploration, along with all related liabilities. Consequently, OTS was considered to be the surviving entity, with the Company intending to include only the financial results of OTS in its financial statements.


Effective March 19, 2012, the Company, Healthcare of Today, Inc. and Élan Health Services, Inc. agreed to rescind the acquisition of Organ Transport Systems, Inc. (“OTS”) from Healthcare of Today, Inc. by the Company, which closed in February, 2011.  Under the terms of the rescission, the Company agreed to return its stock in OTS to Healthcare of Today, Inc. in exchange for the return of the 5,217,000 shares of stock issued to Healthcare of Today.  However, since Healthcare of Today, Inc. had previously transferred all of the shares of the Company received in the earlier transaction to third parties, of which 3,202,507 were transferred to Élan Health Services, Inc. for the assumption of debt, it was agreed that Élan Health Services would return the 3,202,507 shares held by it immediately, and then would credit the balance of 2,014,493 common shares against the planned acquisition of BioCube, Inc. by the Company from Élan Health. The market value of the shares to be received as a credit at March 19, 2012 was $0.2325per share, or a total of $468,370, which was recorded as “Loan Receivable” on the balance sheet in March 2012.  The net effect of the rescission transaction has been to return OTS as a subsidiary of Healthcare of Today, Inc., and to remove OTS as a subsidiary of the Company.  The table below summarizes the effect of the rescission transaction in March 2012:





Acquisition of OTS-February 18, 2011


 $ 8.2500


Shares Returned by Élan in March 2012


 $ 0.2325

$ (744,583)

Stock still due at August 31, 2012*


 $ 0.2325

 $ (468,370)


·         The remaining shares due to be returned as of August 31, 2012 have been returned and have been retired.


As a result of the rescission of the OTS transaction, on July 11, 2012, the Company amended its prior SEC periodic filings to remove the financial results for OTS by filing an amended Form 10-K/A for the year ended August 31, 2011, and amended Forms 10-Q/A for the quarters ended November 30, 2011 and February 29, 2011.


The separate receivable recorded by the Company totaling $469,827 at February 29, 2012 represented amounts actually paid by the Company to or for OTS, primarily for salaries due to OTS officers and employees. This receivable was non-interest bearing and repayment by OTS was guaranteed by a security interest in all equity interests of OTS held by Healthcare of Today, Inc. as a result of the rescission. This receivable was offset by a corresponding note payable to officers of OTS of $755,320 at February 29, 2012 (See, Note 7).  Effective May 31, 2012, the Company entered into a settlement and release agreement with OTS and the OTS officers under which all of the outstanding debt owed to the former OTS officers by the Company was assumed by OTS, the OTS loan receivable was reduced to $235,000 and OTS agreed to pay the Company $235,000.  This settlement transaction was recorded at May 31, 2012 as follows:




May 31, 2012


May 31, 2012

As adjusted

Loan receivable

$                    469,827

$                      234,827

$                      235,000

Long-term liabilities

$                    755,320

$                      755,320

$                                0


As a result of the settlement, the Company recorded a gain on extinguishment of debt of $520,493 as Other Income for the quarter ended May 31, 2012, which represents the difference between the $755,320 in debt transferred to OTS and the $234,827 in OTS loan receivables cancelled in the settlement.


On June 8, 2012, OTS paid $235,000 to the Company in settlement of the full amount remaining due on the OTS loan receivable.


The reverse stock split has been given retroactive recognition in this Form 10-K.  All shares and per share information has been retroactively adjusted to reflect the stock split.


Nature of Operations

The Company has a wholly-owned subsidiary, SureScreen Medical, Inc., through which it has entered into a licensing agreement with AVM Corp. for the licensing of proprietary, patent pending technology that would enable healthcare providers to "see and treat" Human Papillomavirus (HPV), the most common sexually transmitted infection and a cause of cervical cancer, In addition to offering easy, affordable, and on-the-spot HPV diagnosis, the technology offers an important alternative to the HPV vaccine.

Development Stage Enterprises

Development Stage


The Company's financial statements are presented as those of a development stage enterprise through August 31, 2012. Activities during the development stage include company formation, equity issued for patents and technology, and fixed assets and further implementation of the business plan. The Company has not generated any revenues since inception.  We have subsequently acquired or agreed to acquire operating subsidiaries that are producing income and actively engaged in operating activities, and will no longer be required to report as a development stage company for the fiscal year beginning September 1, 2012.


Use of Estimates, Policy

Use of Estimates


The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A significant estimate in 2012 and 2011 included a 100% valuation allowance for deferred tax assets arising from net operating losses incurred since inception.


Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ materially from estimates.

Going Concern Note

As reflected in the accompanying financial statements, the Company has not yet emerged from the development stage, has a net loss of $6,427,618 and net cash used in operations of $761,171 for the year ended August 31, 2012; and negative working capital of $241,907 and an accumulated deficit of $9,266,443 at August 31, 2012.


The accompanying financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company is a development stage company and has suffered recurring losses and has no established source of revenue.  Its ability to continue as a going concern is dependent upon achieving profitable operations and generating positive cash flows.


There can be no assurances that the Company will be able to achieve profitable operations or obtain additional funding.  These factors create substantial doubt about the Company’s ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty.


Management intends to raise financing through private or public equity financing or other means and interests that it deems necessary to provide the Company with the ability to continue in existence.