UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the Fiscal Year Ended August 31, 2011





Commission File Number 000-32923





CLICKER INC.


(Exact name of registrant as specified in its charter)





Nevada
33-0198542(State or other jurisdiction of incorporation

or organization)
(I.R.S. Employer Identification No.)1111 Kane Concourse, Suite 304

Bay Harbor Islands, Florida
33154                      (786) 309-5190(Address of principal executive office)
(Zip Code)          (Registrant’s telephone number,

Including area code)





Securities registered pursuant to Section 12(b) of the Act: None.





Securities registered pursuant to Section 12(g) of the Act:





Title of each class

Name of each exchange on which registeredCommon Stock, $0.001 par value

Over-the-Counter Bulletin Board





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yeso   Nox





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yeso   Nox





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 past 90 days. Yesx    Noo





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 (§ 229.405 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 o   No o





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 the 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.  o





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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer o
Accelerated filer oNon-accelerated filer o
Smaller reporting company x(Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yeso Nox





The aggregate market value of the voting common equity held by non-affiliates as of February 28, 2011, based on the closing sales price of the Common Stock as quoted on the Over-the-Counter Bulletin Board was $392,672. For purposes of this computation, all officers, directors, and 5 percent beneficial owners of the registrant are deemed to be affiliates.  Such determination should not be deemed an admission that such directors, officers, or 5 percent beneficial owners are, in fact, affiliates of the registrant.





As of December 5, 2011, there were 132,964,139 shares of registrant’s common stock outstanding.








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TABLE OF CONTENTS





PAGEPART IItem 1.

Business

3Item 1A.

Risk Factors

8Item 1B.

Unresolved Staff Comments

12Item 2.

Properties

12Item 3.

Legal Proceedings

12Item 4.

(Removed and Reserved)

13PART IIItem 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

14Item 6.

Selected Financial Data

14Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

22Item 8.

Financial Statements and Supplementary Data

22Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

22Item 9A

Controls and Procedures

22Item 9B.

Other Information

22PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

23Item 11.

Executive Compensation

24Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

26Item 13.

Certain Relationships and Related Transactions, and Director Independence

27Item 14.

Principal Accounting Fees and Services

27PART IVItem 15.

Exhibits, Financial Statement Schedules

28Signatures

30








2





PART I





Item 1. Description of Business





This Annual Report on Form 10-K is of Clicker Inc. (“Clicker”), which is  also referred to as “we”, us” or the "Company".





This Annual Report on Form 10-K (including the section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K.  Additionally, statements concerning future matters are forward-looking statements.





Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our Management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks Related to Our Business" below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.





We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.





OVERVIEW





We are web publishers and internet brand builders focused on developing stand alone brands and properties.





The developments of these internet websites have four main stages of development:





Stage One:
The idea and concept stage of a potentially good idea. At this stage a budget and timeline for the property is developed. The size of the market and our plan for integration or exit is established. Additionally the business model is introduced at this level.





Stage Two:
The development of the property is laid out. Site layout and design is established. Logic and user flow and finally site architecture and design are established.





Stage Three:
The site is launched and the operational model is implemented in beta form. We begin to scale some web traffic and begin to test the model. The site is officially launched in the beta stage and can be in a few different versions





Stage Four:
Full operation stage and the property should now have gone though a couple stages of beta with the model being established, and ready to leave the “beta” stage, to go on to be scaled accordingly..






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OUR WEB PROPERTIES





Forwant.com





Graphic




ForWant.com is a free classified advertisements site with millions of ads posted by users.  The website allows users to post advertisements for and search a variety of specialized categories including, housing, merchandises, services, personal ads and employment listings in specialized communities in the United States and Canada, as well as other countries such as United Kingdom, India and Ireland.   The website also has paid premium content and sections, and the property has millions of listings throughout its network. The property is now incorporated under ForWant Inc and ready to begin operations as a standalone entity. Competitors for the property are Craigslist, kijiji (an eBay company), Hotjobs (yahoo), and Monster.





Cashclicker.com and C2we.com





Graphic





Cashclicker.com is an e-reward site that will reward registered users on everyday consumption of content, commerce and search. C2we.com is the social network site that is affiliated with Cashclicker.com. Management is currently evaluating the strategy and viability of this property and no further development of this site is planned at this time.





Sippinit.com





Graphic




Sippinit.com is an online pop, entertainment and gossip property that will incorporate social networking with entertainment. We have launched this property under www.celebritymagazineonline.com. We are currently in beta and evolving the social media capabilities of this property.





4





ItsMyLocal.com










ItsMyLocal.com is a reward property incorporates local search and rewards with local peer to peer social networking and rewards. The strategic plan for the brand is to provide a social network and rewards to local search whereby users of local participating patrons can receive coupons from their local vendors. Plans call for these patrons to become members and rate the established while offering coupons or special offers to their friends within the network. Management is currently evaluating the strategy and viability of this property and no further development of this site is planned at this time.








Sportsgulp.net





Graphic


Sportsgulp.net is a social networking website and gossip channel for sports enthusiasts. The website was launched in 2011. We are currently in beta and evolving the social media capabilities of this property.  Plans call for the property to pull conventional sports feeds while allowing users a more interactive social networking component whereby the sports community could be more interactive with each other by incorporating social networking tools.





Wallst.net and Mywallst.net





Graphic


We have re-launched wallst.net as a news consumption property, and advertising platform. This aggregates financial news and information from the web. We are currently in beta with this property and plan on enhancing its personalization, and social media features.





Dahoodbuzz.com





We recently acquired dahoodbuzz.com, which is a news consumption property, and advertising platform. This aggregates hip hop and urban news from the web. The site is advertising based, and we are currently evolving the social media and capabilities of this property.








5








Financial Filings Corp.





Financial Filings Corp. was launched in March 2006 and provided news distribution and electronic document conversion services to public companies for filing to the EDGAR website of the Securities and Exchange Commission. Financial Filings has no current operations.





Telecom and related services reselling





We have entered into a reselling arrangement to resell a wide variety of telecom and data services, including but not limited to data backup, wireless access reselling, conference call hosting, FoIP (Fax over IP), and broadband access reselling. We are currently evaluating and prioritizing our entry into these different categories, as well as undertaking some of our initial website build outs for beta testing.





RECENT HISTORY





As a result of a downturn in the economy and the outlook for financial services, we decided in 2009 to switch our corporate focus towards building websites to build up new brand identities.  In connection with this shift, we changed our name to CLICKER Inc. on May 12, 2009.





Plan of Operations





As a result of the change in management in March 2011, we are evaluating the strategic direction of the company and exploring additional possible acquisitions and long-term growth opportunities. Due to this change in the direction of the company, we have experienced a decrease in revenue and recorded assets. We are considering the best ways to maximize the value of our intellectual assets (which include our website properties) and revive revenue, including a number of options ranging from the sale of certain intellectual assets to investing further capital to build out and take our potentially productive intellectual assets to market. Management is also contemplating further business development efforts that would result in new website properties that would be incremental to what we already have in our existing portfolio. Since the management change we have expended a good deal of effort in managing our corporate liabilities and interacting with our note holders, many of which notes have gone into default. We are also continuing our efforts to raise additional capital for ongoing operations and business development. To that end, we raised $300,000 in September 2011 through the sale of a convertible debenture and we are currently determining the optimal ways to deploy that capital to maximize its value to the business.





Resignation of Tom Hemingway





On March 3, 2011, Tom Hemingway voluntarily resigned as a director of the Company for personal reasons.  In submitting his resignation, Mr. Hemingway did not express any disagreement with the Company on any matter relating to the registrant’s operations, policies or practices.





Appointment of Lloyd Lapidus





On March 7, 2011, the Board appointed Mr. Lloyd Lapidus (“Lapidus”) to serve as a member of the Board to replace Mr. Hemingway.





Separation Agreement with Albert Aimers





On March 7, 2011, the Company entered into a separation agreement (“Separation Agreement”) with Mr. Albert Aimers (“Aimers”), pursuant to which Aimers’ employment as Chief Executive Officer ended on March 7, 2011.  Aimers agreed to stay with the Company as interim Chief Financial Officer until the earlier of April 19, 2011, the date the Company files its 10-Q for the quarter ended February 28, 2011 or the date the Company terminates Aimers’ services.  For his services as interim Chief Financial Officer, the Company agreed to pay Aimers a sum of $18,750.





Pursuant to the Separation Agreement, the Company paid Aimers $100,000 upon execution.




In connection with the Separation Agreement, Aimers agreed to return all shares of Class A Preferred Stock owned by Aimers or Junior Capital, Inc. (“Junior Capital”) to the Company for cancellation.  In addition, Aimers agreed to return 2,677,105 shares of Common Stock owned by Aimers and/or Junior Capital to the Company for cancellation.  The remaining 23,093,940 shares of Common Stock owned by Aimers and/or Junior Capital are subject to a one-year lock-up agreement and a share forfeiture agreement (“Forfeiture Agreement”).  Pursuant to the Forfeiture Agreement, Aimers and Junior Capital agreed to forfeit the remaining shares of common stock owned by them if the Company achieves an aggregate of $100,000 in gross revenues from operations within 12 months of the date of the Forfeiture Agreement.  The remaining shares are held in escrow pursuant to a share forfeiture escrow agreement. Subsequently, the Company consented to the sale of the Common Stock owned by Aimers and/or Junior Capital to a third party and the Forfeiture Agreement was terminated as result.






6





Furthermore, pursuant to the Separation Agreement, the Company was released from certain outstanding liabilities to employees and/or directors of the Company.





Appointment of New Chief Executive Officer





On March 7, 2011, the Board appointed Lapidus as Chief Executive Officer.  On March 7, 2011, the Company entered into an employment agreement (the “Agreement”) with Lloyd Lapidus to serve as Chief Executive Officer.  The Agreement has an initial term of three years.  The Agreement automatically renews for successive one year terms after the initial term unless either party provides prior written cancellation.  The base salary under the Agreement is $160,000, $200,000 and $225,000 for each of the first three years, respectively. Lapidus was paid a bonus of $10,000 upon execution of the Agreement.  Further, Lapidus is entitled to receive bonuses of up to $150,000 in the first year of the Agreement, in the discretion of the Board, based on the performance of the Company, including increases in revenue, increases in shareholder equity, reduction in outstanding debt and capital raising, with any such bonuses paid out on a quarterly basis.  As well, Lapidus is entitled to receive options to purchase the Company’s Common Stock as follows:





(a)
Three million (3,000,000) shares, upon execution of this Agreement, at an exercise price of $0.02 per share, which options shall become fully vested on the Effective Date;





(b)
Two million (2,000,000) shares, upon the Company having assets greater than liabilities (excluding any derivative liabilities) as shown by the Company’s quarterly and annual reports filed with the Securities and Exchange Commission, at an exercise price of $0.15 per share, which options shall become fully vested upon issuance; and





(c)
Four million (4,000,000) shares, upon the Company achieving aggregate revenues in excess of $1,000,000 in any four consecutive quarters, as shown by the Company’s quarterly and annual reports filed with the Securities and Exchange Commission, which options shall become fully vested upon issuance.





Options shall be issued pursuant to a stock option/incentive plan adopted by the Company, which plan may be adopted after the execution of the Agreement.  The options shall contain language restricting Lapidus’ ability to exercise the options and receive shares of the Company’s common stock such that the number of shares of common stock held by Lapidus in the aggregate and his affiliates after such exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s common stock, which restriction may be waived by Lapidus by providing written notice to the Company at least 61 days in advance.  In addition, Lapidus is entitled to participate in any and all benefit plans, from time to time, in effect for our employees, along with vacation, sick and holiday pay in accordance with our policies established and in effect from time to time.





Competition





Generally, competitive factors within the internet and web development market include the range and depth of financial tools and dimensions of email offerings, the quality of web site content, and the reliability of reference information provided. We are aware of several companies which are much larger and have greater name recognition, that provide some level of presence and awareness in similar delivery formats.





Employees





As of December 1, 2011, we employed one part-time employee, our Chief Executive Officer.









7





Item 1A. Risk Factors





WE HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE, WHICH MAY NEGATIVELY IMPACT OUR ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES.





We incurred net losses of $4,079,483 and $7,501,738 for the years ended August 31, 2011 and 2010, respectively. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether we will be able to continue expansion of our revenue. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us. These losses are largely associated with the operation of our financial related properties.





OUR INDEPENDENT AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE FINANCING.





In their report dated December 12, 2011, our





WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING BUSINESS OPERATIONS.





Our company has a limited operating history. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We have received a limited amount of revenues from operations and have limited assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.





OUR FAILURE TO MANAGE GROWTH EFFECTIVELY COULD IMPAIR OUR BUSINESS.





Our business strategy envisions a period of rapid growth that may put a strain on its administrative, operational resources and funding requirements. Our ability to effectively manage growth will require them to continue to expand the capabilities of its operational and management systems and to attract, train, manage and retain qualified editors, technicians, salespersons and other personnel. There can be no assurance that we will be able to do so, particularly if losses continue and we are unable to obtain sufficient financing. If we are unable to successfully manage growth, our business, prospects, financial condition, and results of operations could be adversely affected.





WE OPERATE WITHIN A HIGHLY COMPETITIVE AND COMPLEX MARKET THAT IS DIRECTLY OR INDIRECTLY AFFECTED BY MARKET RISKS AND REGULATIONS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS.





Website development and branding is an extremely competitive and fragmented industry. The industry can be significantly affected by many factors, including changes in local, regional, and national economic conditions, changes in consumer preferences, brand name recognition, marketing and the development of new and competing internet web publishers and media companies. We expect that existing businesses that compete with us and have greater financial resources than us will be able to undertake more extensive marketing campaigns and more aggressive advertising sales policies than us, thereby generating more attention to their companies and websites. These competitive pressures could have a material adverse effect on our business, prospects, financial condition, and results of operations.





OUR DEPENDENCE ON THE CONTINUED GROWTH IN THE USE OF THE WEB, PARTICULARLY IN OUR INDUSTRIES, COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.





Our business depends on consumers continuing to increase their use of the web for obtaining news and financial information, social networking, classified ads, reward type offers as well as for conducting commercial transactions. The rapid growth and use of the Internet is a relatively recent phenomenon. As a result this acceptance and use may not continue to develop at historical rates. Web usage may be inhibited for a number of reasons, such as - Inadequate network infrastructure; security concerns; inconsistent quality of service; and availability of cost-effective, high-speed service.






8





If web usage grows, the Internet infrastructure may not be able to support the demands placed on it by this growth or its performance and reliability may decline. In addition, web sites have experienced interruptions in their service as a result of outages and other delays occurring throughout the Internet network infrastructure. If these outages or delays frequently occur in the future, web usage, as well as usage of our web site, could grow more slowly or decline, which could adversely affect our results of operations.





IF WE ARE UNABLE TO ESTALISH AND MAINTAIN STRATEGIC RELATIONSHIPS WITH OTHER WEB SITES TO ATTRACT USERS, ADVERTISERS AND CONTENT, OUR BUSINESS COULD BE ADVERSELY AFFECTED.





We depend on establishing and maintaining distribution relationships with high-traffic web sites for a significant portion of our traffic. There is intense competition for placements on these sites, and we may not be able to enter into such relationships on commercially reasonable terms or at all. Even if we enter into distribution relationships with these web sites, they themselves may not attract significant numbers of users. Therefore, our web site may not receive additional users from these relationships. Moreover, we may have to pay significant fees to establish these relationships.





Occasionally we enter into agreements with advertisers, content providers or other high traffic web sites that require us to exclusively feature these parties in certain sections of our web site. Existing and future exclusivity arrangements may prevent us from entering into other content agreements, advertising or sponsorship arrangements, or other strategic relationships. Many companies we may pursue for a strategic relationship also offer competing services. As a result, these competitors may be reluctant to enter into strategic relationships with us. Our business could be adversely affected if we do not establish and maintain additional strategic relationships on commercially reasonable terms or if any of our strategic relationships do not result in increased use of our web site.





DIFFICULTY ACCOMMODATING INCREASES IN THE NUMBER OF USERS OF OUR SERVICES AND INTERNET SERVICE PROBLEMS OUTSIDE OF OUR CONTROL ULTIMATELY COULD RESULT IN THE REDUCTION OF USERS OF OUR WEB PROPERTIES.





In the past, our Web site has experienced significant increases in traffic when there is noteworthy business or financial news stories. In addition, the number of our users has increased over time as we are seeking to further increases in our user base. Therefore, our Web site must accommodate a high volume of traffic and deliver frequently updated information. Our Web site has in the past, and may in the future experience slower response times or other problems for a variety of reasons.





Our web site could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information. In addition, our users depend on Internet service providers, online service providers and other web site operators for access to our Web site. Each of them has experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. These types of occurrences could cause users to perceive our Web site as not functioning properly, and therefore cause them to use other methods to obtain their business and financial news and other information.





IF WE DO NOT DEVELOP NEW AND ENHANCED SERVICES AND FEATURES FOR OUR WEB PROPERTIES, WE MAY NOT BE ABLE TO ATTRACT AND RETAIN A SUFFICIENT NUMBER OF USERS.





We believe that our Web site will be more attractive to advertisers if we develop a larger audience comprised of demographically favorable users. Accordingly, we intend to introduce additional or enhanced services in the future in order to retain its current users and attract new users. If we introduce a service that is not favorably received, the current users may not continue using our service as frequently. New users could also choose a competitive service over ours.





We may also experience difficulties that could delay or prevent us from introducing new services. Furthermore, these services may contain errors that are discovered after the services are introduced. We may need to significantly modify the design of these services on its Web site to correct these errors. Our business could be adversely affected if it experiences difficulties in introducing new services or if users do not accept these new services.








9





THERE IS INTENSE COMPETITION FOR OUR WEB-BASED BUSINESSES AND FINANCIAL CONTENT AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.





Many web sites compete for consumers' and advertisers' attention and spending, particularly in the business and financial information and news area. We expect this competition to continue to increase. We compete for advertisers, users, and content providers and e commerce customers with many types of companies, including:





·
Publishers and distributors of traditional media (television, radio and print), such as The Wall Street Journal, CNN and CNBC;·
General purpose consumer online services such as Craigslist, Kijiji (an Ebay company); Classifieds and  Backpage;





·
Online services or web sites targeted to business, finance and investing needs, such as Monster and Yahoo’s Hot jobs; and·
Affiliate and Multi-level Marketing  and other companies, such as Herbalife and Amway, Infoseek, Lycos, and Yahoo!





Increased competition could result in price reductions, reduced margins, or loss of market share, any of which would adversely affect our business.





THE DIMINUTION OR LOSS, MISAAPROPRIATION OR LEGAL CLAIMS ON THE BRAND NAME "WALLST.NET" “FORWANT”, “CASHCLICKER”, “ITSMYLOCAL” AND OUR OTHER DEVELOPING PROPERTIES WOULD HAVE A MATERIAL ADVERSE AFFECT ON OUR BUSINESS.





We are highly dependent on our brand names for the success of our venture. We believe the diminution or loss, misappropriation of our existing proprietary rights or claims of infringement or legal actions related to intellectual property of these brand names, or any other negative market or industry perception arising from these, would have a material adverse effect on our business.





We currently rely on contractual rights, copyrights, trademarks, and trade secrets to protect our intellectual property rights. We do not hold any patents. We cannot assure you that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop comparable or superior technologies or obtain unauthorized access to our proprietary technologies.





We hold the Internet domain names “www.forwant.com”, “www.cashclicker.com”, “www.itsmylocal.com”, “www.sippinit.com”, www.sportsgulp.net” and “www.wallst.net”. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as ".org,” or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.





WE COULD FACE LIABILITY FOR THE INFORMATION DISPLAYED ON OUR WEB PROPERTIES, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





We may be subjected to claims for defamation, negligence, and copyright or trademark infringement or based on other theories relating to the information we publish on our web site. These types of claims have been brought, sometimes successfully, against online services as well as other print publications in the past. We could also be subjected to claims based upon the content that is accessible from its Web site through links to other web sites. Defending such claims could be costly and could distract management from concentrating on other aspects of our business, which could adversely affect our financial condition and results of operations.





THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR CONVERTIBLE DEBENTURES THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.





As of August 31, 2011, we had 114,375,277 shares of common stock issued and outstanding and convertible debentures outstanding that may be converted into an estimated 1,940,000,000 shares of common stock at current market prices. In addition, the number of shares of common stock issuable upon conversion of the outstanding convertible debentures will increase if the market price of our stock declines. Almost all of the shares issuable upon conversion of the outstanding convertible debentures may be sold without restriction pursuant to Rule 144. The sale of these shares may adversely affect the market price of our common stock. We currently have insufficient common shares available to enable the conversion of our convertible debt or the exercise of our outstanding stock options.





THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE DEBENTURES MAY ENCOURAGE INVESTORS TO MAKE SHORT SALES IN OUR COMMON STOCK, WHICH COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK.





The convertible debentures are convertible into shares of our common stock at a discount ranging between 50% and 65% from the trading price of the common stock prior to the conversion. The significant downward pressure on the price of the common stock as the investors convert and sells material amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. The investors could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of the secured convertible notes, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock.






10





THE ISSUANCE OF SHARES UPON CONVERSION OF THE CONVERTIBLE DEBENTURES MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS.





The issuance of shares upon conversion of the convertible debentures may result in substantial dilution to the interests of other stockholders since the investors may ultimately convert and sell the full amount issuable on conversion. Although the investors may not convert their convertible debentures if such conversion or exercise would cause them to own more than 4.99% of our outstanding common stock, this restriction does not prevent the investors from converting and/or exercising some of their holdings and then converting the rest of their holdings. In this way, the investors could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock.





WE ARE CURRENTLY IN DEFAULT UNDER A SIGNIFICANT AMOUNT OF OUR OUTSTANDING CONVERTIBLE DEBENTURES.





A number of our convertible debentures remain outstanding subsequent to their maturity dates. The aggregate principal face amount of convertible debentures in default is approximately $482,000 as of August 31, 2011.We are currently working with the debt holders on making arrangements to honor our obligations under the debentures, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the debentures.





Risks Relating to Our Common Stock:





OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.





The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:


·
that a broker or dealer approve a person's account for transactions in penny stocks; and·
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.





In order to approve a person's account for transactions in penny stocks, the broker or dealer must:


·
obtain financial information and investment experience objectives of the person; and·
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.





The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:





·
sets forth the basis on which the broker or dealer made the suitability determination; and·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.





Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.





Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.









11





FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A SHAREHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.





In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.





Item 1B. Unresolved Staff Comments





None.





Item 2. Properties





Corporate Offices





Our corporate offices consist of approximately 250 sq. feet of office space in Bay Harbor Islands, Florida. We have a month to month lease basis at a monthly rental of approximately $550.  We believe that our existing facilities are suitable and adequate to meet our current business requirements.





Intellectual Property, Proprietary Rights and Domain Names





We own the domain names “www.forwant.com”, “www.cashclicker.com”, “www.itsmylocal.com”, “www.sippinit.com”, www.sportsgulp.net”, “www.wallst.net” and “www.financialfilings.com”. We believe our ownership of these domain names gives us adequate protection over them and we intend to keep them in our possession.





Other intellectual property is protected through a combination of trademark law, trade secret protection, and confidentiality agreements with our employees, customers, independent contractors, agents, and vendors. We pursue the registration of our domain names, trademarks, and service market in the United States. Effective trademark, service mark, copyright, and trade secret protection may not be available in every country in which we provide services and products are made available online. We create some of our own content and obtain the balance of our content from third parties. It is possible that it could become subject to infringement actions based upon the content obtained by third parties. In addition, others may use this content and we may be subject to claims from our licensors. We currently have no patents or patents pending and do not anticipate that patents will become a significant part of our intellectual property in the future. We have entered into confidentiality agreements with our employees and independent consultants and have instituted procedures to control access to and distribution of our technology, documentation and other proprietary information and the proprietary information of others from who we licenses content. The steps we take to protect our proprietary rights may not be adequate and third parties may infringe or misappropriate the trademarks, service marks, and similar proprietary rights. In addition, other parties may assert claims of infringement of intellectual property or alter proprietary rights against us. The legal status of intellectual property on the Internet is currently subject to various uncertainties as legal precedents have not been set and are still to be determined in many areas of Internet law.





Item 3. Legal Proceedings





Except as disclosed below, there are no legal proceedings to which we are a party or to which any of our property is subject, and to the best of our knowledge, no such actions against us is contemplated or threatened.





PR Newswire Association, Inc. vs. Financial Filings Corporation, Digital Wall Street, Inc. and WallStreet Direct, Inc., Superior Court of New Jersey, Hudson County, Civil Division #5, Docket No. L-878-09.  On February 12, 2009, PR Newswire filed litigation against us and our subsidiaries to pay $74,194.60 for services provided by PR Newswire. A judgment was entered against us in the amount of $74,194.60 and said amount remains unpaid.





Adon Networks, Inc. vs. Wall Street Direct, Inc., Superior Court of Arizona in and for the County of Maricopa County Civil Action  #CV2009-00035.  On February 4, 2009, Adon Networks filed a action to collect $41,966 in amounts due for services provided to Wall Street Direct.  A judgment was entered against us in the amount of $41,966 and said amount remains unpaid.






12





Renaissance Hotel Management Company, LLC vs. Financial Media Group, Inc., Cook County Court, Illinois, First Municipal District, Case No. 08M110495.  On January 22, 2008, litigation claiming $20,250 from us was commenced under the above-entitled action. On September 10, 2008, a judgment was entered against us in the amount of $14,371.87 and said amount remains unpaid.





CBS Outdoors, Inc. vs. Financial Media Group, Inc., New York City Civil Court Index No. CV-003947-08/NY. On March 27, 2008, a Stipulation of Settlement was entered between CBS Outdoors and us for a sum of $16,800. A default judgment in the amount of $17,794.85 was entered against us on October 16, 2008.





Dow Jones & Company, Inc. DBA Dow Jones Marketwatch as successor in interest to Marketwatch, Inc. vs. Financial Media Group, Inc. Et. Al., Superior Court of California, County of Orange, Case No. 30-2208 00112726.  On September 30, 2008, Dow Jones filed a complaint for a breach of contract against us for failing to pay $42,000 in licensing fees for using Marketwatch’s financial information and analytical tools relating to securities pursuant to the terms as required by the License and Service Agreement. On March 4, 2009, a judgment for $48,162.40 was awarded in favor of Dow Jones, and said amount remains unpaid. We plan to contest the judgment if a settlement is not reached as services were supplied to a subsidiary. On November 15, 2010, the Company agreed to settle judgment and paying $2,000 per month until the amount is paid in full. The Company is not current in these payments.





Elite Financial Communications Group, LLC vs. Financial Media Group, Inc., Superior Court of California, County of Orange, Case No. 30-20090012358. On May 22, 2009, Elite Financial Communications Group, LLC filed a complaint for a breach of contract against us for failing to pay for Investor Relations Services. On October 1, 2009, a judgment for $61,293 was awarded in favor of Elite Financial Communications, and the amount remains unpaid. The balance has been included in current liability on the accompanying consolidated financial statements.





Item 4. (Removed and Reserved)









13




PART II





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





Our common stock is traded on the Over-the-Counter Bulletin Board under the symbol CLKZ. The following table sets forth, for the period indicated, the range of high and low closing prices reported by the Over-the-Counter Bulletin Board. Such quotations represent prices between dealers and may not include markups, markdowns, or commissions and may not necessarily represent actual transactions.





Period

High


LowFiscal Year Ended August 31, 2011:First Quarter

$
0.581


$
0.14Second Quarter


0.17



0.006Third Quarter


0.035



0.005Fourth Quarter


0.007



0.001Fiscal Year Ended August 31, 2010:First Quarter

$
2.55


$
1.80Second Quarter


0.36



0.24Third Quarter


0.15



0.15Fourth Quarter


0.36



0.52





Holders





On December 5, 2011 the closing price for our common stock on the Over-the-Counter Bulletin Board was $0.0007 per share. On December 5, 2011, there were 788 shareholders of record of our common stock.





Dividends





We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future.   We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.





Recent Sales of Unregistered Securities





On June 2, 2011, we issued 3,750,000 shares of our common stock upon conversion of $9,000 of an outstanding convertible debenture held by Asher Enterprises, Inc. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





On June 14, 2011, we issued 4,444,444 shares of our common stock upon conversion of $8,000 of an outstanding convertible debenture held by Lotus Fund Group, LLC. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





On June 21, 2011, we issued 4,786,000 shares of our common stock upon conversion of $9,854 of an outstanding convertible debenture held by Assurance Funding Solutions LLC. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





On July 1, 2011, we issued 5,000,000 shares of our common stock upon conversion of $5,000 of an outstanding convertible debenture held by Asher Enterprises, Inc. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





On August 9, 2011, we issued 5,000,000 shares of our common stock upon conversion of $3,500 of an outstanding convertible debenture held by Asher Enterprises, Inc. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





On August 29, 2011, we issued 4,000,000 shares of our common stock upon conversion of $2,400 of an outstanding convertible debenture held by Asher Enterprises, Inc. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act.





Item 6. Selected Financial Data





Not required under Regulation S-K for “smaller reporting companies.”





14





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





This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words.  Those statements include statements regarding the intent, belief or current expectations of us and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.





Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission.  Important  factors  currently  known  to Management  could  cause  actual  results  to differ  materially  from  those in forward-looking  statements.  We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations.  No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions.  Factors that could cause differences include, but are not limited to, expected market demand for our services, fluctuations in pricing for materials, and competition.





Overview





We are a web publisher brand builder focused on developing stand alone brands that incorporate social networking and reward properties that leverage content, commerce and advertising for the next generation global internet users.





Plan of Operations





As a result of the change in management in March 2011, we are evaluating the strategic direction of the company and exploring additional possible acquisitions and long-term growth opportunities. Due to this change in the direction of the company, we have experienced a decrease in revenue and recorded assets. We are considering the best ways to maximize the value of our intellectual assets (which include our website properties) and revive revenue, including a number of options ranging from the sale of certain intellectual assets to investing further capital to build out and take our potentially productive intellectual assets to market. Management is also contemplating further business development efforts that would result in new website properties that would be incremental to what we already have in our existing portfolio. Since the management change we have expended a good deal of effort in managing our corporate liabilities and interacting with our note holders, many of which notes have gone into default. We are also continuing our efforts to raise additional capital for ongoing operations and business development. To that end, we raised $300,000 in September 2011 through the sale of a convertible debenture and we are currently determining the optimal ways to deploy that capital to maximize its value to the business.





Results of Operations





Our consolidated results of operations for the years ended August 31, 2011 and 2010 include our wholly-owned subsidiaries WallStreet, Financial Filings Corp., My WallStreet, Inc., and The Wealth Expo Inc.





Revenues





Revenues for the year ended August 31, 2011 were $41,570 compared to $766,446 for the year ended August 31, 2010. Revenues decreased by $724,876 (95%) during the year ended August 31, 2011 due to a significant decrease in advertisements on our website resulting from the current economic conditions and recent downturn in financial markets, which caused our clients to spend significantly less money on internet advertising.  To date, we have been unable to attract new clients for our new line of business as web development and brand builder.





Operating Expenses, Other Expense and Other Income





Selling, general, and administrative expenses (S,G &A) for the year ended August 31, 2011 were $1,738,806 compared to $2,683,727 for the year ended August 31, 2010, a decrease of $944,921 (35%). The decrease for 2011 period resulted primarily from decreases in consulting fees of approximately $871,000, rent expense of approximately $182,000, officers compensation of approximately $153,000, marketing expense of approximately $66,000, payroll tax expense of approximately $25,000, travel and entertainment of approximately $80,000 and bad debt expense of approximately $358,000, all partially offset by increases in stock based compensation of approximately $655,000 and professional fees of approximately $105,000. The decreases reflect the recent change in management and the reassessment of the strategic direction of the company.





Impairment of marketable securities for the year ended August 31, 2011 was $98,442, compared to $139,970 for the year ended August 31, 2010. During the year ended August 31, 2011 we fully impaired our marketable securities based on the inability to dispose of these types of securities. As of August 31, 2011, we have not been able to locate the related certificates. Based upon consideration of these circumstances, management believes that the probability of recoverability of any related asset may be remote.




15





During 2010 impairment expense was recorded because the market value of the securities we received as compensation for services declined in excess of 50% of their market value. This reduction, in our judgment, appeared to be other than temporary reduction in the fair value of the marketable securities. Therefore, we took a conservative approach of recording the impairment expense. Furthermore, to safeguard us with impairments of marketable securities, we revised our contractual terms on agreements with our clients which provided that, in the event during the term of the agreement, the share bid price of client securities decline by more than 10% of the share bid price on the date of execution of the agreement, the client agrees to issue additional shares of their common stock to us in order to make up the deficiency caused by the reduction in the value of their stock.





Depreciation expense for the year ended August 31, 2011 was $7,297 compared to $29,830 for the year ended August 31, 2010. The decrease resulted from the assets becoming fully depreciated during 2011. Depreciation is provided using the straight-line method over the estimated useful life of the assets from three to five years. Expenditures for maintenance and repairs are charged to expense as incurred.





Interest income for the year ended August 31, 2011 was zero compared to $20,800 for the year ended August 31, 2010. The decrease results from the lack of funds to invest during the 2011 year.





Interest expense for the year ended August 31, 2011 was $1,364,741 compared to $835,695 for the year ended August 31, 2010. The increase in interest expense for the year ended August 31, 2011 resulted primarily from the discounts attributable to the conversion features of convertible notes issued during the year ended August 31, 2011.





Realized gain on sale of marketable securities for the year ended August 31, 2011 were zero compared to realized gains of $317,589 for the year ended August 31, 2010. We did not sell any securities on hand during the year ended August 31, 2011.





We recorded expense of $1,197,519 related to the change in value of derivative liabilities for the year ended August 31, 2011 as compared to income of $820,344 for the year ended August 31, 2010. The increased derivative liability expense resulted from our issuance of convertible notes during the year ended August 31, 2011 and the changes in the market price of our stock, conversion feature discounts and the fluctuations in market volatility.





We recorded a loss on debt redemption of $212,791 for the year ended August 31, 2011 compared to a $5,732,895 loss for the year ended August 31, 2010. The loss on debt redemption resulted from the issuance of common shares in exchange for services or to pay off debt, based on the fair value of the shares issued as compared to the carrying value of the related debt. The closing price on the date of issuance is used to compute the actual fair market value of our common stocks in determining the loss.





During the year ended August 31, 2011, we entered into several settlement agreements with prior officers and directors, whereby we were released from $503,257 of prior employment-related obligations. In connection with this release, we recorded $503,257 as other income. There was no other income for the year ended August 31, 2010.





Net Loss





We reported a net loss of $4,079,483 for the year ended August 31, 2011 compared to a net loss of $7,501,738 for the year ended August 31, 2010.  We recorded a decrease in net loss for the year ended August 31, 2011 of $3,422,255 compared to 2010 due to the factors described above.





Liquidity and Capital Resources





Cash and cash equivalents were $303 at August 31, 2011 compared to $44,700 at August 31, 2010. As shown in the accompanying consolidated financial statements, we recorded a net loss of $4,079,483 for the year ended August 31, 2011 compared to a loss of $7,501,738 for the year ended August 31, 2010. Our current liabilities exceeded our current assets by $5,206,529 at August 31, 2011 and net cash used in operating activities for the year ended August 31, 2011 was $518,172. These factors and our ability to meet our debt obligations from current operations, and the need to raise additional capital to accomplish our objectives raise substantial doubt about our ability to continue as a going concern.








16





We expect significant capital expenditures during the next 12 months, contingent upon raising capital. These anticipated expenditures are for software development, assets additions, administrative overheads and working capital requirements. We do not have sufficient funds to conduct our operations for more than a month and we estimate that we will need an infusion of capital of approximately $1,500,000 to fund our anticipated operations for the next 12 months, depending on revenues from operations. We have no contracts or commitments for additional funds and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.





We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our historical operating losses, our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.





To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing.





Whereas we have been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of our planned service development and marketing efforts, any of which could have a negative impact on our business and operating results. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require us to:





-
curtail operations significantly;-
sell significant assets;-
seek arrangements with strategic partners or other parties that may require the company to relinquish significant rights to products, technologies or markets; or-
explore other strategic alternatives including a merger or sale of our company.





To finance our operations, we have issued a number of convertible debentures.  Our outstanding convertible debentures are as follows:





February 2010 Debt Conversion





On February 1, 2010, we entered into an exchange agreement with Greystone Capital Partners, Inc. (“Greystone”), pursuant to which Greystone exchanged a $491,400 promissory note for a $491,400 convertible debenture (the “Greystone Debenture”).  The Greystone Debenture does not accrue interest and matured on February 1, 2011.  Greystone has the right to convert all or a portion of the principal into shares of our common stock at a conversion price equal to forty percent (40%) of the average of the closing bid price of our common stock during the five (5) trading days immediately preceding the conversion date as quoted by Bloomberg, LP.  As of December 5, 2011, $69,369 of principal face value of the Greystone Debenture remains outstanding.





Greystone Private Placement





On July 2, 2010, we entered into two Securities Purchase Agreements with Greystone providing for the sale to Greystone of (i) a convertible debenture in the principal amount of $50,000 (the “First Debenture”) and (ii) a convertible debenture in the principal amount of $20,000 (the “Second Debenture”, and together with the First Debenture, the “Greystone Debentures”).





The Debentures mature on the first anniversary of the date of issuance (the “Maturity Date”) and bear interest at the annual rate of 10%.  We are not required to make any payments on the Debentures until the Maturity Date.






17





Greystone may convert, at any time, the outstanding principal and accrued interest on the First Debenture into shares of Common Stock at a conversion price per share equal to the lesser of (i) forty percent (40%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or (ii) forty percent (40%) of the closing price of the Common Stock on July 2, 2010.





Greystone may convert, at any time, the outstanding principal and accrued interest on the Second Debenture into Common Stock at a conversion price per share equal to the lesser of (i) thirty-five percent (35%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or (ii) thirty-five percent (35%) of the closing price of the Common Stock on July 2, 2010.  As of December 5, 2011, the entire principal face value of the Greystone Debentures remains outstanding.





Lotus Financing





On July 14, 2010, the Company entered into a Securities Purchase Agreement with Lotus Funding Group, LLC, an accredited investor (“Lotus ”), providing for the sale by the Company to Lotus of a 10% convertible debenture in the principal amount of $55,000 (the “Lotus Debenture”).





The Lotus Debenture matures on the first anniversary of the date of issuance (the “Lotus Maturity Date”) and bears interest at the annual rate of 10%.  The Company is not required to make any payments until the Lotus Maturity Date.





Lotus may convert, at any time, the outstanding principal and accrued interest on the Lotus Debenture into shares of the Company’s Common Stock at a conversion price per share equal to the lesser of (i) forty percent (40%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the conversion date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) $0.408.





Lotus has agreed to restrict its ability to convert the Lotus Debenture and receive shares of the Company’s Common Stock such that the number of shares of common stock held by Lotus in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s Common Stock. As of December 5, 2011, $24,600 of principal face value of the Lotus Debenture remains outstanding.





July 2010 IIG Financing I





On July 26, 2010, we entered into a securities purchase agreement, as amended on January 5, 2011, with IIG Management LLC, an accredited investor (“IIG”), providing for the sale by us to IIG of a 10% convertible debenture in the principal amount of $205,000 (the “IIG Debenture I”).





The IIG Debenture I matures on the first anniversary of the date of issuance and bears interest at the annual rate of 10%.  IIG may convert, at any time, the outstanding principal and accrued interest on the IIG Debenture I into shares of our common stock at a conversion price per share equal to the lesser of (i) thirty-five percent (35%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) $0.3465.  As of December 5, 2011, the entire principal face value of the IIG Debenture I remains outstanding.





Assurance Financing





On December 10, 2010, we entered into a securities purchase agreement with Assurance Funding Solutions, LLC, an accredited investor (“Assurance”), providing for the sale by us to Assurance of a 10% convertible debenture in the principal amount of $55,000 (the “Assurance Debenture”).





The Assurance Debenture matures on the first anniversary of the date of issuance and bears interest at the annual rate of 10%.   Assurance may convert, at any time, the outstanding principal and accrued interest on the Assurance Debenture into shares of our common stock at a conversion price per share equal to the lesser of (i) thirty five percent (35%) of the average of the closing bid price of our common stock during the five (5) trading days immediately preceding the conversion date as quoted by Bloomberg, LP or (ii) $0.0336.  As of December 5, 2011, $45,146 of principal face value of the Assurance Debenture remains outstanding.






18





IIG Financing II





On January 5, 2011, we entered into a securities purchase agreement with IIG providing for the sale by us to IIG of a 10% convertible debenture in the principal amount of $55,000 (the “Second IIG Debenture”).





The Second IIG Debenture matures on the first anniversary of the date of issuance and bears interest at the annual rate of 10%.  IIG may convert, at any time, the outstanding principal and accrued interest on the Second IIG Debenture into shares of our common stock at a conversion price per share equal to the lesser of (i) thirty-five percent (35%) of the lowest closing price of our common stock during the 10 trading days immediately preceding the conversion date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) $0.0175. As of December 5, 2011, the entire principal face value of the Second IIG Debenture remains outstanding.





Asher Financing II





On January 28, 2011, the Company entered into a Securities Purchase Agreement with Asher, providing for the sale by the Company to Asher of an 8% convertible debenture in the principal amount of $32,500 (the “Asher II Debenture”). The Asher II Debenture was amended on February 9, 2011 to allow us to prepay the Asher II Debenture within the first 180 days after issuance.





The Asher II Debenture matures on November 2, 2011 (the “Asher II Maturity Date”) and bears interest at the annual rate of 8%.  The Company is not required to make any payments until the Asher II Maturity Date.





Asher may convert, at any time, the outstanding principal and accrued interest on the Asher II Debenture into shares of Common Stock at a conversion price per share equal to fifty percent (50%) of the average of the three (3) lowest closing bid prices of the Common Stock during the 10 trading days immediately preceding the conversion date.





Asher agreed to restrict its ability to convert the Asher II Debenture and receive shares of the Company’s Common Stock such that the number of shares of Common Stock held by Asher in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s Common Stock.  As of December 5, 2011, the entire principal face value of the Asher II Debenture remains outstanding.





Greystone Financing





On February 17, 2011, the Company entered into a Securities Purchase Agreement with Greystone providing for the sale by the Company to the Investor of a 10% convertible debenture in the principal amount of $30,500 (the “Second Greystone Debenture”).





The Second Greystone Debenture matures on the first anniversary of the date of issuance (the “Second Greystone Maturity Date”) and bears interest at the annual rate of 10%.  The Company is not required to make any payments until the Second Greystone Maturity Date.





Greystone may convert, at any time, the outstanding principal and accrued interest on the Second Greystone Debenture into shares of Common Stock at a conversion price per share equal to the lesser of (i) thirty-five percent (35%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) $0.00875. As of December 5, 2011, the entire principal face value of the Second Greystone Debenture remains outstanding.





IIG Financing III





On March 7, 2011, the Company entered into a Securities Purchase Agreement with IIG providing for the sale by the Company to IIG of a 10% convertible debenture in the principal amount of $130,000 (the “Third IIG Debenture”).





The Third IIG Debenture matures on the first anniversary of the date of issuance (the “Third IIG Maturity Date”) and bears interest at the annual rate of 10%.  The Company is not required to make any payments until the Third IIG Maturity Date.





IIG may convert, at any time, the outstanding principal and accrued interest on the Third IIG Debenture into shares of the Company’s Common Stock at a conversion price per share equal to the lesser of (i) thirty-five percent (35%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the conversion date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) $0.00525.





IIG has agreed to restrict its ability to convert the Third IIG Debenture and receive shares of the Company’s Common Stock such that the number of shares of common stock held by IIG in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s Common Stock. As of December 5, 2011, the entire principal face value of the Third IIG Debenture remains outstanding.






19








Operating Activities





Net cash used in operating activities for the year ended August 31, 2011 was $518,172 which resulted primarily from a net loss of $4,079,483, which was offset by non-cash items for issuance of stock and options for services of $770,172, impairment of marketable securities of $98,442, amortization of debt discount of $1,204,178, change in fair value of derivative liability of convertible notes of $1,197,519 and loss on conversion of debt of $212,791, such non-cash expenses partially offset by non-cash other income of $503,257. We also had an increase in accounts payable, accrued expenses and other liabilities of $514,632.





Net cash used in operating activities for the year ended August 31, 2010 was $1,196,351 which resulted primarily from a net loss of $7,501,738, which was offset by non-cash items for issuance of stock and options for services of $457,239, impairment of marketable securities of $139,970, amortization of debt discount of $578,221, and loss on conversion of debt of $5,732,894, such non-cash expenses partially offset by non-cash income of $820,344 for change in fair value of derivative liability of convertible notes. We also had an increase in accounts payable, accrued expenses and other liabilities of $644,041.





Investing Activities





Net cash provided by investing activities for the year ended August 31, 2010 was $320,412, consisting of proceeds from the liquidation of the marketable securities which we obtained from our clients in exchange for our services. There was no cash provided by investing activities in 2011.





Financing Activities





Net cash provided by financing activities was $473,775 for the year ended August 31, 2011, of which $95,500 was from the exercise of stock options and $378,275 from the sale of notes and convertible notes.





Net cash provided by financing activities for the year ended August 31, 2010 was $888,259, representing cash received from the sale of convertible debentures and shares of common stock and advances from an officer.





As a result of the above activities, we experienced a net decrease in cash of $44,397 during the year ended August 31, 2011 compared to an increase of $12,320 during the year ended August 31, 2010. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or through the sale of convertible debentures.





Application of Critical Accounting Policies





Marketable Securities and Impairments





The Company’s investments in securities are classified as available-for-sale and, as such, are carried at fair value based on quoted market prices. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.





Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized and unrealized gains and losses for securities classified as available-for-sale are included in the statement of operations and comprehensive gain, respectively.





The Company reviews, on a quarterly basis or more frequently if warranted by circumstances, the carrying value of the marketable securities it receives from its customers for providing services. The Company records impairment expense each quarter when the market value of the securities received show a consistent decline over 90 to 180 days, and the carrying amount of the marketable securities exceeds its fair value by 50% or more, and is deemed not recoverable. As such, the Company records on a quarterly basis in its financial statements the impairment loss for the difference between the carrying amount of the marketable securities and their fair value.





To safeguard the Company with impairments of marketable securities, the Company has revised its contractual terms on its agreements with its clients which provides that, in the event during the term of the agreement, the share bid price declines by more than ten per cent (10%) of the share bid price on the date of execution of the agreement, the Client would agree to issue additional shares of their common stock to the Company in order to make up the deficiency caused by the reduction in the value of their stock.






20








Revenue Recognition





Revenue is recorded on the basis of services provide to our clients, and is recognized when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.





Our primary source of revenue was generated from building and developing stand alone brands that incorporate social networking, and providing internet based media and advertising services. The services included web designs, integrated social media network, text and display advertising, press releases, e-mail marketing, and promotion across our network of web sites. Revenues from Internet based media and advertising services were recognized and recorded when the performance of such services completed.





Stock-Based Compensation





The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.





Derivatives





Derivative instruments are recognized as either assets or liabilities and are measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.





Recent Accounting Pronouncements





In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. These disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.





In April 2010, the FASB issued Accounting Standards Update 2010-13 (ASU 2010-13), "Compensation - Stock Compensation (Topic 718)." This Update provides amendments to Topic 718 to clarity that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The provisions of ASU 2010-13 are not expected to have a material effect on the Company's consolidated financial statements.





In July 2010, the FASB issued an accounting update to provide guidance to enhance disclosures related to the credit quality of a company's financing receivables portfolio and the associated allowance for credit losses. Pursuant to this accounting update, a company is required to provide a greater level of disaggregated information about its allowance for credit loss with the objective of facilitating users' evaluation of the nature of credit risk inherent in the company's portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit losses, and the changes and reasons for those changes in the allowance for credit losses. The revised disclosures as of the end of the reporting period are effective for the Company beginning in the second quarter of fiscal 2011, and the revised discourses related to activities during the reporting period are effective for the Company beginning in the third quarter of fiscal 2011. The Company is currently evaluating the impact of this accounting update on its financial disclosures. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.






21





Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial statements.





Off Balance Sheet Arrangements





None.





Item 7A. Quantitative and Qualitative Disclosures about Market Risk





Not required under Regulation S-K for “smaller reporting companies.”





Item 8. Financial Statements and Supplementary Data





Financial statements are filed and included elsewhere herein as a part of this Annual Report on Form 10-K.





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





None.





Item 9A. Controls and Procedures





(a) Evaluation of disclosure controls and procedures.





Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.





Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of August 31, 2011, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.





(b) Changes in internal control over financial reporting.





We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.





There were no changes in our internal control over financial reporting that occurred during the quarter ended August 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





(c) Management’s report on internal control over financial reporting.





Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of August 31, 2011.





This annual report does not include an attestation report by Kabani & Company, Inc., our independent registered public accounting firm regarding internal control over financial reporting.  As a smaller reporting company, our management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.





Item 9B. Other Information





None.








22





PART III





Item 10. Directors, Executive Officers and Corporate Governance.





The names of our directors and executive officers and their ages, titles, and biographies as of August 31, 2011 are set forth below:





NAME

AGE

POSITIONS HELDLloyd Lapidus

42

Chairman of the Board, Chief Executive Officer and Chief Financial Officer





Directors are elected annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected. Officers are elected annually and serve at the discretion of the Board of Directors. There is no family relationship between any of our executive officers or directors.





Lloyd Lapidus, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors





Mr. Lapidus has been our chief executive officer and director since March 2011 and chief financial officer since April 2011.  Mr. Lapidus has been chairman and interim chief executive officer of Vanity Events Holding, Inc., a publicly traded company, since April 2011 (VAEV.OB).  Mr. Lapidus was a founder of Avelle (also known as Bag Borrow or Steal, Inc.). During the last five years, Mr. Lapidus has been a consultant to various private companies, including businesses involved with fashion, e-commerce, direct response media, social media, online marketing, call center management and corporate reorganization. Prior to founding Bag Borrow or Steal, he was a principle in a direct response firm that specialized in online direct sales and marketing. Previous to that, he co-founded and ran a marketing firm that focused primarily on direct response television products and services. In late 1990's, he was one of the founders of the nation's first national prepaid wireless company. That company was subsequently sold to a public telecom company. He started his career in a family business, successfully pioneering new channels of sales and distribution for the company. Lloyd earned his Bachelor of Arts degree from American University in Washington, D.C. We took into account his prior experience in operating public and private enterprises and believe Mr. Lapidus’ past experience gives him the qualifications and skill to serve as a director.





Board Meetings





To the best of management’s knowledge, during the year ended August 31, 2011, the Board of Directors held no board meetings to conduct business. The Board approved certain actions by unanimous written consent.





Board Committees and Independence





We are not required to have any independent members of the Board of Directors. The board of directors has determined that (i) Mr. Lapidus has a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and is not an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market.  As we do not have any board committees, the board as a whole carries out the functions of audit, nominating and compensation committees, and such “independent director” determination has been made pursuant to the committee independence standards.





Code of Ethics





We have adopted a Code of Ethics that are designed to deter wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications. The Code of Ethics promotes compliance with applicable governmental laws, rules and regulations.





COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in ownership of our securities. Except as disclosed below, we believe that, during fiscal 2011, our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements.





·
A late Form 3 was filed by Lloyd Lapidus relating to his appointment as an officer and director and the acquisition of stock options to acquire 9 million shares of common stock on March 7, 2011.·
A late Form 4 was filed by Albert Aimers relating to the disposition on April 27, 2011 of 28,250,239 shares of common stock, including 26,766,114 shares owned by entities that Mr. Aimers controlled.·
A late Form 4 was filed by Junior Capital, Inc., an entity controlled by Albert Aimers, relating to the disposition on April 27, 2011 of 26,666,666 shares of common stock.









23





Item 11. Executive Compensation





The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer, the two highest paid executive officers and up to two other highest paid individuals whose total annual salary and bonus exceeded $100,000 for fiscal years 2011 and 2010.





Name and Principal Position

Year

Salary ($)

Stock Awards ($)


Option Awards ($)


All Other Compensation ($)



Total ($)Lloyd Lapidus

2011


80,000
(2)

-




45,000
(3)


-




125,000Chairman, Chief Executive Officer and Director (1)

2010


-


-




-



-




-Albert Aimers

2011


124,829


-




-



100,000
(5
)


224,829Former Chief Executive Officer (4)

2010


316,250


20,000




3,352



21,510
(6
)


337,760





(1) Mr. Lapidus has served as Chairman, Chief Executive Officer and Director since March 7, 2011.


(2) Of this salary $61,000 has been accrued and not paid.


(3) Represents grant date fair value of 3,000,000 options granted to Mr. Lapiduscomputed in accordance with Accounting Standards Codification Topic 718-10 (formerly FAS No. 123R).


(4) Mr. Aimers served as Chief Executive Officer until March 7, 2011.


(5) Represents a severance payment made to Mr. Aimers.


(6) Includes 25% of compensation being our contribution towards pension plan until December 14, 2009.





Employment Agreements with Executive Officers





Lloyd Lapidus





On March 7, 2011, the Company entered into an employment agreement (the “Agreement”) with Lloyd Lapidus to serve as Chief Executive Officer.  The Agreement has an initial term of three years.  The Agreement automatically renews for successive one year terms after the initial term unless either party provides prior written cancellation.  The base salary under the Agreement is $160,000, $200,000 and $225,000 for each of the first three years, respectively. Lapidus was paid a bonus of $10,000 upon execution of the Agreement.  Further, Lapidus is entitled to receive bonuses of up to $150,000 in the first year of the Agreement, in the discretion of the Board, based on the performance of the Company, including increases in revenue, increases in shareholder equity, reduction in outstanding debt and capital raising, with any such bonuses paid out on a quarterly basis.  As well, Lapidus is entitled to receive options to purchase the Company’s Common Stock as follows:





(a)
Three million (3,000,000) shares, upon execution of the Agreement, at an exercise price of $0.02 per share, which options shall become fully vested on the Effective Date;





(b)
Two million (2,000,000) shares, upon the Company having assets greater than liabilities (excluding any derivative liabilities) as shown by the Company’s quarterly and annual reports filed with the Securities and Exchange Commission, at an exercise price of $0.15 per share, which options shall become fully vested upon issuance; and





(c)
Four million (4,000,000) shares, upon the Company achieving aggregate revenues in excess of $1,000,000 in any four consecutive quarters, as shown by the Company’s quarterly and annual reports filed with the Securities and Exchange Commission, which options shall become fully vested upon issuance.








24





Options shall be issued pursuant to a stock option/incentive plan adopted by the Company, which plan may be adopted after the execution of the Agreement.  The options shall contain language restricting Lapidus’ ability to exercise the options and receive shares of the Company’s common stock such that the number of shares of common stock held by Lapidus in the aggregate and his affiliates after such exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s common stock, which restriction may be waived by Lapidus by providing written notice to the Company at least 61 days in advance.  In addition, Lapidus is entitled to participate in any and all benefit plans, from time to time, in effect for our employees, along with vacation, sick and holiday pay in accordance with our policies established and in effect from time to time.





Outstanding Equity Awards at Fiscal Year-End





The following table sets forth information for the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of August 31, 2011.





Name

Number of Securities underlying Unexercised Options (#) Exercisable


Number of Securities underlying Unexercised Options (#) Unexercisable


Option Exercise Price ($/Sh)

Option Expiration DateLloyd Lapidus
`

3,000,000



-


$
0.02

March 7, 2016





Director Compensation





None.








25






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





The following table sets forth certain information regarding beneficial ownership of our common stock as of December 5, 2011.





-
by each person who is known by us to beneficially own more than 5% of our common stock;-
by each of our officers and directors; and-
by all of our officers and directors as a group.








Name And Address Of Beneficial Owner (1)

Number of

Shares Owned (2)





Percentage

of Class (3)Lloyd Lapidus


5,000,000



(4
)


3.62
%All Officers and Directors as a Group (1 person)


5,000,000



(4
)


3.62
%Thalia Woods Management Inc.560 Peoples Plaza, #325FAustin, Texas 78711


26,768,577



(5
)


20.13
%





(1)
The address for our officer and director is 1111 Kane Concourse, Suite 304, Bay Harbor Islands, Florida 33154.(2)
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of December 5, 2011 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.





(3)
Percentage based on 132,964,139 shares of common stock outstanding.(4)
Represents shares of common stock which may be acquired through the exercise of stock options which were exercisable as of December 5, 2011 or become exercisable within 60 days of that date.(5)
As reported pursuant to a shareholder list from the Company’s transfer agent on November 28, 2011.




EQUITY COMPENSATION PLAN INFORMATION





The following table sets forth information about the shares of our common stock that may be issued upon the exercise of options granted to employees under the 2007 Equity Plan and the 2009 Non-Qualified Stock Option Plan, which were approved by the Board of Directors, and the 2010 Equity Incentive Plan approved by the Board of Directors and shareholders.





Plan Category

(a)

Number of securities to be issued upon exercise of outstanding options, warrants and rights


(b)

Weighted-average exercise price of outstanding options, warrants and rights


(c)

Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a) (1)Equity compensation plan approved by security holders (1)


16,083


$
0.08



7,250Equity compensation plan approved by security holders (2)


-


$
-



6,667Equity compensation plan  approved by security holders (3)


1,273,416


$
0.40



2,070,000Total


1,289,499


$
0.40



2,083,917








26





(1)
We established an equity compensation plan pursuant to which options to acquire a maximum of 23,333 shares of our common stock were reserved for grant (the “2007 Equity Plan”).  As of August 31, 2011, included above in the 2007 Equity Plan are 16,083 shares issuable upon exercise of options granted to employees and directors.





(2)
We established a nonqualified stock option plan pursuant to which options to acquire a maximum of 6,667 shares of our common stock were reserved for grant (the “2009 Non-Qualified Plan”). As of August 31, 2011, no options under the 2009 Non-Qualified Plan were issued or outstanding.





(3)
We established 2010 Incentive Stock Plan pursuant to which options to acquire a maximum of 4,000,000 shares of our common stock were reserved for grant (the “2010 Incentive Stock Plan”). As of August 31, 2011, 400,000 shares were issued to consultants for $225,000 worth of services and 1,530,000 options were granted to consultants.





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





Other than as disclosed below, during the last two fiscal years, there have been no transactions, or proposed transactions, which have materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 5% of the outstanding common or preferred stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions with affiliated parties.





On April 12, 2010, we issued 26,666,666 shares of our common stock to Junior Capital Inc., of which Albert Aimers, our Chief Executive Officer, is the majority shareholder and sole officer and director, for the retirement of $800,000 in accrued debt and compensation we owed to Mr. Aimers.





On March 7, 2011, the Company entered into a separation agreement (“Separation Agreement”) with Mr. Albert Aimers (“Aimers”), pursuant to which Aimers’ employment as Chief Executive Officer ended on March 7, 2011.  Aimers agreed to stay with the Company as interim Chief Financial Officer until the earlier of April 19, 2011, the date the Company files its 10-Q for the quarter ended February 28, 2011 or the date the Company terminates Aimers’ services.  For his services as interim Chief Financial Officer, the Company agreed to pay Aimers a sum of $18,750.





Pursuant to the Separation Agreement, the Company paid Aimers $100,000 upon execution and agreed to pay Aimers an additional $25,000 upon filing of the 10-Q for the quarter ended February 28, 2011 provided that the 10-Q is timely filed and signed by Aimers in his capacity as Chief Financial Officer.





In connection with the Separation Agreement, Aimers agreed to return all shares of Class A Preferred Stock owned by Aimers or Junior Capital, Inc. (“Junior Capital”) to the Company for cancellation.  In addition, Aimers agreed to return 2,677,105 shares of Common Stock owned by Aimers and/or Junior Capital to the Company for cancellation.  The remaining 23,093,940 shares of Common Stock owned by Aimers and/or Junior Capital are subject to a one-year lock-up agreement and a share forfeiture agreement (“Forfeiture Agreement”).  Pursuant to the Forfeiture Agreement, Aimers and Junior Capital agreed to forfeit the remaining shares of common stock owned by them if the Company achieves an aggregate of $100,000 in gross revenues from operations within 12 months of the date of the Forfeiture Agreement.  The remaining shares are held in escrow pursuant to a share forfeiture escrow agreement.





Furthermore, pursuant to the Separation Agreement, the Company was released from certain outstanding liabilities to employees and/or directors of the Company.





Item 14. Principal Accounting Fees and Services





Audit Fees





The aggregate fees billed by our independent registered public accounting firm, for professional services rendered for the audit of our annual financial statements during the years ended August 31, 2011 and 2010, and for the reviews of the financial statements included in our Quarterly Reports on Form 10-QSB during the fiscal years, were $47,500 and $48,000, respectively.





Audit-Related Fees





Our independent registered public accounting firm did not bill us during the years ended August 31, 2011 and 2010 for audit related services.





Tax Fees





Our independent registered public accounting firm did not bill us for tax related work during the fiscal years ended August 31, 2011 and 2010.





All Other Fees





Our independent registered public accounting firm did not bill us during fiscal years ended August 31, 2011 or 2010 for other services.





The Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant's independence.









27





PART IV





Item 15. Exhibits and Financial Statement Schedules





Exhibit Index





3.01
Certificate of Incorporation, filed as an exhibit to the Registration Statement on Form 10SB-12G, filed with the Securities Exchange Commission on June 25, 2001 and incorporated herein by reference.3.02
Certificate of Amendment, filed with the Nevada Secretary of State on May 21, 2004, filed as an exhibit to the annual report on Form 10-K, filed with the Securities Exchange Commission on December 12, 2008 and incorporated herein by reference.3.03
Certificate of Amendment, filed with the Nevada Secretary of State on November 30, 2004, filed as an exhibit to the annual report on Form 10-K, filed with the Securities Exchange Commission on December 12, 2008 and incorporated herein by reference.3.04
Certificate of Amendment, filed with the Nevada Secretary of State on September 9, 2005, filed as an exhibit to the annual report on Form 10-K, filed with the Securities Exchange Commission on December 12, 2008 and incorporated herein by reference.3.05
Bylaws, filed as an exhibit to the Registration Statement on Form 10SB-12G, filed with the Securities Exchange Commission on June 25, 2001 and incorporated herein by reference.3.06
Plan and Agreement of Reorganization, filed as an exhibit to the Current Report on Form 8-K, filed with the Securities Exchange Commission on September 23, 2005 and incorporated herein by reference.3.07
Amendments to Plan and Agreement of Reorganization, filed as an exhibit to the Current Report on Form 8-K, filed with the Securities Exchange Commission on January 12, 2006 and incorporated herein by reference.10.01
Employment Agreement, dated as of December 14, 2009, by and between CLICKER Inc. and Albert Aimers, filed as an exhibit to the annual report on Form 10-K, filed with the Securities and Exchange Commission on December 21, 2009 and incorporated herein by reference.10.02
2007 Nonqualified Stock Option Plan, filed as an exhibit to the Registration Statement on Form S-8, filed with the Securities Exchange Commission on January 19, 2007 and incorporated herein by reference.10.03
2007 Equity Incentive Plan, filed as an exhibit to the Annual Report on Form 10-KSB, filed with the Securities Exchange Commission on December 7, 2007 and incorporated herein by reference.10.04
2009 Nonqualified Stock Option Plan, filed as an exhibit to the annual report on Form 10-K, filed with the Securities Exchange Commission on December 12, 2008 and incorporated herein by reference.10.05
Exchange Agreement, dated as of August 11, 2009, by and between CLICKER Inc. and Lotus Funding Group, LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on August 17, 2009 and incorporated herein by reference.10.06
Form of Convertible Debenture, issued August 11, 2009, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on August 17, 2009 and incorporated herein by reference.10.07
Securities Purchase Agreement, dated as of November 18, 2009, by and between CLICKER Inc. and SBCH Charitable Foundation, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2009 and incorporated herein by reference.10.08
Form of Convertible Debenture, issued November 18, 2009, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on November 20, 2009 and incorporated herein by reference.10.09
Exchange Agreement, dated as of December 16, 2009, by and between CLICKER Inc. and Thalia Woods Management, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on December 22, 2009 and incorporated herein by reference.10.10
Form of Convertible Debenture, issued December 16, 2009, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on December 22, 2009 and incorporated herein by reference.10.11
Exchange Agreement, dated as of February 1, 2010, by and between CLICKER Inc. and Greystone Capital Partners, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 5, 2010 and incorporated herein by reference.10.12
Form of Convertible Debenture, issued February 1, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 5, 2010 and incorporated herein by reference.10.13
Exchange Agreement, dated as of April 23, 2010, by and between CLICKER Inc. and Cortell Communications, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.14
Form of $72,100 Convertible Debenture, issued April 23, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.15
Amendment Agreement, dated as of April 27, 2010, by and between CLICKER Inc. and Cortell Communications, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.16
Securities Purchase Agreement, dated as of July 2, 2010, by and between CLICKER Inc. and Greystone Capital Partners, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.17
Form of $50,000 Convertible Debenture, issued July 2, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.18
Securities Purchase Agreement, dated as of July 2, 2010, by and between CLICKER Inc. and Greystone Capital Partners, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.19
Form of $20,000 Convertible Debenture, issued July 2, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2010 and incorporated herein by reference.10.20
Securities Purchase Agreement, dated as of July 26, 2010, by and between CLICKER Inc. and IIG Management LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 28, 2010 and incorporated herein by reference.10.21
Form of Convertible Debenture, issued July 26, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on July 28, 2010 and incorporated herein by reference.10.22
Securities Purchase Agreement, dated as of December 10, 2010, by and between CLICKER Inc. and Assurance Funding Solutions, LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on December 10, 2010 and incorporated herein by reference.10.23
Form of Convertible Debenture, issued December 10, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on December 10, 2010 and incorporated herein by reference.10.24
Securities Purchase Agreement, dated as of January 5, 2011, by and between CLICKER Inc. and IIG Management LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on January 10, 2011 and incorporated herein by reference.10.25
Form of Convertible Debenture, issued January 5, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on January 10, 2011 and incorporated herein by reference.10.26
Amendment No. 1, dated as of January 5, 2011, by and between CLICKER Inc. and IIG Management LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on January 10, 2011 and incorporated herein by reference.10.27
Securities Purchase Agreement, by and between Clicker Inc. and Asher Enterprises, Inc., dated as of February 7, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 11, 2011 and incorporated herein by reference.   28
   10.28
Form of Convertible Promissory Note, issued to Asher Enterprises, Inc., issued February 7, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 11, 2011 and incorporated herein by reference.10.29
Amendment No. 1 to Convertible Promissory Note, by and between Clicker Inc. and Asher Enterprises, Inc. , dated as of February 9, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 11, 2011 and incorporated herein by reference.10.30
Securities Purchase Agreement, dated as of February 17, 2011, by and between CLICKER Inc. and Greystone Capital Partners, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 24, 2011 and incorporated herein by reference.10.31
Form of Convertible Debenture, issued February 17, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on February 24, 2011 and incorporated herein by reference.10.32
Securities Purchase Agreement, dated as of December 10, 2009, by and between CLICKER Inc. and Asher Enterprises, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.33
Form of Convertible Debenture, issued December 10, 2009, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.34
Securities Purchase Agreement, dated as of June 29, 2010, by and between CLICKER Inc. and Asher Enterprises, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.35
Form of Convertible Debenture, issued June 29, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.36
Securities Purchase Agreement, dated as of July 14, 2010, by and between CLICKER Inc. and Lotus Funding Group, LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.37
Form of Convertible Debenture, issued July 14, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.38
Securities Purchase Agreement, dated as of August 18, 2010, by and between CLICKER Inc. and Asher Enterprises, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.39
Form of Convertible Debenture, issued August 18, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.40
Securities Purchase Agreement, dated as of November 1, 2010, by and between CLICKER Inc. and Asher Enterprises, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.41
Form of Convertible Debenture, issued November 1, 2010, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.42
Securities Purchase Agreement, dated as of March 7, 2011, by and between CLICKER Inc. and IIG Management LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.43
Form of Convertible Debenture, issued March 7, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.44
Separation Agreement, dated as of March 7, 2011, by and between CLICKER Inc. and Albert Aimers, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.45
Share Forfeiture Agreement, dated as of March 7, 2011, by and among CLICKER Inc., Albert Aimers and Junior Capital, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.46
Share Forfeiture Escrow Agreement, dated as of March 7, 2011, by and among CLICKER Inc., Albert Aimers, Junior Capital, Inc. and Sichenzia Ross Friedman Ference LLP, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.47
Lock-Up Agreement, dated as of March 7, 2011, by Albert Aimers, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.48
Lock-Up Agreement, dated as of March 7, 2011, by Junior Capital, Inc., filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.49
Employment Agreement, dated as of March 7, 2011, by and between CLICKER Inc. and Lloyd Lapidus, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2011 and incorporated herein by reference.10.50
Securities Purchase Agreement, dated as of September 21, 2011, by and between CLICKER Inc. and Flyback, LLC, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on September 26, 2011 and incorporated herein by reference.10.51
Form of Convertible Debenture, issued September 21, 2011, filed as an exhibit to the current report on Form 8-K, filed with the Securities and Exchange Commission on September 26, 2011 and incorporated herein by reference.14.01
Code of Ethics, filed as an exhibit to the annual report on Form 10-K, filed with the Securities and Exchange Commission on December 21, 2009 and incorporated herein by reference.21.01
List of Subsidiaries of the Registrant, filed as an exhibit to the annual report on Form 10-K, filed with the Securities Exchange Commission on December 12, 2008 and incorporated herein by reference.23.01
Consent of Kabani & Company, Inc., Independent Registered Public Accounting Firm31.01
Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended31.02
Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended32.01
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








29











SIGNATURES








In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




CLICKER INC.Date:  December 13, 2011
By:
/s/ LLOYD LAPIDUSLloyd LapidusChief Executive Officer (Principal Executive Officer) and Chief Financial Officer

(Principal Accounting Officer)




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








Name

Position

Date/s/ LLOYD LAPIDUS



Lloyd Lapidus

Chairman of the Board

December 13, 2011

















30





CLICKER INC.
 AND SUBSIDIARIES
 
 
 TABLE OF CONTENTS
 
 
 
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
32CONSOLIDATED BALANCE SHEETS AS OF AUGUST 31, 2011 and 2010
33CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED AUGUST 31, 2011 and 2010
34CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED AUGUST 31, 2011 and 2010
35CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED AUGUST 31, 2011 and 2010
36NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
37 - 46


31
 
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 To the Board of Directors of
 
 Clicker Inc.
 
 We have audited the accompanying consolidated balance sheets of Clicker Inc.( formerly, Financial Media Group) and Subsidiaries as of August 31, 2011 and 2010, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years ended August 31, 2011 and 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Clicker Inc. and Subsidiaries as of August 31, 2011 and 2010 and the results of its operations, changes in stockholders’ deficit and cash flows for the years ended August 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States of America.
 
 The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $ 27,402,473 as of August 31, 2011 and has incurred a net loss of $ 4,079,483 for the year ended August 31, 2011. These factors as discussed in notes to the financial statements 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 the Note 14 to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
 /s/ KABANI & COMPANY, INC.CERTIFIED PUBLIC ACCOUNTANTSLos Angeles, CaliforniaDecember 12, 2011




32
 
 CLICKERS INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
 AS OF AUGUST 31, 2011 AND 2010


ASSETSAs of


As ofAUGUST 31, 2011

AUGUST 31, 2010CURRENT ASSETS:Cash & cash equivalents

$
303


$
44,700Accounts receivable, net


230



3,579Marketable securities


-



135,400Other current assets


-



95,822Total current assets


533



279,501PROPERTY & EQUIPMENT, net


-



7,298Total assets

$
533


$
286,798LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIES:Accounts payable

$
1,367,479


$
1,301,510Accrued expenses


981,195



773,410Derivative liability


2,183,694



364,327Due to related parties


22,683



401,921Note payable


55,641



170,000Convertible note payble, net


596,370



308,285Total current liabilities


5,207,062



3,319,453STOCKHOLDERS' DEFICIT:Common stock, $0.001 par value, 300,000,000 shares authorized,114,375,277 and 59,697,688 shares issued and outstanding atAugust 31, 2011 and 2010, respectively


114,375



59,698Paid in capital


22,066,169



20,200,737Prepaid consulting


-



(7,292
)Shares to be issued


15,400



-Unrealized gain (loss) on marketable securities


-



37,194Accumulated deficit


(27,402,473
)


(23,322,990
)Total stockholders' deficit


(5,206,529
)


(3,032,653
)Total liabilities and stockholders' deficit

$
533


$
286,800
  The accompanying notes are an integral part of these consolidated financial statements.








33




CLICKER, INC AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE YEARS ENDED AUGUST 31, 2011 AND 2010


For The Years Ended

August 31,2011


2010Net revenues

$
41,570


$
766,446Operating expensesSelling, general & administrative


1,738,806



2,683,727Depreciation


7,297



29,830Impairment expense - marketable securities


98,442



139,970Total operating expenses


1,844,545



2,853,527Loss from operations


(1,802,975
)


(2,087,081
)Non-Operating Income (Expense):Interest expense


(1,364,741
)


(835,695
)Interest income


-



20,800Gain/(Loss) on sale of marketable securities


-



317,589Change in derivative liability


(1,197,519
)


820,344Gain (loss) on debt redemption


(212,791
)


(5,732,895
)Other income


503,343



-Total non-operating income (expense)


(2,271,708
)


(5,409,857
)Loss before income taxes


(4,074,683
)


(7,496,938
)Provision for income tax


4,800



4,800Net loss


(4,079,483
)


(7,501,738
)Other comprehensive gain (loss):Unrealized gain (loss) on marketable securities


(37,194
)


(32,919
)Reclassification adjustment


-



(19,800
)Comprehensive loss

$
(4,116,677
)

$
(7,554,457
)Basic and diluted net loss per share

$
(0.05
)

$
(0.38
)Basic and diluted weighted average shares of common stock outstanding


76,165,171



19,835,327Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.
  The accompanying notes are an integral part of these consolidated financial statements.











34




CLICKERS INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


FOR THE YEARS ENDED AUGUST 31, 2011 AND 2010






Common Stock


Additional


Prepaid


Shares to


Unrealized


Accumulated


Stockholders'Shares


Par Value


Paid in Capital


Consulting


be issued


Gain (Loss)


Deficit


DeficitBalance, August 31, 2009


282,292


$
282


$
12,240,363


$
-


$
-


$
89,914


$
(15,821,251
)

$
(3,490,693
)Shares issued for Sales of Common Stocks


250,000



250



99,750



-



-



-



-



100,000Shares issued for Services


455,000



455



356,095



(7,292
)


-



-



-



349,258Conversion of Convertible Note Payable to Common Stock


31,893,731



31,894



6,548,015



-



-



-



-



6,579,908Shares issued for CEO & Consultants Accrued Salaries


26,816,666



26,817



848,183



-



-



-



-



875,000Options issued for services


-



-



108,331



-



-



-



-



108,331Unrealized gain on marketable securities


-



-



-



-



-



(52,719
)


-



(52,719
)Net loss


-



-



-



-



-



-



(7,501,738
)


(7,501,738
)Balance, Aug 31, 2010


59,697,688



59,698



20,200,737



(7,292
)


-



37,194



(23,322,990
)


(3,032,653
)Amortization of prepaid consulting


-



-



-



7,292



-



-



-



7,292Exercise of options


211,290



211



79,889



-



15,400



-



-



95,500Conversion of Note Payable


46,598,172



46,598



844,569



-



-



-



-



891,167Shares issued for accrued fees


3,320,000



3,320



150,805



-



-



-



-



154,125Shares issued for services


4,548,127



4,548



27,289



















31,837Options issued for services


-



-



762,880



-



-



-



-



762,880Unrealized gain on marketable securities


-



-



-



-



-



(37,194
)


-



(37,194
)Net loss


-



-



-



-



-



-



(4,079,483
)


(4,079,483
)Balance, August 31, 2011


114,375,277


$
114,375


$
22,066,169


$
-


$
15,400


$
0


$
(27,402,473
)

$
(5,206,529
)
  The accompanying notes are an integral part of these consolidated financial statements.
   35
  CLICKERS INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED AUGUST 31, 2011 AND 2010
 2011


2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(4,079,483
)

$
(7,501,738
)Adjustments to reconcile net loss to net cashused in operating activities:Bad debts


13,851



371,772Depreciation and amortization


7,297



29,830Revenues in form of marketable securities


-



(297,000
)Write off of liabilities


-



(20,800
)Impairment of marketable securities


98,442



139,970Gain on sale of marketable securities


-



(317,589
)Change in derivative liability


1,197,519



(820,344
)Loss on debt redemption


212,791



5,732,894Issuance of options and warrants for services


762,880



108,331Shares issued for services


7,292



348,908Amortization of debt discount


1,204,178



578,221Other income


(503,257
)


-(Increase) decrease in current assets:Receivables


(10,502
)


(101,178
)Loan and other current assets


56,188



(91,670
)Increase (decrease) in current liabilities:Accounts payable


83,903



208,074Accrued expenses and other liabilities


430,729



435,967Net cash used in operating activities


(518,172
)


(1,196,351
)CASH FLOWS FROM INVESTING ACTIVITIES:Cash received from sale marketable securities


-



320,412Net cash provided by investing activities


-



320,412CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from officer


-



228,259Cash proceeds from notes


25,275



-Cash proceeds from convertible note


353,000



560,000Cash received from sale of common stock


95,500



100,000Net cash provided by financing activities


473,775



888,259NET DECREASE IN CASH & CASH EQUIVALENTS


(44,397
)


12,320CASH & CASH EQUIVALENTS, BEGINNING BALANCE


44,700



32,380CASH & CASH EQUIVALENTS, ENDING BALANCE

$
303


$
44,700Face value of notes and interest converted to common stock

$
409,275


$
831,471Fair value of common stock issued upon conversion of notes

$
891,167


$
-Derivative liability of convertible notes at date of issue

$
1,116,379


$
-Derivative liability charged off upon conversion of notes

$
494,531


$
-Unamortized discount charged off upon conversion of notes

$
141,635


$
-Issuance of shares for accrued fees and services

$
185,962


$
875,000


The accompanying notes are an integral part of these consolidated financial statements.










36






CLICKER INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 AUGUST 31, 2011 AND 2010
 
 NOTE 1  NATURE OF BUSINESS AND BASIS OF PRESENTATION
 
 Clicker Inc. (the “Company,” "We," or "Clicker"), a corporation incorporated in the State of Nevada, is a web publisher brand builder focused on developing stand-alone brands that incorporate social networking and reward properties that leverage content, commerce and advertising for the next generation of global internet users.
 
 On May 12, 2009 the Company, formerly, Financial Media Group, Inc. (“FMG”) acquired all of the outstanding capital stock of Clicker, Inc. in exchange for the issuance of 219,900 shares of common stock to the Clicker Shareholders. Such shares are restricted in accordance with Rule 144 of the 1933 Securities Act. As a result of the acquisition, Clicker became our wholly-owned subsidiary. As if the date of the merger, Financial Media Group, Inc. changed its name to Clicker, Inc.
 
 The exchange of shares with Clicker was accounted for as a reverse acquisition under the purchase method of accounting since the stockholders of Clicker obtained control of the consolidated entity. Accordingly, the merger of the two companies was recorded as a recapitalization of Clicker, with Clicker, Inc. being treated as the continuing entity. The historical financial statements presented are those of Clicker.
 
 Principles of Consolidation
 
 The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries WallStreet Direct, Inc., Digital Wall Street, Inc., Financial Filings, Corp., My WallStreet, Inc. and Wealth Expo Inc. All significant inter-company accounts and transactions have been eliminated.
 
 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
 The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, and sales returns, and recoverability of long-term assets. Actual results could differ from our estimates.
 
 Cash and Cash Equivalents
 
 The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.
 
 Accounts Receivable
 
 The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Allowance for doubtful accounts amounted to $585,950 and $572,099 as of August 31, 2011 and 2010, respectively.
 
 Marketable Securities
 
 The Company’s investments in securities are classified as available-for-sale and, as such, are carried at fair value based on quoted market prices. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.
 
 Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized and unrealized gains and losses for securities classified as available-for-sale are included in the statement of operations and comprehensive gain, respectively.
 
 The Company reviews, on a quarterly basis or more frequently if warranted by circumstances, the carrying value of the marketable securities it receives from its customers for providing services. The Company records impairment expense each quarter when the market value of the securities received show a consistent decline over 90 to 180 days, and the carrying amount of the marketable securities exceeds its fair value by 50% or more, and is deemed not recoverable. As such, the Company records on a quarterly basis in its financial statements the impairment loss for the difference between the carrying amount of the marketable securities and their fair value.
   37
 
 Financial Instruments
 
 The Company's financial instruments primarily consist of cash and cash equivalents, accounts receivable, marketable securities, and accounts payable. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is primarily attributed to the short maturities of these instruments.
 
 Fair value measurements
 
 We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
 
 ·
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
 
 ·
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 ·
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 derivative liabilities are comprised of derivatives for conversion features on our convertible notes payable. In certain cases, market-based observable inputs are not available and we use management judgment to develop assumptions to determine fair value for these derivatives.
 
 Our current financial liabilities have fair values that approximate their carrying values.
 
 The table below summarizes the fair values of the Company’s financial liabilities as of August 31, 2011:
 
 Fair Value at


Fair Value Measurement UsingAugust 31,

2011


Level 1


Level 2


Level 3Conversion feature derivative liability

$
2,183,694


$
—


$
—


$
2,183,694$
2,183,694


$
—


$
—


$
2,183,694
 
 The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (warrant derivative liability) for the years ended August 31, 2011 and 2010.
 
 2011


2010Balance at beginning of year

$
364,327


$
116,752Additions to derivative instruments


1,116,379



1,067,919Change in fair value of warrant liability


1,197,519



(820,344
)Conversion of debentures


(494,531
)


-Balance at end of period

$
2,183,694


$
364,327
 
 These instruments were valued using pricing models which incorporate the Company’s stock price, volatility, U.S. risk free rate, dividend rate and estimated life.
 
 Property and Equipment
 
 Property and equipment are carried at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets from three to five years. Expenditures for maintenance and repairs are charged to expense as incurred.
 
 Revenue Recognition
 
 Revenue is recorded on the basis of services provide to our clients, and is recognized when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
 
 Our primary source of revenue was generated from building and developing stand-alone brands that incorporate social networking, and providing internet based media and advertising services. The services included web designs, integrated social media network, text and display advertising, press releases, e-mail marketing, and promotion across our network of web sites. Revenues from Internet based media and advertising services were recognized and recorded when the performance of such services completed.
   38
 
 Concentration of Credit Risk
 
 Financial instruments which potentially subject the Company to concentrations of credit risk are cash, accounts receivable and marketable securities. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk. All of the Company’s investment in marketable securities are considered “available-for-sale” and are carried at their fair value, with unrealized gains and losses (net of income taxes) that are temporary in nature recorded in accumulated other comprehensive income (loss) in the accompanying balance sheets. The fair values of the Company’s investments in marketable securities are determined based on market quotations. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required.
 
 Reporting Segments
 
 The Company reports segment information using the “management approach” model. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company allocates its resources and assesses the performance of its sales activities based upon its products and services.
 
 Stock-Based Compensation
 
 The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.
 
 Impairment of Long-lived Assets
 
 The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
 
 Advertising and Marketing Costs
 
 The Company expenses costs of advertising and marketing as incurred. Advertising and marketing expense for the years ended August 31, 2011 and 2010 amounted to $22,092 and $88,942, respectively.
 
 Income Taxes
 
 The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
 
 Basic and Diluted Net Loss Per Share
 
 Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
 Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive. There were 1,940,060,483 common share equivalents at August 31, 2011 and 3,744,882 at August 31, 2010. These potential shares of common stock have been excluded from the computation of diluted net loss per share for the years ended August 31, 2011 and 2010, respectively as their effect is anti-dilutive.
 
 Comprehensive Income
 
 Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners. Total other comprehensive loss for the years ended August 31, 2011 and August 31, 2010 comprised primarily of unrealized losses on marketable securities was $37,194 and $52,719.
 
  39
  Contingencies
 
 Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
 
 If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
 
 Concentration of Credit Risk
 
 Financial instruments which potentially subject the Company to concentrations of credit risk are cash, accounts receivable and marketable securities. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk. All of the Company’s investment in marketable securities are considered “available-for-sale” and are carried at their fair value, with unrealized gains and losses (net of income taxes) that are temporary in nature recorded in accumulated other comprehensive income (loss) in the accompanying balance sheets. The fair values of the Company’s investments in marketable sureties are determined based on market quotations. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required.
 
 Recent Accounting Pronouncements
 
 In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. These disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
 
 In April 2010, the FASB issued Accounting Standards Update 2010-13 (ASU 2010-13), "Compensation - Stock Compensation (Topic 718)." This Update provides amendments to Topic 718 to clarity that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The provisions of ASU 2010-13 are not expected to have a material effect on the Company's consolidated financial statements.
 
 In July 2010, the FASB issued an accounting update to provide guidance to enhance disclosures related to the credit quality of a company's financing receivables portfolio and the associated allowance for credit losses. Pursuant to this accounting update, a company is required to provide a greater level of disaggregated information about its allowance for credit loss with the objective of facilitating users' evaluation of the nature of credit risk inherent in the company's portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit losses, and the changes and reasons for those changes in the allowance for credit losses. The revised disclosures as of the end of the reporting period are effective for the Company beginning in the second quarter of fiscal 2011, and the revised discourses related to activities during the reporting period are effective for the Company beginning in the third quarter of fiscal 2011. The Company is currently evaluating the impact of this accounting update on its financial disclosures. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
 
 Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial statements.
   40
 
 NOTE 3  MARKETABLE SECURITIES
 
 Occasionally, the Company receives securities of unrelated client companies as payment in full for services rendered. The number of shares the Company receives for services is based on upon contracted amounts, and the number of shares is determined based on the bid price at the time of signing the agreement. The securities received from clients are classified as available-for-sale and, as such, are carried at fair value based on quoted market prices.
 
 During the years ended August 31, 2011 and 2010, the Company recorded impairment of $98,442 and $139,970, respectively, based on the inability to dispose of these type of securities. As of August 31, 2011, the Company has not been able to locate the related certificates. Based upon consideration of these circumstances, the Company believes that the probability of recoverability of any related asset may be remote.
 
 The Company did not sell any marketable securities during the year ended August 31, 2011 as compared to realized gains of $317,589 for the year ended August 31, 2010.
 
 Marketable securities classified as available for sale consisted of the following as of August 31, 2010:
 
 Equity Securities

Name and Symbol

Number of shares held at August 31, 2010


Cost


Market Value at August 31, 2010


Accumulated Unrealized Gain


Accumulated Unrealized Loss

Traded on Pink Sheets (PK) or Bulletin Board (BB)Sunrise Consulting Group SNRS


515,000,000


$
51,500


$
51,500


$
-


$
-

PKVOIP PAL.com, Inc. VPLM


2,500,000



15,000



50,000



35,000



-

PKOthers - Less than $10,000 cost


98,211,723



31,580



33,900



5,544



3,224$
98,080


$
135,400


$
40,544


$
3,224
 
 Unrealized gains on marketable securities as of August 31, 2011 and August 31, 2010 were $0 and $37,194, respectively.
 
 NOTE 4  PROPERTY AND EQUIPMENT
 
 Property and equipment consisted of the following:
 
 August 31, 2011


August, 31, 2010Office and computer equipment

$
191,653


$
191,653Less accumulated depreciation:


(191,653
)


(184,355
)$
-


$
7,298
 
 Depreciation expense for the years ended August 31, 2011 and 2010 was $7,298 and $29,830, respectively.
 
 NOTE 5  OTHER CURRENT ASSETS
 
 Other current assets consisted of the following:
 
 August 31, 2011


August 31, 2010Loan receivable

$
-


$
91,670Rent deposit


-



4,152Total

$
-


$
95,822
 
 Loan receivables are due on demand, interest free, and unsecured.






41


NOTE 6  ACCRUED EXPENSES
 
 Accrued expenses consisted of the following:
 
 August 31, 2011


August 31, 2010Accrued consulting fees

$
49,331


$
126,700Accrued interest


167,692



18,232Accrued salaries and payroll taxes


572,818



447,508Professional fees and others


191,354



180,970$
981,195


$
773,410
 
 NOTE 7  DUE TO RELATED PARTIES
 
 Due to related parties consisted of the following:
 
 August 31, 2011


August 31, 2010Accrued officer’s compensation

$
14,583


$
153,548Accrued interest on a loan paid off


8,100



248,373$
22,683


$
401,921
 
 The due balances were interest free, due on demand, and unsecured as of August 31, 2011 and 2010, respectively.
 
 NOTE 8  NOTE PAYABLE
 
 On March 5, 2010, the Company executed an unsecured promissory note of $170,000 to a third party. The note was interest free and due on September 5, 2010. During the year ended August 31, 2011, the Company paid $39,634 in cash to the note holder and also issued 250,000 shares of common stock with a fair value of $107,500. In connection with this partial settlement, the Company recorded a loss on partial debt settlement of $7,500. The remaining balance of $30,366 is interest free and due on demand.
 
 During the year ended August 31, 2011 the Company entered into three promissory notes in the aggregate amount of $25,275. The notes bear no interest and are repayable upon the consummation of the Company’s next round of financing.
 
 NOTE 9  CONVERTIBLE NOTE PAYABLE
 
 The Company has issued multiple secured convertible notes (the “Secured Convertible Notes” or the “Notes”) to related and unrelated parties (the “Holders . The Secured Convertible Notes have various maturity dates ranging from 9 to 12 months and have annual interest rates ranging from of 0% to 10% per annum. The Holders have the right from and after the Date of Issuance, and until any time until the Secured Convertible Notes are fully paid, to convert any outstanding and unpaid principal portion of the Secured Convertible Notes, and accrued interest, into fully paid and non-assessable shares of Common Stock with an ownership limit of 4.99%. The Secured Convertible Notes have a variable conversion price and full reset feature. The percentage of market conversion rates range from 20% to 50% of the average closing trading price of the Company’s common stock on consecutive trading days immediately preceding the date of conversion, which in the terms of the note agreements range from 3 days to 10 days. The Holders were not issued warrants with the Secured Convertible Notes. In the event of default for the Notes, the amount of principal and interest not paid when due bear interest at the rate of 18% per annum and the notes become immediately due and payable. Should that occur, the Company is liable to pay 105% of the then outstanding principal and interest.
 
 The Company has recorded the embedded conversion feature in the Secured Convertible Notes as derivative liabilities due to the full reset provisions.
 
 During the year ended August 31, 2010, the note due to the former Chief Financial Officer was amended into a 10% convertible note. The total fair value of the note has been recorded as a derivative instrument because the agreement does not contain an explicit limit on the number of shares to be delivered in a share settlement. However, because of the terms detailed in the note agreements stipulate that the total value of the shares to be issued is capped at the amount of principal and interest, the derivative liability is zero.
 
 The Company has valued the derivative liability for secured convertible notes using the Black – Sholes model as of August 31, 2011 and effective as of March 1, 2011. Prior to March 1, 2011 the Company used a probability weighted discounted cash flow model.
 
 As of August 31, 2011 and 2010, the fair value of the conversion features subject to derivative accounting was $2,183,694, and $364,327, respectively. The value of the conversion features as of August 31, 2011 was determined using the Black-Scholes method based on the following assumptions:  (1) risk free interest rates of 0.1%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 324%; and (4) an expected life of the conversion features of 1 year.
 
 At August 31, 2010 the Company valued the derivative liability based on a probability weighted discounted cash flow model. These models are based on future projections of the various potential outcomes. The features in the note that were analyzed and incorporated into the model included the conversion feature with the reset provisions and the call/redemption options. The Company analyzed the underlying economic factors that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. interest rates, stock price, conversion price, etc.). Projections were then made on these underlying factors which led to a set of potential scenarios. Probabilities were assigned to each of these scenarios over the remaining term of the note based on management projections. This led to a cash flow projection over the life of the note and a probability associated with that cash flow. A discounted weighted average cash flow over the various scenarios was completed, and it was compared to the discounted cash flow of the note without the embedded features, thus determining a value for the derivative liability at the date of valuation.
    42
 
 NOTE 10  EQUITY TRANSACTIONS
 
 Common Stock
 
 On April 1, 2010, we affected a consolidation of all our outstanding common shares with a record date of February 18, 2010. This consolidation was in effect a 300:1 reverse stock split, which reduced the total number of issued and outstanding common shares from 155,729,507 to 521,000. As a result of the reduction in the number of common shares, the market price per common share increased. However, there is no assurance that the post-reverse stock split price will be equal to or greater than the consolidation ratio multiplied by the pre-reverse stock split price on a going forward basis.
 
 For the year ended August 31, 2011 the Company issued 46,598,172 shares of common stock (post reverse split) at conversion prices from $0.0006 to $0.47 per share for aggregate redemption of $606,203 note payable and convertible notes payable.
 
 For the year ended August 31, 2011, the Company also issued 7,868,127 shares of common stock, valued at $185,962, to professionals and consultants in exchange for their services.
 
 During the year ended August 31, 2011, the Company received a total of $95,500 from consultants upon exercise of existing stock options. The Company issued 211,290 shares against $80,100 received and recorded the remainder of $15,400 as shares to be issued in the accompanying financial statements.
 
 Outstanding Warrants:
 
 The company had no warrants outstanding at August 31, 2011 or 2010.
 
 Outstanding Stock Options:
 
 2007 Non-Qualified Stock Option Plan (“2007 Non-Qualified Plan”):
 
 On January 5, 2007, the Company adopted the 2007 Non-Qualified Plan and reserved 10,000 shares of common stock for grant to employees, non-employee directors, consultants and advisors. The 2007 Non-Qualified Plan terminates ten (10) years from the date of adoption or sooner, at the discretion of the board of directors. As of August 31, 2011, there are no stock options granted under the 2007 Non-Qualified Plan.
 
 2008 Non-Qualified Stock Option Plan (“2008 Non-Qualified Plan”):
 
 On July 2, 2008, the Company adopted the 2008 Non-Qualified Plan and the Board of Directors approved the reservation of 6,667 shares of the Company’s authorized but unissued common stock for issuance under the plan. As of August 31, 2011, no options have been granted under the 2008 Non-Qualified Plan.
 
 2007 Equity Incentive Plan (“2007 Equity Plan”):
 
 On February 6, 2007, the Company adopted the 2007 Equity Plan, which was approved by the shareholders on April 11, 2007. The Company has reserved 23,333 shares of common stock for grant under this plan, The 2007 Equity Plan terminates ten (10) years from the date of adoption or sooner, at the discretion of the board of directors.  As of August 31, 2011, 16,083 options have been granted under the 2007 Equity Incentive Plan.
 
 2010 Incentive Stock Plan
 
 On June 18, 2010, the Company adopted the 2010 Incentive Stock Plan which was approved by the shareholders and reserved 4,000,000 common shares of the Company’s authorized common stock to grant to employees, directors, officers and consultants for services. The stock granted under the 2010 Incentive Stock Plan shall be the Common Shares of the Company’s common stock, par value $0.001 per share. During the year ended August 31, 2011 the Company issued 211,290 common shares to consultants for options exercised. During the year ended August 31, 2010 the Company issued 400,000 shares to consultants in exchange $225,000 worth of services.
 
 On September 2, 2010, the Company granted 780,000 common stock options to employees. The options have an exercise price of $0.45 per share. The options vested upon grant and lapse if unexercised after five years. The options have a grant date fair value of $351,00, determined using the Black-Scholes method based on the following weighted average assumptions:  (1) risk free interest rate of 2.13%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 625%; and (4) an expected life of the options of 5 years. During the year ended August 31, 2011 we have recorded an expense of $351,000 related to the fair value of the options that vested.
 
 On October 4, 2010, the Company granted 750,000 common stock options to employees. The options have an exercise price of $0.34 per share. The options vested upon grant and lapse if unexercised after five years. The options have a grant date fair value of $337,500, determined using the Black-Scholes method based on the following weighted average assumptions:  (1) risk free interest rate of 2.13%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 657%; and (4) an expected life of the options of 5 years. During the year ended August 31, 2011 we have recorded an expense of $337,500 related to the fair value of the options that vested.
   43
 
 Other 2011 Option Grants
 
 On March 7, 2011, the Company granted 3,000,000 common stock options to our chief executive officer. The options are not covered by any established plan as of August 31, 2011. The options have an exercise price of $0.02 per share. The options vested upon grant and lapse if unexercised after five years.  The options have a grant date fair value of $45,000, determined using the Black-Scholes method based on the following weighted average assumptions:  (1) risk free interest rate of 1.25%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 648%; and (4) an expected life of the options of 3 years. During the year ended August 31, 2011 we have recorded an expense of $45,000 related to the fair value of the options that vested .
 
 Options Outstanding
 
 Transactions involving our stock options are summarized as follows:
  
 August 31, 2011


August 31, 2010Number


Weighted

Average

Exercise Price


Number


Weighted

Average Exercise

PriceOutstanding at beginning of the period


16,083


$
0.08



16,083


$
0.08Granted during the period


4,530,000



0.15



—



—Exercised during the period


(256,584
)


0.37



—



—Terminated during the period


—



—



—



—Outstanding at end of the period


4,289,499


$
0.13



16,083


$
0.08Exercisable at end of the period


4,289,499


$
0.13



16,083


$
0.08
 
 At August 31, 2011 employee options outstanding totaled 3,000,000 with a weighted average exercise price of $0.02. These options had no intrinsic value at August 31, 2011 and a weighted average remaining contractual term of 4.5 years.
 
 The weighted average remaining life of the options is 4.38 years.
 
 The number and weighted average exercise prices of stock Options granted by the Company at August 31, 2011 are as follows:
 
 Options

Outstanding


Weighted

Average

Exercise Price


Aggregate

Intrinsic ValueOutstanding - August 31, 2010


16,083


$
0.08


$
6,684Granted


4,530,000



0.15



-Exercised


(256,584
)


0.37



-Expired/forfeited


-



-



-Outstanding – August 31, 2011


4,289,499


$
0.13



-
 
 The number and weighted average exercise prices of our options and warrants outstanding as of August 31, 2011 are as follows:
 
 Range of Exercise Prices


Remaining

Number

Outstanding


Weighted Average

Contractual Life

(Years)


Weighted

Average

Exercise Price$
0.015 - $0.02



3,012,167



4.5


$
0.02$
0.30



3,917



6.3


$
0.30$
0.34



568,527



4.0


$
0.34$
0.45



704,889



4.1


$
0.45
 
 NOTE 11  OTHER INCOME
 
 During the year ended August 31, 2011, the Company entered into several settlement agreements with prior officers and directors, whereby the Company was released from $503,343 of prior employment-related obligations. In connection with this release, the Company recorded $503,343 as Other Income.
    44
 
 NOTE 12  COMMITMENTS AND CONTINGENCIES
 
 Operating Lease
 
 The Company occupies its premises under operating leases on a monthly basis. Rent expense under the operating leases for the years ended August 31, 2011 and 2010 was $30,593 and $212,408, respectively. The Company has no future lease obligations.
 
 Contingencies
 
 From time to time, the Company may be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination or breach of contract actions incidental to the normal operations of the business. Company is not currently involved in any litigation which it believes could have a material adverse effect on its financial position or results of operations.
 
 Separation Agreement
 
 On March 7, 2011, the Company entered into a separation agreement (“Separation Agreement”) with Mr. Albert Aimers (“Aimers”), pursuant to which Aimers’ employment as Chief Executive Officer ended on March 7, 2011.  Aimers agreed to stay with the Company as interim Chief Financial Officer until the earlier of April 19, 2011, the date the Company filed its 10-Q for the quarter ended February 28, 2011 or the date the Company terminates Aimers’ services.  For his services as interim Chief Financial Officer, the Company agreed to pay Aimers a sum of $18,750.  Pursuant to the Separation Agreement, as amended, the Company paid Aimers $100,000 upon execution. Aimers tendered his resignation as Chief Financial Officer on April 15, 2011.  As a result, the Company believes that no further payments to Aimers are due pursuant to the Separation Agreement.
 
 NOTE 13  INCOME TAXES
 
 Income tax for the years ended August 31, 2011 and 2010 is summarized as follows:
 
 August 31,2011


2010Current:Federal

$
-


$
-State


4,800



4,800Deferred taxes


418,319



2,606,619Change in deferred tax assets


(418,319
)


(2,606,619
)Income tax expense (benefit)

$
4,800


$
4,800
 
 The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Consolidated Statements of Operations:
 
 August 31,2011


2010Tax expense (credit) at statutory rate-federal


(34
%)


(34
%)State tax expense net of federal tax


(6
%)


(6
%)Valuation allowance


40
%


40
%Income tax expense (benefit)

$
-


$
-
 
 The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at August 31, 2011 and 2010 are as follows:
 
 August 31,2010


2010Deferred tax assets:Net operating loss carry forward

$
4,683,426


$
4,265,107Total gross deferred tax assets


4,683,426



4,265,107Less valuation allowance


(4,683,426
)


(4,265,107
)Net deferred tax assets

$
-


$
-
 
 At August 31, 2011, the Company had net operating loss carry forwards for U.S. federal income tax purposes of approximately $11,700,000, available to offset future taxable income expiring on various dates through 2031. The Company has recorded a 100% valuation allowance on the deferred tax assets due to the uncertainty of its realization.
 
 The Company’s Digital Wallstreet Inc. subsidiary is delinquent in the payment of federal employment taxes.  As of August 31, 2011 amounts due to the Internal Revenue Service (IRS) and the Employment Development Department of the State of California (EDD) aggregated approximately $400,000.  The amounts are included in the Company’s balance of accrued expenses.  The Company is currently working with its tax attorney to develop plans for the orderly payment of delinquent balances.
    45
 
 NOTE 14  GOING CONCERN
 
 The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of business. The Company has an accumulated deficit of $27,402,473 as of August 31, 2011 and has incurred a net loss of $4,079,483 for the year ended August 31, 2011. In addition, The Company’s current liabilities exceed its current assets by $5,206,529 at August 31, 2011. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
 Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort during the period ended August 31, 2011 towards (i) obtaining additional equity financing, (ii) evaluation of its marketing methods and (iii) further streamlining and reducing costs.
 
 Management is considering the best ways to maximize the value of the Company’s intellectual assets (which include our website properties) and revive revenue, including a number of options ranging from the sale of certain intellectual assets to investing further capital to build out and take the Company’s potentially productive intellectual assets to market. Management is also contemplating further business development efforts that would result in new website properties that would be incremental to what the Company already has in its existing portfolio. Since the management change management has expended a good deal of effort in managing corporate liabilities and interacting with note holders, many of whose notes have gone into default. Management is also continuing its efforts to raise additional capital for ongoing operations and business development. To that end, the Company raised $300,000 in September 2011 through the sale of a convertible debenture and management is currently determining the optimal ways to deploy that capital to maximize its value to the business.
  NOTE 15  SUBSEQUENT EVENTS
 
 On September 21, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Flyback, LLC, an accredited investor (the “Investor”), providing for the sale by the Company to the Investor of a 10% convertible debenture in the principal amount of $300,000 (the “Debenture”). The Debenture matures on March 20, 2013 (the “Maturity Date”) and bears interest at the annual rate of 10%. The Company is not required to make any payments until the Maturity Date although the Company has the ability to repay the Debenture at any time without penalty upon five days prior written notice to the Investor.
 
 The Investor may convert, at any time, the outstanding principal and accrued interest on the Debenture into shares of the Company’s common stock (“Common Stock”) at a conversion price per share equal to fifty percent (50%) of the average of the closing prices of the Common Stock during the five trading days immediately preceding the date of conversion as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties. The Investor has agreed to restrict its ability to convert the Debenture and receive shares of Common Stock such that the number of shares of Common Stock held by the Investor in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s Common Stock.