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10-K - FORM 10-K - Novation Holdings Incf10k8312012.htm
v2.4.0.6
Debt
12 Months Ended
Aug. 31, 2012
Debt:  
Debt Disclosure

* The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15    "Derivatives and Hedging" and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

The following is a summary of notes payable at August 31, 2012 and August 31, 2011:

 

Description

August 31, 2012

August 31, 2011

Asher Enterprises, Inc. *

On July 7, 2011, the Company issued its promissory note in the amount of $53,000 to an unrelated third party for additional working capital. The note was due on April 11, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 58 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert.   The carrying amount of the debt discount was $0 and 35,917, respectively. The note was fully converted at August 31, 2012.

-

17,083

Asher Enterprises, Inc. *

On August 16, 2011, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on May 18, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 58 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert.  The carrying amount of the debt discount was $0 and $33,320, respectively. The note was fully converted at August 31, 2012.

-

6,680

Asher Enterprises, Inc. *

On April 25, 2012, the Company issued its promissory note in the amount of $37,500 to an unrelated third party for additional working capital. The note is due on January 30, 2013 and carried interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 51 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of August 31, 2012.

37,500

            -

Asher Enterprises, Inc. *

On March 12, 2012, the Company issued its promissory note in the amount of $35,000 to an unrelated third party for additional working capital. The note is due on December 14, 2012 and carried interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The note was fully outstanding as of August 31, 2012.

35,000

-

Asher Enterprises, Inc. *

On January 20, 2012, the Company issued its promissory note in the amount of $40,000 to an unrelated third party for additional working capital. The note was due on October 23, 2012 and carried interest at 8 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 50 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $8,288 and $0, respectively. $25,000 was converted to common stock at August 31, 2012.

6,712

-

Crystal Falls Investments, LLC.

On July 26, 2011, the Company issued its promissory note in the amount of $100,000 to an unrelated third party for additional working capital. The note was due on January 31, 2012 and carried interest at 9 percent per annum, payable at maturity. The note was convertible into common stock of the Company immediately after issuance, at the election of the Holder, at $0.29. The carrying amount of the debt discount was $0 and $59,185, respectively. $60,000 was converted to common stock at August 31, 2012 and the remaining $40,000 was sold to Asher Enterprises, Inc. and subsequently converted.

-

40,815

Common Stock LLC *

On January 20, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note was due on October 31, 2012 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $8,493 and $0, respectively. $6,000 was converted to common stock at August 31, 2012.

                5,507

            -

Common Stock LLC *

On March 19, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on December 19, 2012 and carried interest at 6 percent per annum, payable at maturity. The note was convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Note was fully outstanding at August 31, 2012.

20,000

-

Common Stock LLC *

On May 8, 2012, the Company issued its promissory note in the amount of $20,000 to an unrelated third party for additional working capital. The note is due on February 8, 2013 and carried interest at 6 percent per annum, payable at maturity. The note is convertible into common stock of the Company after six months, at the election of the Holder, at 60 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Note was fully outstanding at August 31, 2012.

20,000

-

Panache Group *

On January 10, 2012, the Company issued its promissory note in the amount of $50,000 to an unrelated third party for additional working capital. The note is due on January 10, 2013 and carried interest at 10 percent per annum, payable at maturity. The note is immediately convertible into common stock of the Company, at the election of the Holder, at 75 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The carrying amount of the debt discount was $3,580 and $0, respectively. $40,320 was converted to common stock at August 31, 2012.

6,100

-

 

JMJ Financial *

On July 30, 2012, the Company issued its promissory note in the amount of $56,000 to an unrelated third party for additional working capital. The note is due on July 30, 2013. The note is convertible into common stock of the Company after three months, at the election of the Holder, at $0.006 or 70 percent of the lowest closing trading price of the common stock for the twenty-five trading days prior to the date of the election to convert. The Note was issued at a discount of $6,000, of which $5,500 unamortized portion remains at August 31, 2012. There were no conversions at August 31, 2012.

50,500

 

-

Total notes payable – current

181,319

 

64,578