NOTE 4. GOING CONCERN
financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses
of $3,664,302 during the period from August 22, 2008 (inception) through August 31, 2012. This condition raises substantial doubt
about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability
to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
plans to raise additional funds primarily by offering securities for cash. Management has raised $197,500 net of legal expenses
in the twelve months ended August 31, 2012 through the issuance of convertible notes. The Company has also raised $261,475 from
other borrowings during the twelve month ended August 31, 2012.
On June 1, 2012 the Company entered into an
Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership
Under the terms of the June Purchase Agreement,
Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares").
During the term of the Purchase Agreement, the Company may at any time deliver a "put notice" to Southridge thereby requiring
Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver
payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to 91% of the average
of the two lowest Closing Prices during the Valuation Period as such capitalized terms are defined in the Agreement.
The number of Shares sold to Southridge shall
not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially
owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally,
Southridge may not execute any short sales of the Company's common stock.
Any sale of Shares pursuant to the June Agreement
is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of
June Agreement shall terminate (i) on the date
on which Southridge shall have purchased Shares pursuant to this Agreement for an aggregate Purchase Price of $10,000,000, or (ii)
on the date occurring 24 months from the date on which the June Agreement was executed and delivered by the Company and Southridge.
The Company has also agreed to pay the following
to Capital Path Securities LLC for acting as the Companys exclusive advisor and placement agent in connection with the June
Purchase Agreement a cash placement fee of 5% of funds received by the Company through the sale of Shares to Southridge as
such funds are received by the Company.
On June 12, 2012 a registration statement on
form S-1 was filed with the United States Securities and Exchange Commission registering 46,238,705 shares of the Companys
common stock that will be put to Southridge pursuant to the June Agreement which was declared effective by the United
States Securities and Exchange Commission on August 27, 2012.
is no guarantee that the Company will be able to raise additional capital through offerings.