Ficose,
You are incorrect, I invested after the "B" shares were issued.
This maybe the reason the shares have reached new low levels. This is from the 10Q Aug.31,2010 page 42. Marvin
New York Private Investors
During the year ended August 31, 2010, the Company issued a $50,000 convertible note under a funding arrangement with a group of New York Private Investors, which bears interest at 8% per annum and matures on April 20, 2011. The notes are convertible at any time after 180 days from the date of the note’s execution, at the option of the holder, into shares of Class A common stock of the Company at a conversion rate of 58% of the average of the three lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten trading days immediately prior to the date a conversion notice is received by the Company. The Company recorded a debt discount of $50,000 relating to the conversion features of the note. For the year ended August 31, 2010, the Company record debt discount amortization of $7,509 and the carrying value of the note as of August 31, 2010 was $7,509. The terms of the agreement require the Company to, at all times, have authorized and reserved five times the number of shares that are actually issuable upon full conversion of the note (478,927,203 shares as of August 31, 2010).
Subsequent to August 31, 2010, the Company has issued two additional convertible notes under the same terms as described above totaling $65,000.
8. Derivative Liabilities
In accordance with ASC 815-15, Embedded Derivatives, the Company determined that the conversion features of the convertible notes described in Note 7 meet the criteria of an embedded derivative and therefore the conversion features of the debt have been bifurcated and accounted for as a derivative. The debt does not meet the definition of “conventional convertible debt” because the number of shares which may be issued upon the conversion of the debt is not fixed. Therefore, the conversion features, pursuant to ASC 815-40, Contracts in Entity’s Own Equity, have been accounted for as derivative liabilities. The Company adjusts the fair value of these derivative liabilities to fair value at each reporting date.
The Company uses the Black-Scholes pricing model to calculate the fair value of its derivative liabilities. Key assumptions used to apply this model were as follows:
