UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K



(Mark One)



[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended August 31, 2014



or



[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ___________ to
___________



Commission file number 001-32658



OSL HOLDINGS INC.

(Exact
name of registrant as specified in its charter)



|NEVADA                                                              |  | 98-0441032                               
|------------------------------------------------------------------- |  | -----------------------------------------
|(State or other
    jurisdiction of 
incorporation or organization) |  | (I.R.S. Employer
    
Identification No.)
|                                                                    |  |                                          
|1669
        Edgewood Rd., Suite 214
        Yardley,
        PA    |  | 19067                                    
|(Address of principal
    executive offices)                        |  | (Zip Code)                               



Registrant’s
telephone number, including area code: (845) 363-6776



Not
applicable.

(Former
name, former address and former fiscal year, if changed since last report)



Securities registered under Section 12(b) of the Exchange Act:



|Title of each
    class registered: |  | Name of each exchange
    on which registered:
|----------------------------------- |  | ----------------------------------------------
|None                                |  | None                                          



Securities registered under Section 12(g) of the Exchange Act:



Common Stock, par value $.001

(Title of class)



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes [  ]
No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [  ] No [X]



Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the last 90 days. Yes [  ] No [X]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.



|Large accelerated
    filer [  ]                                           | Accelerated filer [  ]           
|-------------------------------------------------------------------------- | ---------------------------------
|                                                                           |                                  
|Non-accelerated
    filer [  ] (do not check if smaller reporting company) | Smaller reporting
    company [X]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]



State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal quarter, February 28, 2014: $0.015



Number
of the issuer’s Common Stock outstanding as of December 15, 2014: 363,325,650



DOCUMENTS
INCORPORATED BY REFERENCE



None.
















FORM 10-K



FOR
THE YEAR ENDED AUGUST 31, 2014



INDEX



|           |                                                                                                                   |    | Page
|---------- | ----------------------------------------------------------------------------------------------------------------- | -- | ----
|PART I     |                                                                                                                   |    |     
|           |                                                                                                                   |    |     
|Item 1.    | Business                                                                                                          |    | 4   
|Item 1A.   | Risk Factors                                                                                                      |    | 7   
|Item 1B.   | Unresolved Staff Comments                                                                                         |    | 7   
|Item 2.    | Properties                                                                                                        |    | 8   
|Item 3.    | Legal Proceedings                                                                                                 |    | 8   
|Item 4.    | Mine Safety Disclosures                                                                                           |    | 8   
|           |                                                                                                                   |    |     
|PART II    |                                                                                                                   |    |     
|           |                                                                                                                   |    |     
|Item 5.    | Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |    | 8   
|Item 6.    | Selected Financial Data                                                                                           |    | 10  
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                             |    | 10  
|Item 7A.   | Quantitative and Qualitative Disclosure about Market Risk                                                         |    | 12  
|Item 8.    | Financial Statements and Supplementary Data                                                                       |    | 12  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              |    | 12  
|Item 9A.   | Controls and Procedures                                                                                           |    | 12  
|Item 9B.   | Other Information                                                                                                 |    | 14  
|           |                                                                                                                   |    |     
|PART III   |                                                                                                                   |    |     
|           |                                                                                                                   |    |     
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                            |    | 14  
|Item 11.   | Executive Compensation                                                                                            |    | 16  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                    |    | 19  
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                         |    | 20  
|Item 14.   | Principal Accounting Fees and Services                                                                            |    | 21  
|           |                                                                                                                   |    |     
|PART IV    |                                                                                                                   |    |     
|           |                                                                                                                   |    |     
|Item 15.   | Exhibits, Financial Statement Schedules                                                                           |    | 21  
|           |                                                                                                                   |    |     
|Signatures |                                                                                                                   | 27



2







USE
OF CERTAIN DEFINED TERMS



Except
as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our
Company,” or “the Company” are to the combined business of OSL Holdings Inc. and its consolidated subsidiaries.



In
addition, unless the context otherwise requires and for the purposes of this report only:



| | ● | “Commission”
    refers to the Securities and Exchange Commission;                                              
| | - | ----------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                 
| | ● | “Exchange
    Act” refers to the Securities Exchange Act of 1934, as amended;                                   
| |   |                                                                                                                 
| | ● | “OSL”
    refers to Office Supply Line, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company;
| |   |                                                                                                                 
| | ● | “Red Rock”
    refers to the Company while named Red Rock Pictures Holdings, Inc.; and                          
| |   |                                                                                                                 
| | ● | “Securities
    Act” refers to the Securities Act of 1933, as amended.                                          



CAUTIONARY
STATEMENT RELATED TO FORWARD LOOKING STATEMENTS



This
report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking
information so that investors can better understand a company’s future prospects and make informed investment decisions.
This Annual Report on Form 10-K and other written and oral statements that we make from time to time contain such forward-looking
statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance.
We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will”
and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include
statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome
of contingencies, such as legal proceedings, and financial results. A list of factors that could cause our actual results of operations
and financial condition to differ materially is set forth below:



| | ● | Our ability to
    continue as a going concern.                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                   
| | ● | Our limited operating
    history, ability to achieve profitability and history of losses.                                                                                                                        
| |   |                                                                                                                                                                                                                   
| | ● | Our need for significant
    additional capital to fund our business plan.                                                                                                                                        
| |   |                                                                                                                                                                                                                   
| | ● | Our ability to
    attract merchants and members to our loyalty program.                                                                                                                                          
| |   |                                                                                                                                                                                                                   
| | ● | Economic conditions
    that have an adverse effect on consumer spending.                                                                                                                                         
| |   |                                                                                                                                                                                                                   
| | ● | The market price
    for shares of our common stock has been and may continue to be highly volatile and subject to wide fluctuations and the impact
    of penny stock rules on the liquidity of our common stock.



We
caution that the factors described herein and other factors could cause our actual results of operations and financial condition
to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue
reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess
the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any forward-looking statements.



3







PART
I



Item
1. Business



BUSINESS
OVERVIEW



Our
business is predicated on a socially conscious business model dedicated to consumer advocacy, social activism and the advancement
of civil liberties through the power of commerce. OSL specializes in serving affluent, liberal and libertarian consumer groups,
a constituency that we believe responds to cause marketing and activism. The Company has developed and launched two distinct business
units to effectuate its mission: Equality Rewards, a technology platform delivering consumer rewards programs; and, OSL Medical
Services, a management, future planning and services platform centered on the development and financing of indoor gardens and
cultivation facilities, production technologies, merchandise and operational services for businesses in the herbal and natural
medicine industry. OSL Medical Services is designed to support its clients with branding, technology, marketing, logistics,
and future planning services on a state-by-state basis throughout the United States.



EQUALITY
REWARDS DIVISION



Equality
Rewards is a platform agnostic consumer rewards program designed to advance minority civil rights through the power of commerce.
The technology behind Equality Rewards constitutes a commerce driven, interactive social network powered by consumer transactions.
The Equality Rewards’ social network attracts, aggregates and optimizes a community of consumers, corporations, merchants
and suppliers. The platform is designed to bring minority and minority allied consumer groups together with businesses that support
minority causes or are minority owned and operated. The minority groups supported by Equality Rewards include, but are not limited
to, women, African-Americans, Hispanics, Asian Americans, Veterans, lesbian, gay, bisexual and transgender (LGBT) Americans and
Americans with disabilities.



In
June 2013, OSL Holdings Inc. launched Equality Rewards in Los Angeles, California. The recent and current focus of the brand is
centered on advancing the rights and causes of LGBT Americans. Through our Equality Rewards program, we plan to support the federal
recognition and legalization of same sex marriage, support for LGBT youth at risk and the advancement of research, education and
funding for the fight against HIV/AIDS. Equality Rewards brings LGBT and LGBT allied consumers together with businesses that support
the LGBT community and businesses that are LGBT owned and operated.



Consumers
are able to participate in the program by registering online or downloading the Equality Rewards app. Once a consumer registers
for the program, that consumer receives a virtual currency that can be applied as partial payment toward purchases transacted
with participating merchants. The virtual currency is redeemed at the point of sale through a bar code or voucher delivered to
the consumer’s mobile device. Equality Rewards plans to donate a portion of its profits to marriage equality causes, causes
that support LGBT youth at risk and causes supporting the fight against HIV/AIDS. Cost savings, as well as the advocacy and activist
attributes of the program, motivate the consumer.



Merchants
are able to participate in the program by signing an agreement to accept the Equality Rewards virtual currency. There is no upfront
cost for merchants to participate in the program. Merchants will pay a 25% marketing fee, based on the amount of Equality Rewards
currency they are willing to accept for a particular purchase. We believe merchants will be motivated to participate in the program
because the platform is designed to drive informed and motivated consumers to transact with merchants that accept Equality Rewards.



In
April 2013, our Equality Rewards Division hired a full-time Merchant Acquisition Manager for the Los Angeles, California market
in advance of the sales, business development and marketing initiatives planned for the summer and fall of 2013. Equality Rewards
hired a former Gilt City employee to fill the role and temporarily relocated that employee from Miami, Florida to Los Angeles,
California.



In
June 2013, our Equality Rewards Division launched its branding campaign, mobile application and online application by becoming
a sponsor of Christopher Street West/Los Angeles Pride, a major LGBT civil rights festival and parade. This was Equality Rewards’
first major traditional marketing event. Equality Rewards produced and maintained a booth on the festival grounds of the Los Angeles
Pride during the weekend of the festival.



In
July 2013, Our Equality Rewards Division sponsored two major LGBT marketing events in Los Angeles, California: Outfest, the largest
LGBT film festival in the world and Concrete Hero, an Aids Project Los Angeles-produced athletic competition dedicated to raising
money and awareness for the fight against HIV/AIDS. Equality Rewards contracted with event producers, temporary spokespersons
and local marketing collateral suppliers for both events and produced and maintained a marketing booth at both events.



In
November 2013, OSL Holdings developed Shop4Equality, the national rollout of the Equality Rewards’ brand. Shop4Equality
is a nationwide movement designed to drive consumers to nationally branded retail environments, department stores and malls around
the country to advance LGBT causes through the power of commerce. Shop4Equality is capable of creating specific consumer driven
events and holidays inspired by LGBT causes.



4







In
December 2013, Our Shop4Equality initiative, the national extension of Equality Rewards, ran additional sales and holiday marketing
initiatives in partnership with Engagement Media Technologies, a web and mobile, transaction-based consumer social network.



In
March 2014 Equality Rewards executed its first merchant agreement with a medical marijuana dispensary. That merchant agreement,
and subsequent press release, created the foundation for the launch of Our Medical Services Division.



Equality
Rewards current business operations have created a transactional network that brings together brands, distributors, wholesalers,
retailers (both online commerce and “brick and mortar” stores) and consumers’ audiences to accelerate commerce
and value. The goal is to take advantage of these cross platforms (the ability to purchase products online, through mobile device,
or at retail stores), cross channel (the different channels that purchases occur in such as business to business (“B2B”),
business to consumer (“B2C”), and public sectors (such as local, state and federal governments) and cross vertical
(the motivation behind the purchase such as a diversity purchase, purchase to benefit a non-profit, or sustainability purchase
of green products) commerce companies to enhance the overall offering of each.



As
of December 2014, Equality Rewards has a working mobile application and online solution in the Los Angeles market. Equality Rewards
has issued and executed roughly 80 merchant agreements and has roughly 1,200 customers in the Los Angeles, California market.
Equality Rewards continues to develop strategic applications and partnerships for Shop4Equality. We are actively seeking a Division
Manager for Equality Rewards.



Equality
Rewards is also in discussions with regard to potential acquisitions and strategic partnerships. The purpose of these discussions
is to further secure major corporate contracts, access to additional membership bases, and expand our technology as well as retain
the talent needed to execute our business strategy.



OSL
HOLDINGS MEDICAL SERVICES DIVISION



OSL
Medical Services, a division of OSL Holdings, is dedicated to advancing the rights of patients in need of legal access to medically
recommended, cannabis-based medicines. OSL Holdings supports the decriminalization of medical marijuana while remaining compliant
with local and federal laws governing the use, sale and distribution of medically recommended, legal medical marijuana. We are
committed to supporting consumers who suffer from illnesses best managed and treated by the use of medically recommended, legally
obtained medical marijuana. OSL Medical Services is designed to provide future planning services that optimize, support and provide
business services to legal, fully compliant medical marijuana dispensaries, legal medical marijuana-related technology providers
and legal medical marijuana-related business service providers that intend to enter the market once medical marijuana is federally
legal.



OSL
Medical Services is a development platform centered on the development and financing of indoor gardens and cultivation facilities,
production technologies, merchandise and operational services for businesses in the herbal and natural medicine industry. The
herbal and natural medicine businesses that OSL Holdings serves include, but are not limited to, legal medical marijuana production
facilities, cannabis-related production technologies and merchandise and operational services for legal medical marijuana dispensaries
and distributors. OSL Medical Services is designed to support existing or emerging legal medical marijuana licensees with future
planning services that cover branding, technology, marketing, logistics, and financing on a state-by-state basis throughout
the United States. The Company delivers services in five areas: 1) production, growing and genetics; 2) warehousing and logistics;
3) retail and operations; 4) marketing and sales; and 5) franchising and licensing.



OSL
Medical Services provides these support services in compliance with all federal, state and local laws. At this time, OSL will
not grow or sell marijuana, but intends to gain market share and create value for its shareholders by creating, marketing, and
licensing brands as well as acquiring and licensing production technology. When federal law permits, OSL Medical Services plans
to offer these services to legal and licensed growers and dispensers.



OSL
Medical Services’ corporate and business strategy is predicated on four essential business foci: 1) developing and acquiring
industry-related technologies; 2) identifying, acquiring and leasing compliant real estate assets within the vertical; 3) acquiring
businesses germane to the growth and development of the legal medical marijuana industry; and 4) the acquisition of future planning
service contracts.



On
May 26, 2014, OSL Holdings executed a five-year, agreement to provide a comprehensive suite of services to a Los Angeles client
looking to enter the legal, licensed cannabis business in the future within the Los Angeles, California market. Under the terms
of the agreement, OSL is contracted to provide plans to create new retail experiences, generate operational guidelines and strategy
documents as well as create “launch” or grand opening scenarios with marketing outreach and segmentation strategies.
OSL Holdings also provides future infrastructure planning and future operational support documents. These documents and future
planning services come in the form of documents that explain how to leverage facilities, efficiency technologies, operations guides,
accounting software, genetics, and customer service know-how. OSL Holdings also leases general retail and office equipment not
directly used in the production or processing of cannabis, and other similar activities. OSL Holdings operational support comes
in the form of retail know-how, accounting and billing services, as well as operations and point-of-sale (POS) software. At no
time will OSL grow, process, own, handle, or sell cannabis, or the equipment used for these purposes.



5







In
May 2014 we entered into an Asset Purchase Agreement with The Natural Way of LA, LLC (“Natural Way”) pursuant to which
we acquired certain operational assets related to its dispensary business. In October, 2014 we returned the assets we acquired
from Natural Way and terminated our May 2014 agreement and entered into mutual releases as part of a settlement of a lawsuit that
Natural Way filed against us. We agreed to terminate the Natural Way agreement because, among other reasons, Natural Way failed
to comply with certain governmental regulations in the operation of its business.



Also
in May 2014, We executed an agreement for an option to acquire the exclusive rights to Genetic Catalog of 22 unique cannabis strains
including several “clone only” varietals and three exclusive nutrient mixtures, one of which is organic (OMRI listed).



On
October 22, 2014, OSL Holdings Inc. announced the acquisition of Go Green Hydroponics Inc., a privately held hydroponics, indoor
gardening and cultivation supply retail operation, located in Los Angeles, California, specializing in the sale of hydroponic
cultivation equipment, mineral nutrient solutions and gardening resources and equipment. Go Green Hydroponics achieved revenues
of approximately $2.4 million in the first nine months of 2014 and is expected to reach revenues of approximately $3.0 million
in fiscal 2014 with anticipated future annual revenue increases at a rate of 10% to 15% with expected gross profit margins of
approximately 25% to 30%.



OSL
acquired Go Green Hydroponics for $1.8 million subject to certain post-closing adjustments based on a target working capital amount.
OSL also closed on a debt financing transaction in the amount of $1.9 million, the proceeds of which were used to fund the Go
Green Hydroponics acquisition and for OSL working capital.



On
October 28, 2014, OSL Holdings Inc. announced the development of a multi-tier, on-line cross platform social network and information
repository solution that will enable legal marijuana dispensaries and hydroponic gardening supply retailers to manage marketing,
lead generation, and retail discovery. The platform is expected to become an ad supported online extension of our recently acquired
Go Green Hydroponics retail operations and other vertical venders and will enable local and hyper local search with advanced querying
capabilities when it is expected to launch in the second quarter of fiscal 2015. Designs for the platform include a comprehensive
B2B and B2C portal and a social network with planned user generated content features. We plan to launch both a web based and mobile
platform that will enable dispensaries and patrons to manage and search while on the go. Planned community and social features
will allow patrons to share experiences and provide feedback to the dispensaries and community.



On
November 13, 2014, OSL Holdings Inc. announced the creation of a Social Advisory Board. The Board will help shape OSL’s
corporate identity; will work closely with management to create new socially conscious business verticals and will support corporate
and business development initiatives by raising the awareness of our Company as we seek to attract additional investment capital
within and outside Hollywood. The Board will be comprised of nine members and will include investors and shareholders from the
media and entertainment industries. OSL Holdings intends on including investors and shareholders from the fashion, retail and
financial services industries as well as business leaders in the socially conscious business sectors.



The
Board will launch with three inaugural members: Molly Newman, David Zucker and David Marshall Grant. Newman, Zucker and Grant
have all invested in OSL Holdings and are presently shareholders of the Company. Molly Newman is an Emmy Award-winning television
writer and producer. Most recently, she was a writer and Consulting Producer on “Political Animals,” which was nominated
for Emmy, Golden Globe, and Writers Guild Awards. She spent five years as Executive Producer of the ABC series “Brothers
and Sisters.” Her varied television career includes credits in multiple genres: single camera comedy (“The Larry Sanders
Show”), multi-camera comedy (“Frasier” “Murphy Brown”), sketch comedy (“Tracey Takes On...”)
and drama (“Brothers and Sisters”). As a playwright, she was nominated for a Tony award for the Broadway production
of her play Quilters. Her plays have been produced on the main stages of many regional theaters including The Kennedy Center,
The Mark Taper Forum, Actor’s Theatre of Louisville, Houston’s Alley Theatre, The Denver Center Theatre Company, and
the Pittsburgh Public Theatre.



David
Zucker is an award winning writer, producer and director whose films have grossed more than $1 billion. Among his credits are
Airplane, The Naked Gun and Scary Movie franchises, Kentucky Fried Movie, Phone Booth, Ruthless People, Top Secret, and A Walk
in the Clouds.



David
Marshall Grant is a Tony nominated actor with many Broadway, Television and Film Credits, including Angels in America, American
Fliers, Bat 21, The Devil Wears Prada, thirtysomething, Chicago Hope, Law & Order, and Alias As a television writer and
producer David has worked on numerous shows, including Brothers & Sisters, Smash and Nashville.





6







During
the fourth quarter of fiscal 2014, We are focused on opportunities in the indoor gardening and cultivation vertical, additional
opportunities in the compliant real estate markets and ancillary businesses akin to OSL’s Go Green Hydroponics acquisition
that augment and support hydroponic cultivators that produce herbal and natural medicines. The Company is exploring opportunities
centered on production technologies, hydroponics, agricultural engineering and genetics. We believe there is great enterprise
value for our shareholders within these verticals and recognize the potential for the future of the legal cannabis-based medicines.



We
are is presently accepting investment capital and financing to effectuate OSL Medical Services’ accretive acquisition strategy.



We
retain the exclusive rights to acquire key assets of Legal Medical Marijuana Collective Holding Company, a Nevada LLC. The principals
of the Legal Medical Marijuana Collective Holding Company are bound by exclusive non-compete contracts with OSL Holdings Inc.



Legal
Medical Marijuana Collective Holding Company is a holding company in the indoor gardening, cultivation, herbal, and natural medicine
industry with assets including, but not limited to, service contracts with legal medical marijuana collectives and cultivation
centers.



Customers



We
currently have over 1,500 customers, 80 merchants and membership partnerships that we manage within the Equality Rewards division
and two clients within the Medical Services division.



Employees



As
of August 31, 2014, we had three full time employees.



Intellectual
Property



The
Company has no intellectual property.



Our
Corporate History and Background



We
were originally incorporated in Nevada on November 22, 2004 as Maneki Mining (“Maneki”), a development stage company
in the business of mineral exploration. In August 2006, Red Rock Pictures, Inc. consummated a share exchange agreement, whereby
100% of its shares were acquired by Maneki in exchange for 1,800,000 shares of Maneki. On October 31, 2006, Maneki changed its
name to Red Rock Pictures Holdings Inc. Red Rock Pictures, Inc. was incorporated on August 18, 2006 under the laws of the State
of Nevada and was acquired by Red Rock Pictures Holdings Inc. on August 31, 2006. Following the acquisition of Red Rock Pictures,
Inc., we engaged in the business of developing, financing, producing and licensing feature-length motion pictures and direct response
infomercials.



Office
Supply Line, Inc. (“OSL”), our wholly owned subsidiary was incorporated pursuant to the laws of the State of Nevada
on September 16, 2010.



Share
Exchange of OSL



On
October 10, 2011, we completed a Share Exchange with OSL whereby OSL exchanged all of the issued and outstanding shares of OSL
in exchange for 50,000,000 shares of our common stock, which shares constituted approximately 77% of our issued and outstanding
shares, as of and immediately after the consummation of the Share Exchange. As a result of the Share Exchange, OSL became our
wholly owned subsidiary. All of our assets at the time of the Share Exchange were either spun-out or assigned, other than Red
Rock Pictures, Inc. and SSD which remain our wholly owned subsidiaries, but currently have no operations. The Share Exchange transaction
with OSL was treated as a reverse merger recapitalization, with OSL as the acquirer and the Company as the acquired party. Unless
the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation
of the Share Exchange, we are referring to the business and financial information of OSL.



On
October 17, 2011, we changed our name to OSL Holdings Inc. to more accurately reflect our new business operations.



Effective
January 9, 2013, we completed a reverse split of our outstanding shares of Common Stock. As a result of the reverse stock split,
every one thousand shares of our common stock was combined into one share of common stock.



Item
1A. Risk Factors



Not
required for smaller reporting companies.



Item
1B. Unresolved Staff Comments



Not
applicable for smaller reporting companies.



7







Item
2. Properties



Our
principal executive office is comprised of approximately 200 square feet of office space located at 1669 Edgewood Rd., Yardley,
PA 19067, pursuant to a month to month lease. We pay rent for this office in the amount of $650 per month. We believe that our
facilities are adequate to meet our current needs. [what about Regus space in CT?]



Item
3. Legal Proceedings



In
May 2014 we entered into an Asset Purchase Agreement with The Natural Way of LA, LLC (“Natural Way”) pursuant to which
we acquired certain operational assets related to its dispensary business. In October, 2014 we returned the assets we acquired
from Natural Way and terminated our May 2014 agreement and entered into mutual releases as part of a settlement of a lawsuit that
Natural Way filed against us. We agreed to terminate the Natural Way agreement because, among other reasons, Natural Way failed
to comply with certain governmental regulations in the operation of its business.



Should we
include the Joel Lupo & Marc Moscowitz settlements of Office Supply Line obligations?



From time
to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that
may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material
adverse effect on our business, financial condition or operating results.



Item
4. Mine Safety Disclosures



Not
applicable.



PART
II



Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities



Market
Information



Our
common stock is traded on The OTCQB tier of the OTC Markets under the symbol “OSLH.” As of December 9, 2014, 362,404,909
shares of our common stock were issued and outstanding. The Company is not authorized to issue preferred shares.



Price
Range of Common Stock



The
following table sets forth the high and low trade information for our common stock for each quarter for the previous two years.
The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect
actual transactions.



|                                       |  | High |      |  | Low |  
|-------------------------------------- |  | ---- | ---- |  | --- | -
|Fiscal Year 2014                       |  |      |      |  |     |  
|First quarter ended November 30, 2013  |  | $    | 0.03 |  |     | $
|Second quarter ended February 28, 2014 |  | $    | 0.02 |  |     | $
|Third quarter ended May 31, 2014       |  | $    | 0.29 |  |     | $
|Fourth quarter ended August 31, 2014   |  | $    | 0.06 |  |     | $



|                                       |  | High |       |  | Low |  
|-------------------------------------- |  | ---- | ----- |  | --- | -
|Fiscal Year 2013                       |  |      |       |  |     |  
|First quarter ended November 30, 2012  |  | $    | 12.00 |  |     | $
|Second quarter ended February 28, 2013 |  | $    | 1.20  |  |     | $
|Third quarter ended May 31, 2013       |  | $    | 0.49  |  |     | $
|Fourth quarter ended August 31, 2013   |  | $    | 0.05  |  |     | $



Holders



As
of December 9, 2014, there were approximately 125 holders of record of our common stock. This number does not include shares held
by brokerage clearing houses, depositories or others in unregistered form.



8







Dividends



We
have never declared or paid a cash dividend. Any future decisions regarding dividends will be made by our Board of Directors.
We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate
paying any cash dividends in the foreseeable future. Our Board of Directors has complete discretion on whether to pay dividends.
Even if our Board of Directors decides to pay dividends, the form, frequency and amount will depend upon our future operations
and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the
Board of Directors may deem relevant.



Securities
Authorized for Issuance under Equity Compensation Plans



We
do not have in effect any compensation plans under which our equity securities are authorized for issuance.



Recent
Sales of Unregistered Securities



On October
15, 2014, the Company issued to an unaffiliated party a total of 267,857 shares of its restricted common stock per terms of a
consulting agreement valued at $0.014 per share.



On October
17, 2014, the Company issued to an unaffiliated party a total of 3,571,428 shares of its restricted common stock valued at $0.0084
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
20, 2014, the Company issued to an unaffiliated party a total of 3,061,225 shares of its restricted common stock valued at $0.0098
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
22, 2014, the Company issued to TCA Global Credit Master Fund LP a total of 15,284,916 shares of its restricted common stock valued
at $0.0122 as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
24, 2014, the Company issued to an unaffiliated party a total of 421,407 shares of its restricted common stock valued at $0.0237
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
24, 2014, the Company issued to an unaffiliated party a total of 421,407 shares of its restricted common stock valued at $0.0237
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
24, 2014, the Company issued to an unaffiliated party a total of 421,407 shares of its restricted common stock valued at $0.0237
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
24, 2014, the Company issued to an unaffiliated party a total of 421,407 shares of its restricted common stock valued at $0.0237
per share as a direct investment pursuant to the terms of a Securities Purchase Agreement.



On October
27, 2014, the Company issued a total of 6,287,370 shares of its restricted common stock upon conversion of approximately $50,000
principal and accrued interest held by certain assignees of the Panache debt.



On November
11, 2014, the Company issued to current officers of the Company, pursuant to their employment agreements, a total of 10,050,000
shares of its restricted common stock valued at $0.001 per share.



On November
17, 2014, the Company issued a total of 284,900 shares of its common stock upon conversion of $5,000 principal amount of the Company’s
debt.



On November
21, 2014, the Company issued a total of 601,074 shares of its common stock upon conversion of $10,549 principal and interest of
the Company’s debt.



On December
5, 2014, the Company issued a total of 867,402 shares of its common stock upon conversion of $15,674 principal and interest of
the Company’s debt.



On December
8, 2014, the Company issued a total of 498,063 shares of its common stock upon conversion of $9,000 principal amount of the Company’s
debt.



On November
15, 2014, the Company issued to an unaffiliated party a total of 344,500 shares of its restricted common stock pursuant to the
terms of a consulting agreement.



On November
21, 2014, the Company issued a total of 2,716,749 shares of its restricted common stock upon conversion of approximately $41,000
principal and accrued interest held by an assignee of the Panache debt.



9







On December
2, 2014, the Company issued to current officers of the Company, pursuant to their employment agreements, a total of 10,050,000
shares of its restricted common stock valued at $0.001 per share.



These shares
were issued in reliance on exemptions from registration provided by Sections 4(a)(2) and 3(a)(9) of the Securities Act of 1933,
as amended (the “Securities Act”).



Item
6. Selected Financial Data



We
are not required to provide the information required by this Item because we are a smaller reporting company.



Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations



Overview



Our
business is predicated on a socially conscious business model dedicated to consumer advocacy, social activism and the advancement
of civil liberties through the power of commerce. We specialize in serving affluent, liberal and libertarian consumer groups,
a constituency that we believe responds to cause marketing and activism. The Company has developed and launched two distinct business
units to effectuate its mission: Equality Rewards, a technology platform delivering consumer rewards programs; and, OSL Medical
Services, a management, future planning and services platform centered on the development and financing of indoor gardens and
cultivation facilities, production technologies, merchandise and operational services for businesses in the herbal and natural
medicine industry. OSL Medical Services is designed to support its clients with branding, technology, marketing, logistics,
and future planning services on a state-by-state basis throughout the United States.



EQUALITY
REWARDS DIVISION



Equality
Rewards is a platform agnostic consumer rewards program designed to advance minority civil rights through the power of commerce.
The technology behind Equality Rewards constitutes a commerce driven, interactive social network powered by consumer transactions.
The Equality Rewards’ social network attracts, aggregates and optimizes a community of consumers, corporations, merchants
and suppliers. The platform is designed to bring minority and minority allied consumer groups together with businesses that support
minority causes or are minority owned and operated. The minority groups supported by Equality Rewards include, but are not limited
to, women, African-Americans, Hispanics, Asian Americans, Veterans, lesbian, gay, bisexual and transgender (LGBT) Americans and
Americans with disabilities.



OSL
HOLDINGS MEDICAL SERVICES DIVISION



OSL
Medical Services, a division of our company, is dedicated to advancing the rights of patients in need of legal access to medically
recommended, cannabis-based medicines. We support the decriminalization of medical marijuana while remaining compliant with local
and federal laws governing the use, sale and distribution of medically recommended, legal medical marijuana. We are committed
to supporting consumers who suffer from illnesses best managed and treated by the use of medically recommended, legally obtained
medical marijuana. OSL Medical Services is designed to provide future planning services that optimize, support and provide business
services to legal, fully compliant medical marijuana dispensaries, legal medical marijuana-related technology providers and legal
medical marijuana-related business service providers that intend to enter the market once medical marijuana is federally legal.



Recent
Developments



On
May 26, 2014 we entered into a Management Services Agreement with Sean Ridgley (“Ridgley”) who agreed to pay us $75,000
per month to act as his sole and exclusive agent for the management of the business affairs of Ridgley’s business. Under
the terms of this agreement, we will arrange for the business to lease, acquire, or otherwise procure a location reasonably acceptable
to the business. We will provide all equipment, fixtures, office supplies, furniture, and furnishings deemed reasonably necessary
by the us for the operation of the business. We will provide or arrange for all printing, stationery, forms, postage, duplication
or photocopying services, payroll, other support services as are reasonably necessary and appropriate for the operation of the
business, including billing and collection and certain advertising and promotion services.



In
May 2014 we entered into an Asset Purchase Agreement with The Natural Way of LA, LLC (“Natural Way”) pursuant to which
we acquired certain operational assets related to its dispensary business. In October, 2014 we returned the assets we acquired
from Natural Way and terminated our May 2014 agreement and entered into mutual releases as part of a settlement of a lawsuit that
Natural Way filed against us. We agreed to terminate the Natural Way agreement because, among other reasons, Natural Way failed
to comply with certain governmental regulations in the operation of its business.



On
October 20, 2014 we acquired Go Green Hydroponics Inc. (“Go Green”) for $1,800,000 paid in cash at closing and entered
into employment agreements with its principals. Go Green is a hydroponics, indoor gardening and cultivation supply retail operation,
located in Los Angeles, California, specializing in the sale of hydroponic cultivation equipment, mineral nutrient solutions and
gardening resources and equipment. Simultaneously, we entered into and completed the sale of an initial $1,900,000 of our senior
secured convertible redeemable debenture to TCA Global Credit Master Fund, LP maturing on October 20, 2015.



10







As
we continue to grow, we are in the development of a multi-tier, on-line cross platform social network and information repository
solution that will enable legal marijuana dispensaries and hydroponic gardening supply retailers to manage marketing, lead generation,
and retail discovery. The platform is expected to become an ad supported online extension of our recently acquired Go Green Hydroponics
retail operations and other vertical venders and will enable local and hyper local search with advanced querying capabilities
when it is expected to launch in the second quarter of fiscal 2015. Designs for the platform include a comprehensive B2B and B2C
portal and a social network with planned user generated content features. We plan to launch both a web based and mobile platform
that will enable dispensaries and patrons to manage and search while on the go. Planned community and social features will allow
patrons to share experiences and provide feedback to the dispensaries and community.



We
believe that these initiatives will enable us to achieve growth in our partner and customer base leading to increasing revenues
in fiscal 2015.



Results
of Operations



Comparison
of the Year Ended August 31, 2014 and 2013



Revenues



Revenues
from management fees were $225,000 for the year ended August 31, 2014. No similar revenue existed in the prior year



General
and Administrative



General
and administrative expenses increased $2,959,354 to $6,485,713 for the year ended August 31, 2014, from $3,526,359 for year ended
August 31, 2013. The increase was primarily related to increases in non-cash stock based compensation expense related to common
shares issued to Company executives as bonuses or as part of their employment agreements entered into in January 2014 in the amount
of $2,740,470. In addition, consulting fees increased $313,841 and professional fees increased $193,212. These increases were
partially offset by decreases in advertising of $139,099 and information technology and computer related costs of $119,586.



Interest
Expense



Interest
expense was $441,976 and $317,891 for the years ended August 31, 2014 and 2013, respectively. The increase in expense was primarily
due to an increase in debt.



Loss
on Conversion of Debt and Settlement of Accrued Interest



Loss
on conversion of debt and settlement of accrued interest was $755,978 for the year ended August 31, 2013. This change is
a non-cash expense reported on the statements of operations. No similar expense existed in the current year.



Gain
(Loss) on Settlement of Debt



Gain (loss)
on settlement of debt was $(43,921) and $21,700 for the years ended August 31, 2014 and 2013, respectively. The change is reported
in the statements of operations.



Change
in derivative liabilities



Loss
on derivative liabilities was $306,535 and $5,900,560 for the years ended August 31, 2014 and 2013, respectively. This change
in derivative liability is a non-cash expense reported on the statements of operations.



Net
Loss



Our
net loss was $7,565,126 and $10,479,088 for the years ended August 31, 2014 and 2013, respectively. Our net loss was attributable
to our lack of significant revenue together with increased general and administrative expenses, increased interest expense, loss
on conversion of debt and settlement of accrued interest, debt issuance costs, and the change in value of our derivative liability,
as discussed above. We expect to continue to incur net losses until such time as we can begin generating revenue from operations.







11







Liquidity
and Capital Resources



Liquidity
is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. The Company is in
the start-up stage and has not generated significant revenues since inception. It has experienced recurring operating losses and
negative cash flows from operations since its inception. It also has a working capital and stockholders’ deficit of $1,343,884
and $3,611,289, respectively, at August 31, 2014. We have $0 cash on hand. We expect a burn rate of at least $50,000 per month
and will need to raise at least $600,000 in 2015 to remain in business, for which we can give no assurance of success. Due to
the “start-up” nature of our business, we expect to incur losses as and if we expand. Our business plan involves adding
qualified executives and rolling out various rewards platforms. To date, our cash flow requirements have been met by equity and
debt financings. If we are unable to successfully sell additional securities in one or more offerings, generate sufficient profits
or otherwise obtain additional funds for our working capital needs, we may need to cease or curtail operations. Furthermore, there
is no assurance the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during
the initial stages of our operations. For these reasons, our auditors believe that there is substantial doubt that we will be
able to continue as a going concern.



The
Company has incurred and continues to incur substantial indebtedness in order to finance its operations. As of August 31, 2014
the Company’s total current liabilities were $3,663,348, with a working capital deficit of $1,343,884. See Note 7 –
Advances from Related Parties, Note 7 – Senior Secured Convertible Note, Note 8 – Secured Promissory Note, Note 9
– Convertible Notes with Related Parties, Note 10 - Convertible Notes, Note 11 – Promissory Notes, Note 12 –
Promissory Notes with Related Parties and Note 13 – Derivative Liability of the Company’s financial statements appearing
elsewhere in this Report.



Net
cash used in operating activities was $704,794 and $688,143 for the years ended August 31, 2014 and 2013, respectively. Cash was
primarily used to fund our net losses from operations.



Net
cash used in investing activities was $45,000 and $0 for the years ended August 31, 2014 and 2013, respectively. Cash was used
to purchase the assets of The Natural Way of L.A.



Net
cash provided by financing activities was $697,577 and $758,158 for the years ended August 31, 2014 and 2013, respectively. During
the year ended August 31, 2014, we received cash of $734,612 from the issuance of promissory notes and convertible notes which
was offset by $183,135 in payments of promissory notes and convertible notes. The Company also received $110,000 from the sale
of common shares and made net payments of $42,942 on operating loans from related parties.



We
believe our current working capital position together with our expected future cash flows from operations will be insufficient
to fund our operations in the ordinary course of business, anticipated capital expenditures, debt payment requirements and other
contractual obligations for at least the next twelve months. We have been and expect to continue to fund these activities with
debt and equity financing.



The
Company will require additional capital, either through debt or private placements, in order to meet its substantial debt obligations
and execute its business plan. Such additional financing may not become available on acceptable terms and there can be no assurance
that any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the
Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing,
or cause substantial dilution for our stockholders, in the case of equity financing.



Off
Balance Sheet Arrangements



None.



Item
7A. Quantitative and Qualitative Disclosures About Market Risk



We
are not required to provide the information required by this Item because we are a smaller reporting company.



Item
8. Financial Statements and Supplementary Data



Our
Financial Statements are annexed to this Report as pages F-1 through F-40. An index to such materials appears on page 24.



Item
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure



None.



Item
9A. Controls and Procedures



Evaluation
of Disclosure controls and procedures.



Under
the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer
(the “Certifying Officers”) we evaluated the effectiveness of the design and operation of our disclosure controls
and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based
upon that evaluation, the Certifying Officers concluded that, as of the end of the period covered by this report, our disclosure
controls and procedures were not effective. We and our auditors identified material weaknesses discussed below in the Report of
management on internal control over financial reporting.



12







Report
of Management on Internal Control over Financial Reporting.



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles. The Certifying Officers evaluated the effectiveness of the Company’s internal
control over financial reporting and concluded that, as of the end of the period covered by this report, the Company’s internal
control over financial reporting was not effective. Our internal control over financial reporting includes those policies and
procedures that:



(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets;



(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and



(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets
that could have a material effect on the financial statements.



Management
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework inInternal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and has
concluded that as of the end of the period covered by this report, our internal control over financial reporting was not effective.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will
not be prevented or detected.



In
the course of management’s assessment, we have identified the following material weaknesses in internal control over financial
reporting:



| | ● | Segregation
    of Duties and Lack of Control Processes That Provide for Multiple Levels of Supervision and Review-- As a result
    of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee,
    an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial
    information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of
    the lack of segregation of duties potentially affects multiple processes and procedures.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Maintenance
    of Current Accounting Records -- This weakness specifically affects the payments and purchase cycle and therefore we failed
    to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital
    transactions.                                                                                                                                                                                                                                                                                                                              



We
are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material
weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies.
Management has hired a Principal Accounting Officer in an effort to mitigate some of the identified weaknesses. The Company intends to
continue to hire additional finance and accounting personnel necessary to address the weaknesses once additional capital is obtained
which will allow full operations to commence. Despite the existence of the material weaknesses, we believe that our consolidated
financial statements contained in this Annual Report on Form 10-K fairly presents our financial position, results of operations
and cash flows for the fiscal year ending August 31, 2014 in all material respect.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation
and presentation.



This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s Report was not subject to attestation by the company’s registered public accounting
firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only Management’s Report
in this annual report.







13







Changes
in internal controls over financial reporting.



There
were no changes that occurred during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



Item
9B. Other Information



None.



PART
III



Item
10. Directors, Executive Officers and Corporate Governance



The
following sets forth information about our directors and executive officers as of the date of this report:



|Name                 |  | Age |  | Position                                                       
|-------------------- |  | --- |  | ---------------------------------------------------------------
|Robert H. Rothenberg |  | 43  |  | Chief Executive
    Officer and Director                       
|Steven Gormley       |  | 47  |  | Chief Business
    Development Officer and Director            
|Eli Feder            |  | 58  |  | Chief Corporate
    Development Officer and Director           
|Thomas D’Orazio      |  | 56  |  | Vice President,
    Controller and Principal Accounting Officer



Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until
removed by the board. All officers and directors listed above will remain in office until the next annual meeting of our stockholders,
and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors.



Robert
H. Rothenberghas been our President and Chief Executive Officer since April 11, 2014, our President since January 2012
and since June 20, 2013 our Chief Executive Officer and a Director. Mr. Rothenberg has over 20 years of marketing and operational
experience. He transitions out of LSF Interactive, a global digital marketing agency, where he was Managing Director of their
U.S. operations from January 2010 to January 2012. Mr. Rothenberg was involved in three acquisitions while with LSF, while strengthening
their US operations and client roster, gaining momentum and turning it profitable. He helped LSF achieve gains in gross revenues
and gross profits by expanding profitable engagements with Fortune 1000 companies. Prior to LSF, Mr. Rothenberg was Managing Director
of Unreal Marketing from 2002 to 2010. Prior to his work at Unreal Marketing, Mr. Rothenberg served as Vice President of Marketing
& Business Development at GSI Commerce, Inc. from 1999 to 2002 helping clients such as JP Morgan Chase, the NFL, L’Oreal,
Core Logic, Morgan Stanley (Discover Card), Career Education Corporation, Penske and Warnaco Brands (Speedo, CKU and CK Jeans).
As one of the first employees hired after the formation of GSI Commerce in 1999 and during his tenure at GSA Commerce, Mr. Rothenberg
helped launch the company and grow the foundation of the business that became an ecommerce powerhouse that was acquired by eBay
in 2011 for $2.4 billion. Prior to his work for GSI Commerce, Mr. Rothenberg worked for the National Basketball Association (NBA)
from 1995 to 1999 where he launched and managed NBA Properties Direct to Consumer (DTC) business initiatives which included printed
catalogues, e commerce websites, projects for their retail store on 5th Avenue and a database partnership with Sport Illustrated.
Mr. Rothenberg earned a Bachelors of Science Degree in 1993 at the University of StonyBrook and a Masters Degree in 1995 at Adelphi
University.



Steven
Gormleyhas been our Chief Business Development Officer and Acting Secretary since April 11, 2014, an employee of the
Company since January 2013, President of our Equality Rewards division since January 2013, a director since June 20, 2013 and
a consultant from July 2012 until January 2013. Mr. Gormley has nearly twenty years experience developing, branding, marketing,
launching, managing and operating businesses in the US and international markets. Mr. Gormley has also served as a partner in
GB Strategic LLC, a business consultancy firm since August 2011. Prior to that, in 2008 Mr. Gormley founded Zamaneth Media Consulting,
a branded entertainment company, where he served as its Chief Executive Officer until October 2011. Prior to that from 2005 to
2008 Mr. Gormley served as Managing Director for Medical Capital Holdings. From 2004 to 2005 Mr. Gormley served as Managing Director
for a branded entertainment company called Seed, a subsidiary of Backyard Holdings, a commercial production company. Steve Gormley
also served as Managing Director at American Entertainment Partners from 2000 to 2004.where he was responsible developing, branding,
marketing, launching, managing and operations for these companies. Mr. Gormley, received a Bachelors of Arts Degree in Political
Science from Gettysburg College in 1989 and continued studies in the Chinese language and literature and the privatization of
the former Soviet Union.



Eli
Federhas been our Chief Corporate Development Officer since June 30, 2014, our Chief Executive Officer (a position he
resigned on April 1, 2013), and Director of the Company since October 2011 and our president from October 2011 through January
2012. He was the founder of Infinity Network and served as its Chairman from September 2006 through May 2008. Mr. Feder has launched
several successful companies in the food service and marketing industries. His experiences from which include cofounding Quality
Care, a nursing staffing firm startup, in the New York Metropolitan Area and participating successfully in the development of
several food products for that have been commercialized (e.g., a peanut butter and jelly cookie was conceived and sold to Smuckers).
Mr. Feder served as Director of Business Development for Splitstream Technologies in 2002 and 2003; the underlying technology
that powered Countonme, a registered card program. He has since acquired the technology for use by Infinity Network. Mr. Feder
was named one of the “Top 40 Businessmen Under 40” by Entrepreneur Magazine in 1989.



14







Thomas
D’Orazio has been our Vice President, Corporate Controller and Principal Accounting Officer since July 7, 2014.
Prior to joining the Company, Mr. D’Orazio was a member of the Technical Accounting Staff of the Disclosure Operations of
the U.S. Securities and Exchange Commission, Division of Corporation Finance from 2013 to 2014 where he was responsible for reviewing
management’s discussion and analysis disclosure and financial statement and related disclosure/internal control issues on
a variety of SEC reports to ensure adherence to authoritative accounting/SEC guidance. From 2005 to 2012 Mr. D’Orazio was
the Senior Vice President, Finance at Sensus, a provider of advanced utility metering and related communications solutions. From
2004 to 2005 Mr. D’Orazio was the Vice President and Controller of R.H. Donnelley Corporation, a leading yellow pages publisher
and directional media company. From 2001 to 2003 Mr. D’Orazio was the Vice President and Corporate Controller of Pillowtex
Corporation, a home textile product manufacturer whose brand name products include Cannon, Fieldcrest, Royal Velvet and Charisma.
Previously, Mr. D’Orazio has been involved in corporate accounting in a variety of roles, and has been an assistant project
manager for research and technical activities for the Financial Accounting Standards Board and a supervising senior auditor at
Arthur Andersen LLP. Mr. D’Orazio received a bachelor’s degree in Business Administration in Accounting and Financial
Management from Pace University, is a Certified Public Accountant in the state of New York and a member of the AICPA and New York
State Society of CPAs.



Family
Relationships



There
are no family relationships among any of our officers or directors.



Conflicts
of Interest



Certain
potential conflicts of interest are inherent in the relationships between our officers and directors and us.



From
time to time, one or more of our affiliates may form or hold an ownership interest in and/or manage other businesses both related
and unrelated to the type of business that we own and operate. These persons expect to continue to form, hold an ownership interest
in and/or manage additional other businesses which may compete with our business with respect to operations, including financing
and marketing, management time and services and potential customers. These activities may give rise to conflicts between or among
the interests of us and other businesses with which our affiliates are associated. Our affiliates are in no way prohibited from
undertaking such activities, and neither us nor our shareholders will have any right to require participation in such other activities.



Further,
because we intend to transact business with some of our officers, directors and affiliates, as well as with firms in which some
of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests
of us and these related persons or entities. We believe that such transactions will be effected on terms at least as favorable
to us as those available from unrelated third parties.



With
respect to transactions involving real or apparent conflicts of interest, we have adopted policies and procedures which require
that the: (i) fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors
who authorize or approve the transaction prior to such authorization or approval, (ii) transaction be approved by a majority of
our disinterested outside directors, and (iii) transaction be fair and reasonable to us at the time it is authorized or approved
by our directors.



Our
policies and procedures regarding transactions involving potential conflicts of interest are not in writing. We understand that
it will be difficult to enforce our policies and procedures and will rely and trust our officers and directors to follow our policies
and procedures. We will implement our policies and procedures by requiring the officer or director who is not in compliance with
our policies and procedures to remove himself, and the other officers and directors will decide how to implement the policies
and procedures accordingly.



Involvement
in Certain Legal Proceedings



To
the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten
years that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships
and Related Transactions, and Director Independence – Transactions with Related Persons,” none of our directors, director
nominees, or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates,
or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.



15







Committees



Our Board
of Directors has no separate committees and our Board of Directors acts as the audit committee and the compensation committee.
We do not have an audit committee financial expert serving on our Board of Directors.



Compliance
with Section 16(A) of the Exchange Act.



Section
16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10%
of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and are required to furnish copies to the Company. Reports, namely Form 4 and Schedule 13 D/A,
required to be filed were not timely filed during the fiscal year ended August 31, 2014 but were filed as of the date of this
Annual Report on Form 10-K.



Code
of Ethics



The Company
has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics is filed
as an exhibit to the Company’s Annual Report on Form 10K for the fiscal year ended August 31, 2008.



Item
11. Executive Compensation



Summary
Compensation Table



The
following table summarizes all compensation recorded by us in the fiscal years ended August 31, 2014 and 2013:



| | ● | our principal
    executive officer or other individual serving in a similar capacity during fiscal 2014;                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                        
| | ● | our two most highly
    compensated executive officers other than our principal executive officer who were serving as executive officers at August
    31, 2014 whose compensation exceed $100,000; and
| |   |                                                                                                                                                                                                        
| | ● | up to two additional
    individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive
    officer at August 31, 2014.                 



For
definitional purposes these individuals are sometimes referred to as the “named executive officers” as that term is
defined under Rule 3b-7 of the Securities Exchange Act of 1934. The value attributable to any stock or option awards is computed
in accordance with ASC Topic 718 (formerly FAS 123R). None of our named executive officers received compensation in the form of
Non-Equity Incentive Plan Compensation, Nonqualified Deferred Compensation Earnings, or any other forms of compensation in excess
of the $10,000 in the aggregate in fiscal 2014 and fiscal 2013. The amounts reflected in columns (d) and (e) represent the dollar
amount recognized for financial statement reporting purposes with respect to fiscal 2013 and fiscal 2012 for the fair value of
securities granted in each respective year in accordance with ASC Topic 718. Pursuant to Securities and Exchange Commission rules,
the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our methodology, including
its underlying estimates and assumptions used in calculating these values, is set forth in the notes to our audited financial
statements included in our annual report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended
August 31, 2014. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that
may be realized upon exercise.



|Name and Principal Position         |  | Year |  | Salary
 ($) |         |  | Bonus
 ($) |   |   | Stock Awards
 ($) |  |   | Total
 ($) | 
|----------------------------------- |  | ---- |  | ----------- | ------- |  | ---------- | - | - | ----------------- |  | - | ---------- | 
|Robert H. Rothenberg (1)            |  | 2014 |  | $           | 263,334 |  |            | $ | - |                   |  | $ | 1,364,000  | 
|Chief Executive Officer             |  | 2013 |  | $           | 240,000 |  |            | $ | - |                   |  | $ | 390,200    | 
|                                    |  |      |  |             |         |  |            |   |   |                   |  |   |            | 
|Steve Gormley (2)                   |  | 2014 |  | $           | 214,445 |  |            | $ | - |                   |  | $ | 1,364,000  | 
|Chief Business Development Officer  |  | 2013 |  | $           | 160,000 |  |            | $ | - |                   |  | $ | 540,000    | 
|                                    |  |      |  |             |         |  |            |   |   |                   |  |   |            | 
|Eli Feder (3)                       |  | 2014 |  | $           | 142,500 |  |            | $ | - |                   |  | $ | 1,102,500  | 
|Chief Corporate Development Officer |  | 2013 |  | $           | 135,000 |  |            | $ | - |                   |  | $ | 262,000    | 



16







|(1) | For
    the year ended August 31, 2014, Mr. Rothenberg received $X in cash and the balance of the cash portion of his $263,334 salary
    was accrued. Mr. Rothenberg also received 27,700,000 shares of common stock valued at $1,364.000 as provided for in his employment
    agreement dated April 10, 2014. The shares were issued at an average market price of $0.049 per share. Mr. Rothenberg was
    appointed as our Chief Executive Officer and a director of our company on June 20, 2013. For the year ended August 31, 2013,
    Mr. Rothenberg received $122,000 in cash and balance of the cash portion of his $240,000 salary was accrued. Mr. Rothenberg
    also received 21,005,000 shares of common stock of which 15,000,000 shares, valued at $150,000 as provided for in his employment
    agreement dated January 10, 2013. Additionally, 6,005,000 shares, valued at $240,200, were issued as a bonus. The remaining
    balance owed has been accrued and is included in accrued officer compensation in the attached Consolidated Balance Sheets.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(2) | For
    the year ended August 31, 2014, Mr. Gormley received $X in cash and the balance of the cash portion of his $214,445 salary
    was accrued. Mr. Gormley also received 27,700,000 shares of common stock valued at $1,364.000 as provided for in his employment
    agreement dated April 10, 2014. The shares were issued at an average market price of $0.049 per share. Mr. Gormley was appointed
    as a director of our company on June 20, 2013. For the year ended August 31, 2013, Mr. Gormley received $147,000 in cash and
    any balance of the cash portion of his salary of $160,000 was accrued. Mr. Gormley also received 21,000,000 shares of common
    stock of which 10,000,000 shares, valued at $100,000, were issued per his employment agreement dated January 10, 2013. Additionally,
    11,000,000 shares, valued at $440,000, were issued as a bonus. The shares were issued at an average market price of $0.04
    per share.                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(3) | For
    the year ended August 31, 2014, Mr. Feder received $X in cash and the balance of the cash portion of his $142,500 salary was
    accrued. Mr. Feder also received 27,900,000 shares of common stock valued at $1,102,500 as provided for in his employment
    agreement dated June 30, 2014. The shares were issued at an average market price of $0.049 per share. Mr. Feder resigned as
    our Chief Executive Officer on April 1, 2013. For the year ended August 31, 2013, Mr. Feder received $0 in cash and the balance
    of the cash portion of his salary of $135,000 earned prior to his resignation was accrued. Mr. Feder received 21,300,000 shares
    of common stock, valued at $262,000 as provided for in his employment agreement dated January 10, 2013. The shares were issued
    at an average market price of $0.012 per share.                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(4) | For
    the year ended August 31, 2014, Mr. D’Orazio’s salary reflects the prorated portion of his annual base salary
    of $165,000 based on his effective date of July 7, 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             








|(2) | For the year ended
    August 31, 2013, Mr. Kotch received $0 in cash and any balance of the cash portion of his salary of $180,000 was accrued.
    Mr. Kotch received 21,800,000 shares of common stock, valued at $276,700 as provided for in his employment agreement dated
    January 10, 2013. The shares were issued at an average market price of $0.013 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Mr. Rothenberg
    was appointed as our Chief Executive Officer and a director of our company on June 20, 2013. For the year ended August 31,
    2014, Mr. Rothenberg received $________. For the year ended August 31, 2013, Mr. Rothenberg received $122,000 in cash and
    balance of the cash portion of his $240,000 salary was accrued. Mr. Rothenberg also received 21,005,000 shares of common stock
    of which 15,000,000 shares, valued at $150,000 as provided for in his employment agreement dated January 10, 2013. Additionally,
    6,005,000 shares, valued at $240,200, were issued as a bonus. The shares were issued at an average market price of $0.04 per
    share. The remaining balance owed has been accrued and is included in accrued officer compensation in the attached Consolidated
    Balance Sheets.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(4) | Mr. Gormley was
    appointed as a director of our company on June 20, 2013. For the year ended August 31, 2013, Mr. Gormley received $147,000
    in cash and any balance of the cash portion of his salary of $160,000 was accrued. Mr. Gormley also received 21,000,000 shares
    of common stock of which 10,000,000 shares, valued at $100,000, were issued per his employment agreement dated January 10,
    2013. Additionally, 11,000,000 shares, valued at $440,000, were issued as a bonus. The shares were issued at an average market
    price of $0.04 per share. Mr. Gormley began his employment with the Company as a consultant in July 2012.                                                                                                                                                                           



17









Outstanding
Equity Awards at Fiscal Year-End Table



We had no
outstanding equity awards as of the end of fiscal 2014.



Employment
Agreements



Our
Board of Directors approved employment agreements with three executive officers and key employees. A summary of these follows:



Robert
Rothenberg Employment Agreement



On
April 11, 2014 our board approved an employment agreement with Mr. Rothenberg to serve as our President and Chief Executive Officer
for the period beginning April 11, 2014 through April 11, 2015. The term may be extended for up to two successive consecutive
one year periods unless either party sends notification of non-renewal to the other party not more than 270 days and not less
than 90 days before the end of the then existing term. Mr. Rothenberg’s employment agreement provides for, among other things,
payment of a base salary of $300,000, an award of 20,000,000 shares of common stock upon execution of the agreement, an award
of 100,000 shares of common stock each month during the term of the agreement, eligibility to receive an annual incentive bonus
if approved by our board, and participation in certain health and welfare benefit plans. At any time during his employment, Mr.
Rothenberg may convert any or all of the funds owed to him into common shares of the Company at a 70% discount to the average
closing price for the previous five days of trading on the OTCQB. Mr. Rothenberg may engage in any business activity outside of
the Company that is non-competitive with its business so long as such activity does not affect the performance of his duties under
as the Company’s Chief Executive Officer.



Under
the terms of the employment agreement, if Mr. Rothenberg’s employment is terminated as a result of his death, disability,
by us without cause, occurrence of a “change of control” or upon a “constructive termination”, Mr. Rothenberg
will be entitled to receive (in addition to salary and certain other benefits earned prior to termination) a single lump sum payment
in an amount equal to two times the sum of his then-current annual base salary discounted by the U.S. Treasury rate most comparable
to the applicable time left in the agreement or as and when normal payroll payments are made, the issuance of any undistributed
shares issuable under the agreement and health and welfare benefits for a period of six months following such termination.



The
agreement obligates Mr. Rothenberg not to compete against us, solicit our employees, disparage us, or disclose confidential information
about us during the term of the agreement, if his employment is terminated regardless of the reason.



Steve
Gormley Employment Agreement



On
April 11, 2014 our board approved an employment agreement with Mr. Gormley to serve as our Chief Business Development Officer
reporting to the Company’s Chief Executive Officer for the period beginning April 11, 2014 through April 11, 2015. The term
may be extended for up to two successive consecutive one year periods unless either party sends notification of non-renewal to
the other party not more than 270 days and not less than 90 days before the end of the then existing term. Mr. Gormley’s
employment agreement provides for, among other things, payment of a base salary of $300,000, an award of 20,000,000 shares of
common stock upon execution of the agreement, an award of 100,000 shares of common stock each month during the term of the agreement,
eligibility to receive an annual incentive bonus if approved by our board, and participation in certain health and welfare benefit
plans. At any time during his employment, Mr. Gormley may convert any or all of the funds owed to him into common shares of the
Company at a 70% discount to the average closing price for the previous five days of trading on the OTCQB. Mr. Gormley may engage
in any business activity outside of the Company that is non-competitive with its business so long as such activity does not affect
the performance of his duties under as the Company’s Chief Executive Officer.



Under
the terms of the employment agreement, if Mr. Gormley’s employment is terminated as a result of his death, disability, by
us without cause, occurrence of a “change of control” or upon a “constructive termination”, Mr. Gormley
will be entitled to receive (in addition to salary and certain other benefits earned prior to termination) a single lump sum payment
in an amount equal to two times the sum of his then-current annual base salary discounted by the U.S. Treasury rate most comparable
to the applicable time left in the agreement or as and when normal payroll payments are made, the issuance of any undistributed
shares issuable under the agreement and health and welfare benefits for a period of six months following such termination.



The
agreement obligates Mr. Gormley not to compete against us, solicit our employees, disparage us, or disclose confidential information
about us during the term of the agreement, if his employment is terminated regardless of the reason.



Eli
Feder Consulting Agreement



On
April 11, 2014 our board approved a consulting agreement with Mr. Feder to provide food production, logistics, consulting and
development services to the Company for its cannabis division for the period beginning April 10, 2014 through April 10, 2017.
Mr. Feder’s consulting agreement provides for, among other things, payment of up to $5,000 per month based on the number
of hours expensed each month by Mr. Feder and an award of 20,000,000 shares of common stock upon execution of the agreement. The
consulting agreement obligates Mr. Feder not to disclose confidential information about us during the term of the agreement.





18









Thomas
D’Orazio. Effective as of July 7, 2014, the Company appointed Thomas D’Orazio as Vice President, Corporate Controller
and Principal Accounting Officer. Pursuant to terms of employment set forth in Mr. D’Orazio’s letter agreement he
entered into with the Company, Mr. D’Orazio will receive an annual base salary of $165,000 and on or before December 31,
2014, his base salary will be reviewed and a package, including a new Base Salary of not less than $180,000 per year and a new
bonus may be mutually agreed upon. In addition to his base salary, Mr. D’Orazio will be paid a $15,000 transition bonus
by the end of September 2014 upon completion of a three month transition from the company’s current accountants.



Further,
Mr. D’Orazio will also be entitled to paid vacations and stock options to purchase 226,000 shares of the Company’s
common stock which shall have an exercise price equal to its fair market value as determined by the Company’s board of directors
on date of each grant. The stock options will be subject to vesting over a four year period, such that twenty-five percent (25%)
of the shares subject to the Option shall vest one (1) year from the start date of employment with the Company and the remaining
seventy-five percent (75%) of the shares subject to the option will vest in thirty-six (36) equal monthly installments thereafter.



The
term of Mr. D’Orazio’s employment is on an “at-will” basis and may be terminated by either party at any
time for any reason. In the event that Mr. D’Orazio’s employment with the Company is terminated without cause as defined
in the letter agreement on or before November 1, 2014, Mr. D’Orazio’s base salary and any qualifying bonus payments
will continue to be paid through November 1, 2014 or three months from date of termination, whichever is greater, as if he had
remained employed through that date.



The
Company has agreed to indemnify and hold harmless Mr. D’Orazio to the full extent authorized or permitted by law with respect
to any claim, liability, action, or proceeding instituted or threatened against or incurred by Mr. D’Orazio or his legal
representatives and arising in connection with his conduct or position at any time as an officer, employee or agent of the Company
or any subsidiary thereof. The Company shall not change, modify, alter, or in any way limit the existing indemnification and reimbursement
provisions relating to and for the benefit of its directors and officers without the prior written consent of Mr. D’Orazio,
including any modification or limitation of any directors and officer liability insurance program.



Compensation
of Directors



The
Company’s directors received no compensation. Directors who are or were also employees (Messrs. Rothenberg, Gormley and
Feder) are not paid for board service in addition to their regular employee compensation.



Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



The
following table sets forth certain information as of December 9, 2014 with respect to the holdings of: (1) each person known to
us to be the beneficial owner of more than 5% of our common stock; (2) each of our directors, nominees for director and named
executive officers; and (3) all directors and executive officers as a group. To the best of our knowledge, each of the persons
named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with
respect to such shares, unless otherwise indicated.



|Name of Beneficial Owner and Address                       |  | Amount and Nature of Beneficial Ownership of Common Stock |             |  | Percent of Common  Stock (1) | 
|---------------------------------------------------------- |  | --------------------------------------------------------- | ----------- |  | ---------------------------- | 
|                                                           |  |                                                           |             |  |                              | 
|Robert H. Rothenberg (2)                                   |  |                                                           | 65,707,521  |  |                              | 
|                                                           |  |                                                           |             |  |                              | 
|Eli Feder (2)                                              |  |                                                           | 57,721,430  |  |                              | 
|                                                           |  |                                                           |             |  |                              | 
|Steven Gormley (2)                                         |  |                                                           | 57,200,000  |  |                              | 
|                                                           |  |                                                           |             |  |                              | 
|Thomas D’Orazio                                            |  |                                                           | 0           |  |                              | 
|                                                           |  |                                                           |             |  |                              | 
|All directors and executive officers as a group (4 people) |  |                                                           | 180,628,951 |  |                              | 



|(1) | Based on 362,404,909
    shares of common stock issued and outstanding as of December 9, 2014. Shares of common stock subject to options or warrants
    currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the
    person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other
    person.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | The address for
    each such person is c/o OSL Holdings Inc., 1669 Edgewood Rd., Suite 214, Yardley, PA 19067                                                                                                                                                                                                                                                                                                                    





19







Changes
in Control



We
are not aware of any person who owns of record, or is known to own beneficially, five percent or more of our outstanding securities
of any class, other than as set forth above. We do not have an investment advisor. There are no current arrangements which will
result in a change in control, other than those set forth above.



Item
13. Certain Relationships and Related Transactions, and Director Independence.



Transactions
with Related Persons



We
also engage in a number of transactions with related parties in the ordinary course of our business, including:



The Company
has received funding of $28,100 from certain related parties to help fund its cash operating needs for the year ended August 31,
2014. The balance outstanding as of August 31, 2014 and 2013 was $20,500 and $63,560, respectively. The loans are non-interest
bearing, unsecured and due on demand.



On March
5, 2014, the Company entered into an Executive Agreement (see Note 15 to the notes to financial statements included elsewhere
in this report) in which certain related parties waived the balance owed to them from advances of $71,160. The $71,160 of advances
were convertible at a 70% discount of the average trading price 5 days prior to conversion. Under the Executive Agreement, advances
of $71,160 were settled with stock options. The total fair value of the conversion feature on the conversion date was $962,499.
This value was reclassified from liabilities to equity. In addition, during the year ended August 31, 2014, $835,178 was recorded
as gain on derivative liability. See footnote 13 for additional information.



The remaining
advances from related parties of $20,500 outstanding as of August 31, 2014 are not convertible.



For the
year ended August 31, 2013, the Company paid net advances to related parties of $14,842 and the related parties made payments
of $63,674 of accounts payable on behalf of the Company.



Director
Independence



We
do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we
have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule
5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or
any other individual having a relationship which, in the opinion of the company’s Board of Directors, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that
a director cannot be considered independent if:



| | ● | the director is,
    or at any time during the past three years was, an employee of the company;                                                                                                                                                                                                                                                                                                                            
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | the director or
    a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive
    months within the three years preceding the independence determination (subject to certain exclusions, including, among other
    things, compensation for board or board committee service);                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | a family member
    of the director is, or at any time during the past three years was, an executive officer of the company;                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | the director or
    a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which
    the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed
    5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain
    exclusions);
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | the director or
    a family member of the director is employed as an executive officer of an entity where, at any time during the past three
    years, any of the executive officers of the company served on the compensation committee of such other entity; or                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | the director or
    a family member of the director is a current partner of the company’s outside auditor, or at any time during the past
    three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.                                                                                                                                                                



Messrs.
Rothenberg, Gormley and Feder are not considered to be independent because they are current or former employees of the Company.



We
do not currently have a separately designated audit, nominating or compensation committee.





20







Item
14. Principal Accountant Fees and Services



Fees
and Services



The
following table shows the fees that were billed for the audit and other services for the fiscal years ended August 31, 2014 and
August 31, 2013.



|                   |  |   | 2014 |  |  |   | 2013 | 
|------------------ |  | - | ---- |  |  | - | ---- | 
|                   |  |   |      |  |  |   |      | 
|Audit fees         |  | $ | -    |  |  | $ | -    | 
|Audit related fees |  |   | -    |  |  |   | -    | 
|Tax fees           |  |   | -    |  |  |   | -    | 
|Other fees         |  |   | -    |  |  |   | -    | 
|Total fees         |  | $ | -    |  |  | $ | -    | 



Audit
Fees – This category includes the audit of our annual financial statements, review of financial statements included
in our quarterly reports and services that are normally provided by the independent registered public accounting firm in connection
with engagements for those years and services that are normally provided by our independent registered public accounting firm
in connection with statutory audits and Securities and Exchange Commission regulatory filings or engagements.



Audit-Related
Fees – This category consists of assurance and related services by the independent registered public accounting firm
that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under
“Audit Fees”.



Tax
Fees – This category consists of professional services rendered by our independent registered public accounting firm
for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and
technical tax advice.



Other
Fees – This category consists of fees for the audits on the financial statements of our client companies and all other
miscellaneous items.



Pre-Approval
Policies and Procedure for Audit and Permitted Non-Audit Services



The
Company has not adopted any written pre-approval policies or procedures as described in paragraph (c)(7)(i) of Rule 2.01 of Regulation
S-X.



PART
IV



Item
15. Exhibits, Financial Statement Schedules



(a) Exhibits:



|Exhibit
    
No. |  | Title
    of Document                                                                     |  | Location                                                             
|---------------- |  | ----------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------
|                 |  |                                                                                           |  |                                                                      
|3.1              |  | Articles
    of Incorporation                                                             |  | Incorporated
    by reference to Form SB-2 filed on June 17, 2005    
|                 |  |                                                                                           |  |                                                                      
|3.2              |  | Bylaws                                                                                    |  | Incorporated
    by reference to Form SB-2 filed on June 17, 2005    
|                 |  |                                                                                           |  |                                                                      
|3.3              |  | Certificates
    of Amendment to Articles of Incorporation and Certificate of Designation |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|                 |  |                                                                                           |  |                                                                      
|4.1              |  | Promissory
    Note between OSL Holdings, Inc. and Peter Dene dated March 13, 2014        |  | Incorporated
    by reference to Form 8-K as filed on March 20, 2014 
|                 |  |                                                                                           |  |                                                                      
|4.2              |  | Promissory
    Note between OSL Holdings, Inc. and Adar Bays, LLC dated June 16, 2014     |  | Incorporated
    by reference to Form 8-K filed on June 23, 2014     





21







|4.3   |  | Promissory
    Note between OSL Holdings, Inc. and Gel Properties, LLC dated June 16, 2014                                     |  | Incorporated
    by reference to Form 8-K as filed on June 23, 2014  
|----- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------
|      |  |                                                                                                                                |  |                                                                      
|4.4   |  | Convertible
    Promissory Note between OSL Holdings Inc. and Typenex Co-Investment, LLC dated July 1, 2014                    |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014 
|      |  |                                                                                                                                |  |                                                                      
|4.5   |  | Form
    of Warrant to Purchase Shares of Common Stock between OSL Holdings, Inc. and Typenex Co-Investment, LLC.              |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014 
|      |  |                                                                                                                                |  |                                                                      
|4.6   |  | Convertible
    Redeemable Debenture between OSL Holdings Inc. and TCA Global Credit Master Fund, LP dated October 20, 2014    |  | Incorporated
    by reference to Form 8-K filed on November 24, 2014 
|      |  |                                                                                                                                |  |                                                                      
|10.1  |  | Senior
    Secured Convertible Note dated December 28, 2008 with The Exchange LLC (as assignee of Emerald Asset Advisors, LLC) |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.2  |  | Amendment
    No. 1 to Senior Secured Convertible Note dated as of October 12, 2011 with The Exchange LLC                      |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.3  |  | Employment
    Agreement dated January 17, 2012 with Robert H. Rothenberg                                                      |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.4  |  | Convertible
    Note dated January 20, 2012 with Asher Enterprises                                                             |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.5  |  | Convertible
    Note dated March 5, 2012 with Panache Capital                                                                  |  | Incorporated
    by reference to Form 8-K filed on March 15, 2012    
|      |  |                                                                                                                                |  |                                                                      
|10.6  |  | Convertible
    Note dated June 15, 2012 with Asher Enterprises                                                                |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.7  |  | Office
    Lease Agreement dated March 11, 2012                                                                                |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.8  |  | Promissory
    Note dated October 10, 2011 with Crisnic Fund, S.A.                                                             |  | Incorporated
    by reference to Form 8-K filed on October 20, 2011  
|      |  |                                                                                                                                |  |                                                                      
|10.9  |  | Convertible
    Note dated April 10, 2012 with Panache Capital                                                                 |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|      |  |                                                                                                                                |  |                                                                      
|10.10 |  | Convertible
    Note dated April 18, 2012 with Panache Capital                                                                 |  | Incorporated
    by reference to Form 8-K filed on April 20, 2012    
|      |  |                                                                                                                                |  |                                                                      
|10.11 |  | Convertible
    Note dated April 26, 2012 with Panache Capital                                                                 |  | Incorporated
    by reference to Form 8-K filed on April 20, 2012    
|      |  |                                                                                                                                |  |                                                                      
|10.12 |  | Convertible
    Note dated July 17, 2012 with Asher Enterprises                                                                |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012





22







|10.13  |  | Convertible
    Note dated August 13, 2012 with Continental Equities                                                                                    |  | Incorporated
    by reference to Form 8-K filed on September 25, 2012
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------
|       |  |                                                                                                                                                         |  |                                                                      
|10.14  |  | Amendment
    to Convertible Notes dated September 21, 2012 with Panache Capital                                                                        |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|       |  |                                                                                                                                                         |  |                                                                      
|10.15  |  | Convertible
    Note dated November 8, 2012 with Asher Enterprises                                                                                      |  | Incorporated
    by reference to Form 8-K filed on November 14, 2012 
|       |  |                                                                                                                                                         |  |                                                                      
|10.16  |  | Stock
    Purchase Agreement with Asher Enterprises dated November 8, 2012                                                                              |  | Incorporated
    by reference to Form 8-K filed on November 14, 2012 
|       |  |                                                                                                                                                         |  |                                                                      
|10.17  |  | Amendment
    No. 2 to Senior Secured Convertible Note dated as of December 4, 2012 with The Exchange LLC                                               |  | Incorporated
    by reference to Form 10-K filed on December 14, 2012
|       |  |                                                                                                                                                         |  |                                                                      
|10.18  |  | Employment
    Agreement with Steven Gormley dated January 2, 2013                                                                                      |  | Incorporated
    by reference to Form 8-K filed on January 18, 2012  
|       |  |                                                                                                                                                         |  |                                                                      
|10.19* |  | Employment
    Agreement with Bob Rothenberg dated January 2, 2013                                                                                      |  | Incorporated
    by reference to Form 8-K filed on January 23, 2012  
|       |  |                                                                                                                                                         |  |                                                                      
|10.20* |  | Employment
    Agreement with Eric Kotch dated January 10, 2013                                                                                         |  | Incorporated
    by reference to Form 8-K filed on January 18, 2012  
|       |  |                                                                                                                                                         |  |                                                                      
|10.21* |  | Employment
    Agreement with Eli Feder dated January 10, 2013                                                                                          |  | Incorporated
    by reference to Form 8-K filed on January 18, 2012  
|       |  |                                                                                                                                                         |  |                                                                      
|10.22  |  | Marketing
    Agreement with Outfest dated February 13, 2013                                                                                            |  | Incorporated
    by reference to Form 10-Q filed on April 19, 2013   
|       |  |                                                                                                                                                         |  |                                                                      
|10.23  |  | Marketing
    Agreement with One Good Love, Inc. dated March 6, 2013                                                                                    |  | Incorporated
    by reference to Form 10-Q filed on April 19, 2013   
|       |  |                                                                                                                                                         |  |                                                                      
|10.24  |  | Assignment,
    Termination and Release Agreement, dated March 21, 2013 OSL Holdings, Inc. Asher Enterprises, Inc., Samuel Kotch and Benjamin
    Kotch |  | Incorporated
    by reference to Form 8-K filed on March 27, 2013    
|       |  |                                                                                                                                                         |  |                                                                      
|10.25  |  | Consent
    to Assignment with Samuel Kotch and Benjamin Kotch dated March 21, 2013                                                                     |  | Incorporated
    by reference to Form 10-Q filed on April 19, 2013   
|       |  |                                                                                                                                                         |  |                                                                      
|10.26  |  | Marketing
    Agreement with LA Pride dated April 9, 2013                                                                                               |  | Incorporated
    by reference to Form 10-Q filed on April 19, 2013   
|       |  |                                                                                                                                                         |  |                                                                      
|10.27  |  | Letter
    Agreement with Christopher Street West dated April 9, 2013                                                                                   |  | Incorporated
    by reference to Form 10-Q filed on April 19, 2013   
|       |  |                                                                                                                                                         |  |                                                                      
|10.28  |  | Form
    of Promissory Note dated May 2013                                                                                                              |  | Incorporated
    by reference to Form 8-K filed on June 11, 2013     
|       |  |                                                                                                                                                         |  |                                                                      
|10.29  |  | Form
    of Demand Promissory Note dated May 28, 2013                                                                                                   |  | Incorporated
    by reference to Form 8-K filed on June 11, 2013     
|       |  |                                                                                                                                                         |  |                                                                      
|10.30  |  | Form
    of $200,000.00 Promissory Note dated June 21, 2013                                                                                             |  | Incorporated
    by reference to Form 8-K filed on June 26, 2013     





23







|10.31 |  | Form
    of Securities Purchase Agreement dated June 21, 2013                                                            |  | Incorporated
    by reference to Form 8-K filed on June 26, 2013            
|----- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------
|      |  |                                                                                                                          |  |                                                                             
|10.32 |  | Project
    Collaboration and Profit Sharing Agreement dated October 2, 2013 among OSL Holdings, Inc. and Kevin Mulhearn |  | Incorporated
    by reference to Form 10-Q as filed on January 21, 2014     
|      |  |                                                                                                                          |  |                                                                             
|10.33 |  | Amendment
    to Project Collaboration and Profit Sharing Agreement dated October 13, 2013                               |  | Incorporated
    by reference to Form 8-K as filed on March 10, 2014        
|      |  |                                                                                                                          |  |                                                                             
|10.34 |  | OSLH
    Executive Agreement                                                                                             |  | Incorporated
    by reference to Form 8-K as filed on March 10, 2014        
|      |  |                                                                                                                          |  |                                                                             
|10.35 |  | Agreement
    Among Tony Tucci, Matthew Cohen and OSL Holdings, Inc.                                                     |  | Incorporated
    by reference to Form 8-K as filed on March 10, 2014        
|      |  |                                                                                                                          |  |                                                                             
|10.36 |  | Natural
    Way of LA, Matthew Cohen Agreement with OSL Holdings, Inc.                                                   |  | Incorporated
    by reference to Form 8-K as filed on March 10, 2014        
|      |  |                                                                                                                          |  |                                                                             
|10.37 |  | Promissory
    Note                                                                                                      |  | Incorporated
    herein by reference to Form 8-K as filed on March 21, 2014 
|      |  |                                                                                                                          |  |                                                                             
|10.38 |  | Funding
    Agreement                                                                                                    |  | Incorporated
    by reference to Form 8-K as filed on March 21, 2014        
|      |  |                                                                                                                          |  |                                                                             
|10.39 |  | Employment
    Agreement between OSL Holdings, Inc. and Robert Rothenberg dated April 10, 2014                           |  | Incorporated
    herein by reference to Form 10-Q as filed on April 18, 2014
|      |  |                                                                                                                          |  |                                                                             
|10.40 |  | Consulting
    Agreement between OSL Holdings, Inc. and Eli Feder dated April 10, 2014                                   |  | Incorporated
    by reference to Form 10-Q as filed on April 18, 2014       
|      |  |                                                                                                                          |  |                                                                             
|10.41 |  | Employment
    Agreement between OSL Holdings, Inc. and Steve Gormley dated April 10, 2014                               |  | Incorporated
    by reference to Form 10-Q as filed on April 18, 2014       
|      |  |                                                                                                                          |  |                                                                             
|10.42 |  | Asset
    Purchase Agreement with The Natural Way of LA, LLC dated May 12, 2014                                          |  | Incorporated
    by reference to Form 8-K as filed on May 21, 2014          
|      |  |                                                                                                                          |  |                                                                             
|10.43 |  | Consulting
    Agreement with Anthony Tucci dated May 15, 2014                                                           |  | Incorporated
    by reference to Form 8-K as filed on May 21, 2014          
|      |  |                                                                                                                          |  |                                                                             
|10.44 |  | Management
    Services Agreement between OSL Holdings, Inc. and Sean Ridgley                                            |  | Incorporated
    by reference to Form 8-K as filed on May 28, 2014          
|      |  |                                                                                                                          |  |                                                                             
|10.45 |  | Business
    Furniture and Equipment Lease Agreement between OSL Holdings, Inc. and Sean Ridgley                         |  | Incorporated
    by reference to Form 8-K as filed on May 28, 2014          
|      |  |                                                                                                                          |  |                                                                             
|10.46 |  | Consulting
    Agreement between OSL Holdings, Inc. and Sean Ridgley                                                     |  | Incorporated
    by reference to Form 8-K as filed on May 28, 2014          
|      |  |                                                                                                                          |  |                                                                             
|10.47 |  | Securities
    Purchase Agreement between OSL Holdings, Inc. and Adar Bays, LLC dated June 16, 2014                      |  | Incorporated
    by reference to Form 8-K as filed on June 23, 2014         
|      |  |                                                                                                                          |  |                                                                             
|10.48 |  | Terms
    of Employment between OSL Holdings Inc. and Thomas D’Orazio dated June 24, 2014                                |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014        





24







|10.49  |  | Employment
    Agreement between OSL Holdings, Inc. and Eli Feder dated June 30, 2014                                              |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|       |  |                                                                                                                                    |  |                                                                     
|10.50  |  | Securities
    Purchase Agreement between OSL Holdings, Inc. and Typenex Co-Investment, LLC dated July 1, 2014                     |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|       |  |                                                                                                                                    |  |                                                                     
|10.51  |  | Form
    of Investor Notes between OSL Holdings, Inc. and Typenex Co-Investment, LLC dated July 1, 2014                            |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|       |  |                                                                                                                                    |  |                                                                     
|10.52  |  | Security
    Agreement between OSL Holdings, Inc. and Typenex Co-Investment, LLC dated July 1, 2014                                |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|       |  |                                                                                                                                    |  |                                                                     
|10.53  |  | Membership
    Interest Pledge Agreement between OSL Holdings, Inc. and Typenex Co-Investment, LLC dated July 1, 2014              |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|       |  |                                                                                                                                    |  |                                                                     
|10.54  |  | Consolidated
    Promissory Note between OSL Holdings Inc. and Kevin Mulhearn dated July 10, 2014                                  |  | Incorporated
    by reference to Form 10-Q as filed on July 21, 2014
|       |  |                                                                                                                                    |  |                                                                     
|10.55  |  | Leak-Out
    Agreement between OSL Holdings Inc. and Eli Feder, Robert Rothenberg, and Steven Gormley dated August 4, 2014         |  | Incorporated
    by reference to Form 8-K filed on August 7, 2014   
|       |  |                                                                                                                                    |  |                                                                     
|10.56  |  | Stock
    Purchase Agreement between OSL Holdings Inc., Go Green Hydroponics Inc., and Jeffrey Malinovitz dated October 20, 2014   |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.57  |  | Stock
    Purchase Agreement between OSL Holdings Inc., Go Green Hydroponics Inc., and Jason Babadjov dated October 20, 2014       |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.58* |  | Employment
    Agreement between OSL Holdings Inc., Go Green Hydroponics Inc., and Jeffrey Malinovitz dated October 20, 2014       |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.59* |  | Employment
    Agreement between OSL Holdings Inc., Go Green Hydroponics Inc., and Jason Babadjov dated October 20, 2014           |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.60  |  | Securities
    Purchase Agreement between OSL Holdings Inc. and TCA Global Credit Master Fund, LP effective as of October 20, 2014 |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.61  |  | Form
    of Guaranty Agreement                                                                                                     |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.62  |  | Form
    of Security Agreement                                                                                                     |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 
|       |  |                                                                                                                                    |  |                                                                     
|10.63  |  | Form
    of Pledge Agreement                                                                                                       |  | Incorporated
    by reference to Form 8-K filed on October 24, 2014 





25







|14.1 |  | Code
    of Ethics                                                                                                                                                                                               |  | Incorporated
    by reference to Form 10-K/A filed on December 17, 2008
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                  |  |                                                                        
|21.1 |  | Subsidiaries
    of the registrant                                                                                                                                                                               |  | Filed
    herewith                                                     
|     |  |                                                                                                                                                                                                                  |  |                                                                        
|31.1 |  | Certification
    of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002                                                    |  | Filed
    herewith                                                     
|     |  |                                                                                                                                                                                                                  |  |                                                                        
|31.2 |  | Certificate
    of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.                                                     |  | Filed
    herewith                                                     
|     |  |                                                                                                                                                                                                                  |  |                                                                        
|32.1 |  | Certification
    of Principal Executive Officer, and Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Filed
    herewith                                                     








* Management
contract or compensatory plan or arrangement.



26







SIGNATURES



Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant had duly caused this report
to be signed on its behalf to the undersigned, thereunto duly authorized.



Dated: December
16, 2014



| | OSL HOLDINGS INC.
| | -----------------
| |                  
| | By:              
| |                  
| |                  



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of
the registrant in the capacities indicated:



|Signature                    |  | Title                                        |  | Date                 
|---------------------------- |  | -------------------------------------------- |  | ---------------------
|                             |  |                                              |  |                      
|/s/
    Robert H. Rothenberg |  | Chief
    Executive Officer and Director     |  | December
    16, 2014
|Robert H. Rothenberg         |  | (Principal Executive
    Officer)            |  |                      
|                             |  |                                              |  |                      
|/s/Thomas
    D’Orazio       |  | Vice
    President, Corporate Controller     |  | December
    16, 2014
|Thomas D’Orazio              |  | (Principal Financial and Accounting Officer) |  |                      
|                             |  |                                              |  |                      
|/s/
    Steven Gormley       |  | Director                                     |  | December
    16, 2014
|Steven Gormley               |  |                                              |  |                      
|                             |  |                                              |  |                      
|/s/
    Eli Feder            |  | Director                                     |  | December
    16, 2014
|Eli Feder                    |  |                                              |  |                      



27







INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                              |  | Page
|------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                              |  |     
|Reports of Independent Registered Public Accounting Firms                                                     |  | F-1 
|                                                                                                              |  |     
|Consolidated Balance Sheets as of August 31, 2014 and 2013                                                    |  | F-2 
|                                                                                                              |  |     
|Consolidated Statements of Operations for the Years Ended August 31, 2014 and 2013                            |  | F-3 
|                                                                                                              |  |     
|Consolidated Statements of Changes in Stockholders’ Deficit for the years August 31, 2013 and August 31, 2014 |  | F-4 
|                                                                                                              |  |     
|Consolidated Statements of Cash Flows for the Years Ended August 31, 2014 and 2013                            |  | F-5 
|                                                                                                              |  |     
|Notes to the Consolidated Audited Financial Statements                                                        |  | F-6 



28







Report
of Independent Registered Public Accounting Firm



To the Board
of Directors and Stockholders

OSL Holdings,
Inc. and Subsidiaries.



We
have audited the accompanying consolidated balance sheet of OSL Holdings, Inc. and its subsidiaries (collectively, the “Company”)
as of August 31, 2014 and 2013 and the related consolidated statements of operations, stockholders’ deficit, and cash flows
for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.



In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of OSL Holdings, Inc. and its subsidiaries as of August 31, 2014 and 2013 and the results of their consolidated operations and
their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of
America.



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company has suffered net losses and has a working capital deficiency. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to
these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.





|/s/
    MaloneBailey, LLP | 
|------------------------- | 
|www.malonebailey.com      | 
|Houston, Texas            | 
|                          | 
|December 16, 2014         | 





F-1







OSL
Holdings Inc. and Subsidiaries

Consolidated
Balance Sheets



|                                                                                                                                                                      |  | August 31, |            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | -----------
|                                                                                                                                                                      |  | 2014       |            
|ASSETS                                                                                                                                                                |  |            |            
|Current Assets:                                                                                                                                                       |  |            |            
|Cash                                                                                                                                                                  |  | $          | -          
|Accounts receivable, net                                                                                                                                              |  |            | 29,833     
|Prepaid expenses and other current assets                                                                                                                             |  |            | 11,013     
|Total current assets                                                                                                                                                  |  |            | 40,846     
|                                                                                                                                                                      |  |            |            
|Property and equipment, net                                                                                                                                           |  |            | 42,500     
|                                                                                                                                                                      |  |            |            
|Total assets                                                                                                                                                          |  | $          | 83,346     
|                                                                                                                                                                      |  |            |            
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                 |  |            |            
|Current Liabilities:                                                                                                                                                  |  |            |            
|Accounts payable and accrued expenses                                                                                                                                 |  | $          | 1,198,969  
|Accrued officers compensation                                                                                                                                         |  |            | 164,500    
|Officers expense reimbursements payable                                                                                                                               |  |            | 21,260     
|Advances from related parties                                                                                                                                         |  |            | 20,500     
|Convertible notes with related parties, net of discounts                                                                                                              |  |            | -          
|Promissory notes with related parties, net of discounts                                                                                                               |  |            | 100,000    
|Senior secured convertible note                                                                                                                                       |  |            | -          
|Secured promissory note                                                                                                                                               |  |            | -          
|Convertible notes, net of discounts                                                                                                                                   |  |            | 381,033    
|Promissory notes, net of discounts                                                                                                                                    |  |            | 78,029     
|Derivative liabilities                                                                                                                                                |  |            | 1,008,807  
|Common shares payable                                                                                                                                                 |  |            | 690,250    
|Total current liabilities                                                                                                                                             |  |            | 3,663,348  
|Convertible notes, net of discounts                                                                                                                                   |  |            | 19,399     
|Promissory notes, net of discounts                                                                                                                                    |  |            | 11,888     
|Total liabilities                                                                                                                                                     |  |            | 3,694,635  
|                                                                                                                                                                      |  |            |            
|Commitments and contingencies                                                                                                                                         |  |            |            
|                                                                                                                                                                      |  |            |            
|Stockholders’ Deficit:                                                                                                                                                |  |            |            
|Common stock, $.001 par value, 450,000,000 shares authorized, 269,628,488 and 136,936,316 shares
    issued and outstanding at August 31, 2014 and 2013, respectively |  |            | 269,103    
|Additional paid-in capital                                                                                                                                            |  |            | 16,966,527 
|Accumulated deficit                                                                                                                                                   |  |            | (20,846,919
|Total stockholders’ deficit                                                                                                                                           |  |            | (3,611,289 
|Total liabilities and stockholders’ deficit                                                                                                                           |  | $          | 83,346     



See
accompanying notes to the consolidated audited financial statements.



F-2







OSL
Holdings Inc. and Subsidiaries

Consolidated
Statements of Operations



|                                                               |  | Year Ended August 31, |            
|-------------------------------------------------------------- |  | --------------------- | -----------
|                                                               |  | 2014                  |            
|Management fee income                                          |  | $                     | 225,000    
|                                                               |  |                       |            
|General and administrative expenses                            |  |                       | 6,485,713  
|Total operating expenses                                       |  |                       | 6,485,713  
|                                                               |  |                       |            
|Operating loss                                                 |  |                       | (6,260,713 
|                                                               |  |                       |            
|Loss on executive agreement settlement with stock options      |  |                       | (707,700   
|Change in value of derivative liability                        |  |                       | (306,535   
|Gain (loss) on settlement of debt, net                         |  |                       | (43,921    
|Gain on discharge of debt                                      |  |                       | 170,000    
|Loss on conversion of debt and settlement of accrued interest  |  |                       | -          
|Other income                                                   |  |                       | 25,000     
|Interest expense                                               |  |                       | (435,889   
|Interest expense - related party                               |  |                       | (6,087     
|Interest income                                                |  |                       | 719        
|Other income (expense), net                                    |  |                       | (1,304,413 
|                                                               |  |                       |            
|Net loss                                                       |  | $                     | (7,565,126 
|                                                               |  |                       |            
|Net loss per common share:                                     |  |                       |            
|Net loss per common share - basic and diluted                  |  | $                     | (0.04      
|                                                               |  |                       |            
|Weighted average common shares outstanding - basic and diluted |  |                       | 192,231,155



See
accompanying notes to the consolidated audited financial statements.



F-3







OSL
Holdings Inc. and Subsidiaries

Consolidated
Statements of Stockholders’ Deficit



|                                                                               |  |              |             |   |         |  |         | Additional |  |  | Common      |   |  |               |          |   | Total   | 
|------------------------------------------------------------------------------ |  | ------------ | ----------- | - | ------- |  | ------- | ---------- |  |  | ----------- | - |  | ------------- | -------- | - | ------- | 
|                                                                               |  | Common Stock |             |   | Paid-in |  |         | Shares     |  |  | Accumulated |   |  | Stockholders’ |         
|                                                                               |  | Shares       |             |   | Amount  |  |         | Capital    |  |  | Issuable    |   |  | Deficit       |          |   | Deficit | 
|                                                                               |  |              |             |   |         |  |         |            |  |  |             |   |  |               |          |   |         | 
|Balance, August 31, 2012                                                       |  |              | 86,694      |   |         |  | 87      |            |  |  | 858,597     |   |  |               | 102,083  |   |         | 
|Common shares issued for services from outside parties                         |  |              | 6,965,616   |   |         |  | 6,966   |            |  |  | 468,015     |   |  |               | -        |   |         | 
|Common shares issued for employee compensation                                 |  |              | 85,105,000  |   |         |  | 85,105  |            |  |  | 1,383,695   |   |  |               | -        |   |         | 
|Common shares issued upon conversion of convertible notes and accrued interest |  |              | 40,704,006  |   |         |  | 40,704  |            |  |  | 915,973     |   |  |               | -        |   |         | 
|Common shares issued to private investors for cash                             |  |              | 3,875,000   |   |         |  | 3,875   |            |  |  | 175,625     |   |  |               | -        |   |         | 
|Common shares issued as consideration for issuance of promissory note          |  |              | 200,000     |   |         |  | 200     |            |  |  | 8,371       |   |  |               | -        |   |         | 
|Derivative liabilities adjustment to additional paid-in capital                |  |              | -           |   |         |  | -       |            |  |  | 3,896,606   |   |  |               | -        |   |         | 
|Reclassification of shares issuable to additional paid-in capital              |  |              | -           |   |         |  | -       |            |  |  | 102,083     |   |  |               | (102,083 | ) |         | 
|Net loss                                                                       |  |              | -           |   |         |  | -       |            |  |  | -           |   |  |               | -        |   |         | 
|Balance, August 31, 2013                                                       |  |              | 136,936,316 |   |         |  | 136,937 |            |  |  | 7,808,965   |   |  |               | -        |   |         | 
|                                                                               |  |              |             |   |         |  |         |            |  |  |             |   |  |               |          |   |         | 
|Common shares issued for services from outside parties                         |  |              | 3,380,385   |   |         |  | 3,380   |            |  |  | 122,676     |   |  |               | -        |   |         | 
|Common shares issued for employee compensation                                 |  |              | 77,900,000  |   |         |  | 77,900  |            |  |  | 3,752,600   |   |  |               |          |   |         | 
|Common shares issued upon conversion of convertible notes and accrued interest |  |              | 38,742,533  |   |         |  | 38,743  |            |  |  | 290,143     |   |  |               | -        |   |         | 
|Common shares issued per collaboration agreement                               |  |              | 500,000     |   |         |  | 500     |            |  |  | 306,500     |   |  |               | -        |   |         | 
|Common shares issued to private investors for cash                             |  |              | 5,040,504   |   |         |  | 4,514   |            |  |  | 105,486     |   |  |               | -        |   |         | 
|Common shares issued as consideration for issuance of promissory notes         |  |              | 488,692     |   |         |  | 489     |            |  |  | 40,121      |   |  |               | -        |   |         | 
|Common shares issued for settlement of accounts payable                        |  |              | 1,240,018   |   |         |  | 1,240   |            |  |  | 81,160      |   |  |               | -        |   |         | 
|Common shares issued for warrant exercises                                     |  |              | 5,000,000   |   |         |  | 5,000   |            |  |  | (5,000      | ) |  |               | -        |   |         | 
|Cancellation of common shares per executive agreement                          |  |              | (1,100,000  | ) |         |  | (1,100  | )          |  |  | 1,100       |   |  |               | -        |   |         | 
|Reclassification from additional paid-in capital to common stock               |  |              | 1,500,000   |   |         |  | 974     |            |  |  | (974        | ) |  |               | -        |   |         | 
|Stock options issued to settle liabilities                                     |  |              | -           |   |         |  | -       |            |  |  | 2,065,000   |   |  |               | -        |   |         | 
|Derivative liabilities adjustment to additional paid-in capital                |  |              | -           |   |         |  | -       |            |  |  | 2,399,276   |   |  |               | -        |   |         | 
|Net loss                                                                       |  |              | -           |   |         |  | -       |            |  |  | -           |   |  |               | -        |   |         | 
|Balance, August 31, 2014                                                       |  |              | 269,628,448 |   |         |  | 268,577 |            |  |  | 16,967,053  |   |  |               | -        |   |         | 



See
accompanying notes to the consolidated audited financial statements.



F-4







Osl
Holdings Inc. and Subsidiaries

Consolidated
Statements of Cash Flows



|                                                                                |  | Year Ended August 31, |           
|------------------------------------------------------------------------------- |  | --------------------- | ----------
|                                                                                |  | 2014                  |           
|Cash flows from operating activities:                                           |  |                       |           
|Net loss                                                                        |  | $                     | (7,565,126
|Adjustments to reconcile net loss to net cash used in operating activities:     |  |                       |           
|Loss on executive agreement settlement by issuance of options                   |  |                       | 707,700   
|Gain on discharge of debt                                                       |  |                       | (170,000  
|Fair value of stock issued for services from third parties                      |  |                       | 126,056   
|Stock issued to officers for compensation and services                          |  |                       | 3,830,500 
|Loss on settlement of promissory notes                                          |  |                       | 80,750    
|Loss on conversion of debt and accrued interest                                 |  |                       | 8,000     
|Gain on settlement of senior convertible debt                                   |  |                       | (44,829   
|Change in fair value of derivative liabilities                                  |  |                       | 306,535   
|Depreciation                                                                    |  |                       | 2,500     
|Amortization of note discounts                                                  |  |                       | 281,876   
|Changes in operating assets and liabilities:                                    |  |                       |           
|Accounts receivable                                                             |  |                       | (29,833   
|Prepaid expenses and other current assets                                       |  |                       | (8,013    
|Accounts payable and accrued expenses                                           |  |                       | 419,706   
|Accrued compensation                                                            |  |                       | 637,874   
|Officers expense reimbursements payable                                         |  |                       | 21,260    
|Common shares payable                                                           |  |                       | 690,250   
|Net cash used in operating activities                                           |  |                       | (704,794  
|                                                                                |  |                       |           
|Cash flows from investing activities:                                           |  |                       |           
|Purchases of property, plant and equipment                                      |  |                       | (45,000   
|Net cash used in investing activities                                           |  |                       | (45,000   
|                                                                                |  |                       |           
|Cash flows from financing activities:                                           |  |                       |           
|Advances from (to) related parties                                              |  |                       | 28,100    
|Payment of senior secured convertible note                                      |  |                       | (25,000   
|Cash received on issuances of convertible notes                                 |  |                       | 330,000   
|Repayment of convertible notes                                                  |  |                       | (58,120   
|Repayment of convertible notes - related party                                  |  |                       | (36,397   
|Cash received on issuances of promissory notes                                  |  |                       | 294,612   
|Repayments of promissory notes                                                  |  |                       | (58,618   
|Cash received on issuances of a promissory notes - related parties              |  |                       | 10,000    
|Repayments of promissory notes - related parties                                |  |                       | (15,000   
|Cash received on issuances of common stock                                      |  |                       | 110,000   
|Additional paid-in capital contribution - collaboration agreement               |  |                       | 100,000   
|Net cash provided by financing activities                                       |  |                       | 679,577   
|Net increase (decrease) in cash and cash equivalents                            |  |                       | (70,217   
|Cash and cash equivalents at beginning of period                                |  |                       | 70,217    
|Cash and cash equivalents at end of period                                      |  | $                     | -         
|                                                                                |  |                       |           
|Supplemental disclosures of cash flow information:                              |  |                       |           
|                                                                                |  |                       |           
|Cash paid for:                                                                  |  |                       |           
|Interest                                                                        |  | $                     | 21,194    
|Income taxes                                                                    |  | $                     | -         
|                                                                                |  |                       |           
|Non-cash financing activities:                                                  |  |                       |           
|Common shares issued upon conversion of convertible debt and accrued interest   |  | $                     | 178,472   
|Common shares issued in repayment of promissory notes                           |  | $                     | 69,664    
|Common shares issued to lender as consideration for issuance of promissory note |  | $                     | 40,610    
|Reclassification of derivative liability to additional paid-in capital          |  | $                     | 2,399,276 
|Debt discounts originated from derivative liability                             |  | $                     | 519,183   
|Fair value of common shares issued upon conversion of collaboration agreement   |  | $                     | 307,000   
|Fair value of shares issued upon conversion of accounts payable                 |  | $                     | 82,400    
|Shares issued for cashless warrant exercise                                     |  | $                     | 5,000     
|Share cancellation                                                              |  | $                     | (1,100    
|Reclassification from additional paid-in capital to common shares               |  | $                     | 974       
|Reclassification of common shares issuable to additional paid-in capital        |  | $                     | -         
|Reclassification of accounts payable to notes payable - related parties         |  | $                     | -         
|Reclassification of accrued interest from notes payable to accrued liabilities  |  | $                     | -         
|Accounts payable and accrued liabilities settled with options                   |  | $                     | 1,357,300 



See
accompanying notes to the consolidated audited financial statements.



F-5







Osl
Holdings Inc. and Subsidiaries

Notes
to Consolidated Audited Financial Statements



Note
1 – Organization, Nature of Business and Basis of Presentation



Organization
and Nature of Business



OSL
Holdings Inc. (the “Company”) was incorporated under the name Red Rock Pictures, Inc. on August 18, 2006 under the
laws of the State of Nevada and was engaged in the business of developing, financing, producing and licensing feature-length motion
pictures and direct response infomercials. On June 6, 2008, the Company entered into a stock for stock exchange agreement with
Studio Store Direct, Inc. (“SSD”). Pursuant to the stock for stock exchange agreement the Company acquired 100% of
the assets of SSD by issuing 11,000 restricted common shares in exchange for all the issued and outstanding shares of SSD. With
the addition of SSD, the Company also operated as a traditional infomercial production and distribution company.



On
October 10, 2011, the Company completed a share exchange (the “Share Exchange”) with Office Supply Line, Inc. (“OSL”),
a company incorporated in the State of Nevada on September 16, 2010, whereby OSL exchanged all of the issued and outstanding shares
of OSL in exchange for 50,000 shares of the Company’s common stock. As part of the Share Exchange, the Company entered into
a Share Cancellation Agreement and Release (the “Share Cancellation Agreement”) with Crisnic Fund S.A., a Costa Rican
corporation (“Crisnic”), and OSL, pursuant to which Crisnic cancelled 14,130 shares of the Company in exchange for
$10,000 cash and a Secured Promissory Note of OSL in the principal amount of $240,000 (the “Crisnic Note”). See Note
8.



Immediately
prior to the Share Exchange, the Company entered into an Asset Assignment Agreement (the “Asset Assignment Agreement”)
by and among Reno Rolle (“Rolle”), Todd Wiseman (“Wiseman”), former principals of the Company, and Red
Rock Direct (an entity managed by Rolle and Wiseman), pursuant to which the Company assigned certain of its assets to Red Rock
Direct in consideration of the cancelation of shares of the Company of Rolle (144 shares that had not yet been issued) and Wiseman
(5,000 shares due under an employment agreement), pursuant to Share Cancellation Agreements and Releases entered into among each
of Rolle (and Lynn Rolle, the wife of Rolle) and Wiseman, the Company and OSL; and the assumption of certain indebtedness of the
Company by Red Rock Direct.



For
financial statement reporting purposes, the Share Exchange was treated as a reverse acquisition, with OSL deemed the accounting
acquirer and the Company deemed the legal acquirer. These financial statements reflect the historical activity of OSL, and the
historical stockholders’ equity of OSL has been retroactively restated for the equivalent number of shares received in the
Share Exchange after giving effect to the differences in par value offset to additional paid-in capital. In connection with the
Share Exchange, OSL was deemed to have issued an additional 1,068 shares of common stock to its stockholders existing prior to
the Share Exchange. Reverse merger costs of approximately $649,000 include net liabilities of $408,000 assumed upon the reverse
merger and the $250,000 cost of the Share Cancellation Agreement.



On
October 17, 2011, the Company changed its name to OSL Holdings Inc. and became a holding company for its operating subsidiaries.



Effective
January 9, 2013, the Company completed a 1000:1 reverse split of its outstanding shares of common stock, par value $0.001 (the
“Common Stock”). Outstanding shares and per share data have been retroactively adjusted to effect the reverse split
as if it occurred at the beginning of the earliest period presented.



On
December 4, 2012,the Company amended its Articles of Incorporation to increase the number of authorized shares of Common
Stock available for issuance from 120,000,000 to 450,000,000.



Basis
of Presentation



In the quarter
ended May 31, 2014, the Company elected to early adopt Accounting Standards Update (“ASU”) No. 2014-10 - Development
Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allowed the
company to remove the inception to date information and all references to development stage.



F-6







Note
2 – Going Concern



The
Company’s consolidated financial statements are presented on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The Company has experienced losses from operations since
inception, does not have significant sources of revenue, and has working capital and stockholders’ deficiencies. These circumstances
raise substantial doubt as to its ability to continue as a going concern. The Company has no cash on hand and therefore must rely
on additional financing to fund ongoing operations. Over the next twelve months, the Company expects a burn rate of at least $50,000
per month and will need to raise at least $600,000 by the end of the year of 2015 to remain in business. We can give no assurance
that our efforts to raise additional capital in the future will be successful. As a result, the Company’s independent registered
public accounting firm, in its report on the Company’s August 31, 2014 consolidated financial statements, raised substantial
doubt about the Company’s ability to continue as a going concern. The Company’s existence is dependent upon management’s
ability to develop profitable operations and resolve its liquidity problems. The consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the possible inability of the Company to continue as a going concern.



The
Company will require additional capital, either through debt or private placements, in order to execute its business plan. Such
additional financing may not become available on acceptable terms, or at all. We can give no assurance that any additional financing
that the Company does obtain will be sufficient to meet our needs in the long term. Even if the Company is able to obtain additional
financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for
our stockholders, in the case of equity financing.



Note
3 – Summary of Significant Accounting Policies



Principles
of Consolidation



The
accompanying consolidated financial statements of the Company include the accounts of OSL Holdings Inc. and its wholly owned subsidiaries,
OSL, OSL Diversity Marketplace, Inc., OSL Rewards Corporation, Red Rock Pictures Inc. and Studio Store Direct Inc. Inter-company
balances and transactions have been eliminated in consolidation.



Use
of Estimates



The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. Actual results could differ from those estimates. Examples include estimates and assumptions used in valuing
derivative liabilities and the value of stock compensation. These estimates are reviewed periodically, and, as adjustments become
necessary, they are reported in earnings in the period in which they become known.



Cash
and Cash Equivalents



For
purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of
90 days or less to be cash equivalents to the extent the funds are not being held for investment purposes.



Where
right of offset does not exist, book overdrafts representing outstanding checks are included in accounts payable in the accompanying
consolidated balance sheets since the Company is not relieved of its obligations to vendors until the outstanding checks have
cleared the bank. The change in outstanding book overdrafts is considered an operating activity and is presented as such in the
consolidated statement of cash flows. The balance of book overdrafts included in accounts payable were $62,985 and $0 at August
31, 2014 and 2013, respectively.



Accounts
Receivable and Allowance for Doubtful Accounts



Accounts
receivable are recorded at the invoiced amount and do not bear interest. The Company maintains allowances for doubtful accounts
for estimated losses resulting from the inability of its customers to make required payments. Account balances are charged off
against the allowance when it is probable the receivable will not be recovered. Bad debt expense was $0 the years ended August
31, 2014 and 2013, respectively.



Property
and Equipment



Property
and equipment are stated at cost less accumulated depreciation and amortization. When property and equipment is retired or otherwise
disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time. Maintenance
and repairs are expensed as incurred.



Depreciation
is calculated on a straight-line basis using an estimated useful life of the assets of 3 years.



F-7







Internal
Website Development Costs



Under
Accounting Standards Codification (“ASC”) 350-50 – Intangibles - Goodwill and Other - Website Development
Costs, costs and expenses incurred during the planning and operating stages of the Company’s website development are
expensed as incurred. For the year ended August 31, 2013, costs and expenses incurred during the planning and operating stages
of the Company’s website development were expensed as incurred.



Revenue
Recognition



Management
fees are recognized when earned based upon the contractual terms of the management agreements. (See Note 16).



Other
Income



Other
income consists of rental revenue from the leasing of property and equipment. (See Note 16).



Fair
Value of Financial Instruments



The
Company measures its financial assets and liabilities in accordance with the requirements of ASC 820 - Fair Value Measurements
and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes
a fair value hierarchy to classify the inputs used in measuring fair value as follows:



Level
1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.



Level
2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived
from or corroborated by observable market data.



Level
3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best available information.



The
carrying value of the Company’s cash, accounts payable and accrued liabilities, advances from stockholder, senior secured
convertible debt, secured note payable and advances from related parties approximates fair value because of the short-term maturity
of these instruments.



The
following table presents financial liabilities of the Company measured and recorded at fair value on the Company’s balance
sheets on a recurring basis and their level within the fair value hierarchy as of August 31, 2014 and 2013, respectively.



|                                                     |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|---------------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Fair value of derivative liability - August 31, 2014 |  | $       | - |  |         | $ | - |         |  | $ | 1,008,807 | 
|                                                     |  |         |   |  |         |   |   |         |  |   |           | 
|Fair value of derivative liability - August 31, 2013 |  | $       | - |  |         | $ | - |         |  | $ | 2,574,365 | 



Vendor
Concentrations



As
of August 31, 2014, two vendors each represented 10% of accounts payable and accrued expenses. As of August 31, 2013, one vendor
represented 11% accounts payable and accrued expenses.



Income
Taxes



The
Company accounts for income taxes pursuant to ASC 740 - Income Taxes. Deferred tax assets and liabilities are recorded
for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable
for the period, increased or decreased by the change in deferred tax assets and liabilities during the period.



F-8







Earnings
or Loss per Share



The
Company accounts for earnings per share pursuant to ASC 260 - Earnings per Share, which requires disclosure in the financial
statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed
by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss)
per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock
equivalents (if dilutive) related to stock options and warrants for each year. As there was a net loss for the period, basic and
diluted loss per share is the same for the twelve months ended August 31, 2014 and 2013, respectively.



Weighted
average number of shares outstanding has been retroactively restated for the effects of the January 9, 2013 reverse stock split,
and to reflect the equivalent number of shares received by the accounting acquirer as a result of the reverse merger with OSL
as if these shares had been outstanding as of the beginning of the earliest period presented.



Stock-Based
Compensation



The
Company periodically issues stock grants, stock options and warrants to officers, directors and consultants for services rendered.
Options vest and expire according to terms established at the grant date. The Company accounts for share-based payments to officers
and directors by measuring the cost of services received in exchange for equity awards based on the grant date fair value of the
awards, with the cost recognized as compensation expense in the Company’s financial statements over the vesting period of
the awards. The Company accounts for share-based payments to consultants by determining the value of the stock compensation based
upon the measurement date at either (a) the date at which a performance commitment is reached or (b) at the date at which the
necessary performance to earn the equity instruments is complete.



Derivative
Financial Instruments



The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported
in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black Scholes
Merton option pricing model, assuming maximum value, to value the derivative instruments at inception and on subsequent valuation
dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet
as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12
months of the balance sheet date.



Recent
Accounting Standards



The
Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial
position, results of operations or cash flows.



Note
4 - Property and Equipment



The table
below displays our property and equipment balances as of August 31, 2014 and 2013.



|                               |  | August 31, 2014 |        |   | August 31, 2013 |  
|------------------------------ |  | --------------- | ------ | - | --------------- | -
|Property and equipment         |  | $               | 45,000 |   |                 | $
|Less: accumulated depreciation |  |                 | (2,500 | ) |                 |  
|Property and equipment, net    |  | $               | 42,500 |   |                 | $



Property
and equipment is comprised primarily of office equipment and furniture. (See Note 17).



F-9







Note
5 – Accrued Officers Compensation



As
of August 31, 2014 and 2013, the Company had accrued compensation for its officers in amount of $164,500 and $716,000, respectively.
Under the terms of their employment agreements that were executed during the year ended August 31, 2014, the balance is convertible
at a 70% discount of the average trading price 5 days prior to conversion.



Under
ASC 815-15 - “Derivatives and Hedging”, the Company determined that the convertible feature of the liabilities
should be classified as derivative liabilities. The derivative liabilities are subsequently measured at fair value at the end
of each reporting period with the change in fair value recorded in earnings. The Company determined the fair value of the embedded
conversion feature as of August 31, 2014 to be $571,181. For the year ended August 31, 2014, $571,181 was recorded as a loss on
derivatives that resulted from the change in fair value of the conversion features. (See Note 13).



As
of August 31, 2014, the Company’s officers were due $21,260 for expenses incurred by them on behalf of the Company in the
normal course of business.



Note
6 – Advances from Related Parties



The
Company has received funding of $28,100 from certain related parties to help fund its cash operating needs for the year ended
August 31, 2014. The balance outstanding as of August 31, 2014 and 2013 was $20,500 and $63,560, respectively. The loans are non-interest
bearing, unsecured and due on demand.



On
March 5, 2014, the Company entered into an Executive Agreement (see Note 15) in which certain related parties waived the balance
owed to them from advances of $71,160. The $71,160 of advances were convertible at a 70% discount of the average trading price
5 days prior to conversion. Under ASC 815-15 - “Derivatives and Hedging”, the Company determined that the convertible
feature of the advances should be classified as derivative liabilities. The derivative liabilities were subsequently measured
at fair value at the end of each reporting period with the changes in fair value recorded in earnings. Under the Executive Agreement,
advances of $71,160 were settled with stock options. The total fair value of the conversion feature on the conversion date was
$962,499. This value was reclassified from liabilities to equity. In addition, during the year ended August 31, 2014, $835,178
was recorded as gain on derivative liability. See footnote 13 for additional information.



The
remaining advances from related parties of $20,500 outstanding as of August 31, 2014 are not convertible.



For
the year ended August 31, 2013, the Company paid net advances to related parties of $14,842 and the related parties made payments
of $63,674 of accounts payable on behalf of the Company.



Note
7 – Senior Secured Convertible Note



The
Company assumed a $100,000 senior secured convertible note due (the “Senior Note”) to The Exchange LLC (the “Exchange
LLC”), an unrelated company, upon the consummation of the reverse merger recapitalization with OSL. On October 12, 2011,
the Company and Exchange LLC entered into Amendment No. 1 (the “Amendment”) to the Senior Note. Pursuant to the Amendment,
the maturity date of the Senior Note was extended to October 5, 2012 and the conversion price of the Senior Note was set at $0.001.
Any conversion of debt owed to Exchange LLC under the Senior Note required approval by the Board of Directors of the Company and
in the event that the Board of Directors does not approve such conversion request, the corresponding principal amount shall be
due. The Company entered into Amendment No. 2 (“Amendment 2”) to the Senior Note on December 12, 2012, pursuant to
which the maturity date of the Senior Note was extended to October 5, 2013 and that the parties agreed that the conversion of
the Senior Note shall not be affected by any reverse split of the Company’s Common Stock. The Company entered into Amendment
No. 3 (“Amendment 3”) to the Senior Note on August 31, 2013 and that the parties agreed to reduce the balance owed
of $101,000 to $35,000 so long as Exchange LLC was paid $10,000 on August 30, 2013, $10,000 on September 10, 2013, $10,000 on
September 23, 2013, and $5,000 on September 30, 2013. The remaining principal and interest on the note will be paid down in proportion
to the ratio of the payments made on the $35,000.



F-10







During
the year ended August 31, 2014, $25,000 of outstanding note balance was paid in cash. On October 3, 2013, The Exchange LLC entered
into an Assignment Agreement (the “Assignment Agreement”) by and among the Exchange LLC and an assignee for the remaining
balance owed of $14,421 in exchange for $5,000. During the year ended August 31, 2014, the assignee elected to receive a total
of 14,421,000 shares of common stock at an average conversion price of $0.001 or $14,421 as final repayment of the outstanding
balance owed. In relation to Amendment 3 and in conjunction with the final repayment, the Company recorded a proportional reduction
in balance of $44,829 which was recorded as a gain on extinguishment of debt during the year ended August 31, 2014. As of August
31, 2014, the balance of the Senior Note has been paid in full.



During
the year ended August 31, 2013, the Company issued a total of 32,350,000 shares of Common Stock at an average conversion price
of $0.001 or $32,350 as partial repayment of the Senior Note, made payments of $10,000 as partial repayment, and in relation to
Amendment 3 recorded a proportional reduction in balance of $21,700 as a gain on extinguishment of debt. As of August 31, 2013,
the total remaining balance outstanding due to Exchange LLC under the Senior Note was $19,950.



The
Company analyzed the modification of the terms of the Senior Note under ASC 470-60 - “Troubled Debt Restructurings”and ASC 470-50 - “Extinguishment of Debt”. The Company determined the creditor had not granted a concession
and the modification was not substantial under the modified terms



On
April 4, 2012, as a result of the issuance of convertible debt to Panache Capital, LLC, the convertible option of the Senior Note
became tainted. Under ASC 815-15 - “Derivative and Hedging”, it should be reclassified from equity to liability
and the liabilities were subsequently measured at fair value at the end of each reporting period with the change in fair value
recorded to earnings.



As
a result of note payment and conversion, under ASC 815-15 - “Derivatives and Hedging”, the instruments are
measured at fair value at the date of payment and conversion with the change in fair value recorded in earnings. The Company determined
the fair value of the embedded conversion feature of the Senior Notes as of October 3, 2013, to be $284,625 and $367,591 was recorded
as gain on derivative liability for the year ended 31, 2014. See Note 13.



Note
8 – Secured Promissory Note



As
part of the Share Exchange discussed in Note 1, the Company entered into the Share Cancellation Agreement with Crisnic and OSL.
Pursuant to the Share Cancellation Agreement, Crisnic agreed to cancel 14,130 shares in exchange for $10,000 and the Crisnic Note
in the principal amount of $240,000. Under the terms of the Crisnic Note, OSL was required to pay Crisnic $50,000 on November
8, 2011, then $25,000 every subsequent week until December 27, 2011, and one final payment of $15,000 on January 3, 2012. The
Crisnic Note is non-interest bearing. Due to delays in raising financing, the Company was unable to meet the original repayment
terms of the Crisnic Note. The Company has made intermittent payments and the balance due as of August 31, 2013, was $170,000.



In
July 2014, the Company received a judgment in its favor whereby the debt was discharged. As a result, for the year ended August
31, 2014, the Company recorded a gain from the discharge of debt of $170,000.



Note
9 – Convertible Notes with Related Parties



Convertible
notes with related parties consisted of the following as of August 31, 2014 and 2013:



|                                                         |  | August 31, 2014 |   |  | August 31, 2013 |  
|-------------------------------------------------------- |  | --------------- | - |  | --------------- | -
|Convertible notes with related parties                   |  | $               | - |  |                 | $
|Less: note discounts                                     |  |                 | - |  |                 |  
|Convertible notes with related parties, net of discounts |  | $               | - |  |                 | $



F-11







Asher
Enterprises, Inc. (Assigned on March 21, 2013)



During
the period November 15, 2011 to August 31, 2013, the Company issued four unsecured convertible notes (the “Asher Notes”)
to Asher Enterprises, Inc. (“Asher”) in the aggregate amount of $135,500. The Asher Notes were due after one year
and bore interest at 8% per annum. Interest accrued and was payable in cash upon maturity provided that an elected conversion
to common shares did not occur. Any amount of principal or interest on these Asher Notes which was not paid when due bore interest
at the rate of twenty two percent (22%) per annum from the due date until the past due amount was paid. At any time or times after
180 days from the date of the Asher Notes and until the maturity dates, Asher was entitled to convert any portion of the outstanding
and unpaid amount into fully paid and non-assessable shares of common stock. The conversion price was based on a 49-59% discount
to the average of the three lowest closing bid prices for the Company’s common stock during the ten trading days immediately
preceding a conversion date.



Each
of the Asher Notes included an anti-dilution provision that allowed for the automatic reset of the conversion or exercise price
upon any future sale of common stock instruments at or below the current exercise price. The Company considered the current Financial
Accounting Standards Board (“FASB”) guidance of “Determining Whether an Instrument Indexed to an Entity’s
Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the
instrument regardless of the probability or whether or not within the issuers’ control, means the instrument is not indexed
to the issuers own stock. Accordingly, the Company determined that the conversion price of the Asher Notes was not a fixed amount
because they were subject to fluctuation based on the occurrence of future offerings or events. As a result, the Company determined
that the conversion features were not considered indexed to the Company’s own stock and characterized the fair value of
the conversion features as derivative liabilities upon issuance and at the end of each reporting period or termination of the
instrument with the change in fair value recorded to earnings.



During
the year ending August 31, 2012, $113,000 of the Asher Notes were issued. The Company determined the initial fair value of the
embedded conversion feature of the Asher Notes issued during the year ended August 31, 2012 to be $258,510. This amount was determined
by management using a weighted-average Black-Scholes Merton option pricing model. In accordance with current accounting guidelines,
the excess of $145,510 of derivative liability created over the face amount of the Asher Notes was considered to be a debt issuance
cost during the year ended August 31, 2012. As such the Company recorded an $113,000 valuation discount upon issuance.



During
the year ended August 31, 2013, $22,500 of the Asher Notes were issued. The Company determined the initial fair value of the embedded
conversion feature of the Asher Notes issued during the year ended August 31, 2013 to be $39,846. The excess of $17,346 of derivative
liability over the face amount was considered to be a loss on derivative liability and recorded a $22,500 debt discount. During
the year ended August 31, 2013 the Company further amortized $92,275 of the discount and as of August 31, 2013, the remaining
discount of $89,911 was offset against the balance of the notes for financial statement presentation.



On
March 21, 2013, the Company entered into that certain Assignment, Termination and Release Agreement (the “Assignment Agreement”)
by and among the Company; Asher; Samuel Kotch (“S. Kotch”) and Benjamin Kotch (“B. Kotch”) (S. Kotch and
B. Kotch each an “Assignee” and collectively the “Assignees”), each the son of Eric Kotch, the Chief Financial
Officer, Secretary, Treasurer and a director of the Company, pursuant to which i) Asher assigned its rights to the Asher Notes,
issued pursuant to those certain corresponding securities purchase agreements (the “SPAs”); ii) the Company and Asher
agreed to terminate their obligations to one another under the Asher Notes and the SPAs; and iii) the Company and Asher provided
one another with complete releases of all claims, in consideration of a payment by the Assignees of $125,500 to Asher. The Company
and the Assignees also entered into that certain Consent to Assignment dated March 21, 2103, whereby the Company consented to
the waiver of the requirement under the SPAs that any assignee of the Asher Notes be an accredited investor.



During
the year ended August 31, 2013, the Company issued a total of 8,070,793 shares of common stock at an average conversion price
of $0.01 or $87,910 and $7,769 as partial repayment of the Asher Notes and accrued interest, respectively. As a result of the
conversion, $886,875 of loss on conversion of debt and accrued interest was recognized during the year ended August 31, 2013.
As of August 31, 2013, the total remaining balance was $39,153, net of discount of $8,437.



The
Company determined the fair value of the embedded conversion feature of all the Asher Notes as of August 31, 2013 to be $89,911
and $193,225 was recorded as a loss on derivative from these notes. As a result of note conversion, under ASC 815-15 - “Derivatives
and Hedging”, the instruments are measured at fair value at the date of conversion with the change in fair value recorded
to earnings. The fair value of the instrument related to the converted Asher Notes totaling $376,785 was reclassified out of liabilities
to equity. (See Note 13).



During the
year ended August 31, 2014, the Company paid $36,397 and issued a total of 9,100,000 shares of common stock at an average conversion
price of $0.0012 or $11,193 as final repayment of the Asher Notes and interest accrued thereon. During the year ended August 31,
2014, the Company amortized the remaining $8,437 of debt discount to interest expense. As of August 31, 2014, the balance of the
Asher Notes was paid in full.



F-12







Under ASC
815-15 – “Derivatives and Hedging”, the Company determined that the convertible feature of the note should
be classified as a derivative liability. Upon conversion of the note on April 4, 2014, the total fair value of the conversion
feature on the conversion date was $23,231. This value was reclassified from liabilities to equity. Due to the repayment and conversion
of the Asher Notes the Company determined the fair value of the embedded conversion feature of all the Asher Notes as of August
31, 2014 to be $0. For the year ended August 31, 2014, the change in fair value of the derivative liability of $66,680 was recorded
as a gain on derivative. See Note 13.



Note
10 – Convertible Notes



Convertible
notes consisted of the following as of August 31, 2014 and 2013:



|                                                  |  |     |  | August 31, 2014 |          |   | August 31, 2013 |  
|------------------------------------------------- |  | --- |  | --------------- | -------- | - | --------------- | -
|Convertible notes - Panache                       |  | (A) |  | $               | 120,218  |   |                 | $
|Convertible notes - Mulhearn                      |  | (B) |  |                 | -        |   |                 |  
|Convertible notes - Adar Bays                     |  | (C) |  |                 | 105,125  |   |                 |  
|Convertible notes - LG Capital Fund               |  | (D) |  |                 | 55,125   |   |                 |  
|Convertible notes - Gel Properties                |  | (E) |  |                 | -        |   |                 |  
|Convertible notes - Union Capital                 |  | (F) |  |                 | 104,219  |   |                 |  
|Convertible notes - Typenex Co.                   |  | (G) |  |                 | 137,500  |   |                 |  
|Less: note discounts                              |  |     |  |                 | (121,755 | ) |                 |  
|Convertible notes, net of discounts               |  |     |  |                 | 400,432  |   |                 |  
|Less: current portion                             |  |     |  |                 | (381,033 | ) |                 |  
|Convertible notes, net of discounts - non-current |  |     |  | $               | 19,399   |   |                 | $



(A)
Panache Capital, LLC



During
the period March 5, 2012 to April 26, 2012, the Company issued four convertible promissory notes (the “March Panache Notes”)
to Panache Capital, LLC (“Panache”) for an aggregate amount of $250,000, bearing 10% interest per annum. The March
Panache Notes are each due after the one year anniversary thereof. All past-due principal of the March Panache Notes bears interest
at 15%. The notes include a 25% prepayment fee. Panache has the right to convert the March Panache Notes, in their entirety or
in part, into common stock of the Company. The conversion price is based on a 25% discount to the average of the three lowest
closing bid prices for the Company’s common stock during the ten trading days immediately preceding a conversion date. The
Company determined the initial fair value of the beneficial conversion feature to be $83,333 and was recorded by the Company as
a note discount, which was amortized to interest expense over the life of the notes.



As
of August 31, 2014 and 2013, the unamortized balance of the March Panache Notes discount was $0 and $417 respectively. The Company
recorded an additional $30,000 of debt discount, and amortized a total of $77,444 of debt discount into interest expense during
the year ended August 31, 2013.



On
September 21, 2012, the Company entered into an amendment agreement (the “Panache Amendment”) with Panache which amended
the March Panache Notes. Pursuant to the Panache Amendment, the Company had the option, for 90 days after September 21, 2012 (the
“Outside Date”), to redeem the March Panache Notes for 100% of their outstanding principal and interest, which it
opted not to do. Additionally, Panache was not able, until the Outside Date and absent an event of default, to convert any of
the March Panache Notes into Company Common Stock. Each of the March Panache Notes were further amended to permit Panache to convert
the March Panache Notes at a price not to fall below a 49% discount to the average of the three lowest closing bid prices for
the Company Common Stock during the ten trading days immediately preceding a conversion date.



The
Company analyzed the modification of the note terms under ASC 470-60 - “Troubled Debt Restructurings” and ASC
470-50 - “Extinguishment of Debt”. The Company determined the creditor had not granted a concession and the
modification of the embedded conversion options did not fall within the scope of ASC 470-50.



On
September 21, 2012, the Company issued a convertible promissory note (the “September Panache Note” and together with
the March Panache Notes, the “Panache Notes”) to Panache in the principal amount of $30,000, with 10% annum interest.
The September Panache Note is due after the one year anniversary thereof. All past-due principal of the September Panache Note
bears interest at 15%. There is a 25% prepayment fee. Panache has the right to convert the September Panache Note, in its entirety
or in part, into common stock of the Company. The original conversion price was based on a 49% discount to the average of the
three lowest closing bid prices for the Company’s common stock during the ten trading days immediately preceding a conversion
date.



F-13







The
Panache Notes include an anti-dilution provision that allows for the automatic reset of the conversion or exercise price upon
any future sale of common stock instruments at or below the current exercise price. The Company considered the current FASB guidance
of “Determining Whether an Instrument Indexed to an Entity’s Own Stock” which indicates that any adjustment
to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability or whether or
not within the issuers’ control, means the instrument is not indexed to the issuers own stock. Accordingly, the Company
determined that the conversion price of the Panache Notes is not a fixed amount because it is subject to fluctuation based on
the occurrence of future offerings or events. As a result, the Company determined that the conversion features are not considered
indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities
upon issuance and at the end of each reporting period or termination of the instrument with the change in fair value recorded
to earnings.



In
March and April 2014, Panache Capital, LLC (“Assignor”) entered into certain assignment of debt agreements with several
investors (“Assignees”) pursuant to which the Assignor granted, transferred and set over unto the Assignees its right,
title and interest in the Panache Notes including, without limitation, all rights, accrued interest, benefits and advantages of
the Assignor to be derived here from and all burdens, obligations and liabilities to be derived thereunder.



During
the year ended August 31, 2014, the Company paid $12,500 and issued a total of 8,030,493 shares of Common Stock at an average
conversion price of $0.019 or $150,853 in partial settlement of the Panache Notes. In addition the remaining debt discount of
$417 was amortized to interest expense for the year ended August 31, 2014. As of August 31, 2014, the total remaining balance
outstanding to Panache under the Panache Notes was $120,218, net of a discount of zero.



During
the year ended August 31, 2013, the Company paid $25,000 and issued a total of 4,018 shares of Common Stock at an average conversion
price of $1.00 or $4,018 in partial repayment of the Panache Notes. As of August 31, 2013, the total remaining balance outstanding
to Panache under the Panache Notes was $250,565, net of discount of $417.



The Company
determined the fair value of the embedded conversion feature for the Panache Notes as of August 31, 2014 to be $190,630. Upon
conversion of the note, under ASC 815-15 - “Derivatives and Hedging”, the total fair value of the conversion
feature on the conversion date of $583,995 was reclassified from liabilities to equity. For the year ended August 31, 2014, the
change in the fair value of the derivative liability of $765,470 was recorded as loss. See Note 13.



The
Company determined the fair value of the embedded conversion feature for the Panache Notes as of August 31, 2013 to be $265,313.
For the year ended August 31, 2013, $265,313 was recorded as loss on derivative for the Panache Notes, resulting from the change
in fair value of the conversion features. See Note 13.



(B)
- Kevin Mulhearn



On
June 21, 2013, the Company issued an unsecured convertible promissory note to Kevin Mulhearn (“Mulhearn Note”) in
the principal amount of $200,000, bearing 10% interest per annum. The note was due on December 21, 2013. The note was convertible,
in its entirety or in part, into common stock of the Company. The conversion price was the average of the three trading days prior
to conversion, and the total amount that could be converted was $400,000.



Under
ASC 815-15 - “Derivatives and Hedging”, the Company determined that the convertible feature of the note should
be classified as a derivative liability. See Note 13. The derivative resulted in a debt discount of $200,000, of which $66,667
has been amortized into interest expense during the year ended August 31, 2013. As of August 31, 2013, the total remaining balance
outstanding on the Mulhearn Notes was $66,667, net of a discount of $133,333.



On
October 2, 2013 the Company entered into a Project Collaboration and Profit Sharing Agreement (“Collaboration Agreement”)
with Kevin Mulhearn (See Note 18), at which time the Company reclassified the balance owed on the Mulhearn Note of $200,000 to
additional paid in capital. In addition, the Company expensed the remaining debt discount balance of $133,333 to interest expense
during the year ended August 31, 2014.



Under
ASC 815-15 - “Derivatives and Hedging”, as a result of the note conversion, the instruments were measured at
fair value at the date of the conversion with the change in fair value recorded to earnings. The Company determined the fair value
of the embedded conversion feature of the Mulhearn Note as of October 2, 2013 to be $139,551 which was reclassified from liabilities
to equity. In addition $170,480 was record as gain on derivative liability for the year ended August 31, 2014. See Note 13.



F-14







(C)
– Adar Bays, LLC



On
May 12, 2014, the Company issued an unsecured convertible promissory note to Adar Bays, LLC (an accredited investor) in the principal
amount of $55,125. The note was issued at a discount of 5%, in exchange for $52,500 cash consideration and bears interest at 8%
per annum. The note matures on May 13, 2015.



At
any time or times after 180 days from the date of the note and until the maturity dates, the note holder is entitled to convert
any portion of the outstanding and unpaid amount into fully paid and non-assessable shares of common stock. The conversion price
will be based on a 35% discount to the lowest closing bid price for the ten prior trading days including the day upon which the
notice of conversion is received by the Company. During the year ended August 31, 2014 the Company amortized $798 of debt discount
to interest expense. As of August 31, 2014, the total remaining balance outstanding was $53,298, net of discount of $1,827, respectively.



On
June 16, 2014, the Company issued an unsecured convertible promissory note to Adar Bays, LLC in the principal amount of $50,000.
The note bears interest at 8% per annum. The note matures on June 15, 2015. At any time or times after 180 days from the date
of the note and until the maturity dates, the note holder is entitled to convert any portion of the outstanding and unpaid amount
into fully paid and non-assessable shares of common stock. The conversion price will be based on a 35% discount to the lowest
closing bid price for the ten prior trading days including the day upon which the notice of conversion is received by the Company.
As of August 31, 2014, the total remaining balance outstanding was $50,000.



(D)
– LG Capital Fund



On
May 12, 2014, the Company issued an unsecured convertible promissory note to LG Capital Fund (an accredited investor) in the principal
amount of $55,125. The note was issued at a discount of 5%, in exchange for $52,500 cash consideration and bears interest at 8%
per annum. The note matures on May 13, 2015. At any time or times after 180 days from the date of the note and until the maturity
dates, the note holder is entitled to convert any portion of the outstanding and unpaid amount into fully paid and non-assessable
shares of common stock. The conversion price will be based on a 35% discount to the lowest closing bid price for the ten prior
trading days including the day upon which the notice of conversion is received by the Company. During the year ended August 31,
2014 the Company amortized $798 of debt discount to interest expense. As of August 31, 2014, the total remaining balance outstanding
was $53,298, net of discount of $1,827, respectively.



(E)
– Gel Properties



On
June 15, 2014, Kevin Mulhearn assigned $50,000 of the Company’s debt held by him to Gel Properties. On June 16, 2014 the
Company issued a replacement note to Gel Properties for the acquired Mulhearn note. The replacement note was an unsecured convertible
promissory note in the principal amount of $55,219. The note bore interest at 8% per annum. The maturity date of the note was
June 16, 2015. At any time or times after 180 days from the date of the note and until the maturity date, the note holder was
entitled to convert any portion of the outstanding and unpaid amount into fully paid and non-assessable shares of common stock.



The
conversion price was to be based on a 35% discount to the lowest closing bid price for the ten prior trading days including the
day upon which the notice of conversion is received by the Company. During the fourth quarter of 2014, $1,005 of the note’s
principal was converted into 1,500,000 shares of the Company’s common stock. The Company settled the remaining balance due
under the replacement note of $54,214 with a cash payment of $45,620. The difference between the carrying value of the debt and
the final settlement amount was recorded as a reduction to interest expense of $8,594 for the year ended August 31, 2014. As of
August 31, 2014, the total remaining balance outstanding was $0.



(F)
– Union Capital



On
June 15, 2014, Kevin Mulhearn assigned $50,000 of the Company’s debt held by him to Union Capital (an accredited investor).
On June 16, 2014 the Company issued a replacement note to Union Capital for the acquired Mulhearn Note. The replacement note is
an unsecured convertible promissory note in the principal amount of $55,219. The note bears interest at 8% per annum. The note
matures on June 16, 2015.



F-15







At
any time or times after 180 days from the date of the note and until the maturity dates, the note holder is entitled to convert
any portion of the outstanding and unpaid amount into fully paid and non-assessable shares of common stock. The conversion price
will be based on a 35% discount to the lowest closing bid price for the ten prior trading days including the day upon which the
notice of conversion is received by the Company. During the fourth quarter of 2014, $1,000 of the note’s principal was converted
into 2,000,000 shares of the Company’s common stock. As of August 31, 2014, the total remaining balance outstanding was
$54,219.



On
June 16, 2014, the Company issued an unsecured convertible promissory note to Union Capital in the principal amount of $50,000.
The note bears interest at 8% per annum. The note matures on June 16, 2015. At any time or times after 180 days from the date
of the note and until the maturity dates, the note holder is entitled to convert any portion of the outstanding and unpaid amount
into fully paid and non-assessable shares of common stock. The conversion price will be based on a 35% discount to the lowest
closing bid price for the ten prior trading days including the day upon which the notice of conversion is received by the Company.
As of August 31, 2014, the total remaining balance outstanding was $50,000.



(G)
– Typenex Co.



On
July 1, 2014, the Company entered into a securities purchase agreement with Typenex Co-Investment, LLC, (“Typenex”)
for the sale and issuance of a secured convertible promissory note in the principal amount of $535,000 (the “Typenex Note”)
and warrants to purchase shares of the Company’s common stock for an aggregate of $267,503 (the “Typenex Warrants”).
The Typenex Note matures on September 30, 2015 (15 months after the date they are issued) and carries an Original Issue Discount
(“OID”) of $30,000. In addition, the Company agreed to pay $5,000 to Typenex to cover Typenex’s legal fees,
accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the Typenex Note. Interest
is payable on the Typenex Note at 10% per annum. The Typenex Note is exercisable in seven (7) tranches (each, a “Tranche”),
consisting of (i) an initial Tranche in an amount equal to $137,500 and any interest, costs, fees or charges accrued thereon or
added thereto under the terms of the Typenex Note and the other transaction documents (“Tranche #1”), which was funded
by way of a $125,000 initial cash payment to the Company on July 1, 2014, $7,500 of OID and $5,000 in transaction costs, and (ii)
six (6) additional Tranches by way of a promissory note issued by Typenex in favor of the Company (each, an “Investor Note”)
in the amount of $66,250, plus any interest, costs, fees or charges accrued thereon or added thereto under the terms of the Typenex
Note. The conversion price for each Tranche conversion into shares of the Company’s common stock shall be the lesser of
(i) the Lender Conversion Price of $.07, and (ii) 70% of the average of the three (3) lowest VWAPs (volume weighed average price)
in the twenty (20) trading days immediately preceding the applicable conversion (the “Market Price”), provided that
if at any time the average of the three (3) lowest VWAPs in the twenty (20) trading days immediately preceding any date of measurement
is below $0.01, then in such event the then-current conversion factor shall be reduced by 5% for all future conversions (e.g.,
70% to 65%).



The
Company granted Typenex a security interest in those certain Tranches or “Investor Notes” issued by Typenex in favor
of the Company on July 1, 2014, in the initial principal amounts of $62,500 each, and any and all claims, rights and interests
in any of the above and all substitutions for, additions and accessions to and proceeds thereof. The Investor Notes bear interest
at the rate of 8% per annum and mature on September 30, 2015 (15 months after the date they are issued). The Company granted a
security interest in the general assets of the Company to Typenex.



In
connection with the Typenex Note, the Company entered into a membership interest pledge agreement with Typenex (“Typenex
Membership Interest Pledge Agreement”) whereby Typenex pledged its 40% membership interest in Typenex Medical, LLC to the
Company to secure Typenex’s performance of its obligations under two promissory notes, issued to the Company by Typenex,
each in the principal amount of $62,500.



Under
and concurrently with the securities purchase agreement with Typenex, the Company also issued to Typenex warrants to purchase,
in the aggregate, a number of shares equal to $267,503 divided by the by the Market Price as defined in the Typenex Note. The
Typenex Warrants may also be exercised by cashless exercise.



Neither
the Typenex Note nor warrants are exercisable, however, if the number of shares to be issued to the holder upon such exercise,
together with all other shares then owned by the holder and its affiliates, would result in the holder beneficially owning more
than 4.99% of our outstanding common stock. This ownership limitation can be increased or decreased to any percentage not exceeding
9.99% by the holder upon 61 days’ notice to us.



The
conversion price under the Typenex Note and the exercise price of the Typenex Warrants is subject to proportional adjustment in
the event of stock splits, stock dividends and similar corporate events. In addition, the conversion price and exercise price
is subject to adjustment if we issue or sell shares of our common stock for a consideration per share less than the conversion
or exercise price then in effect, or issue options, warrants or other securities convertible or exchange for shares of our common
stock at a conversion or exercise price less than the conversion price under the Typenex Notes or exercise price of the Typenex
Warrants then in effect. If any of these events should occur, the conversion or exercise price is reduced to the lowest price
at which the Company’s common stock was issued or is exercisable.



F-16







On
July 1, 2014, in conjuction with the funding of Tranche #1 of the Typenex Note, the Company issued warrants to Typenex with a
value of $66,875, and recorded an initial discount on the note in the same amount, of which $8,946 has been amortized to interest
expense during the year ended August 31, 2014.



Under
ASC 815-15 - “Derivatives and Hedging”, the Company determined that the convertible feature of the note should
be classified as a derivative liability. See Note 13. The derivative resulted in an initial debt discount of $56,964, of which
$7,620 has been amortized into interest expense during the year ended August 31, 2014. In addition, $1,003 and $669 of the OID
discount and closing costs discount, respectively has been amortized to interest expense for the year ended August 31, 2014.



As
of August 31, 2014, the total remaining Typenex Note balance outstanding was $19,399 net of debt discounts of $118,101.



Note
11 – Promissory Notes



May
1, 2013 Note



On
May 1, 2013, the Company issued an unsecured promissory note in the principal amount of $10,000 to a private investor. The note
was due on demand, bore interest at 12% per annum where interest accrued and was payable in cash upon demand. As of August 31,
2014 and 2013, the total remaining balance outstanding under the note was $10,000.



May
15, 2013 Notes



On
May 15, 2013, the Company issued unsecured promissory notes (the “May 15 Notes”) in an aggregate principal amount
equal to $40,000 (the Principal Amount) to two (2) accredited investors. The May 15 Notes accrued simple interest at a rate of
12% per annum and were due and payable six (6) months from the date of their respective issuances. All past-due principal of the
May 15 Notes bore interest until paid at the maximum non-usurious interest rate that at any time may be contracted for, taken,
reserved, charged, or received on the indebtedness evidenced by the May 15 Notes (the “Maximum Rate”) or, if no Maximum
Rate is established by applicable law, at the rate of 15% per annum.



As
of August 31, 2013, the total remaining balance outstanding under the May 15 Notes was $40,000.



During
the year ended August 31, 2014, the Company issued a total of 1,191,040 shares of common stock at an average conversion price
of $0.04, or $44,664, as final repayment of the May 15 Notes and accrued interest leaving no balance outstanding at August 31,
2014. Along with the issuance of the shares, the Company also issued warrants for the purchase of 160,000 shares of common stock.



Under
ASC 815-15 - “Derivatives and Hedging”, the warrants were tainted by the convertible notes. The initial value
of the warrants of $9,760 was determined by management using a weighted-average Black-Scholes Merton option pricing model and
was recorded as a liability. Upon settlement of the May Notes, $8,000 of the derivative liability balance was recorded as a loss
on settlement of promissory notes. The remaining derivative liability balance of $1,760 was recorded as loss on derivative liability
as a result of the change in fair value through the conversion date. See Note 13.



November
14, 2013 Note



On
November 14, 2013, the Company issued an unsecured promissory note (the “November Note”) in the principal amount of
$25,000 to a private investor. The principal of this note was due and payable on February 15, 2014. All past-due principal of
this note bore interest until paid at the rate of 12% per annum. In addition to the principal amount of $25,000 the Company agreed
to deliver to the private investor shares of the Company’s common stock in an amount valued at $25,000 based on the five
day average prices preceding the payment date. In addition, as additional consideration, the Company has agreed to issue the private
investor an additional 50,000 shares at a price of $0.01 per share and allocate $500 of the principal amount of the promissory
note towards payment of the purchase price. The Company determined the relative fair value of the 50,000 common stock to be $610,
which was recorded as a debt discount.



During
the fourth quarter of 2014, the Company issued 2,500,000 shares of common stock with a fair value (based upon quoted market prices)
of $105,750 in full settlement of the principal amount of $25,000. During the year ended August 31, 2014, the Company amortized
$610 of debt discount to interest expense. As a result, the Company recorded a loss on settlement of debt of $80,750 during the
period. As of August 31, 2014, the total remaining balance outstanding under the promissory note was $0.



F-17







December
12, 2013 Note



On
December 12, 2013, the Company issued an unsecured promissory note in the principal amount of $20,000 to a private investor. The
principal of this note is due and payable on January 12, 2014. All past due principal of this note shall bear interest until paid
at the rate of 15% per annum. In lieu of cash interest, the Company agreed to deliver to the private investor shares of the Company’s
common stock in an amount valued at $40,000 based on the five day average prices preceding the date March 12, 2014, which resulted
in an issuance of 438,692 common shares to the investor. During the year ended August 31, 2014, $15,000 of outstanding note balance
was paid in cash. As of August 31, 2014, the total remaining balance outstanding under the promissory note was $5,000.



March
13, 2014 Note



On
March 13, 2014, the Company issued an unsecured promissory note in the principal amount of $100,000 with an interest rate of 3%
per annum to a private investor in exchange for $50,000 cash. The promissory note matures on March 12, 2015 and may be prepaid
in whole or in part, at any time. The difference between the note amount of $100,000 and the $50,000 cash received, or $50,000,
is considered debt discount and being amortized over the term of the note. As additional consideration, the Company issued warrants
to purchase of 200,000 shares of common stock without any additional consideration. The warrants are exercisable when the Company
share price reaches $0.50. Under ASC 815-15 “Derivatives and Hedging”, the warrants were tainted by the convertible
notes. The Company determined the initial relative fair value of the warrants to be $47,780 which was recorded as a debt discount
and derivative liability. See Note 13.



During
the year ended August 31, 2014, the Company amortized $45,810 of the debt discounts to interest expense. As of August 31, 2014,
the total remaining balance outstanding was $48,029, net of discount of $51,971. In addition $42,780 was record as gain on derivative
liability resulting from the change in fair value of the conversion features for the year ended August 31, 2014. The value of
derivative liability as of August 31, 2014, was determined to be $5,000. See Note 13.



May
1, 2014 Note



On
May 1, 2014, the Company issued an unsecured promissory note in the principal amount of $15,000 in exchange for $10,000 in cash
consideration. The promissory note bears no interest and is due on August 1, 2014. All past due principal on this note bears interest
at 12% per annum. The difference between the cash received and note amount, or $5,000, was recorded as a debt discount and was
amortized to interest expense over the term of the note.



As
additional consideration, the Company issued warrants to purchase 160,000 shares of common stock without any additional consideration.
Under ASC 815-15 - “Derivatives and Hedging”, the warrants were tainted by the convertible notes. The Company
determined the initial relative fair value of the warrants to be $8,976 which was recorded as a debt discount and a derivative
liability.



During
the year ended August 31, 2014, the Company amortized $13,976 of the debt discount to interest expense. As of August 31, 2014,
the total remaining note balance outstanding was $15,000, net of discounts of $0. In addition $4,976 was record as loss on derivative
liability resulting from the change in fair value of the conversion features for the year ended August 31, 2014. The derivative
liability as of August 31, 2014, was determined to be $4,000. See Note 13.



Kevin
Mulhearn – (See Note 18 - Project Collaboration and Profit Sharing Agreement)



On
May 31, 2013, the Company issued an unsecured promissory note to Kevin Mulhearn, an accredited investor, (the “May Mulhearn
Note”) in an aggregate principal amount equal to $100,000. The May Mulhearn Note accrued simple interest at a rate of 10%
per annum and was due and payable six (6) months from the date of its issuance, with the Company able to pay the principal amount
in common stock of the Company discounted by 20%. As of August 31, 2013, the total remaining balance outstanding under the May
Mulhearn Note was $100,000.



During
August 2013, the Company issued an additional unsecured promissory note to Kevin Mulhearn substantially in the form of the May
Mulhearn Note in an aggregate principal amount equal to $150,000 (the “August Mulhearn Note”). The August Mulhearn
Note was due on demand and bore an interest rate of 0%. As of August 31, 2013, the total remaining balance outstanding under the
August Mulhearn Note was $150,000.



F-18







On
October 2, 2013 the Company entered into a Project Collaboration and Profit Sharing Agreement (the “Collaboration Agreement”)
with Kevin Mulhearn (see Note 18), at which time the Company reclassified the balances owed on the May Mulhearn Note and August
Mulhearn Note of $100,000 and $150,000, respectively, to additional paid-in capital.



On
March 5, 2014, the Company entered into an amendment to the Collaboration Agreement that resulted in a reduction in the amount
of profit sharing to be received by Mr. Mulhearn in exchange for reinstating a note payable balance of $150,000 (the “Reinstated
Note”) by reversing the previously reclassified note amounts (described above) from additional paid-in capital to promissory
notes. The Reinstated Note was due on January 31, 2019, and bore interest at 0%.



During
the year ended August 31, 2014, the Company issued four additional unsecured promissory notes to Mr. Mulhearn for cash consideration
(the (“2014 Mulhearn Notes”) in an aggregate principal amount equal to $189,612. One of these notes was for a principal
amount of $60,000, in exchange for $50,000 cash consideration. The difference between the cash received and the note amount, or
$10,000, was recorded as a debt discount and was being amortized to interest expense over the term of the note. The notes accrued
no interest per annum and were due and payable on January 31, 2019. Payments made prior to August 31, 2014 were to be applied
to the outstanding balance by the payment amount multiplied by 2. Any payments made between September 1, 2014 and December 31,
2014 would be applied to the outstanding balance by the payment amount multiplied by 1.75. Any payments made between January 1,
2015 and March 31, 2015, were to be applied to the outstanding balance by the payment amount multiplied by 1.5. Any payments made
between April 1, 2015 and June 30, 2015 were to be applied to the outstanding balance by the payment amount multiplied by 1.25;
and any payments made after June 30, 2015 were to be applied to the outstanding balance without a multiplier. In the event of
default, which would occur if the Company failed to pay when due any principal of the 2014 Mulhearn Notes.



As
consideration for the 2014 Mulhearn Notes and along with the Reinstated Note, the Company issued warrants for the purchase of
9,333,333 shares of common stock exercisable without any additional consideration. Under ASC 815-15 - “Derivatives and
Hedging”, the warrants were tainted by the convertible notes. The Company determined the initial fair value of the warrants
to be $1,287,954 of which $329,612 was recorded as debt discount with the remaining $958,342 recorded as a loss on derivative
liability. On March 18, 2014, 5,000,000 warrants were exercised. As a result of the exercise, the Company recorded a reduction
in the change in value of derivative liability of $690,000 with an offset to additional paid-in capital. For the year ended August
31, 2014, $489,629 was recorded as a gain on derivative from these warrants resulting from the change in fair value of the warrants.
The derivative liability as of August 31, 2014 was determined to be $108,325.



On
July 10, 2014, the 2014 Mulhearn Notes, along with the Reinstated Note, were consolidated under one note (the “Consolidated
Mulhearn Note”) in the principal amount of $339,612 (See Note 18). The Consolidated Mulhearn Note contains substantially
the same terms as the 2014 Mulhearn Notes described above.



During
the year ended August 31, 2014, the Company repaid $43,618 of the Consolidated Mulhearn Note and amortized $45,506 of the debt
discount to interest expense leaving a remaining debt discount of $284,106. As of August 31, 2014, the total remaining balance
outstanding of the Consolidated Mulhearn Note was $11,888, net of discount of $284,106, and was classified as a long term liability
in the consolidated balance sheet.



Note
12 – Promissory Notes with Related Parties



On
August 8, 2011, the Company issued an unsecured promissory note in the principal amount of $24,000 to a related party. The promissory
note is due on demand, bears interest at 8% per annum where interest accrues and is payable in cash upon demand. As of August
31, 2014 and 2013, the total remaining balance outstanding was $24,000.



On
April 15, 2013, the Company issued an unsecured promissory note in the principal amount of $6,000 to a related party. The promissory
note is due on demand, bears interest at 12% per annum where interest accrues and is payable in cash upon demand. As of August
31, 2014 and 2013, the total remaining balance outstanding was $6,000.



On
May 13, 2013, the Company issued a promissory note in an aggregate principal amount equal to $20,000 to a related party. The promissory
note accrues simple interest at a rate of 12% per annum and is due on demand. All past-due principal shall bear interest until
paid at the maximum non-usurious interest rate that at any time may be contracted for, taken, reserved, charged, or received on
the indebtedness evidenced by the promissory note (the Maximum Rate) or, if no Maximum Rate is established by applicable law,
at the rate of 15% per annum.



F-19







The
occurrence of any one of the following events will be deemed an event of default: (a) the Company shall fail to pay when due any
principal of the promissory note; or (b) the Company shall: (i) apply for or consent to the appointment of a receiver, trustee,
or intervenor, custodian or liquidator of all or a substantial part of its assets, (ii) be adjudicated as bankrupt or insolvent
or file a voluntary petition for bankruptcy or admit in writing that it is unable to pay its debts as they become due, (iii) make
a general assignment for the benefit of creditors, (iv) file a petition or answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an answer admitting the material allegations of,
or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization, or insolvency proceeding,
or any action for the purpose of effecting any of the foregoing; or (vi) an order, judgment or decree shall be entered by any
court of competent jurisdiction or other competent authority approving a petition appointing a receiver, trustee, intervenor or
liquidator of all of its assets, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty
(60) days. The Company also issued 200,000 shares of its common stock to the related party as consideration for issuance of the
promissory note. The Company determined the relative fair value of the common stock to be $8,571. As of August 31, 2013, the total
remaining balance outstanding under the promissory note was $11,429 net of discount of $8,571. During the year ended August 31,
2014 the Company amortized $8,571 of the debt discount to interest expense. As of August 31, 2014, the total remaining balance
outstanding under the promissory note was $20,000 net of discount of $0.



On
May 28, 2013, the Company issued a demand promissory note (the “Demand Note”) in an aggregate principal amount equal
to $50,000 (the Demand Note Principal Amount) to an accredited investor and related party, which is secured by all intellectual
and personal property of the Company. The Demand Note accrues simple interest at a rate of 12% per annum, is due and payable on
any future date on which the holder of the Demand Note (the “Demand Noteholder”) demands repayment (the “Due
Date”). Unpaid principal after the Due Date shall accrue interest at a rate of 16% annually until paid. The occurrence of
any one of the following events will be deemed an event of default: (a) the failure of the Company to pay the Demand Note Principal
Amount and any accrued interest in full on or before the Due Date; (b) the death of the Demand Noteholder; (c) the filing of bankruptcy
proceedings involving the Company as a debtor; (d) the application for the appointment of a receiver for the Company; (e) the
making of a general assignment for the benefit of the Company’s creditors; (f) the insolvency of the Company; or (g) a misrepresentation
by the Company to the Demand Noteholder for the purpose of obtaining or extending credit. As of August 31, 2014 and 2013, the
total remaining balance outstanding under the Demand Note was $50,000.



On
May 1, 2014, the Company issued an unsecured promissory note in the principal amount of $15,000 to a related party in exchange
for $10,000 in cash consideration. The promissory note bears no interest and was due on June 15, 2014. All past due principal
on this note bore interest at 12% per annum. The difference between the cash received and note amount, or $5,000, was recorded
as a debt discount and was being amortized to interest expense over the term of the note. As additional consideration, the Company
issued warrants for the purchase of 160,000 shares of common stock exercisable without any additional consideration. Under ASC
815-15 - “Derivatives and Hedging”, the warrants were tainted by the convertible notes. The Company determined
the relative fair value of the warrants to be $8,976. During the fourth quarter of 2014, the Company repaid the debt in full.
As of August 31, 2014, the total remaining balance outstanding was $0. During the year ended August 31, 2014, the Company amortized
the entire debt discounts of $13,976 to interest expense. In addition $8,976 was recorded as a loss on the derivative liability
resulting from settlement of the debt in full.



Note
13 – Derivative Liability



In
June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an
entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement
provisions are deemed to be derivative instruments. The conversion feature of certain of the Company’s Asher Notes and September
Panache Note (described in Notes 9 and 10), does not have a fixed settlement provision because conversion of the Asher Notes and
the September Panache Notes will be lowered if the Company issues securities at lower prices in the future.



The
Company was required to include the reset provisions in order to protect the holders of the Asher Notes and the September Panache
Note from the potential dilution associated with future financings. In accordance with the FASB authoritative guidance, the conversion
feature of the Asher Notes and the March and September Panache Note was separated from the host contract and recognized as a derivative
instrument. The conversion feature of the Asher Notes and the Panache Notes have been characterized as a derivative liability
to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.



At
the date of issuance and as of August 31, 2014 and 2013, the derivative liabilities were valued using a probability weighted average
Black-Scholes pricing model, assuming maximum value. Maximum value was computed using the stock price on the date of the transaction.



F-20









The
following table summarizes the derivative liabilities included in the consolidated balance sheet:



|Derivative liabilities as of August 31, 2012                            |  | $ | 250,970    |  
|----------------------------------------------------------------------- |  | - | ---------- | -
|Record derivative liability as a debt discount                          |  |   | 319,441    |  
|Change in fair value of derivative liabilities                          |  |   | 5,900,560  |  
|Settlement of derivative liabilities due to conversion of related notes |  |   | (3,896,606 | )
|Derivative liabilities as of August 31, 2013                            |  | $ | 2,574,365  |  
|                                                                        |  |   |            |  
|Derivative liabilities as of August 31, 2013                            |  | $ | 2,574,365  |  
|Record derivative liability as a debt discount                          |  |   | 519,183    |  
|Change in fair value of derivative liabilities                          |  |   | 306,535    |  
|Loss on settlement of debt                                              |  |   | 8,000      |  
|Settlement of derivative liabilities due to conversion of related notes |  |   | (2,399,276 | )
|Derivative liabilities as of August 31, 2014                            |  | $ | 1,008,807  |  



Note
14 – Capital Stock



Common
Stock



Common
Shares Issued for Services from Outside Parties



During
the year ended August 31, 2014, the Company issued a total of 3,380,385 shares of common stock at an average per share purchase
price of $0.037, or $126,056. The Company issued these shares as payment for various outside services received including legal,
investor relations, consulting and marketing related services. The Company recorded $126,056 in general and administrative expenses
during the year ended August 31, 2014.



During
the year ended August 31, 2013, the Company issued a total of 6,965,616 shares of Common Stock at an average per share purchase
price of $0.07, or $474,981. The Company issued these shares as payment for various outside services received including legal,
investor relations, consulting and marketing related services. The Company recorded $474,981 in general and administrative expenses
during the year ended August 31, 2013.



Common
Shares Issued for Employee Compensation



During the
year ended August 31, 2014, the Company issued a total of 77,900,000 shares of common stock to its officers as stipulated in their
executive employment agreements at an average price of $0.049 or $3,830,500 in the aggregate and was valued at the market price
on the respective dates of issuance.



During
the year ended August 31, 2013, the Company issued a total of 85,105,000 shares of common stock to its officers and employees.
Of the 85,105,000 shares issued, 68,100,000 common shares valued at $788,700 were issued as stipulated in the executive employment
agreements with certain executive officers of the Company and were valued at the market price on the respective dates of issuance,
which averaged $0.012 per share. An additional 17,005,000 common shares were valued at the market price on the respective dates
of issuance, which averaged $0.04 per common share valued at $680,100. The 17,005,000 common shares were issued to certain executives
as a bonus.



Common
Shares Issued upon Conversion of Convertibles Notes and Accrued Interest



During
the year ended August 31, 2014, the Company issued a total of 14,421,000 shares of common stock at an average conversion price
of $0.001 or $14,421 in the aggregate, as final repayment of outstanding senior secured convertible debt, as discussed in Note
7.



During
the year ended August 31, 2014, the Company issued a total of 9,100,000 shares of common stock at an average conversion price
of $0.001 or $11,193 in the aggregate, as final repayment of outstanding related party convertible debt, as discussed in Note
9.



During
the year ended August 31, 2014, the Company issued a total of 11,530,493 shares of common stock at an average conversion price
of $0.013 or $152,858 in the aggregate, as partial repayment of outstanding convertible notes, as discussed in Note 10.



During
the year ended August 31, 2014, the Company issued a total of 3,691,040 shares of common stock at an average conversion price
of $0.04 or $150,414 in the aggregate, as final repayment of outstanding promissory notes, as discussed in Note 11.



During
the year ended August 31, 2013, the Company issued a total of 40,704,006 shares of common stock with a fair value of $956,677
to settle $200,699 of convertible notes and accrued interest, resulting in a loss on extinguishment of debt of $755,978.



F-21







Common
Shares Issued for Cash



During
the year ended August 31, 2014, the Company entered into private agreements to sell 5,040,504 shares of the Company’s common
stock for $110,000.



During
the year ended August 31, 2013, the Company entered into a private agreement to sell 3,875,000 shares of the Company’s common
stock for $179,500.



Common
Shares Issued as Consideration for Issuance of Promissory Notes



During
the year ended August 31, 2014, the Company issued 488,692 shares of common stock as consideration for the issuance of promissory
notes at an average price of $0.08 or $40,610 in the aggregate. See Note 11.



During
the year ended August 31, 2013, in consideration of a note holder providing the Company with a loan in the principal amount of
$20,000 (See Note 12), the Company issued an aggregate of 200,000 shares of common stock. The relative fair value of the share
was $8,571 was recorded as debt discount and included in promissory notes on the consolidated balance sheets.



Shares
Issued per Collaboration Agreement



On
October 2, 2013 the Company entered into a Collaboration Agreement (see Note18). Per the terms of the Collaboration Agreement
the Company issued 500,000 shares of its common stock, at $0.001 par value, as partial consideration for the investor to enter
into the Collaboration Agreement.



Common
Stock Issued for Settlement of Accounts Payable



During
the year ended August 31, 2014, the Company issued a total of 1,240,018 shares of common stock at an average price of $0.076 or
$82,400 in the aggregate, for payment of outstanding trade accounts payable balances.



Common
Stock Issued for Exercise of Warrants



During
the year ended August 31, 2014, the Company issued a total of 5,000,000 shares of common stock on the exercise of warrants from
outside third parties. The warrants were issued on a cashless basis without any additional consideration received. (See Note 15).



Cancellation
of Common Stock



During
the year ended August 31, 2014, the Company cancelled 1,100,000 shares of common stock issued to employees in prior years. The
cancellation of shares was recorded at par value of $1,100.



Common
Shares Payable



Common
shares payable represents contractual obligations incurred by the Company to issue common shares. The liability represents shares
that have been earned but not yet issued either in certificate, electronic or book entry form.



|                          |  | August
    31, 2014 |            |  | August
    31, 2013 |  
|------------------------- |  | ------------------- | ---------- |  | ------------------- | -
|                          |  | Shares              |            |  | Amount              |  
|Share due to employees    |  |                     | 20,800,000 |  |                     | $
|Shares due to debtholders |  |                     | 2,500,000  |  |                     |  
|Shares due to consultants |  |                     | 150,000    |  |                     |  
|                          |  |                     | 23,450,000 |  |                     | $



F-22







Note
15 – Stock Options and Warrants



There were
no stock options issued or outstanding for the year ended August 31, 2013.



A summary
of stock option activity for the year ended August 31, 2014 is as follows:



|                                     |  |                |            |  | Weighted |  
|------------------------------------ |  | -------------- | ---------- |  | -------- | -
|                                     |  |                |            |  | Average  |  
|                                     |  | Number         |            |  | Exercise |  
|                                     |  | of
    Options |            |  | Price    |  
|Balance outstanding, August 31, 2013 |  |                | -          |  |          | $
|Options granted                      |  |                | 35,000,000 |  |          |  
|Options exercised                    |  |                | -          |  |          |  
|Options expired or forfeited         |  |                | -          |  |          |  
|Balance outstanding, August 31, 2014 |  |                | 35,000,000 |  |          | $
|Balance exercisable, August 31, 2014 |  |                | 35,000,000 |  |          | $



Information
relating to outstanding stock options at August 31, 2014, summarized by exercise price is as follows:



|                   |   |  | Outstanding |  |            | Exercisable | 
|------------------ | - |  | ----------- |  | ---------- | ----------- | 
|Exercise
    Price |   |  |             |  |            | Life        | 
|Per
    Share      |   |  | Shares      |  |            | (Years)     | 
|$                  | - |  |             |  | 35,000,000 |             | 



The aggregate
intrinsic value of the options outstanding at August 31, 2014, was $875,000.



Stock
Options Issued to Executives



The Executive
Agreements



On
March 5, 2014, the Company entered into an Executive Agreement with Eric Kotch, Eli Feder, Bob Rothenberg and Steven Gormley (Executives).
In exchange for all rights to past due employment compensation, equity, debt, and conversion rights, totaling in aggregate $1,357,300;
the Company agreed to provide the Executives in aggregate 35,000,000 stock options to purchase common stock, full indemnification
protection from the Company, and release of any claims or liabilities through the date of the Executive Agreement. The Executives
also agreed:



a)
to forgive the full balance currently owed as set forth above;



b)
to terminate all employment agreements and rights thereunder effective on the date of the Executive Agreement;



c)
that any employment or compensation agreements with any of the Executives entered into within a date 18 months from the Executive
Agreement, will require an approval by 75% of the board of directors;



d)
the Executives will enter into leakout agreements on a pro rata basis and to be determined terms;



e)
the Executives will be subject to a one year non-competition agreement beginning the later of the termination of such directors
employment with the Company or resignation or removal from the board of directors.



The
35,000,000 stock options, which vest immediately, have a two year life and are exercisable with no further consideration. The
Company valued these stock options at $2,065,000, and after offsetting this expense against the $1,357,300 discussed above, recorded
a loss on executive agreement of $707,700 which was classified in other income (expense) in the Consolidated Statements of Operations
for the three and nine months ended May 31, 2014.



F-23







Warrants



Summary
of Warrants



There
were no warrants issued or outstanding for the year ended August 31, 2013.



A
summary of warrant activity for the year ended August 31, 2014 is as follows:



|                                     |  |             |            |   | Weighted |  
|------------------------------------ |  | ----------- | ---------- | - | -------- | -
|                                     |  |             |            |   | Average  |  
|                                     |  | Number      |            |   | Exercise |  
|                                     |  | of Warrants |            |   | Price    |  
|Balance outstanding, August 31, 2013 |  |             | -          |   |          | $
|Warrants granted                     |  |             | 14,807,333 |   |          |  
|Warrants exercised                   |  |             | (5,000,000 | ) |          |  
|Warrants expired or forfeited        |  |             | -          |   |          |  
|Balance outstanding, August 31, 2014 |  |             | 9,807,333  |   |          | $
|Balance exercisable, August 31, 2014 |  |             | 9,807,333  |   |          | $



Information
relating to outstanding warrants at August 31, 2014, summarized by exercise price is as follows:



|                   |   |  | Outstanding |  |           | Exercisable | 
|------------------ | - |  | ----------- |  | --------- | ----------- | 
|Exercise
    Price |   |  |             |  |           | Life        | 
|Per
    Share      |   |  | Shares      |  |           | (Years)     | 
|$                  | - |  |             |  | 9,807,333 |             | 



The aggregate
intrinsic value of outstanding warrants as of August 31, 2014, was $245,183.



Warrants
Issued to Outside Parties



During
the year ended August 31, 2014, the Company issued 14,807,333 warrants as additional consideration for investors’ purchases
of shares of common stock for cash, for entering into certain notes payable transaction, and as additional consideration for debt
conversions (see Notes 10-12). The warrants vest immediately, have a two year life and are exercisable with no further consideration.
5,000,000 warrants were exercised during the year ended August 31, 2014. The outstanding warrants have the following exercise
terms:



| | a. | 80,000
    warrants are exercisable on the earlier of 1) 6 months after issue or,                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------
| |    | 2)
    average Volume Weighted Average Price (VWAP) for 3 days equals or exceeds $0.50 per share                                   
| |    |                                                                                                                                    
| | b. | 480,000
    warrants are exercisable on the earlier of 1) 6 months after issue or.                                                 
| |    | 2)
    average VWAP for 3 days equals or exceeds $0.25 per share.                                                                  
| |    |                                                                                                                                    
| | c. | 3,700,000
    warrants are exercisable beginning on the date when the stock price reaches a closingmarket price of $0.50 per share.
| |    |                                                                                                                                    
| | d. | 833,333
    warrants are exercisable beginning on the date when the stock price reaches a closingmarket price of $0.25 per share.  
| |    |                                                                                                                                    
| | e. | 150,000
    warrants are exercisable on the earlier of 1) 6 months after Issue or.                                                 
| |    | 2)
    average VWA P for 3 days equals or exceeds $0.10 per share.                                                                 
| |    |                                                                                                                                    
| | f. | 4,564,000
    warrants are exercisable at 30% discount to the VWAP for the 20daysprior to exercise.                                



F-24







Note
16 – Management Services and Business Furniture and Equipment Lease Agreements



In
connection with the operations of a dispensary in California, we entered into the following agreements with Sean Ridgley (“Ridgley”)
during the year ended August 31, 2014.



Management
Services Agreement. On May 26, 2014, the Company entered into a management services agreement with Sean Ridgley (“Ridgley”)
(the “Ridgley Management Agreement”) whereby Ridgley appointed the Company as its sole and exclusive agent for the
management of the business affairs of Ridgley’s business (the “Business”). Ridgley plans to operate a dispensary
in California. Ridgley agreed to pay the Company $75,000 per month. The term of the agreement is for an initial term of five years
and will be automatically renewed for three successive five year periods. Under the terms of the Ridgley Management Agreement,
the Company agreed to arrange for the Business to lease, acquire, or otherwise procure a location reasonably acceptable to the
Business and operate such business under the name The Natural Way of LA. The Company will provide all equipment, fixtures, office
supplies, furniture, and furnishings deemed reasonably necessary by the Company for the operation of the Business. The Company
will provide or arrange for all printing, stationery, forms, postage, duplication or photocopying services, payroll, and other
support services as are reasonably necessary and appropriate for the operation of the business, including billing and collection.
The Company has granted Ridgley a non-assignable, non-transferable license solely to use The Natural Way of LA service mark, consistent
with the terms and conditions of the Agreement and use such service mark to identify, advertise, and otherwise promote a retail
business within the geographic territory of the State of California. (See Note 20).



Business
Furniture and Equipment Lease Agreement. Under the terms of the Business Furniture and Equipment Lease Agreement, we agreed
to lease to Ridgley effective as of June 1, 2014 the business furnishings, equipment, and all related software and materials related
to the former operations of The Natural Way of LA. We are responsible for maintaining the equipment and other items included under
the lease in good operating condition and repair except for repairs necessitated by damage to such items by Ridgley or his employees,
agents, and assigns. The agreement has an initial term of five years and automatically renews for three additional periods of
five years unless terminated as provided in the Agreement. Ridgley is obligated to pay us $8,333.33 per month on the first day
of each month during the term of the agreement. (See Note 20).



In
addition, the Company entered into an a consulting agreement with Sean Ridgley (“Ridgley”) on or about May 25, 2014
whereby Ridgley agreed to provide us with contract and business development services for a period of thirty-six (36) months. As
compensation for his services, we agreed to issue Mr. Ridgley 250,000 shares of our unregistered common stock (which shares were
issued on May 15, 2014), a cash payment of $15,000 net of all applicable taxes, state, federal, or otherwise for hours expended
each month, 50,000 shares of our unregistered common stock which shall be issued to Ridgley within ten (10) business days of his
request for each month of service, and reimbursement for previously approved expenses incurred by Ridgley in connection with providing
the services to us under the Consulting Agreement.



F-25







Note
17 – Commitments and Contingencies



Litigation



Crisnic
Fund, S.A. - On March 18, 2014, the Company filed a revised summons with notice with the Supreme Court of the State of
New York, County of Rockland Index No.: 031291/2014 against Crisnic Fund, S.A. and Kexuan Yao. By filing the revised summons with
notice, the Company is seeking declaratory judgment declaring the Escrow Agreement dated October 10, 2011 among Office Supply
Line, Inc., Crisnic Fund, S.A., Red Rock Pictures Holdings, Inc. and Sichenzia Ross, Friedman, Ference, Anslow LLP null and void
and declaring Section 5 of the promissory note dated October 11, 2011 by Office Supply Line, Inc. to Crisnic Fund S.A. null and
void.



Crisnic
Fund, S.A. and Kexuan Yao failed to respond to the summons within the statutorily prescribed time period and the Company then
moved the Court, pursuant to an Order to Show Cause, for the relief requested in the revised summons with notice. Crisnic Fund,
S.A. and Kexuan Yao were duly served with the Order to Show Cause but again failed to respond within the time established by the
Court.



In
July 2014, the Company received a judgment in its favor whereby the debt was discharged. (See Note 8).



Moscowitz/Lou
Ross Holdings, LLC- On June 20, 2014, Marc Moscowitz filed a Complaint in the Supreme Court of the State of New York
for Rockland County (Index No. 032738/14) against the Company seeking judgment in favor of Mr. Moscowitz in the amount of $30,000
with interest from August 7, 2011 as to $24,000 and interest from April 13, 2013 as to $6,000 and attorney’s fees and expenses
as a result of the Company’s alleged failure to pay such amounts to the plaintiff due under two promissory notes issued
by the Company in favor of Mr. Moscowitz. On June 25, 2014, Mr. Moscowitz and Lou Ross Holdings, LLC filed a Notice of Motion
for Summary Judgment in Lieu of Complaint in the Supreme Court of the State of New York for Rockland County (Index No. 032742/2014)
against the Company seeking judgment in favor of Mr. Moscowitz in the amount of $50,000 with interest from May 24, 2013 at the
rate of 12% per annum and a judgment in favor of Lou Ross Holdings, LLC in the amount of $10,000 with interest from May 15, 2013
at the rate of 12% per annum and attorney’s fees and expenses as a result of the Company’s alleged failure to pay
such amounts to the plaintiffs due under a promissory note issued by the Company in favor of the respective plaintiffs.



The
Company has previously recorded as liabilities the amounts owed to Mr. Moscowtiz and Lou Ross Holdings, LLC under the respective
promissory notes for which they are seeking a judgment.



The
Natural Way Agreement



On
May 12, 2014, we acquired certain assets from The Natural Way of LA, LLC, and all rights, title and interest in the assets (excluding
the assumption of any of the seller’s liabilities). The acquisition excluded the purchase of any assets which are illegal
under the federal “Controlled Substances Act” in connection with the operation of businesses in the marijuana-related
industry.



The
purchase price for the assets was comprised of two components: (1) a fixed amount and (2) Contingent Additional Payments. The
fixed amount of $45,000 was paid as of May 31, 2014 and is included in property and equipment in the consolidated balance sheets.
The amount of the Contingent Additional Payments are based on the milestones listed in the description of the Due Diligence Period,
which amount of contingent payments shall be a combination of our restricted common stock and/or cash, as more particularly described
in the Asset Purchase Agreement (“APA”). As set forth in the APA, these Contingent Additional Payments have a current
stated value of $630,000.



Letter
of Intent to Acquire the Assets of a Licensed Medical Marijuana Dispensary – Purchase Option



On
March 21, 2014, the Company executed a letter of intent (LOI) to acquire the assets of a licensed medical marijuana dispensary
on Melrose Avenue in Los Angeles. Under terms of the LOI the Company was required to pay $75,000 of earnest money upon execution
of the LOI. On May 15, 2014, an amendment to the LOI was entered into under which the earnest money provision of the LOI agreement
was removed. On May 15, 2014, the Company also entered into a consulting agreement with the owner of the assets to assist in the
acquisition transition process. For the year ended August 31, 2014, the Company paid consulting fees of $48,860 under this agreement.
The consulting fees are included in general and administrative expenses in the accompanying consolidated statement of operation.



Eli
Feder Employment Agreement



On
June 30, 2014, the Company entered into an employment agreement with Eli Feder, effective immediately, in which Eli Feder accepted
the position of Chief Corporate Development Officer of the Company. Mr. Feder will perform the services and duties that are normally
and customarily associated with the Chief Corporate Development Officer position, as well as other associated duties as our Board
and our Chief Executive Officer reasonably determine.



F-26







Pursuant
to Mr. Feder’s employment agreement, Mr. Feder will receive an annual base salary of $180,000 and 100,000 shares of the
Company’s common stock monthly. Further, Mr. Feder may receive an annual bonus if deemed reasonable and appropriate by the
Company’s Board of Directors. Mr. Feder will also receive customary benefits including health benefits.



The
term for the employment agreement is eleven months, and is automatically extended for two (2) successive consecutive one (1) year
periods unless terminated by either party not more than 270 days and not less than 90 days before the end of the then-existing
term.



The
Company can terminate the employment agreement at any point for cause, as defined in the employment agreement, and without cause.
If termination is without cause, Mr. Feder is entitled to a payment equal to two (2) years of his base salary, the issuance of
any undistributed shares pursuant to Section 3.02 of the employment agreement, and the customary benefits set forth in Article
IV of the employment agreement for six (6) months.



Note
18 – Project Collaboration and Profit Sharing Agreement



On
October 2, 2013 the Company entered into a Project Collaboration and Profit Sharing Agreement (“Collaboration Agreement”)
with Kevin Mulhearn (“Mulhearn”). The purpose of the Collaboration Agreement was to provide the Company with finance,
development and marketing services for the launch of its Shop4Equality marketing program. The Investor contributed $550,000, of
which $450,000 was received during the year ended August 31, 2013 (See Notes 10 and 11) and $100,000 was received during the year
ended August 31, 2014. The Mulhearn agreed to cancel $557,000 of promissory notes with accrued interest owed by the Company. On
March 5, 2014, the Company entered into a Second Amendment to the Collaboration Agreement.



The
Second Amendment resulted in a reduction in the amount of profit sharing for Mulhearn in exchange for reinstating the balance
owed of $150,000, at an interest rate of $0 and due on January 31, 2019. The Company reinstated the balance owed of $150,000 by
reversing the reclassified from additional paid in capital to long term promissory notes on the consolidated balance sheets. Additionally,
the Company issued 500,000 shares of its common stock, at par value, as partial consideration for the Mulhearn to enter into the
Second Amendment. Mulhearn also acquired 5,100,000 shares of the Company’s common stock from a third party in a separate
transaction as of the date of the agreement.



The profit
sharing arrangement related to the Shop4Equality project is as follows:



| | 1. | The
    Investor will receive 100% of the first $550,000 in losses, 45% of the first $500,000 in gains, 10% thereafter unless reduced
    pro-rata by the other Investor’s interests until November 15, 2013;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                              
| | 2. | The
    Company will receive 0% of the first $550,000 in losses, 45% of the first $500,000 in gains, and 80% thereafter until November
    15, 2013.                                                         
| |    |                                                                                                                                                                                                              
| | 3. | After
    November 15, 2013, 100% of the Shop4Equality gains or losses shall be the Company’s.                                                                                                               
| |    |                                                                                                                                                                                                              
| | 4. | On
    January 30, 2014, the Company shall issue to the Investor shares valued as of January 15, 2014, at an amount equal to $1,000,000
    less gains distributed to Investor.                              



The
obligations of the Company were guaranteed and secured by the assets of the Company including the name Shop4Equality and the related
URL, all URLs owned by the Company, all software owned by the Company, all contracts between the Company and partner organizations,
and all cash and receivables of the Company.



During
the year ended August 31, 2014, the Company reclassified the $300,000, plus interest of $7,000 received from convertible and promissory
notes to additional paid in capital.



On
July 10, 2014, the Company issued an unsecured consolidated promissory note to Kevin Mulhearn in the principal amount of $339,612
(see Note 11). The consolidated promissory note represents the consolidation of the principal balance, together with all interest,
costs, and fees due under promissory notes previously issued by the Company to Mr. Mulhearn.



In
addition to representing the agreed on consolidated amount due under the Prior Notes, the October 2, 2013 Project Collaboration
and Profit Sharing Agreement entered into between the Company and Mr. Mulhearn, as amended on March 6, 2014 was hereby terminated.



F-27







Note
19 – Income Taxes



As
of August 31, 2014 and 2013, there were no differences between financial reporting and tax bases of assets and liabilities. The
Company will have tax losses available to be applied against future years’ income as result of the losses incurred. However,
due to the losses incurred in the period and expected future operating results, management determined that it is more likely than
not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction
of future income tax payments. Accordingly a 100% valuation allowance has been recorded for deferred tax assets. Net operating
loss carry forwards were $10,446,386 and $3,785,284 as of August 31, 2014 and 2013 and will begin expiring in 2030.



Deferred
tax assets consisted of the following as of August 31, 2014 and 2013:



|                        |  | 2014 |            |   | 2013 |  
|----------------------- |  | ---- | ---------- | - | ---- | -
|Net operating losses    |  | $    | 2,208,273  |   |      | $
|Valuation allowance     |  |      | (2,208,273 | ) |      |  
|Net deferred tax assets |  | $    | -          |   |      | $



Note
20 – Subsequent Events



Issuance
of Unregistered Shares of Common Stock



On
September 2, 2014, the Company issued to a certain unaffiliated party a total of 1,650,000 shares of its restricted common stock
valued at $0.018 as a direct investment per a Securities Purchase Agreement.



On
September 15, 2014, pursuant to a warrant right the Company issued to Eric Kotch (the Company’s former CFO), a total of
15,000,000 shares of its restricted common stock valued at $0.05. The warrant was exercisable at the earlier to occur of (i) six
months from issuance; or (ii) after any three consecutive days where the weighted average share price exceeded $0.50 and was to
expire two years from the date of issuance.



On
September 15, 2014, the Company issued to current officers of the Company, pursuant to various warrant rights, a total of 20,000,000
shares of its restricted common stock valued at $0.001. The warrants were exercisable at the earlier of six months from issuance
or after any three consecutive days where the weighted average share price exceeded $0.50 and were to expire two years from the
date of issuance.



On
September 18, 2014, the Company issued to a certain unaffiliated party a total of 344,500 shares of its restricted common stock
valued at $0.001 as a signing bonus on a management consulting agreement.



On
October 15, 2014, the Company issued to a certain unaffiliated party a total of 267,857 shares of its restricted common stock
per terms of the consulting agreement.



On
October 21, 2014, the Company issued to a certain unaffiliated party a total of 3,571,428 shares of its restricted common stock
valued at $0.0084 per share as a direct investment per a Securities Purchase Agreement.



On
October 21, 2014, the Company issued to a certain unaffiliated party a total of 3,571,428 shares of its restricted common stock
valued at $0.0084 per share as a direct investment per a Securities Purchase Agreement.



On October
22, 2014, the Company issued to TCA Global Credit Master Fund LP a total of 15,284,916 shares of its restricted common stock valued
at $0.0122 as a direct investment per a Securities Purchase Agreement.



On October
24, 2014, the Company issued to a certain unaffiliated party a total of 421,407 shares of its restricted common stock valued at
$0.0237 per share as a direct investment per a Securities Purchase Agreement.



On
October 24, 2014, the Company issued to a certain unaffiliated party a total of 421,407 shares of its restricted common stock
valued at $0.0237 per share as a direct investment per a Securities Purchase Agreement.



On
October 24, 2014, the Company issued to a certain unaffiliated party a total of 421,407 shares of its restricted common stock
valued at $0.0237 per share as a direct investment per a Securities Purchase Agreement.



F-28







On
October 24, 2014, the Company issued to a certain unaffiliated party a total of 421,407 shares of its restricted common stock
valued at $0.0237 per share as a direct investment per a Securities Purchase Agreement.



On
October 27, 2014, the Company issued a total of 6,287,370 shares of its restricted common stock upon conversion of approximately
$50,000 principal and accrued interest held by certain assignees of the Panache debt.



On
November 11, 2014, the Company issued to current officers of the Company, pursuant to their employment agreements, a total of
10,050,000 shares of its restricted common stock valued at $0.001.



On
November 15, 2014, the Company issued to a certain unaffiliated party a total of 107,143 shares of its restricted common stock
per terms of the consulting agreement.



On
November 17, 2014, the Company issued a total of 284,900 shares of its common stock upon conversion of $5,000 principal amount
of the Company’s debt.



On
November 21, 2014, the Company issued a total of 601,074 shares of its common stock upon conversion of $10,549 principal and interest
of the Company’s debt.



On
November 21, 2014, the Company issued a total of 2,716,749 shares of its restricted common stock upon conversion of approximately
$41,000 principal and accrued interest held by an assignee of the Panache debt.



On
December 2, 2014, the Company issued to current officers of the Company, pursuant to their employment agreements, a total of 10,050,000
shares of its restricted common stock valued at $0.001.



On
December 3, 2014, the Company issued to a certain unaffiliated party a total of 250,000 shares of its restricted common stock
per terms of a consulting agreement.



On
December 5, 2014, the Company issued a total of 867,402 shares of its common stock upon conversion of $15,674 principal and interest
of the Company’s debt.



On
December 8, 2014, the Company issued a total of 498,063 shares of its common stock upon conversion of $9,000 principal amount
of the Company’s debt.



On
December 10, 2014, the Company issued a total of 608,744 shares of its common stock upon conversion of $11,000 principal amount
of the Company’s debt.



Debt
Issuances



On
September 3, 2014, the Company issued an unsecured convertible promissory note to an accredited investor in the principal amount
of $100,000. The note bears interest at 12% per annum. The note matures on March 1, 2015. At any time or times from the issuance
date of the note and until the maturity dates, the note holder is entitled to convert any portion of the outstanding and unpaid
amount into fully paid and non-assessable shares of common stock. The conversion price will be based on a 45% discount to the
lowest daily trading prices for the ten previous trading days to the date of conversion.



On September
8, 2014, the Company received the second Tranche of funding under the Typenex note in the amount of $63,418 in exchange for a
promissory note in the amount of $66,250. See Note 10.



On September15,
2014, the Company entered into an agreement with Kevin Mulhearn (see Note 11), under which Mr. Mulhearn agreed to reduce the amount
then due under the Mulhearn Consolidated Note to $125,000.



F-29







On
October 20, 2014 (the “TCA Effective Date”), we borrowed an initial $1,900,000.00 from TCA Global Credit Master Fund,
LP (“TCA”) and issued a senior secured convertible redeemable debenture to TCA in the original principal amount of
$1,900,000.00 (the “TCA Debenture”) pursuant to the terms of a securities purchase agreement we entered into with
TCA (the “TCA SPA”). We agreed to borrow up to maximum of $5,000,000.00 in one or more closings in TCA’s sole
discretion (each a “Funding”) under the TCA SPA. Our subsidiaries, Office Supply Line, Inc., OSL Diversity Marketplace,
Inc., OSL Rewards Corporation, and Go Green Hydroponics Inc. (“GGH”) (collectively the “Subsidiary Guarantors”)
signed the TCA SPA as joint and several guarantors. We agreed to issue $223,500.00 worth of our unregistered shares of common
stock to TCA upon the TCA Effective Date, in exchange for advisory services previously provided to us, with the price per share
valued at the lowest volume weighted average price for our common stock for the 5 business days immediately prior to the TCA Effective
Date (the “TCA Initial Shares”). We agreed to issue additional shares of our unregistered common stock to TCA in the
event that TCA does not realize $223,500.00 of net proceeds from the sale of the TCA Initial Shares. The amount of additional
shares issued would only be the amount required for TCA to meet the $223,500.00 threshold upon their sale. If after twelve months,
TCA has not realized net proceeds totaling $223,500.00 from the sale of the TCA Initial Shares, and the additional shares if applicable,
then we agreed to redeem TCA’s remaining shares upon written notice for an amount sufficient for TCA to reach the $223,500.00
threshold. Further, we agreed to pay a 2% transaction fee to TCA for each Funding, which will be subtracted from the principal
amount of each respective Funding, as well as a one-time due diligence fee of $8,000.00 and legal fees of $15,000.00 to TCA. The
TCA SPA also contains additional covenants, representations, conditions precedent, and other provisions that are customary of
securities purchase agreements.



We
used $1,800,000.00 from the issuance of the TCA Debenture to finance our purchase of GGH. The TCA Debenture bears interest at
the rate of 11% per annum, has a maturity date of October 20, 2015 (“TCA Maturity Date”), and was funded by TCA in
cash on October 20, 2014. We may redeem the TCA Debenture at any time prior to the TCA Maturity Date, by giving written notice
to TCA three business days beforehand, and by paying the entire outstanding amount plus related fees on the third business day.
We agreed to make monthly payments of principal, interest, and a redemption premium in the amount of $11,400.00, subject to a
5% late charge if we do not pay within the 5 day grace period of each monthly payment.



The
interest rate under the TCA Debenture will increase to 18% per annum, and TCA may accelerate full repayment of the TCA Debenture
upon the occurrence of an event of default. An event of default includes, but is not limited to: (i) our failure to pay any amount
due under the TCA Debenture, (ii) an assignment by us for the benefit of our creditors, (iii) any court order appointing a receiver,
liquidator, or trustee for us (subject to a 30 day cure period), (iv) any court order adjudicating us insolvent (subject to a
30 day cure period), (v) our filing of a bankruptcy petition, (vi) the filing of a bankruptcy petition against us (subject to
a 30 day cure period), (vii) we admit we cannot pay our debts, or (vii) we breach the TCA Debenture or TCA SPA (each a “TCA
Event of Default”).



The
TCA Debenture is convertible by TCA into shares of our common stock at any time while the TCA Debenture is outstanding, if agreed
upon by us and TCA, or in TCA’s sole discretion upon a TCA Event of Default. If a TCA Event of Default occurs, TCA may convert
the TCA Debenture at the conversion price for each share of 85% multiplied by the lowest volume weighted average price for our
common stock during the 5 trading days prior to the relevant notice of conversion (“TCA Conversion Price”). The TCA
Conversion Price is subject to adjustment upon certain events, including but not limited to stock splits, dividends, the sale
of all or substantially all of our assets, reclassification of our common stock, and our effectuation of a merger or consolidation.
TCA does not have the right to convert the TCA Debenture into our common stock if such conversion would result in TCA’s
beneficial ownership exceeding 4.99% of our outstanding common stock at that time. During the time that the TCA Debenture is outstanding,
we have agreed to reserve the total number of our common stock that would be issuable if the entire TCA Debenture was converted
at that time. The TCA Debenture also contains waiver, notice, and assignment provisions that are customary of convertible debentures.



The
TCA SPA, TCA Debenture, and all future debentures issued pursuant to the TCA SPA are guaranteed by the Subsidiary Guarantors pursuant
to separately signed guaranty agreements (the “TCA Guaranty Agreements”). The TCA Guaranty Agreements contain representations,
warranties, covenants, and other provisions that are customary of guaranty agreements. The TCA SPA, TCA Debenture, and all future
debentures issued pursuant to the TCA SPA are secured by a security interest in all of the Subsidiary Guarantors’ assets,
whether now existing or hereafter acquired, pursuant to separately signed security agreements (the “TCA Security Agreements”).
The TCA Guaranty Agreements contain representations, warranties, covenants, and other provisions that are customary of security
agreements.



F-30







We,
as well as Robert Rothenberg (“Rothenberg”), our Chief Executive Officer, and Eli Feder (“Feder”), our
Chief Corporate Development Officer and Director, and Steve Gormley (“Gormley”), our Chief Business Development Officer
and Director (collectively, the “Pledging Parties”), have signed pledge agreements (the “TCA Pledge Agreements”),
whereby the Pledging Parties pledged to TCA as additional security for the TCA Debenture all of their right, title and interest
in, and provided a first priority lien and security interest on (i) all outstanding shares of common stock of the Subsidiary Gurantors
owned by us and (ii) a total of 60,000,000 shares of our common stock owned by the Pledging Parties.



Acquisition
of Go Green Hydroponics Inc.



On
October 20, 2014 (“GGH Closing Date”), OSL Holdings Inc. (“we,” “us,” “our,” or
“Company”) entered into and completed the closing of a stock purchase agreement (the “Malinovitz SPA”)
with Jeffrey Malinovitz (“Malinovitz”) and Go Green Hydroponics Inc. (“GGH”), whereby we completed the
purchase of 750 shares of GGH’s common stock from Malinovitz, representing 50% of GGH’s outstanding shares, for a
total of $900,000.00 (the “Malinovitz Purchase Price”). GGH is a hydroponics, indoor gardening and cultivation supply
retail operation, located in Los Angeles, California, specializing in the sale of hydroponic cultivation equipment, mineral nutrient
solutions and gardening resources and equipment.



The
Malinovitz Purchase Price was paid on the GGH Closing Date as follows: (i) $800,000.00 to Malinovitz and (ii) $100,000.00 (the
“Malinovitz Holdback Funds”) to Ingber & Associates (the “Escrow Agent”). In the event that GGH’s
final net liquid working capital is less than $235,000.00 (the “NLWC Amount”) on the GGH Closing Date, the Malinovitz
Purchase Price will be decreased by 50% multiplied by the difference between $235,000.00 and the NLWC Amount on the GGH Closing
Date, with the maximum amount of decrease equal to the Malinovitz Holdback Funds. Net liquid working capital means the difference
between (x) the GGH’s Liquid Current Assets (defined below), and (y) the DDH’s Immediately Due Current Liabilities
(defined hereafter). The phrase, “Liquid Current Assets” means cash and near-cash assets immediately convertible into
cash, and the phrase “Immediately Due Current Liabilities” means GGH’s current liabilities that are due and
owing on or before October 31, 2014, as well as all credit card charges on all Company credit cards as of the Closing date, whether
or not same are reflected upon the balance sheet as of the Closing Date and whether or not same are technically due in accordance
with the terms of such credit cards to be paid by GGH on or before October 31, 2014, in each instance as determined in accordance
with GAAP. GGH’s accounts receivable are not deemed Liquid Current Assets.



The
Company’s completion of the acquisition was conditioned upon the sale by Jason Babadjov (“Babadjov”) of his
50% interest in GGH to us. The Malinovitz SPA also contains additional covenants, representations, warranties, conditions precedent,
and other provisions that are customary of stock purchase agreements including Malinovitz’ agreement to refrain from competing
with GGH for a period of two years after the GGH Closing Date.



On
October 20, 2014, GGH entered into an employment agreement with Malinovitz as Vice President of Marketing of GGH (the “Malinovitz
Employment Agreement”). The Malinovitz Employment Agreement provides for a base salary of $250,000.00 annually. In addition,
Malinovitz is entitled to participate in GGH’s profit sharing program, including profit allocation for 2014 provided the
Malinovitz Employment Agreement is in effect on December 31, 2014. The Malinovitz Employment Agreement provides for a 1 year term,
ending on October 20, 2015 (the “Malinovitz Employment Term”). Malinovitz’s duties include but are not limited
to the marketing of GGH and its products. The Malinovitz Employment Agreement may be terminated by GGH in the event of Malinovitz’
disability, on 90 days written notice by GGH any time after January 1, 2015, for cause as defined in the agreement. The Malinovitz
Employment Agreement may be terminated by Malinovitz in the event of a change of control of GGH, constructive termination as defined
in the agreement or voluntarily without reason. In the event of termination by GGH except for cause or by Malinovitz voluntarily,
Malinovitz is entitled to (a) any accrued and unpaid Guaranteed Salary, payment of any accrued and unused PTO, and payment of
two (2) additional weeks of additional Base pay; (b) the issuance of any profit sharing up until date of termination. Malinovitz
agreed to refrain from competing with GGH or soliciting its customers and employees during the term of his employment with GGH
as well as additional covenants and other provisions that are customary of employment agreements. The Company guaranteed the obligations
of GGH under the Malinovitz Employment Agreement.



F-31







Simultaneously,
on the GGH Closing Date, we entered into and completed the closing of a stock purchase agreement with Babadjov and GGH (the “Babadjov
SPA”), whereby we agreed to purchase 750 shares of GGH’s common stock from Babadjov, representing 50% of GGH’s
outstanding shares, for a total of $900,000.00 (the “Babadjov Purchase Price”). The Babadjov Purchase Price was paid
as follows: (i) $800,000.00 to Babadjov and (ii) $100,000.00 (the “Holdback Funds”) to Ingber & Associates (the
“Escrow Agent”). In the event that GGH’s final net liquid working capital is less than the NLWC Amount on the
GGH Closing Date, the Babadjov Purchase Price will be decreased by 50% multiplied by the difference between $235,000.00 and the
NLWC Amount on the GGH Closing Date, with the maximum amount of decrease equal to the Babadjov Holdback Funds. The Babadjov SPA
was expressly conditional upon the simultaneous sale by Malinovitz of his 50% interest in GGH to us. The Babadjov SPA also contains
additional covenants, representations, warranties, conditions precedent, and other provisions that are customary of stock purchase
agreements including Babadjov’s agreement to refrain from competing with GGH for a period of two years after the GGH Closing
Date.



Upon
closing of the above transactions with Malinovitz and Babadjov, we acquired 100% of GGH, and thus GGH is now our wholly-owned
subsidiary. Pursuant to the Malinovitz SPA and Babadjov SPA, we assumed GGH’s lease of the property located at 15721 Ventura
Boulevard, Encino, California.



On
October 20, 2014, we appointed Babadjov as Vice President of Operations of GGH, pursuant to an employment agreement (the “Babadjov
Employment Agreement”), which provides for a base salary of $120,000.00 annually. The Babadjov Employment Agreement provides
for an initial 1 year term (the “Babadjov Initial Term”), and automatic renewal for two successive 1 year terms, unless
we give Babadjov notice of termination between 30 and 90 days before the end of the relevant yearly term. We also agreed to pay
Babadjov a guaranteed bonus of $250,000.00 payable monthly over the Initial term. In addition, Babadjov is entitled to participate
in GGH’s benefit and welfare plans that are generally available to other employees. Babadjov’s duties include but
are not limited to overseeing all of GGH’s day to day operations, evaluating GGH’s marketing plans and products, and
reviewing GGH’s financial performance. Babadjov agreed to refrain from competing with GGH or soliciting its customers and
employees during the term of his employment with GGH as well as additional covenants and other provisions that are customary of
employment agreements. The Company guaranteed the obligations of GGH under the Babadjov Employment Agreement.



Joint
Venture



On
November 25, 2014, the Company entered into a joint venture agreement with Alpha Equity Group, LLC. The joint venture is to be
called Gold is Green, LLC. This company plans to acquire commercial real property for lease to growers, processors, manufacturers,
sellers and distributors of cannabis products in a manner that is legal under state and local ordinances in all of its legal forms
including but not limited to medicinal cannabis. Upon completion of the joint venture agreement, OSL will receive a 49% equity
interest in Gold is Green for its identification of zone complaint locations, lease holders, negotiation of purchase and management
of leaseholder relationships. Alpha Equity Group will arrange financing for its interest in Gold is Green. Gold is Green signed
its first Purchase Sales Agreement on October 31, 2014 to acquire a multi-tenant commercial retail building consisting of approximately
17,692 square feet in Torrance, California for $6.3 million. The building is zone compliant for the operation of a legal medical
marijuana collective. The closing on this property is subject to completion of financing, a property inspection and additional
conditions, representations and warranties that are customary of real estate purchase and sale agreements.



F-32