STOCKHOLDERS' DEFICIENCY

3 Months Ended

Aug. 31, 2015

Equity [Abstract]

STOCKHOLDERS' DEFICIENCY

6. STOCKHOLDERS’ DEFICIENCY

Reverse Stock Split  

Effective March 18, 2015, the Company implemented a reverse stock split of its outstanding common stock at a ratio of 1-for-30 shares.  In connection with the reverse stock split, the Company’s Certificate of Incorporation was amended such that the Company’s issued and outstanding common stock was proportionally reduced. The number of authorized shares and the par value of the Company’s common stock and preferred stock were not affected by the reverse stock split. Stockholders will not receive fractional shares but instead will receive cash in an amount equal to the fraction of a share that stockholder would have been entitled to receive multiplied by the sale price of the common stock as last reported on February 12, 2015, the last business day prior to the first public disclosure/announcement of the reverse stock split.

Private Placement Offering (“PPO”)

On March 15, 2015, the Company commenced a PPO for accredited investors to issue up to 2,500,000 shares of common stock and warrants to purchase 2,500,000 shares of common stock at $2.00 per share (each share and warrant constitutes a “Unit”) for total gross proceeds of $1,500,000. The warrants are immediately exercisable and have a term of three years. The Units are being offered by the Company on a “best efforts” “any-or-none” basis in Units of 166,666 shares although the Company may accept fractional Units. See Notes 6g, 6j and 7B for the shares and warrants subscribed for through the date of this report.

Issuances of Common Stock

FY 2015 (Year Ended May 31, 2015):

a. On July 16, 2014, the Company issued 666,667 shares of common stock to a consultant under the terms of a consulting agreement.  The shares were valued at $1.50 per share which was the price of the common stock on the date of the consummation of an agreement with a customer.  See Note 9.

b. As described above, the Company signed a Settlement Agreement and Release with an unsecured creditor and agreed to issue 792,550 shares of common stock for $550,000 of accounts payable and $310,977 of a promissory note and accrued interest. The Company issued such shares under this Settlement Agreement in September 2014.  Prior to the issuance date, such shares were classified as common stock to be issued.

c. As described above, the Company entered into a Separation Agreement with Typaldos and agreed to issue 469,132 shares of common stock as part of the Agreement. The Company issued such shares under this Separation Agreement in September 2014.  Prior to the issuance date, such shares were classified as common stock to be issued.

d. As described above, the Company entered into final supplemental agreements with bridge note holder to settle all outstanding claims. In September 2014, the Company agreed to issue 648,381 shares of common stock to settle claims totaling $466,000. Prior to the issuance date, such shares were classified as common stock to be issued.  On April 1, 2015, the Company issued 256,486 shares of common stock to settle claims totaling $207,754.

e. As described above, the Company settled all outstanding claims with previous holders of unsecured debt. In September 2014, the Company issued 418,669 shares of common stock to settle claims totaling $502,408.

f. On February 19, 2015, the Company issued 50,000 shares of common stock to a consultant under the terms of an investor relations agreement.  The shares were valued at $1.20 per share which was the price of the common stock on the date the agreement was signed.   See Note 9.

g. For the period March 15, 2015 through May 31, 2015, 833,330 shares of common stock were subscribed for under the PPO and the Company received proceeds of $500,000. The shares were issued on April 7, 2015. 

h. As described above, on April 1, 2015, the Company issued 4,387,879 shares of common stock for the conversion of notes payable of $1,200,000 and accrued interest of $116,364.  

FY 2016 (Year Ended May 31, 2016):  

i. On June 25, 2015, the Company issued 108,333 shares of common stock to its chairman/chief executive officer and 35,000 shares of common stock to an officer/former director for services rendered to the Company’s board of directors in fiscal 2015.  The shares were valued at $1.75 per share.  The value of the shares totaling $250,833 was charged as stock compensation in fiscal 2015.

j. For the period June 1, 2015 through the date of the filing of this report, 838,334 shares of common stock have been subscribed for under the PPO and the Company received proceeds of $503,000.