Form 10-Q Mass Hysteria Entertainment Company, Inc.

10-Q - Quarterly report [Sections 13 or 15(d)]

Published: 2012-10-22 17:04:58
Submitted: 2012-10-22
Period Ending In: 2012-08-31

f10q0812_masshysteria.htm QUARTERLY REPORT

f10q0812_masshysteria.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended

August 31, 2012

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

For the transition period from _________________ to _________________

Commission File No.:

000-53739

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-3107499
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8899 Beverly Blvd, Suite 710 Los Angeles, CA 90048 (Address of principal executive offices)

Issuer’s telephone number:

(310) 285-7800

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

Indicate by check mark whether the registrant (1) 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.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes

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

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

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

As of October 22, 2012, 524,316,722shares of our common stock were outstanding.

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

FORM 10-Q

August 31, 2012

TABLE OF CONTENTS

		Page
PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4
Item 4	Control and Procedures	4

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings
Item 1A	Risk Factors	6
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6
Item 3.	Defaults Upon Senior Securities	6
Item 4.	Mine Safety Disclosures	6
Item 5.	Other Information	6
Item 6.	Exhibits	7

SIGNATURES		8

ITEM 1 –FINANCIAL INFORMATION

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

(A Development-Stage Company)

BALANCE SHEETS

As of August 31, 2012 and November 30, 2011

(Unaudited)

	August 31,			November 30,
	2012			2011
Assets
Current Assets
Cash	$	14,280		$	3,851
Accounts receivable, net of allowances for doubtful accounts of $31,616 and $25,000, respectively		-			-
Other assets		5,855			5,855
Total current assets		20,135			9,706
Intangible assets, net		737			1,392
Film costs		95,250			95,250
Total Assets	$	116,122		$	106,348

Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	82,981		$	70,170
Accrued liabilities (Note 4)		308,105			246,538
Accrued payroll		279,596			172,181
Short-term debt (Note 5)		240,000			70,000
Short-term convertible debt, net of discount of $48,390 and $41,486, respectively (Note 5)		34,110			78,014
Derivative liability (Note 5)		70,705			116,635
Total current liabilities		1,015,497			753,538
Convertible long-term debt, net of discount of $46,700 and $61,711, respectively (Note 5)		606,361			591,350
Stand ready obligation		250,000			50,000
Total Liabilities		1,871,858			1,394,888

Stockholders’ Deficit Series A Preferred stock, $0.00001 and $ 0.001 par value, respectively 10,000,000 shares authorized; 10,000 issued and outstanding		-			10
Common stock, $0.00001 and $ 0.001 par value, respectively, 2,000,000,000 and 300,000,000 shares authorized, respectively; 474,731,356 and 108,431,950 shares issued and outstanding as of August 31, 2012 and November 30, 2011, respectively.		4,747			108,431
Additional paid-in capital		6,344,141			5,702,411
Deficit accumulated during the development stage		(8,104,624	)		(7,099,392	)
Total Stockholders’ Deficit		(1,755,736	)		(1,288,540	)

Total Liabilities and Stockholders’ Deficit	$	116,122		$	106,348

See notes to financial statements

F-1

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

(A Development-Stage Company)

STATEMENTS OF OPERATIONS

Three and Nine Months Ended August 31, 2012 and 2011,

and for the period from Inception to August 31, 2012

(Unaudited)

	Three Months Ended August 31,						Nine Months Ended August 31,						For the Period from August 5, 2009 (Inception) to August 31,
	2012			2011			2012			2011			2012

Revenue	$	-		$	-		$	-		$	47,500		$	72,500

Operating expenses:
General and administrative		245,271			248,219			745,549			730,796			3,167,138
Selling expense		-			-			-			-			30,573
Total operating expenses		245,271			248,219			745,549			730,796			3,197,711
Operating loss		(245,271	)		(248,219	)		(745,549	)		(683,296	)		(3,125,211	)

Other income (expense):
Other income		-			-			65,006			-			65,006
Interest income		-			92			-			184			426
Interest expense		(46,722	)		(48,462	)		(139,162	)		(90,928	)		(317,507	)
Excess of fair value of derivative		(77,095	)		(10,656	)		(213,250	)		(20,540	)		(240,341	)
Gain on fair value of derivative liability		93,389			29,436			227,723			26,668			269,881
Loss on guarantee		(200,000	)		-			(200,000	)		-			(200,000	)
Total other income (expense)		(230,428	)		(29,590	)		(259,683	)		(84,616	)		(422,535	)

Net loss	$	(475,699	)	$	(277,809	)	$	(1,005,232	)	$	(767,912	)	$	(3,547,746	)

Basic and diluted weighted average shares
Outstanding		354,251,946			82,832,739			243,765,406			81,230,500

Basic and diluted net loss from continuing
Operations per share		-	*		-	*		-	*		(0.01	)

*Amount was less than $0.01 per share

See notes to financial statements

F-2

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

(A Development-Stage Company)

STATEMENTS OF CASH FLOWS

Nine Months Ended August 31, 2012 and 2011,

and for the period from Inception to August 31, 2012

(Unaudited)

	August 31, 2012			August 31, 2011			For the Period from August 5, 2009 (Inception) to August 31, 2012
Cash Flows from Operating Activities:
Net loss	$	(1,005,232	)	$	(767,912	)	$	(3,547,746	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		655			783			2,403
Bad debt expense		-			-			25,000
Share-based compensation		268,668			202,250			1,120,235
Loss on settlement of convertible notes		-			-			(14,000	)
Contributed services		-			-			89,500
Change in fair market value of derivative liability		(227,723	)		(26,668	)		(269,881	)
Loss on excess fair value of derivative liability		213,250			20,540			240,341
Amortization of discount on convertible debt		103,106			60,041			206,517
Loss on increase in stand ready obligation		200,000			-			200,000
Changes in operating assets and liabilities:
Accounts receivable		-			(28,818	)		(2,797	)
Prepaid expenses		-			1,213			(295	)
Accounts payable		12,811			56,818			96,346
Accrued liabilities		67,479			165,443			252,515
Accrued payroll		107,415			-			282,523
Bank credit line		-			-			(1,156	)
Net cash used in operating activities		(259,571	)		(316,310	)		(1,320,495	)

Cash Flows from Investing Activities:
Film costs		-			-			(32,000	)
Other assets		-			-			1,214
Net cash used in investing activities		-			-			(30,786	)
Cash Flows from Financing Activities:
Stand-ready obligation		-			50,000			25,000
Proceeds from issuance of convertible debt		95,000			-			432,500
Proceeds from issuance of convertible debt to related p arties		-			327,500			453,061
Proceeds from issuance of short-term debt		180,000			-			250,000
Payments on short-term debt		(10,000	)		-			(10,000	)
Proceeds from sale of common stock		5,000			-			215,000
Net cash provided by financing activities		270,000			377,500			1,365,561

Net increase in cash and cash equivalents		10,429			61,190			14,280

Cash and cash equivalents, beginning balance		3,851			780			-
Cash and cash equivalents, ending balance	$	14,280		$	61,970		$	14,280

See notes to financial statements

F-3

	August 31, 2012		August 31, 2011		For the Period from August 5, 2009 (Inception) to August 31, 2012

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	-	$	-	$	-
Income taxes	$	-	$	-	$	800

Supplemental schedule of non-cash investing and financing activities:
Conversion of convertible debt and accrued interest	$	137,912	$	10,000	$	229,180
Cash received under subscription agreement	$	-	$	-	$	200,000
Stock-based compensation to be issued, included in accrued liabilities, for script development	$	-	$	-	$	40,000
Common stock issued in lieu of cash payment for script costs	$	-	$	-	$	23,250
Fair value of beneficial conversion feature received on convertible note payable	$	-	$	75,000	$	75,000
Derivative liability relieved by conversion	$	126,457	$	-	$	126,457

See notes to financial statements

F-4

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

(A Development-Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND BUSINESS

Mass Hysteria Entertainment Company, Inc. ("MHe", “Mass Hysteria” or the “Company”) is an innovative development-stage entertainment company working on creating real time interactive capacity through Smart Phones and Tablets for Movies. Additionally, Mass Hysteria produces movies for theatrical, DVD, Cable and television distribution. These traditional revenue streams are pursued concurrently as we identify revenue streams that will define new media's involvement in the entertainment business such as downloading applications to smart phones that will allow theater-goers to "participate" with the experience. We will outsource development of our own mobile applications to exploit these new revenue streams; however, our success will depend on our ability to raise capital, as well as generate revenues from our current operations (see Note 3). There are technology and competitive risks associated with interactive mobile devices and related entertainment events.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements of Mass Hysteria have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to our financial statements which substantially duplicate the disclosures contained in our Annual Report on Form 10-K for the year ended November 30, 2011 have been omitted.

Development-Stage Company

On August 5, 2009, the Company entered into the development stage with its intended new business, which currently has minimal revenues. Management expects to sustain losses from operations until such time it can generate revenues sufficient to meet its anticipated cost structure. The Company is considered a development-stage company in accordance with Accounting Standards Codification (“ASC”) 915 “Development-Stage Entities.” Upon distribution of the Company’s products, it will exit the development stage. The nature of our operations is highly speculative, and there is consequently a risk of loss of your investment. The success of our plan of operation will depend to a great extent on the operations, financial condition, and management of the identified business opportunity.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require the Company's most significant, difficult and subjective judgments include the valuation and recognition of share-based compensation, evaluation of the Company’s stand-ready obligation and values of derivative instruments. We use the Black-Scholes valuation model for simplicity purposes to value derivative instruments. Various valuation techniques render varying amounts. We consistently use this model and use inputs that are appropriate. As the Company develops its technologies, and capitalization of costs occurs, the carrying value of those long-lived assets will need to be evaluated for impairment.

We base our estimates and judgments on historical experience and on various other factors that are considered reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources.

Actual results could differ materially from these estimates.

F-5

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

The Company accounts for financial instruments under the guidance of ASC 820-10 – “Fair Value Measurements.” ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of August 31, 2012 and November 30, 2011, the Company’s derivatives which include the embedded conversion feature on the convertible note payable were considered level 2 financial instruments. See Note 5 for valuation technique and assumptions used. The respective carrying value of certain on-balance sheet financial instruments approximated their fair values. These financial instruments include cash, prepaids, accounts payable, accrued liabilities, notes payable and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short term nature or they are payable on demand. The Company did not have any level 3 instruments at August 31, 2012 and November 30, 2011.

Accounts Receivable

Accounts receivable are reported net of allowance for expected losses and represents the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expect to collect, are charged to operations in the year in which those differences are determined, with an offsetting entry to a valuation allowance. As of August 31, 2012 and November 30, 2011, the Company reserved $31,616 and $25,000 respectively against accounts receivable.

Loss per Share

Loss per share is computed on the basis of the weighted average number of common shares outstanding. Diluted loss per share is computed on the basis of the weighted average number of common shares outstanding. At August 31, 2012, the Company’s dilutive securities outstanding consisted of (1) the CEO’s options to purchase shares of common stock (see Note 8), for which the exercise price is above the average closing price of the Company’s common stock and thus excluded under the treasury method; (2) 6,768,454 shares relative to convertible notes to a former related party (post conversion) beginning in February 2015; (3) approximately 194,887,620 shares relative to convertible notes (post conversion) beginning in September 2012 and (4) 206,349 shares related to the warrant issued with the August 9, 2011 $37,500 convertible note. The proceeding common stock equivalents were excluded from the diluted net loss per share as the effects would have been anti-dilutive.

New Accounting Pronouncements

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. Except for the ASUs listed above, those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

F-6

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. The Company is a development-stage company, has limited available capital, limited revenues from intended operations, and has suffered losses and negative cash flow from operations since Inception. These matters raise substantial doubt about the Company's ability to continue as a going concern. We are seeking debt or equity capital to meet our obligations and business needs. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments that might result from these uncertainties.

NOTE 4 – ACCRUED LIABILITIES

Accrued liabilities by major classification are as follows:

	August 31, 2012		November 30, 2011

Accrued interest	$	106,111	$	75,973
Accrued consulting fees		91,000		91,000
Accrued payroll taxes		89,994		63,800
Other accrued expenses		21,000		15,765
Total accrued liabilities	$	308,105	$	246,538

Accrued interest at August 31, 2012 represents interest on convertible long-term debt and convertible and non-convertible short-term debt from multiple external parties. Accrued consulting fees are for script writers and a film consultant.

On December 17, 2009, the Company entered into an employment agreement with our President and Chief Executive Officer (“CEO”) which provides for a base salary of $360,000 per year, payable semi-monthly for a period of five years, expiring December 17, 2014. As of August 31, 2012 and November 30, 2011, accrued and unpaid wages due the CEO of $228,971 and $172,181, respectively, are reflected as accrued payroll on the accompanying balance sheet. The portion of the CEO’s paid compensation is required to be reported on IRS Form W-2; however, only partial reporting has been made by the Company to date. Payroll taxes are accrued for the CEO’s salary on which reporting is due to properly reflect the amount of the employer’s share of payroll taxes related to his paid compensation, which includes the contemplation of penalties and interest estimated to cumulatively total $89,994 and $63,800 through August 31, 2012 and November 30, 2011, respectively.

The Company entered into an employment agreement as of February 3, 2012 with our Chief Financial Officer (“CFO”) which provides for a base salary of $90,000 per year, payable monthly, on a month-to-month basis. The Company pays these wages only as capital becomes available. No wages have been paid to date. As of August 31, 2012, accrued wages due the CFO were $50,625 and are reflected as accrued payroll on the accompanying balance sheet.

NOTE 5 – BORROWINGS

Short-Term Debt

(A)	Related Parties

On February 28, 2012, our Chief Financial Officer made a demand interest free advance of $30,000 to the Company to provide working capital, which remains outstanding at August 31, 2012.

F-7

NOTE 5 – BORROWINGS (CONTINUED)

Short-Term Debt (Continued)

On July 13, 2010 and March 22, 2012, the Company borrowed $60,000 and $50,000 respectively from a shareholder

for use as operating capital. Both parties entered into loan agreements which make the Company liable for repayment of the principal with interest at the rate of 15% per annum for the period from inception through maturity dates of January 11, 2013 and March 7, 2013 respectively. During the three and nine months ended August 31, 2012 and 2011, the Company incurred and accrued $4,158 and $11,144; and $2,300 and $6,750 respectively, in interest expense on these loans. As of August 31, 2012 and November 30, 2011, the Company had cumulatively accrued interest of $22,560 and $11,416 respectively.

(B)	Film Finance Agreement

On May 11, 2012, we entered into an agreement with Coral Ridge Capital Partners, LLC (“CRCP”) under which CRCP agreed to provide up to $300,000 in equity financing towards the production of the motion picture currently entitled “End of the Gun” (the "Picture"). The initial $100,000 under this agreement was paid to us on June 12, 2012. While it was the Company’s intent to commence filming of the Picture by September 1, 2012, certain delays have postponed the commencement date to a date yet to be determined. CRCP has agreed to this postponement. In the event that the motion picture is abandoned, we are required to repay CRCP all funds paid to us, plus interest of 12% per annum. Accordingly, we have included the $ 100,000 advance within short-term debt until the status of the Picture has been better determined.

At August 31, 2012, cumulative expenses totaling $12,188 have been paid in connection with the Picture, which

have been recorded as an expense during the three months ended August 31, 2012.

Short-term Convertible Debt with Ratchet Provisions

On January 11, 2012, March 1, 2012, May 9, 2012 and July 9, 2012, the Company borrowed $22,500, $10,000, $32,500, and $30,000 respectively, from external parties for use as operating capital. The parties entered into convertible notes payable agreements which make the Company liable for repayment of the principal and 8% annual interest by the agreements’ expiration dates ranging between October 6, 2012 and April 11, 2013. If a default is called by the lender after failure to repay principal or interest when due, a default interest rate of 22% per annum is triggered and retrospectively applied from the notes’ inception date on the unpaid amount. As of August 31, 2012, none of the holders have held the Company in default for non-payment.

After 180 days, the notes are convertible into common stock at a 41% discount off the average of the lowest three (3) trading prices for the Company’s common stock within the ten (10) days preceding the conversion. These notes contain a “ratchet” provision, which protects the note holders in case the issuer sells stock during the term of the notes for a per-share price which is less than the effective conversion rate. Due to this ratchet provision, these notes are considered to contain a derivative instrument associated with the embedded conversion feature. This liability is recorded on the face of the financial statements as “derivative liability”, and must be revalued each reporting period.

The Company discounts the notes by the fair market value of the derivative liability upon inception of each note. These discounts will be accreted back to the face value of the notes over the note term.

Additionally, a $37,500 convertible note agreement entered into on August 9, 2011 contained an attached warrant to purchase 1 million shares of Company common stock at a fixed price of $0.001 per share. The warrant has a five year life, expiring on August 9, 2016. Using the Black-Scholes pricing model, along with the inputs listed directly below, we calculated the fair market value of this warrant to be $985 and $9,895 at August 31, 2012 and November 30, 2011. Because the warrant reflected a derivative liability, the entire value was recorded as a loss on derivative at the date of grant and the liability is recorded on the face of the financial statements. Additionally, this derivative liability will be revalued each quarterly reporting period.

F-8

NOTE 5 – BORROWINGS (CONTINUED)

Short-term Convertible Debt with Ratchet Provisions (Continued)	August 31, 2012			November 30, 2011
Annual dividend yield		-			-
Expected life (years)		3.93			5.0
Risk-free interest rate		.45	%		.91	%
Expected volatility		245	%		269	%

The Company calculated the derivative liability using the Black-Scholes pricing model for each note upon inception and recorded the fair market value of the derivative liability as a discount to the note. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations.

The derivative liabilities associated with these convertible notes were revalued during the quarter when and if principal was converted and as of August 31, 2012 using the Black-Scholes Model with the below range of inputs. Upon conversion of all or a portion of the convertible notes, the derivative liability associated with the principal converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal converted is recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operation, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital.

As of August 31, 2012 and November 30, 2011, the Company has outstanding principal amounts on convertible debt of $82,500 and $119,500, respectively. At these notes inception, they were fully discounted due to the associated derivative liabilities. Aggregate remaining discounts on convertible notes to be accreted over the life of each respective note on a straight-line method are $48,390 and $41,486 as of August 31, 2012 and November 30, 2011, respectively. During the three and nine months ended August 31, 2012, interest expense from accretion of the discount, including converted notes, was $ 30,693 and $88,095, respectively.

During the nine months ended August 31, 2012, lenders of convertible notes converted $137,912 of principal and interest thereon through the issuance of 289,875,644 shares. The remaining derivative liability written off from converted principal credited to additional paid-in capital was $126,457 for the nine months ended August 31, 2012. As part of these conversions, convertible notes from May 6, 2011, August 2, 2011 and October 18, 2011 were fully satisfied and the note from January 11, 2012 was partially satisfied with a reduction of $12,500 to $10,000.

Aggregate derivative liabilities associated with remaining convertible notes were $70,705 as of August 31, 2012. Based on this revaluation at quarter end and the revaluation of derivative liabilities measured during the period immediately before extinguishment of associated convertible notes, the Company recognized a gain in fair value of derivative liability of $227,723 during the nine months ended August 31, 2012.

As of August 31, 2012 and November 30, 2011, the range of inputs used to calculate derivative liabilities noted above were as follows:

	August 31, 2012			November 30, 2011
Annual dividend yield		-			-
Expected life (years)		.10 - .62	yrs		.01 - .63	yrs
Risk-free interest rate		.09% - .14	%		.01% - .09	%
Expected volatility		91%-258	%		52%-235	%

F-9

NOTE 5 – BORROWINGS (CONTINUED)

Short-term Convertible Debt with Ratchet Provisions (Continued)

The range of inputs used to calculate derivative liabilities on those convertible notes converted during the quarter ended August 31, 2012 were as follows:

Annual dividend yield	-
Expected life (years)	.001-.13	yrs
Risk-free interest rate	0.06% - 0.10	%
Expected volatility	71%-93	%

Convertible Long-term Debt

On March 31, 2011, the Company borrowed $ 200,000 from an external party for use as operating capital. The parties entered into a loan term convertible note agreement which makes the Company liable for repayment of the principal and 2% annual interest by the agreement’s expiration date of December 28, 2014. Beginning September 27, 2011, the note is convertible into shares of our common stock at a fixed conversion price of $0.0016 per share. As a result, the Company will be liable to issue up to 12,500,000 shares of common stock upon conversion. Based on a $0.022 closing price on the day of the note agreement, we recorded a discount of $ 75,000 as a result of the beneficial conversion feature (“BCF”). As such, the Company discounted the note by the value of the BCF upon inception of the note. During the three and nine months ended August 31, 2012, interest expense from accretion of the discount was $5,004 and $15,011, respectively, leaving a remaining discount of $46,700 as of August 31, 2012. During the three and nine months ended August 31, 2011, interest expense from accretion of the discount was $5,004 and $8,286, respectively. The discount is being amortized using the effective interest method over the term of the note, which is effectively straight-lines the amortization since the note is due in a balloon payment at the end of its term.

From July 2009 to November, a former related party and significant stockholder of the Company made advances on behalf of the Company and purchased predecessor convertible debt totaling $305,430, as of November 30, 2009. During the quarter ended May 31, 2010, $55,268 of convertible debt acquired by this former related party, as part of the recapitalization and change in ownership, was converted into 5,900,000 shares of common stock for full satisfaction of the liability. During the quarter ended February 28, 2010, this holder advanced the Company $88,199 in working capital for operations. Cumulative advances as of February 28, 2010 were established in a convertible note totaling $338,362. Such note is convertible into 4,229,512 common shares, based on an $0.08 share price. The convertible note bears interest at 6% per annum, and is due February 28, 2015. During the quarter ended May 31, 2010, this holder advanced the Company an additional $75,383, for which an additional note agreement was effected. Such note is convertible into 1,507,660 common shares based on a fixed conversion price of $0.05, interest at 6% per annum, due May 31, 2015.

During the quarter ended August 31, 2010, the holder advanced the Company an additional $33,511, for which an additional note agreement was effected, which dictates that the note will be convertible into 837,775 common shares based on a fixed conversion price of $0.04, interest at 6% per annum, due August 31, 2015. During the quarter ended November 30, 2010, this holder advanced the Company an additional $5,805, for which an additional note was effected, which indicates that the note will be convertible at a fixed conversion price of $0.03 per share, interest at 6%, per annum, resulting in an aggregate total debt of $ 453,061. The notes are immediately convertible; no beneficial conversion feature was deemed applicable at the date of issuance. As of August 31, 2012 and November 30, 2011, the Company has accrued $75,344 and $54,863 of interest expense related to these notes respectively

F-10

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Office Lease

On April 14, 2011, the Company entered into a lease for office space for one (1) year and currently leases the same space on a month-to-month basis requiring monthly payments of $2,927 in addition to a security deposit of $5,855 (equal to 2 month’s rent in advance).

Consulting Agreement

In August 2009, the Company entered into a one year engagement agreement with successful comedy writer Pat Proft to hire him as the Senior Vice President of Comedy. His role was to create and write our movies. Per the terms of his engagement, Mr. Proft received 200,000 shares of our common stock, and an initial monthly fee of $10,000 for a minimum of one year. During March 2010, a new agreement was negotiated which reflected that Mr. Proft would be paid half of this monthly fee in the form of stock compensation – retroactive from January 2010. As of August 31, 2012 and November 30, 2011, accrued cash and stock compensation totaling $15,000 and $40,000, respectively, was due to Mr. Proft and included in accrued liabilities on the accompanying balance sheet. This agreement terminated in August 2010.

Stand-Ready Obligation

During the production of the film

Carjacked,

the production company Carjacked Entertainment, LLC and Carjacked Investments, LLC (collectively “Carjacked LLC’s”) obtained financing from Wet Rose Productions, LLC (“Wet Rose”) in the amount of $850,000. Grodfilm Corp, owned by the Company's CEO, is the managing member of the LLC's and acts on behalf of 9207-8856 Quebec Inc, a Quebec company and owner of the copyright to the motion picture "Carjacked".

On October 5, 2010, the Company entered into an indirect guarantee of the indebtedness in which the Company guaranteed any shortfalls in repayment of the $850,000 of debt related to the investment provided by Wet Rose up to an amount not to exceed $250,000. The financing from Wet Rose becomes due and payable at a date which is 30 months after first release of the film

Carjacked

. The film was released on November 22, 2011 and accordingly a payable may become due in approximately 21 months on May 22, 2014. As of August 31 2012 and November 30, 2011, management evaluated the guarantee liability under ASC 460-10 – “Guarantees” and ASC 450-20 – “Loss Contingencies” by reviewing the projected ability of the

Carjacked

film to repay the obligation under contract to determine if there is a probable chance of a default, and if so, provides a reasonable estimate for losses. As of August 31, 2012, management believed that past performance and current projections indicate that full repayment to Wet Rose was not probable. According, Management reserved the entire $250,000 as a liability, including the $50,000 “guarantor fee” due the Company upon close of production funding, as a stand-ready obligation liability.

Film Costs and Movie Rights Option Contract

On November 1, 2010, the Company entered in to an “option/purchase” agreement with Richard Taylor (the “Writer”) in which the Company would be granted the exclusive right and option (“Option”) to acquire all motion picture, television and allied and ancillary rights to the Writer’s screenplay – “Bad Monday”. The initial term of this option agreement was for one year; however, the Company subsequently obtained an extension through October 31, 2012. As consideration, the Company paid the Writer $2,000 which is included in Film Costs. It is the intention of the Company to produce the motion picture and to either renew the option for an additional six month period through April 30, 2013 for the payment of $3,500 or to exercise the Option., at which point the Writer would be paid a purchase price of between $40,000 and $100,000, depending on the final production budget for the motion picture. Additionally, the Writer would be entitled to 5% of the net proceeds of the picture, and an additional 2.5% of net proceeds if the Writer received shared writing credit on the picture.

The additional amount of $93,250 included in Film Costs relates to payments to Pat Proft, a related party, to deliver a finished script to a comedic motion picture which the Company intends will be the first interactive "second screen" motion picture produced and distributed to help launch the Company's interactive technology.

F-11

NOTE 7 - STOCKHOLDERS’ DEFICIT

Amended and Restated Charter

We filed amended and restated articles of incorporation with the Nevada Secretary of State on each of December 16, 2011 and January 5,2012 respectively (with the January 5, 2012 version superseding the previously filed version), which amended and restated articles (i) increased our authorized common stock to two billion (2,000,000,000) shares; (ii) reduced the par value for its capital stock from $0.001 per share to $0.00001 per share; (iii) granted authority to our board of directors to effectuate a stock split or reverse stock split without stockholder approval; (iv) elected not to be governed by certain provisions pertaining to “resident domestic corporations” under the Nevada Revised Statutes; and (v) elected not to be governed by certain provisions relating to “issuing corporations” under the Nevada Revised Statutes. A copy of the amended and restated articles was filed as an exhibit to our Definitive Information Statement on Form 14C, filed with the Securities and Exchange Commission on January 13, 2012. The amended and restated articles became effective on February 17, 2012, as stated therein.

Stock Incentive Plans

2012 Stock Incentive Plan

On March 13, 2012, our Board of Directors adopted the 2012 Stock Incentive Plan

The purpose of our 2012 Stock Incentive Plan is to advance the best interests of the Company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either common stock or stock options under the plan is 56,000,000 shares, subject to adjustment. As of August 31, 2012, 45,867,206 shares have been granted under the plan.

Our Board of Directors administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. Any decision made, or action taken, by our board of directors arising out of or in connection with the interpretation and administration of the plan is final and conclusive.

The Board of Directors, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the Company, and such other persons as the board of directors or compensation committee may select, and permit holders of common stock options to exercise such options and hold the common stock issued. Stock options may also be granted by our board of directors or compensation committee to non-employee directors of the Company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the Company.

In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the plan.

Our Board of Directors may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our Board of Directors may deem appropriate and in our best interest.

F-12

NOTE 7 - STOCKHOLDERS’ DEFICIT (CONTINUED)

Stock Incentive Plans (Continued)

2012 Stock Incentive Plan #2

On August 21, 2012, our Board of Directors adopted the 2012 Stock Incentive Plan #2. The purpose of our 2012 Stock Incentive Plan #2 is to advance the best interests of the Company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either common stock or stock options under the plan is 132,800,000 shares, subject to adjustment. As of August 31, 2012, no shares have been granted under the plan.

Common Stock

Following is the activity for our shares of common stock during the nine months ended August 31, 2012:

Shares
Shares outstanding as of November 30, 2011		108,431,950
Issuance for conversion of convertible notes and accrued interest thereon	289,875,644		See Note 5
Issuance for services and operating expenses:
Legal		61,440,647
Investor relations		6,000,000
Issuance in connection with technology transfer and license		3,983,115
Stock purchase		5,000,000
Shares outstanding as of August 31, 2012		474,731,356

F-13

NOTE 7 - STOCKHOLDERS’ DEFICIT (CONTINUED)

Common Stock (Continued)

On February 8, 2011, the Company entered into a Fee Agreement pursuant to which the Company agreed to issue common stock to Indeglia& Carney, P.C. (“I&C”) for legal services rendered to the Company. During the nine months ended August 31, 2012, our Board of Directors approved the issuance of a total of 58,940,647 shares of common stock to I&C in consideration of legal services rendered and recorded a reduction of accrued legal fees of $70,127. For the nine months ended August 31, 2011, the Board of Directors approved the issuance of a total of 1,935,000 shares of common stock to I&C in consideration of legal services rendered and recorded a reduction of accrued legal fees of $39,120 during the period.

In addition, our Board of Directors approved (a) the issuance of a total of 2,500,000 shares of common stock to a third party attorney in consideration of legal services rendered and an expense of $11,750 based on the stock’s closing market price of $0.0047 on the date of the grant; and (b) the issuance of a total of 6,000,000 shares of common stock to a third party marketing consultant in consideration of services rendered and an expense of $ 4,800 based on the stock’s closing market price of $0.0008 on the date of the grant.

On February 14, 2012 our Board of Directors approved the issuance of 5,000,000 shares to a relative of our CEO for $5,000 received on January 3,2012 based on the stock’s closing market price on the date of the grant. The stock issuance was exempt under Section 4(2) of the Securities Act of 1933, as amended.

Technology Transfer and License.

On February 6, 2012, we entered into two related agreements with Three Point Capital (“3PC”). In exchange for $65,000 in cash and five Class B Units in 3PC’s subsidiary FanCloud, LLC (representing a 5% interest), we transferred certain of our intellectual property related to our mobile application. Concurrently with this transfer, 3PC granted us an exclusive, irrevocable, worldwide license to such transferred technology within the field of cinema.

The $65,000 receipt was recorded as “other income” in the three months ended February 29, 2012.

On February 6, 2012, in connection with a Technology and Transfer License (above) with Three Point Capital (“3PC”) our Board of Directors approved the issuance of (i) 1,991,559 shares to three individuals for services, including the development of a long-term business plan and (ii) 1,991,559 shares to 3PC for services rendered, based on the combined fair market value totaling $1,991 of the Company’s common stock at that time.

NOTE 8 – EMPLOYEE STOCK OPTIONS

In addition to his annual salary, the President and CEO’s Employment Agreement dated December 17, 2009, grants employee stock options to purchase common stock in an amount equal to 20,000,000 shares at an exercise price of $0.07 per share. The options vest equally over a five-year period (4,000,000 shares per year), which commenced on January 1, 2010. Each series of options shall survive for 24 months following vesting, and may be exercised all or in part, and each series of options shall include a “cashless feature.”

Under ASC 718, stock compensation expense of $1,200,000 will be recognized and expensed quarterly, beginning with the first quarter of the Company's 2010 fiscal year and equally over the five-year vesting period until the options are vested in their entirety in December 2014. For the three and nine months ended August 31, 2012 and 2011 and the period from Inception to August 31, 2012, stock compensation related to this grant was $60,000, $180,000, $60,000, $180,000,and $648,667, respectively. Future compensation expense is $240,000 annually through 2014.

F-14

NOTE 9 - SUBSEQUENT EVENTS

Conversion of short-term convertible debt.

Subsequent to August 31, 2012, the Company issued a total of 32,585,366 shares of common stock to third party holders of short-term convertible debt for the conversion of $12,170 of principal and $1,310 in accrued interest based on a conversion price of $0.00041.

Convertible Notes

On September 14 and 28, 2012, we borrowed $22,500 and $10,000 from external parties for use as operating capital. The parties entered into convertible note payable agreements which make the Company liable for repayment of the principal and 8% annual interest by the agreements’ expiration dates of June 19, 2013 and June 28, 2013 respectively. Failure to repay principal or interest when due triggers a default interest rate (from notes’ inception date) of 22%, per annum, on the unpaid amount. After 180 days, the notes are convertible into common stock at a 41% discount of the average of the lowest three (3) trading prices for the Company’s common stock within the ten (10) days preceding the conversion. These notes contains a “ratchet” provision, which protects the note holders in case the issuer sells stock during the term of the notes for a per-share price which is less than the effective conversion rate. Due to this ratchet provision, these notes are considered to contain a derivative instrument associated with the embedded conversion feature.This liability will be recorded on the face of the financial statements as “derivative liability”, and must be revalued each reporting period.The Company will discount the notes by the fair market value of the derivative liability upon inception of the notes. This discount will be accreted back to the face value of the notes over the note terms using the straight line method.

Issuance of Common Stock Related to Services Rendered

On October 10, 2012 our Board of Directors approved the issuance of 17,000,000 shares of common stock to I&C in consideration of legal services rendered and accordingly recorded a reduction of accrued legal fees.

F-15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS “FORM 10-Q”), CONSTITUTE “FORWARD LOOKING STATEMENTS” WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE “REFORM ACT”). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “BELIEVES”, “EXPECTS”, “MAY”, “SHOULD”, OR “ANTICIPATES”, OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF MASS HYSTERIA ENTERTAINMENT COMPANY, INC. (“THE COMPANY”, “WE”, “US” OR “OUR”) TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO AUGUST 31, 2012.

We were incorporated in Nevada on November 2, 2005 under the name “Michael Lambert, Inc.”. Up until August 5, 2009, we manufactured handbags. On August 5, 2009 (the “Effective Date”), pursuant to the terms of a Stock Purchase Agreement, Daniel Grodnik and affiliated parties purchased a total of 7,984,548 shares of our issued and outstanding common stock. This constituted a majority control of the Company. In addition to the shares purchased, the Company also issued 42,015,452 shares to Daniel Grodnik and certain affiliated parties in connection with the Change of Control. The total of 50,000,000 shares issued to Daniel Grodnik and the affiliated parties represents 74.6% of the shares of outstanding common stock of the Company at the time of transfer. For financial accounting purposes, this change in control of Mass Hysteria was treated as a recapitalization with the assets contributed and liabilities assumed recorded at their historical basis.

In connection with the change of control transaction referenced above, we changed our name to Mass Hysteria Entertainment Company, Inc. (“we”, “us“, the “Company”, or “Mass Hysteria”) and also changed our business plan. We are now a development stage multi-media entertainment company created to produce feature films for theatrical, DVD, video on demand (VOD) and television distribution with an interactive component.

Plan of Operations for the Next Twelve Months

We are in the development stage and consequently are subject to the risks associated with development stage companies, including the need for additional financing; the uncertainty of our technology and intellectual property resulting in successful commercial products or services as well as the marketing and customer acceptance of such products or services; competition from larger organizations and dependence on key personnel. To achieve successful operations, we will require additional capital to finance the acquisition of film properties and their attendant costs, further development of our interactive technology, marketing and the creation and rendering of second screen content for original and repurposed movies for interactivity. No assurance can be given as to the timing or ultimate success of obtaining future funding.

Over the next twelve months, we intend to develop at least one short-film to be interactive with a custom built application (“App”) and beta test it with a live audience. We intend to outsource the building and testing of the App that will allow audiences to interact, via their handset, between the theatrical movies, other audience members and a cloud server. The nature of the interaction involves social connectivity, conversation between audience members narrative extensions, in-experience gaming and content acquisition. The three core innovations are a mobile app, a mobile website and specially designed cloud architecture -- together these three technologies will create what we believe to be a unique immersive quality that can offer each theatrical audience member a customizable and sharable movie entertainment experience.

We also intend to enter into negotiations with leading entertainment companies with similar objectives and technologies relating to the creation and exhibition of an interactive viewing experience, with the objective of exploring possible joint ventures and mergers to combine synergies and expertise in the interactive area

COMPARISON OF OPERATING RESULTS

RESULTS OF OPERATION FOR THE THREE MONTHS ENDED AUGUST 31, 2012 COMPARED TO THREE MONTHS ENDED AUGUST 31, 2011

Revenues.

We had no revenues for the three months ended August 31, 2012 and the three months ended August 31, 2011. We did not have any films in production in the three months ended August 31, 2012 although we are continuing to develop and to secure the casting to five scripts, “End of the Gun”, “Bad Monday”, “The Boiling Point”, “Sleeping Together” and “Fight Town”, which if and when placed into production will generate producer fee revenue for the Company. We are also in active negotiation with three software programming companies for the development of the “proof of concept” to our mobile interactive cinema technology, which when launched will also produce licensing revenue.

General and Administrative Expenses.

Our general and administrative expenses decreased to $245,271 in the three months ended August 31, 2012 from

$248,219

in the comparable period in 2011.

Interest Expense.

Our interest expense decreased to $46,722 in the three months ended August 31, 2012 from $48,462 in the comparable period in 2011. This decrease is attributable to decreased borrowings subject to interest charges during the period.

Net Loss

. Our net loss increased to

$475,699

for the three months ended August 31, 2012 from

$277,809

for the comparable period in 2011. The increase was primarily attributable to a loss on guarantee of $200,000 due to the corresponding increase in the stand-ready obligation relating to the motion picture “Carjacked” which has not performed according to original expectations.

The lack of significant revenue in both periods is a direct reflection of our development stage of introducing a new focus and business plan. As the new Company meets its business plan goals, we expect to generate more revenue in the future. In the period from August 5, 2009 to August 31, 2012, we have been assembling its new management team, developing its marketing and merchandising strategies and generally starting a new business.

RESULTS OF OPERATION FOR THE NINE MONTHS ENDED AUGUST 31, 2012 COMPARED TO NINE MONTHS ENDED AUGUST 31, 2011

Revenues.

We had no revenues for the nine months ended August 31, 2012 compared with revenues of $47,500 during the nine months ended August 31, 2011. Our revenues in the first nine months of 2011 were primarily related to film production revenues. We did not have any films in production during the first nine months ended August 31, 2012.

General and Administrative Expenses.

Our general and administrative expenses increased to

$745,549

in the nine months ended August 31, 2012 from

$730,796

in the comparable period in 2011. The increase was primarily attributable to higher legal and professional fees in the nine months ended August 31, 2012 as compared to the comparable period in 2011.

Other Income(Expense).

We recorded net other expense of $259,683 for the nine months ended August 31, 2012 compared with a net other expense of $84,616 for the nine months ended August 31, 2011. The increase in net other expense for the nine months ended August 31, 2012 resulted primarily from the loss on guarantee of $200,000 to our stand-ready obligation on “Carjacked”, less $65,000 received from the sale of certain of our intellectual property related to our mobile application in the initial stages of development, for use other than within the field of cinema. There was no such other income or expense in the comparable period in 2011.

Interest Expense.

Our interest expense increased to $139,162 in the nine months ended August 31, 2012 from

$90,928 in the comparable period in 2011. This increase is attributable to increased borrowings of convertible debt during the period and accretion of discount on short term convertible debt.

Net Loss

. Our net loss increased to $1,005,232 for the nine months ended August 31, 2012 from

$767,912

for the comparable period in 2011. The increase was primarily attributable to the loss on guarantee of $200,000, and to higher interest and general and administrative expense during the nine months ended August 31, 2012 from the comparable period in 2011.

LIQUIDITY AND CAPITAL RESOURCES

We had total assets of $116,122 as of August 31, 2012, consisting of

$14,280

in cash, $737 in net intangible assets,

$5,855

in other assets and $95,250 in capitalized film costs. We had a working capital deficit of $995,362 as of August 31, 2012.

We had total liabilities of

$1,871,858

as of August 31, 2012, consisting of $1,015,497 in current liabilities, which included $82,981 of accounts payable; $308,105 of accrued liabilities; $279,596 of accrued payroll; short term debt of $240,000; short term convertible debt, net of discount, of $34,110 and a derivative liability of $70,705. Our accrued liabilities include accrued payroll taxes of $89,994 in anticipation of any possible assessments related to our payment of certain accrued salaries to our chief executive officer which were not reported on IRS FormW-2. Our convertible long term debt, net of discount, was $606,361, including convertible long term debt of $435,061 as of August 31, 2012 due to a former related party and significant stockholder who provided capital for expenses and purchased predecessor notes. We also have a stand-ready obligation of $250,000.

We had a total stockholders’ deficit of

$1,755,736 as of August 31, 2012, and an accumulated deficit as of August 31, 2012 of $8,104,624.

We used $259,571 in net cash from operating activities for the nine months ended August 31, 2012, which included $1,005,232 in net loss, adjusted by: non-cash items of $655 in depreciation; $268,668 in share-based compensation; $227,723 net gain in change in fair value of derivative liabilities; $213,250 net loss on excess fair value of derivative liability, $103,106 amortization of discount on convertible debt; Increase in our stand-ready obligation of $200,000 and operating account variances of $187,705.

We had no cash provided by investment activities in the nine months ended August 31, 2012.

We had $270,000 of cash provided by financing activities for the nine months ended August 31, 2012, which included net proceeds from the issuance of convertible debt of $95,000; an increase of $170,000 in other short-term debt (net) and $5,000 from the sale of common stock.

Since we have no liquidity and have suffered losses, we depend to a great degree on the ability to attract external financing in order to conduct our business activities and in order that we have sufficient cash on hand to expand our operations. These factors raise substantial doubt about our ability to continue as a going concern. If we are unable to raise additional capital from conventional sources, including increases in related party loans and/or additional sales of additional stock, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. We have no commitments to provide us with financing in the future, other than described above. Our independent registered public accounting firm included an explanatory paragraph raising substantial doubt about the Company’s ability to continue as a going concern in our prior Form 10-K filed with the Securities and Exchange Commission for the year ended November 31, 2011.In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when it approaches a condition of cash insufficiency. The sale of additional equity securities, if accomplished, may result in dilution to our shareholders. We cannot assure you, however, that financing will be available in amounts or on terms acceptable to us, or at all.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Use of Estimates:

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

Revenue Recognition:

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured.

Stock-Based Compensation:

The Company accounts for its stock-based compensation under the provisions of ASC 718 “Compensation-Stock Compensation.” Under ASC 718, the Company is permitted to record expense for stock options and other employee compensation plans based on their fair value at the date of grant. Any such compensation cost is charged to expense on a straight-line basis over the periods the options vest. If the options had cashless exercise provisions, the Company utilizes variable accounting.

Off-Balance Sheet Arrangements

None.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

ITEM 4 – CONTROLS AND PROCEDURES

(a)

Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures were not 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 the Securities and Exchange Commission 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. They were deemed not effective due to adjustment and disclosure omissions identified by our Independent Registered Public Accounting firm. The Company will continue to take steps to identify matters of accounting and disclosure.

(b)

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

INHERENT LIMITATIONS OF INTERNAL CONTROLS

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

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

-	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
-	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II: OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

None.

ITEM 1A – RISK FACTORS

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended August 31, 2012, we issued an aggregate of 198,437,782 shares of common stock upon conversions of various convertible notes. The aggregate principal and interest amount of these notes that were converted was $32,058. The issuances were exempt pursuant to Section 3(a)(9) of the Securities Act of 1933 as well as Section 4(2) of the Securities Act of 1933.

On September 14, 2012, we issued an 8% convertible promissory note in the aggregate principal amount of $22,500 to a single accredited investor. The note has a maturity date of June 19, 2013. Beginning March 13, 2013, this note is convertible into shares of our common stock at a conversion price of fifty nine percent (59%) of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. The proceeds were used for working capital and general corporate purposes. The issuance was exempt under Section 4(2) and/or Regulation D of the Securities Act of 1933, as amended.

3. On September 28, 2012, we issued an 8% convertible promissory note in the aggregate principal amount of $10,000 to a single accredited investor. The note has a maturity date of June 28, 2013. Beginning March 27, 2013, this note is convertible into shares of our common stock at a conversion price of fifty nine percent (59%) of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. The proceeds were used for working capital and general corporate purposes. The issuance was exempt under Section 4(2) and/or Regulation D of the Securities Act of 1933, as amended.

ITEM 3 – DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

Item No.	Description	Method of Filing

4.1	Form of 8% Convertible Note	Filed as an exhibit to our Quarterly Report on Form 10Q for the period ended May 31, 2012 and incorporated by reference herein

10.1	Form of Securities Purchase Agreement	Filed as an exhibit to our Quarterly Report on Form 10Q for the period ended May 31, 2012 and incorporated by reference herein.

10.2	Employment Agreement for Alan Bailey	Filed herewith.

31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer	Filed herewith.

31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer	Filed herewith.

32.1	Section 1350 Certification of Chief Executive Officer	Filed herewith.

32.2	Section 1350 Certification of Chief Financial Officer	Filed herewith.

101.INS	XBRL Instance Document	Filed herewith.

101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MASS HYSTERIA ENTERTAINMENT COMPANY, INC.

October 22, 2012	/s/ Daniel Grodnik
	Daniel Grodnik
	President
	(Principal Executive Officer)
October 22, 2012	/s/ Alan Bailey
	Alan Bailey
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

f10q0812ex10ii_masshysteria.htm EMPLOYMENT AGREEMENT FOR ALAN BAILEY

f10q0812ex10ii_masshysteria.htm

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of February 8,2012, between Mass Hysteria Entertainment Company, Inc., a Nevada corporation (the “Corporation”), and Alan J. Bailey (the “Employee”).

The Corporation wishes to retain the services of the Employee and the Employee wishes to be employed by the Corporation, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Employment. The Employee and the Corporation hereby agree upon the terms and conditions of employment hereinafter set forth.

Term. The term of this Agreement shall commence on the date hereof and continue on a month-to-month basis (the “Term”), unless sooner terminated as herein provided including termination under any of the subsections described in paragraph 9 or 10.

3. Duties. The Employee shall serve as Chief Financial Officer and as a Member of the Board of the Corporation, in which capacities he shall be responsible for the financial operations and strategy of the Corporation and its subsidiaries and such other duties consistent with such position as the Board of Directors of the Corporation (the “Board”) shall determine from time to time. Without limiting the foregoing, the Employee shall consult with the Board with respect to determining the Corporation’s financial business strategies. The Employee shall receive no additional compensation for any services rendered as a Director in the event he is simultaneously employed by the Corporation and serving as a director of the Corporation.

4. Compensation.

(a) Salary. For all services rendered by the Employee pursuant to this Agreement, during the term of this Agreement the Corporation shall pay the Employee a salary at the annual rate of $90,000, payable at the rate of $ 7,500 per month (which amount shall be automatically increased by ten percent (10%) when and if the Corporation’s revenues, based on the trailing twelve months on a pro forma basis, exceed $1,000,000) during the term of this Agreement. The Board in its sole discretion may further increase said salary from time to time. Payments hereunder shall be made only to the extent that the Corporation has sufficient cash working capital to make such payments after taking into account the Corporation’s necessary operating expenses including any and all payments due to its Chief Executive Officer. Until such time that payments can be made to Employee , the amount of Employee’s compensation shall accrue without interest. The Board of Directors shall, not less than once each year, assess the Employee’s performance relative to performance criteria discussed by the Board with the Employee and adopted by the Board at the beginning of such year.

(b) Bonus. At any time, at the sole discretion of the Board, the Corporation may grant to the Employee a bonus in such amount and in such form, as it deems appropriate.

(c) Equity. The Employee shall be granted an employee stock option to purchase common stock at an amount and at an exercise price as determined by the Board of Directors.

5. Best Efforts. During the term of this Agreement, the Employee shall use his best efforts to promote the interests of the Corporation and shall devote sufficient time and efforts to its business and affairs in relation to Employee’s responsibilities.

6. Expenses. The Employee is authorized to incur reasonable expenses for promoting the business of the Corporation, including expenses for entertainment, travel and similar items. The Corporation will reimburse the Employee for appropriate expenses upon the Employee’s presentation of an itemized account of such expenditures. The Corporation shall at all times retain access to the records maintained by Employee relative to reimbursable expenses.

7. Benefits. During the Term of this Agreement, the Employee shall be entitled to, and the Corporation shall provide the following benefits in addition to those specified in Section 4:

(a)	Health Insurance. At any time, the Corporation may, at the sole discretion of the Board, pay for the Employee’s health and medical insurance consistent with those provided to other key employees of the Corporation through the Term of this Agreement.

(b)	Life Insurance. At any time during the Term of this Agreement, the Corporation may, at the sole discretion of the Board, pay for the Employee’s personal life insurance coverage up to a maximum amount of $1,000,000 per year.

(c)	D&O Liability Insurance. At any time during the Term of this Agreement, the Corporation may, at the sole discretion of the Board, maintain in effect directors’ and officers’ liability insurance covering the Employee, with coverage reasonably satisfactory to the Employee.

(d)

Pension and Retirement Benefits. At any time during the Term of this Agreement, the Corporation may, and at the sole discretion of the Board, contribute an amount equal to ten percent (10%) of the Employee’s annual salary to a qualified retirement account either set up by the Corporation or by the Employee.

(e)	Other Benefits. At the sole discretion of the Board, the Corporation may provide to the Employee the same benefits it makes available to other key employees of the Corporation.

8. Disclosure of Information. The Employee recognizes and acknowledges that the Corporation’s trade secrets and all other confidential and proprietary information of a business, financial or other nature, including without limitation, lists of the Corporation’s actual and prospective customers, as they exist from time to time (collectively, the “Confidential Information”), are a valuable and unique asset of the Corporation and therefore agrees that he will not, either during or after the term of his employment, disclose any Confidential Information concerning the Corporation and/or its subsidiaries, to any person, firm, corporation, association or other entity, for any reason whatsoever, unless previously authorized to do so by the Corporation’s Board. It is understood that the term “Confidential Information” shall not include any information that has entered or enters the public domain through no fault of the Employee. The Employee shall not make any use whatsoever, directly or indirectly, of the Confidential Information, except as required in connection with the performance of his duties for the Corporation. For the purpose of enforcing this provision, the Corporation may resort to any remedy available to it under the law.

9. Disability and Death. In the event that Employee is absent from employment by reason of illness or other incapacity by which Employee is unable to perform the essential functions of his position for more than six (6) consecutive months during the term of this Agreement or if the Employee dies during the term of this Agreement , the Corporation may terminate this Agreement and the Corporation shall pay to the Employee’s estate in a lump sum within 90 days an amount equal to 100% of the Employee’s annual salary rate then payable to the Employee pursuant to paragraph 4(a) of this Agreement.

10. Termination. The Corporation shall have the right, on written notice to the Employee, by action of its Board to terminate the Employee’s employment immediately at any time for cause . For purposes of this Agreement, “cause” shall mean (i) conviction of a crime involving dishonesty or (ii) willfully engaging in conduct materially injurious to the Corporation or (iii) the material breach of this Agreement or any other agreement between the Employee and the Corporation, which material breach has not been cured by Employee within ten days after Employee’s receipt of written notice from the Corporation of such material breach. Employee shall not be required to mitigate the amount of any payment provided for in this paragraph 10 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this paragraph 10 be reduced by any compensation earned by Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Employee to the Corporation or otherwise. In the event of termination of this Agreement for cause (including death or disability), the Corporation shall have no further obligation to make any payments or provide any benefits hereunder, with the exception of any Medical coverage that was provided during the Employee’s employment. Such Medical coverage shall continue for such period of time equal to the time the Employee worked at the Corporation, but in no event shall the Medical coverage be discontinued less than one-year after the termination of said Employee.

11. Enforceability, etc. This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.

12. Notices. Any notice or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered, sent by overnight courier or express mail, or mailed by first class certified or registered mail, postage prepaid, return receipt requested to the parties at their respective addresses set forth on the signature page hereof, or to such other address as the parties shall have designated by notice to the other parties.

13. Waiver. The waiver by either party of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach.

14. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, and the Employee, his heirs and legal representatives.

15. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. It may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement shall be construed in accordance with and governed by the laws of the State of California without giving effect to principles of conflicts of laws. Any disputes shall be resolved in accordance with the rules of the American Arbitration Association . This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

MASS HYSTERIA ENTERTAINMENT COMPANY, INC.



By:
Name: Daniel Grodnik
Title: Chairman of the Board of Director

EMPLOYEE

By:
Alan J. Bailey

f10q0812ex31i_masshysteria.htm RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

f10q0812ex31i_masshysteria.htm

Exhibit 31.1

CERTIFICATION

I, Daniel Grodnik, certify the following:

1.	I have reviewed this report on Form 10-Q of Mass Hysteria Entertainment Company, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have done the following:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 22, 2012		/s/ Daniel Grodnik
		Daniel Grodnik
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

f10q0812ex31ii_masshysteria.htm RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER

f10q0812ex31ii_masshysteria.htm

Exhibit 31.2

CERTIFICATION

I, Alan Bailey, certify the following:

1.	I have reviewed this report on Form 10-Q of Mass Hysteria Entertainment Company, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have done the following:

c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees whio have a significant role in the registrant’s internal control over financial reporting.

October 22, 2012	/s/ Alan Bailey
	Alan Bailey
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

f10q0812ex32i_masshysteria.htm RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER

f10q0812ex32i_masshysteria.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mass Hysteria Entertainment Company, Inc., a Nevada corporation, (the “Company”) on Form 10-Q for the period ending August 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel Grodnik, Chief Executive Officer of the Company, certify the following pursuant to Section 18, U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel Grodnik
Daniel Grodnik, Chief Executive Officer
October 22, 2012

f10q0812ex32ii_masshysteria.htm RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER

f10q0812ex32ii_masshysteria.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mass Hysteria Entertainment Company, Inc., a Nevada corporation, (the “Company”) on Form 10-Q for the period ending August 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan Bailey, Chief Financial Officer of the Company, certify the following pursuant to Section 18, U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Alan Bailey
Alan Bailey, Chief Financial Officer
October 22, 2012

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Series A Preferred stock, shares issued

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Series A Preferred stock, shares outstanding

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Common stock, shares authorized after restatement

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Shares outstanding as of August 31, 2012

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149

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General and Administrative Expense

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General and administrative

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Selling Expense

154

Selling expense

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Operating Expenses

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160

Operating loss

161

Operating loss

162

Nonoperating Income (Expense) [Abstract]

163

Other income (expense):

164

Other Income

165

Other income

166

Other income

167

Investment Income, Interest

168

Interest income

169

Interest Expense, Debt

170

Interest expense

171

Interest Expense, Debt, Total

172

Interest expense

173

Increase (Decrease) In Fair Value Of Derivative Instruments, Not Designated As Hedging Instruments

174

Excess of fair value of derivative

175

Gain (Loss) On Derivative Instruments, Net, Pretax

176

Gain on fair value of derivative liability

177

Gain (Loss) on Derivative Instruments, Net, Pretax, Total

178

Loss On Contracts

179

Loss on guarantee

180

Loss on guarantee

181

Nonoperating Income (Expense)

182

Total other income (expense)

183

Total other income (expense)

184

Total other income (expense)

185

Net Income (Loss), Including Portion Attributable To Noncontrolling Interest

186

Net loss

187

Net loss

188

Weighted Average Number Of Shares Outstanding, Basic and Diluted

189

Basic and diluted weighted average shares Outstanding

190

Income (Loss) From Continuing Operations, Per Basic and Diluted Share

191

Basic and diluted net loss from continuing Operations per share

192

Earnings Per Share, Basic and Diluted

193

Amount less than, per share

194

Amount was less than, per share

195

Earnings Per Share, Basic and Diluted, Total

196

Statement Of Cash Flows [Abstract]

197

Statement of Cash Flows [Abstract]

198

Net Cash Provided By (Used In) Operating Activities [Abstract]

199

Cash Flows from Operating Activities:

200

Adjustments To Reconcile Net Income (Loss) To Cash Provided By (Used In) Operating Activities [Abstract]

201

Adjustments to reconcile net loss to cash used in operating activities:

202

Depreciation

203

Depreciation

204

Depreciation, Total

205

Bad Debt Expense

206

Bad debt expense

207

Bad debt expense.

208

Share-Based Compensation

209

Share-based compensation

210

Share-based Compensation, Total

211

Provision For Doubtful Accounts

212

Loss on settlement of convertible notes

213

Other Noncash Income

214

Contributed services

215

Contributed services

216

Unrealized Gain (Loss) On Derivatives

217

Change in fair market value of derivative liability

218

Change in fair market value of derivative liability

219

Unrealized Gain (Loss) On Derivatives and Commodity Contracts

220

Loss on excess fair value of derivative liability

221

Unrealized Gain (Loss) on Derivatives and Commodity Contracts, Total

222

Loss on excess fair value of derivative liability

223

Amortization Of Discount On Convertible Debt

224

Amortization of discount on convertible debt

225

Amortization of discount on convertible debt.

226

Loss On Increase In Stand Ready Obligation

227

Loss on increase in stand ready obligation

228

Loss on increase in stand ready obligation.

229

Increase (Decrease) In Operating Capital [Abstract]

230

Changes in operating assets and liabilities:

231

Increase (Decrease) In Accounts Receivable

232

Accounts receivable

233

Accounts receivable

234

Increase (Decrease) In Prepaid Expense

235

Prepaid expenses

236

Prepaid expenses

237

Increase (Decrease) In Accounts Payable, Trade

238

Accounts payable

239

Increase (Decrease) In Accrued Liabilities

240

Accrued liabilities

241

Increase (Decrease) in Accrued Liabilities, Total

242

Increase (Decrease) In Other Accrued Liabilities

243

Accrued payroll

244

Increase (Decrease) In Other Operating Liabilities

245

Bank credit line

246

Bank credit line

247

Net Cash Provided By (Used In) Operating Activities

248

NET CASH USED IN OPERATING ACTIVITIES

249

Net cash used in operating activities

250

Net Cash Provided By (Used In) Investing Activities [Abstract]

251

Cash Flows from Investing Activities:

252

Increase (Decrease) In Film Costs

253

Film costs

254

Proceeds From Sale Of Other Productive Assets

255

Other assets

256

Net Cash Provided By (Used In) Investing Activities

257

NET CASH USED IN INVESTING ACTIVITIES

258

Net cash used in investing activities

259

Net Cash Provided By (Used In) Financing Activities [Abstract]

260

Cash Flows from Financing Activities:

261

Proceeds From Issuance Of Other Long-Term Debt

262

Stand-ready obligation

263

Proceeds From Convertible Debt

264

Proceeds from issuance of convertible debt

265

Proceeds From Related Party Debt

266

Proceeds from issuance of convertible debt to related parties

267

Proceeds From Short-Term Debt

268

Proceeds from issuance of short-term debt

269

Proceeds from Short-term Debt, Total

270

Payments For (Proceeds From) Deposit On Loan

271

Payments on short-term debt

272

Payments on short-term debt

273

Proceeds From Issuance Of Common Stock

274

Proceeds from sale of common stock

275

Proceeds from sale of common stock

276

Net Cash Provided By (Used In) Financing Activities

277

NET CASH PROVIDED BY FINANCING ACTIVITIES

278

Net cash provided by financing activities

279

Cash and Cash Equivalents, Period Increase (Decrease)

280

NET CHANGE IN CASH

281

Net increase in cash and cash equivalents

282

Cash and Cash Equivalents, At Carrying Value

283

Cash balance, end of period

284

Cash and Cash Equivalents, at Carrying Value, Total

285

Cash and cash equivalents, beginning balance

286

Cash and cash equivalents, ending balance

287

Supplemental Cash Flow Information [Abstract]

288

Supplemental disclosures of cash flow information:

289

Cash Paid During Period [Abstract]

290

Cash paid during the period for:

291

Cash paid during the period for:

292

Cash paid during the period.

293

Interest Paid

294

Interest

295

Income Taxes Paid

296

Income taxes

297

Noncash Investing and Financing Items [Abstract]

298

Supplemental schedule of non-cash investing and financing activities:

299

Debt Conversion, Original Debt, Amount

300

Conversion of convertible debt and accrued interest

301

Cash Received Under Subscription Receivable

302

Cash received under subscription agreement

303

Cash received under subscription receivable in a non-cash investing and financing activity.

304

Stock Based Compensation Included In Accrued Liabilities For Script Development

305

Stock-based compensation to be issued, included in accrued liabilities, for script development

306

Stock-based compensation, included in accrued liabilities, for script development in a non-cash investing and financing activity.

307

Common Stock Issued In Lieu Of Cash Payment For Script Costs 1

308

Common stock issued in lieu of cash payment for script costs

309

Common stock issued in lieu of cash payment for script costs in a non-cash investing and financing activity.

310

Fair Value Of Beneficial Conversion Feature Received On Convertible Note Payable

311

Fair value of beneficial conversion feature received on convertible note payable

312

Fair value of beneficial conversion feature received on convertible note payable.

313

Derivative Liability Relieved By Conversion

314

Derivative liability relieved by conversion

315

Derivative liability relieved by conversion.

316

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

317

Organization, Consolidation and Presentation of Financial Statements [Abstract]

318

Organization, Consolidation, Basis Of Presentation, Business Description and Accounting Policies [Text Block]

319

ORGANIZATION AND BUSINESS

320

Accounting Policies [Abstract]

321

Accounting Policies [Abstract]

322

Significant Accounting Policies [Text Block]

323

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

324

Going Concern [Abstract]

325

Going Concern [Abstract]

326

Going Concern [Text Block]

327

GOING CONCERN

328

Disclosure of going concern.

329

Accrued Liabilities [Abstract]

330

Accrued Liabilities [Abstract]

331

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

332

ACCRUED LIABILITIES

333

Debt Disclosure [Abstract]

334

Debt Disclosure [Abstract]

335

Debt Disclosure [Text Block]

336

BORROWINGS

337

Commitments and Contingencies Disclosure [Abstract]

338

Commitments and Contingencies Disclosure [Abstract]

339

Commitments and Contingencies Disclosure [Text Block]

340

COMMITMENTS AND CONTINGENCIES

341

Stockholders Equity Note [Abstract]

342

Stockholders' Equity Note [Abstract]

343

Stockholders Equity Note Disclosure [Text Block]

344

STOCKHOLDERS’ DEFICIT

345

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

346

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

347

Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block]

348

EMPLOYEE STOCK OPTIONS

349

Subsequent Events [Abstract]

350

Subsequent Events [Abstract]

351

Subsequent Events [Text Block]

352

SUBSEQUENT EVENTS

353

Basis Of Accounting, Policy [Policy Text Block]

354

Basis of Presentation

355

Development Stage Company [Policy Text Block]

356

Development-Stage Company

357

Development stage company.

358

Use Of Estimates, Policy [Policy Text Block]

359

Use of Estimates

360

Fair Value Of Financial Instruments, Policy [Policy Text Block]

361

Fair Value of Financial Instruments

362

Receivables, Policy [Policy Text Block]

363

Accounts Receivable

364

Earnings Per Share, Policy [Policy Text Block]

365

Loss per Share

366

New Accounting Pronouncements, Policy [Policy Text Block]

367

New Accounting Pronouncements

368

Schedule Of Accrued Liabilities [Table Text Block]

369

Schedule of accrued liabilities

370

Schedule Of Common Stock Outstanding Roll Forward [Table Text Block]

371

Summary of common stock activity

372

Schedule Of Short-Term Debt [Table]

373

Schedule of Short-term Debt [Table]

374

Debt Instrument [Axis]

375

Debt Instrument [Axis]

376

Debt Instrument, Name [Domain]

377

Debt Instrument, Name [Domain]

378

Derivative Liability Revaluation One [Member]

379

Revaluation 1 [Member]

380

Derivative liability revaluation one.

381

Derivative Liability Revaluation Two [Member]

382

Revaluation 2 [Member]

383

Derivative liability revaluation two.

384

Derivative Liability Revaluation Three [Member]

385

Revaluation 3 [Member]

386

Derivative liability revaluation three.

387

Short-Term Debt [Line Items]

388

Short-term Debt [Line Items]

389

Fair Value, By Balance Sheet Grouping [Table Text Block]

390

Range of inputs used to calculate derivative liabilities on convertible notes

391

Summary Of Significant Accounting Policy Textual [Abstract]

392

Summary of Significant Accounting Policies (Textual)

393

Shares Relative To Convertible Notes Issued To Former Related Party

394

Shares relative to convertible notes issued to former related party

395

Shares relative to convertible notes issued to former related party.

396

Beginning Date Of Shares Relative To Convertible Notes Issued To Former Related Party Description

397

Convertible notes shares issued to former related party, Beginning date description

398

Description of beginning date of shares relative to convertible notes issued to a former related party.

399

Shares Relative To Convertible Notes

400

Shares relative to convertible notes

401

Shares relative to convertible notes.

402

Beginning Date Of Shares Relative To Convertible Notes Description

403

Convertible notes shares, Beginning date description

404

Description of beginning date of shares relative to convertible notes.

405

Shares Related To Warrant

406

Shares related to warrant

407

Shares related to warrant.

408

Convertible Debt

409

Convertible note

410

Accrued Liabilities, Current [Abstract]

411

Schedule of accrued liabilities

412

Interest Payable, Current

413

Accrued interest

414

Accrued Professional Fees, Current

415

Accrued consulting fees

416

Accrued Payroll Taxes, Current

417

Accrued payroll taxes

418

Other Accrued Liabilities, Current

419

Other accrued expenses

420

Accrued Liabilities [Table]

421

Accrued liabilities.

422

Accrued Liabilities [Table]

423

Title Of Individual [Axis]

424

Title of Individual [Axis]

425

Title Of Individual With Relationship To Entity [Domain]

426

Title of Individual with Relationship to Entity [Domain]

427

President [Member]

428

President [Member]

429

Chief Executive Officer [Member]

430

Chief Executive Officer [Member]

431

Chief Financial Officer [Member]

432

Chief Financial Officer [Member]

433

Accrued Liabilities [Line Items]

434

Accrued liabilities.

435

Accrued Liabilities [Line Items]

436

Accrued Liabilities Textual [Abstract]

437

Accrued Liabilities (Textual)

438

Accrued liabilities textual.

439

Officers' Compensation

440

Base salary

441

Agreement Maturity Period

442

Maturity period of employment agreement

443

Agreement maturity period.

444

Agreement Maturity Date

445

Maturity date of employment agreement

446

Agreement maturity date.

447

Accrued Salaries, Current

448

Accrued and unpaid wages

449

Income Tax Examination, Penalties and Interest Expense

450

Penalties and interest

451

Range [Axis]

452

Range [Axis]

453

Range [Domain]

454

Range [Domain]

455

Minimum [Member]

456

Minimum [Member]

457

Maximum [Member]

458

Maximum [Member]

459

Fair Value Assumptions and Methodology For Assets and Liabilities [Abstract]

460

Range of inputs used to calculate derivative liabilities on convertible notes

461

Fair Value Assumptions, Expected Dividend Rate

462

Annual dividend yield

463

Fair Value Assumptions, Expected Term

464

Expected life (years)

465

Fair Value Assumptions, Risk Free Interest Rate

466

Risk-free interest rate

467

Fair Value Assumptions, Expected Volatility Rate

468

Expected volatility

469

Shareholder [Member]

470

Shareholder [Member]

471

Shareholder.

472

External Parties [Member]

473

External parties.

474

Plan Name [Axis]

475

Plan Name [Axis]

476

Plan Name [Domain]

477

Plan Name [Domain]

478

Film Finance Agreement [Member]

479

Film Finance Agreement.

480

Warrant [Member]

481

Borrowings Textual [Abstract]

482

Borrowings (Textual)

483

Borrowings textual.

484

Due To Related Parties, Current

485

Due to related party

486

Debt Instrument, Interest Rate, Stated Percentage

487

Debt instrument interest rate

488

Debt Instrument, Maturity Date

489

Expiration date

490

Debt instrument maturity date

491

Line Of Credit Facility, Maximum Borrowing Capacity

492

Line of credit facility provided by Coral Ridge Capital Partners, LLC (“CRCP”)

493

Line Of Credit Facility, Amount Outstanding

494

Initial amount paid to the company under line of credit facility

495

Line Of Credit Facility, Interest Rate At Period End

496

Interest rate payable to Coral Ridge Capital Partners, LLC

497

Interest and Debt Expense

498

Cumulative expense paid in connection with the Picture, under agreement

499

Debt Instrument, Maturity Date Range, Start

500

Debt instrument maturity date range, start

501

Debt Instrument, Maturity Date Range, End

502

Debt instrument maturity date range, end

503

Debt Default, Short-Term Debt, Description Of Notice Of Default

504

Debt default description

505

Interest Expense, Related Party

506

Accrued interest expense

507

Cumulatively Accrued Interest Current

508

Cumulatively accrued interest

509

Cumulatively accrued interest.

510

Conversion Of Stock, Description

511

Conversion of Stock, Description

512

Debt Instrument, Decrease, Repayments

513

Convertible debt decreased amount

514

Common Stock, Capital Shares Reserved For Future Issuance

515

Shares to be issued upon the conversion of warrant

516

Investment Warrants, Exercise Price

517

Exercise price of warrants

518

Maturity Period Of Warrant

519

Maturity period of warrant

520

Maturity period of warrant.

521

Investment Warrants Expiration Date

522

Expiration date of warrants

523

Convertible Debt, Fair Value Disclosures

524

Fair market value of warrants

525

Principal Amount On Convertible Debt

526

Principal amount outstanding on convertible debt

527

Principal amount outstanding on convertible debt.

528

Interest Expense, Borrowings

529

Interest expense from accretion of the discount

530

Issuance For Conversion Of Convertible Notes and Accrued Interest Thereon

531

Issuance for conversion of convertible notes and accrued interest thereon

532

Issuance for conversion of convertible notes and accrued interest thereon.

533

Long-Term Debt, Gross

534

Borrowed fund from external parties

535

Amount borrowed from an external party

536

Debt Conversion, Original Debt, Interest Rate Of Debt

537

Annual interest on a loan term convertible note agreement

538

Debt Instrument, Convertible, Conversion Price

539

Conversion Price

540

Fixed conversion price

541

Debt Conversion, Converted Instrument, Shares Issued

542

Shares of common stock upon conversion

543

Debt Instrument, Convertible, Stock Price Trigger

544

Closing price on the day of the note agreement

545

Debt Instrument, Convertible, Beneficial Conversion Feature

546

Beneficial conversion feature

547

Debt Instrument, Convertible, Interest Expense

548

Interest expense from accretion of the discount

549

Debt Instrument, Unamortized Discount

550

Remaining discount

551

Proceeds From Issuance Of Debt

552

Advances from the holder

553

Debt Instrument, Increase, Additional Borrowings

554

Additional debt received

555

Debt Conversion Converted Instrument Shares Issued Additional

556

Conversion into common shares, additional

557

Debt Conversion Converted Instrument Shares Issued Additional.

558

Debt and Capital Lease Obligations

559

Total debt

560

Accrued Interest On Long Term Convertible Notes

561

Accrued interest on long term convertible notes

562

Accrued interest on long term convertible notes.

563

Term Of Lease

564

Lease for office space, Term

565

Term of Lease.

566

Payments For Rent

567

Monthly payment of rent

568

Security Deposit

569

Security deposit (equal to 2 month’s rent in advance)

570

Loss Contingencies [Table]

571

Loss Contingencies [Table]

572

Loss Contingency Nature [Axis]

573

Loss Contingency Nature [Axis]

574

Loss Contingency, Nature [Domain]

575

Loss Contingency, Nature [Domain]

576

Consulting Agreement With Mr Proft [Member]

577

Consulting Agreement with Mr. Proft [Member]

578

Consulting Agreement with Mr. Proft.

579

Financing From Wet Rose [Member]

580

Financing from Wet Rose [Member]

581

Financing from Wet Rose.

582

Movie Rights Option Contract [Member]

583

Movie Rights Option Contract.

584

Loss Contingencies [Line Items]

585

Loss Contingencies [Line Items]

586

Commitments and Contingencies Textual [Abstract]

587

Commitments and Contingencies (Textual)

588

Commitments and Contingencies.

589

Period Of Engagement Agreement

590

Period of engagement agreement

591

Period of engagement agreement.

592

Stock Issued During Period, Shares, Issued For Services

593

Shares issued for service rendered

594

Common shares received as per agreement

595

Monthly Fee For Consulting Services

596

Monthly fee for consulting services

597

Monthly fee for consulting services.

598

Period Of Payment Of Monthly Fee

599

Minimum period of monthly fee payment for services

600

Period of payment of monthly fee.

601

Accrued Cash and Stock Compensation

602

Accrued cash and stock compensation

603

Accrued cash and stock compensation.

604

Proceeds From Long-Term Capital Lease Obligations

605

Financing from Wet Rose

606

Guarantee Of Indebtedness Maximum Amount

607

Guarantee of the indebtedness, maximum amount

608

Guarantee of the indebtedness, maximum amount.

609

Stand Ready Obligation Due and Payable, Description

610

Stand-Ready obligation due and payable, Description

611

Stand-Ready Obligation Due and Payable, Description.

612

Guarantor Fee

613

Guarantor fee

614

Guarantor fee.

615

Initial Term Of Option Agreement

616

Initial term of option agreement

617

Initial term of option agreement.

618

Payment To Writer As Consideration

619

Payment to writer as consideration

620

Payment to writer as consideration.

621

Option Renewal Cost

622

Option renewal cost

623

Option renewal cost.

624

Extension Of Option Contract

625

Extension of option contract

626

Extension of option contract.

627

Amount Paid To Related Parties

628

Amount paid to related parties

629

Amount paid to related parties.

630

Purchase Price Of Writer Under Option Contract

631

Purchase price of writer under option contract

632

Purchase price of writer under option contract.

633

Summary Of Common Stock Activity [Abstract]

634

Summary of Common Stock Activity

635

Stock Issued During Period, Shares, Conversion Of Convertible Securities

636

Issuance for conversion of convertible notes and accrued interest thereon

637

Common Stock Shares, Issuance For Services and Operating Expenses [Abstract]

638

Issuance for services and operating expenses:

639

Common Stock Shares, Issuance for services and operating expenses.

640

Stock Issued During Period, Shares, Issued For Legal Services

641

Legal

642

Stock Issued During Period, Shares, Issued for Legal Services.

643

Stock Issued During Period, Shares, Issued For Investor Relations

644

Investor relations

645

Stock Issued During Period, Shares, Issued for Investor Relations.

646

Stock Issued During Period, Shares, Purchase Of Assets

647

Issuance in connection with technology transfer and license

648

Stock Repurchased During Period, Shares

649

Stock purchase

650

Schedule Of Share-Based Compensation Arrangements By Share-Based Payment Award [Table]

651

Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table]

652

Stock Incentive Plan One [Member]

653

2012 Stock Incentive Plan [Member]

654

Stock Incentive Plan.

655

Stock Incentive Plan Two [Member]

656

2012 Stock Incentive Plan #2 [Member]

657

Stock Incentive Plan.

658

Related Party [Axis]

659

Related Party [Axis]

660

Related Party [Domain]

661

Related Party [Domain]

662

Related Party One [Member]

663

Indeglia& Carney, P.C. [Member]

664

Related Party One.

665

Third Party Attorney [Member]

666

Third party attorney.

667

Third Party Marketing Consultant [Member]

668

Third party marketing consultant.

669

Relative Of Ceo [Member]

670

Relative of CEO [Member]

671

Relative of CEO.

672

Related Party Two [Member]

673

Three Point Capital (“3PC”) [Member]

674

Related Party Two.

675

Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items]

676

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

677

Stockholders' Deficit (Textual) [Abstract]

678

Stockholders' Deficit (Textual)

679

Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares Available For Grant

680

Common stock or stock options available for grant

681

Number Of Shares Granted Under Stock Incentive Plan

682

Number of shares granted under Stock Incentive Plan

683

Number of shares granted under Stock Incentive Plan.

684

Number Of Shares Approved For Issuance For Service Provided

685

Number of shares approved for issuance for service provided

686

Number of shares approved for issuance for service provided.

687

Number Of Shares Approved For Issuance For Service Provided

688

Value Of Shares Approved For Issuance For Service Provided

689

Value of shares approved for issuance for service provided

690

Value of shares approved for issuance for service provided.

691

Sale Of Stock, Price Per Share

692

Closing market price of shares

693

Number Of Units In Subsidiary Used As Consideration Of Agreement

694

Number of Class B Units in subsidiary used as consideration of agreement

695

Number of units in subsidiary used as consideration of agreement.

696

Ownership Percentage Represented By Units Of Subsidiary Of Related Party Used As Noncash Consideration

697

Ownership percentage represented by Units of subsidiary of related party used as noncash consideration

698

Ownership percentage represented by Units of subsidiary of related party used as noncash consideration.

699

Cash Consideration For Intellectual Property Transferred

700

Cash consideration for intellectual property transferred

701

Cash consideration for intellectual property transferred.

702

Number Of Shares Issued To Related Party Individuals For Services

703

Number of shares issued to Related Party individuals for services

704

Number of shares issued to Related Party individuals for services.

705

Combined Fair Market Value Of Shares Issued To Related Party

706

Combined fair market value of shares issued to Related Party

707

Combined fair market value of shares issued to Related Party.

708

Common Stock, Par Or Stated Value Per Share Before Amendment

709

Common stock, par value before amendment

710

Common Stock, Par or Stated Value Per Share before amendment.

711

Employee Stock Options (Textual) [Abstract]

712

Employee Stock Options (Textual)

713

Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross

714

Number of shares granted

715

Excercise Price Of Common Stock Grant To Employee

716

Excercise price of common stock granted

717

Excercise price of common stock grant to employee.

718

Vesting Period Of Stock Options Granted

719

Vesting period of stock options granted

720

Vesting period of stock options granted.

721

Number Of Shares Vesting Annually

722

Number of shares vesting annually

723

Number of shares vesting annually.

724

Survivable Period Of Each Series Of Option Post Vesting

725

Survivable period of each series of option post vesting

726

Survivable period of each series of option post vesting.

727

Aggregate Amount Of Stock Compensation Expense Recognized

728

Stock compensation expense recognized

729

Aggregate Amount Of Stock Compensation Expense Recognized.

730

Employee Stock Ownership Plan (Esop), Compensation Expense

731

Stock compensation expensed during period

732

Future Compensation Expense

733

Future annual compensation expense

734

Future compensation expense.

735

Subsequent Event [Table]

736

Subsequent Event [Table]

737

Short-Term Debt, Type [Axis]

738

Short-term Debt, Type [Axis]

739

Short-Term Debt, Type [Domain]

740

Short-term Debt, Type [Domain]

741

Convertible Debt [Member]

742

Convertible Debt [Member]

743

Convertible Notes Payable [Member]

744

Convertible Notes [Member]

745

Deferred Bonus and Profit Sharing Plan By Title Of Individual [Axis]

746

Deferred Bonus and Profit Sharing Plan by Title of Individual [Axis]

747

Director [Member]

748

Director [Member]

749

Subsequent Event [Line Items]

750

Subsequent Event [Line Items]

751

Subsequent Events Textual [Abstract]

752

Subsequent Events (Textual)

753

Debt Instrument, Annual Principal Payment

754

Principal Payment

755

Debt Instrument, Increase, Accrued Interest

756

Accrued Interest

757

Debt Instrument, Interest Rate, Effective Percentage

758

Annual interest rate

759

Expiration Date Of Agreement Related To Party One

760

Expiration date of agreement related to party one

761

Expiration date of agreement related to party one.

762

Expiration Date Of Agreement Related To Party Two

763

Expiration date of agreement related to party two

764

Expiration date of agreement related to party two.

765

Debt Instrument, Maturity Date, Description

766

Description of notes convertible into common stock

Label Arc

myhs-20120831_pre.xml

Role Ref

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http://www.masshysteriafilms.com/role/DocumentAndEntityInformation

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http://www.masshysteriafilms.com/role/StatementOfFinancialPositionClassified

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http://www.masshysteriafilms.com/role/BalanceSheetsParantheticals

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http://www.masshysteriafilms.com/role/StatementOfIncomeAlternative

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http://www.masshysteriafilms.com/role/StatementsOfOperationsParenthetical

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http://www.masshysteriafilms.com/role/StatementOfCashFlowsIndirect

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http://www.masshysteriafilms.com/role/OrganizationAndBusiness

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http://www.masshysteriafilms.com/role/SummaryOfSignificantAccountingPolicies

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http://www.masshysteriafilms.com/role/GoingConcern

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http://www.masshysteriafilms.com/role/AccruedLiabilities

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http://www.masshysteriafilms.com/role/Borrowings

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http://www.masshysteriafilms.com/role/CommitmentsAndContingencies

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http://www.masshysteriafilms.com/role/EmployeeStockOptions

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http://www.masshysteriafilms.com/role/SubsequentEvents

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http://www.masshysteriafilms.com/role/SummaryofSignificantAccountingPoliciesPolicies

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http://www.masshysteriafilms.com/role/AccruedLiabilitiesTables

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http://www.masshysteriafilms.com/role/StockholdersDeficitTables

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http://www.masshysteriafilms.com/role/BorrowingsTables

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http://www.masshysteriafilms.com/role/Summaryofsignificantaccountingpoliciesdetails

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http://www.masshysteriafilms.com/role/Accruedliabilitiesdetails

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http://www.masshysteriafilms.com/role/Accruedliabilitiesdetailstextual

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http://www.masshysteriafilms.com/role/Borrowingsdetails

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http://www.masshysteriafilms.com/role/Borrowingsdetailstextual

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http://www.masshysteriafilms.com/role/CommitmentsandContingenciesDetails

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http://www.masshysteriafilms.com/role/Stockholdersdeficitdetails

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http://www.masshysteriafilms.com/role/Stockholdersdeficitdetailstextual

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http://www.masshysteriafilms.com/role/EmployeeStockOptionsDetails

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http://www.masshysteriafilms.com/role/SubsequentEventsDetails

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http://www.xbrl.org/2009/role/negatedLabel

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http://www.xbrl.org/2009/role/negatedPeriodEndLabel

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http://www.xbrl.org/2009/role/negatedPeriodStartLabel

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http://www.xbrl.org/2009/role/negatedTotalLabel

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http://www.xbrl.org/2009/role/negatedNetLabel

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http://www.xbrl.org/2009/role/negatedTerseLabel

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http://www.xbrl.org/2009/role/netLabel

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Loc

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http://www.xbrl.org/2003/role/verboseLabel

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http://www.xbrl.org/2003/role/verboseLabel

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http://www.xbrl.org/2003/role/verboseLabel

Loc

http://www.xbrl.org/2003/role/totalLabel

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http://www.xbrl.org/2003/role/verboseLabel

Loc

http://www.xbrl.org/2003/role/verboseLabel

Loc

http://www.xbrl.org/2003/role/periodEndLabel

Loc

http://www.xbrl.org/2003/role/verboseLabel

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http://www.xbrl.org/2003/role/verboseLabel

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http://www.xbrl.org/2003/role/verboseLabel

myhs-20120831.xml

Comment

Additional Files

File	Sequence	Description	Type	Size
0001213900-12-005768.txt		Complete submission text file		3273820
myhs-20120831.xsd	7		EX-101.SCH	35912
a0.jpg	13		GRAPHIC	8867