--11-30
sdev
Security Devices International Inc.
2015-08-31
0001354866
No
Smaller Reporting Company
No
10-Q
false
54615642
Yes
2015
Q3
0001354866
2015-09-30
0001354866
2014-12-01
2015-08-31
0001354866
2015-08-31
0001354866
2014-11-30
0001354866
2013-12-01
2014-08-31
0001354866
2015-06-01
2015-08-31
0001354866
2014-06-01
2014-08-31
0001354866
2013-11-30
0001354866
2014-08-31
0001354866
us-gaap:CommonStockMember
2013-11-30
0001354866
us-gaap:AdditionalPaidInCapitalMember
2013-11-30
0001354866
sdev:DeficitAccumulatedDuringDevelopmentStageMember
2013-11-30
0001354866
us-gaap:AdditionalPaidInCapitalMember
2013-12-01
2014-11-30
0001354866
2013-12-01
2014-11-30
0001354866
us-gaap:CommonStockMember
2013-12-01
2014-11-30
0001354866
sdev:DeficitAccumulatedDuringDevelopmentStageMember
2013-12-01
2014-11-30
0001354866
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2013-12-01
2014-11-30
0001354866
us-gaap:CommonStockMember
2014-11-30
0001354866
us-gaap:AdditionalPaidInCapitalMember
2014-11-30
0001354866
sdev:DeficitAccumulatedDuringDevelopmentStageMember
2014-11-30
0001354866
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2014-11-30
0001354866
us-gaap:CommonStockMember
2014-12-01
2015-08-31
0001354866
us-gaap:AdditionalPaidInCapitalMember
2014-12-01
2015-08-31
0001354866
sdev:DeficitAccumulatedDuringDevelopmentStageMember
2014-12-01
2015-08-31
0001354866
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2014-12-01
2015-08-31
0001354866
us-gaap:CommonStockMember
2015-08-31
0001354866
us-gaap:AdditionalPaidInCapitalMember
2015-08-31
0001354866
sdev:DeficitAccumulatedDuringDevelopmentStageMember
2015-08-31
0001354866
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2015-08-31
shares
iso4217:USD
iso4217:USD
shares
iso4217:CAD
pure
utr:Y
utr:M
iso4217:CAD
shares
utr:D
iso4217:CAD
utr:M
iso4217:USD
utr:M
2160948
1085006
0
0
16635
7393
68928
120246
122959
170674
67595
29557
2437065
1412876
108802
144176
2545867
1557052
60598
161405
60598
161405
1398592
1398592
1459190
1559997
0
0
54616
46899
26540684
24024631
25467782
24042769
-40841
-31706
1086677
-2945
2545867
1557052
0.001
0.001
5000000
5000000
0.001
0.001
100000000
100000000
54615642
46899285
54615642
46899285
85362
29743
10757
624
65048
16883
5480
344
20314
12860
5277
280
35374
33563
11791
12024
1236246
1523619
402699
417003
1271620
1557182
414490
429027
-1251306
-1544322
-409213
-428747
173707
16416
58325
16416
0
6045
0
0
-1425013
-1554693
-467538
-445163
0
0
0
0
-1425013
-1554693
-467538
-445163
-9135
-15355
-2295
3588
-1434148
-1570048
-469833
-441575
-0.03
-0.03
-0.01
-0.01
48992501
46857679
53133429
46874285
0
222422
47718
4921
8939
-20201
27025
-6056
-51318
32886
-91117
-36170
-1417684
-1336586
0
37625
0
-37625
2500000
0
0
1241299
23770
12500
2523770
1253799
-30144
-15356
1075942
-135768
1842149
1706381
0
0
167831
0
46849285
46849
23226988
-21320357
1953480
751610
751610
50000
50
12450
12500
33583
33583
-2722412
-2722412
-31706
-31706
46899285
46899
24024631
-24042769
-31706
7575757
7576
2492424
2500000
35000
35
6960
6995
105600
106
16669
16775
-1425013
-9135
-9135
54615642
54616
26540684
-25467782
-40841
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">1.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">BASIS OF PRESENTATION</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America (GAAP); however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The unaudited interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in Security Devices International Inc.’s (“SDI” or the “Company”) annual report on Form 10-K for the year ended November 30, 2014. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at August 31, 2015 and November 30, 2014, the results of its operations for the nine and three-month periods ended August 31, 2015 and May 31, 2014, and its cash flows for the nine-month periods ended August 31, 2015 and May 31, 2014. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the nine-month period ended August 31, 2015 are not necessarily indicative of results to be expected for the full year.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company was incorporated under the laws of the state of Delaware on March 1, 2005. On February 3, 2014 the Company incorporated a wholly owned subsidiary in Canada “Security Devices International Canada Corp”. The interim unaudited consolidated financial statements for the period ended August 31, 2015 include the accounts of Security Devices International, Inc. (the “Company” or “SDI”), and its subsidiary Security Devices International Canada Corp. All material inter-company accounts and transactions have been eliminated.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">
<b>2.</b>
</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">NATURE OF OPERATIONS AND GOING CONCERN</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company is a less-lethal defense technology company, specializing in the innovative next generation solutions for security situations that do not require the use of lethal force. SDI has implemented manufacturing partnerships to assist in the deployment of their patented and patent pending family of products. These products consist of the current manufacture of Blunt Impact Projectile 40mm (BIP) line of products, and the future Wireless Electric Projectile 40mm (WEP).</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The Company has incurred a cumulative loss of $25,467,782
from inception to August 31, 2015 which includes a non-cash stock based compensation expense of $7,237,381
for issue of options and warrants. The Company has funded operations through the issuance of capital stock and convertible debentures. The Company has started to generate revenue from operations. However, it still expects to incur significant expenses before becoming profitable. The Company’s future success is dependent upon its ability to raise sufficient capital or generate adequate revenue, to cover its ongoing operating expenses, and also to continue to develop and be able to profitably market its products. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
In addition to raising funds in the prior years, the Company raised $160,000
through the issuance of
800,000
common shares during the year ended November 30, 2011. The Company further raised an additional $878,328
by issue of Convertible Debentures during the year ended November 30, 2011 and $910,000
during the year ended November 30, 2012. In addition, the Company raised $649,750
by issuance of
2,165,834
common shares during the year ended November 30, 2012. On August 15, 2013, the Company filed an amended and restated final prospectus (the “Prospectus”) in Canada, in the provinces of Alberta, British Columbia and Ontario for listing its shares in these provinces in Canada. On August 27, 2013 the Company completed an initial public offering to raise gross proceeds of CAD $3,993,980
(US $3,794,280) through the issuance of
9,984,950
Common Shares at a price of CAD $0.40
(US $0.38) per Common Share (the “Issue Price”). During the year ended November 30, 2014, the Company issued $1,398,592
(CAD $1,549,000) face value
12% convertible debentures with a term to August 6, 2017 (the “Maturity Date”) and raised net $1,241,299. In addition, during the nine-month period ended August 31, 2015, the Company raised $2,500,000
through the issuance of
7,575,757
common shares and also issued
105,600
common shares on exercise of warrants for $16,775
and
35,000
common shares on exercise of options for $6,995. The Company’s common shares commenced trading on the TSX Venture Exchange (“TSX”) under the symbol “SDZ”.
</p>
25467782
7237381
160000
800000
878328
910000
649750
2165834
3993980
3794280
9984950
0.40
0.38
1398592
1549000
0.12
1241299
2500000
7575757
105600
16775
35000
6995
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">3.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">EQUIPMENT</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Equipment is recorded at cost less accumulated depreciation. Depreciation is provided commencing in the month following acquisition using the following annual rate and method:</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap">Computer equipment</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap" width="33%">
30%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" width="33%">declining balance method</td>
</tr>
<tr valign="top">
<td align="left">Furniture and Fixtures</td>
<td align="center" width="33%">
30%
</td>
<td align="left" width="33%">declining balance method</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Leasehold Improvements</td>
<td align="center" bgcolor="#e6efff" width="33%"> </td>
<td align="left" bgcolor="#e6efff" width="33%">straight line over period of lease</td>
</tr>
<tr valign="top">
<td align="left">Moulds</td>
<td align="center" width="33%">
20%
</td>
<td align="left" width="33%">
straight line over
5
years
</td>
</tr>
</table>
</div>
<br/>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" valign="bottom" width="23%">August 31, 2015</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" valign="bottom" width="23%">November 30, 2014</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Accumulated</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Accumulated</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Cost</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Amortization</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Cost</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Amortization</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Computer equipment</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
37,573
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
34,152
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
37,573
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
33,159
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Furniture and fixtures</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
18,027
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
15,846
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
18,027
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
15,212
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Leasehold Improvements</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
23,721
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
15,471
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
23,721
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
13,151
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Moulds</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
209,515
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
114,565
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
209,515
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
83,138
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
288,836
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
180,034
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
288,836
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
144,660
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td valign="bottom"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Net carrying amount</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
108,802
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
144,176
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td valign="bottom"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Depreciation expense</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
35,374
(
9
months)
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
45,586
(
12
months)
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap">Computer equipment</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap" width="33%">
30%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" width="33%">declining balance method</td>
</tr>
<tr valign="top">
<td align="left">Furniture and Fixtures</td>
<td align="center" width="33%">
30%
</td>
<td align="left" width="33%">declining balance method</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Leasehold Improvements</td>
<td align="center" bgcolor="#e6efff" width="33%"> </td>
<td align="left" bgcolor="#e6efff" width="33%">straight line over period of lease</td>
</tr>
<tr valign="top">
<td align="left">Moulds</td>
<td align="center" width="33%">
20%
</td>
<td align="left" width="33%">
straight line over
5
years
</td>
</tr>
</table>
0.30
0.30
0.20
5
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" valign="bottom" width="23%">August 31, 2015</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" valign="bottom" width="23%">November 30, 2014</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Accumulated</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Accumulated</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Cost</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Amortization</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Cost</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="10%">Amortization</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center" nowrap="nowrap" valign="bottom"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> $</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Computer equipment</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
37,573
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
34,152
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
37,573
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
33,159
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Furniture and fixtures</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
18,027
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
15,846
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
18,027
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
15,212
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Leasehold Improvements</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
23,721
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
15,471
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
23,721
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="10%">
13,151
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Moulds</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
209,515
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
114,565
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
209,515
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="10%">
83,138
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
288,836
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
180,034
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
288,836
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
144,660
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td valign="bottom"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Net carrying amount</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
108,802
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
144,176
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td valign="bottom"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="10%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Depreciation expense</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
35,374
(
9
months)
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="10%">
45,586
(
12
months)
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
37573
34152
37573
33159
18027
15846
18027
15212
23721
15471
23721
13151
209515
114565
209515
83138
288836
180034
288836
144660
108802
144176
35374
9
45586
12
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">4.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">CAPITAL STOCK</p>
</td>
</tr>
</table>
<br/>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%">a)</td>
<td align="left" width="10%">Authorized  </td>
<td align="left" width="80%"> </td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="center" width="10%"> </td>
<td align="left" width="80%">
              
100,000,000
* Common shares, $0.001
par value
</td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="80%">And</td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="center" width="10%"> </td>
<td align="left" width="80%">
              
5,000,000
Preferred shares, $0.001
par value
</td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="80%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">
*On March 20, 2013 the Company filed with the Secretary of the State of Delaware a certificate of amendment (the “Amendment”) to the Company’s certificate of incorporation. The Amendment increased the number of authorized shares of the Company’s common stock, par value $0.001, from
50,000,000
to
100,000,000
common shares.
</p>
</td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> </p>
</td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="80%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">
The Company’s Articles of Incorporation authorize its Board of Directors to issue up to
5,000,000
shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow the directors to issue preferred stock with multiple votes per share and dividend rights, which would have priority over any dividends paid with respect to the holders of SDI’s common stock.
</p>
</td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%">b)</td>
<td align="left" width="10%">Issued  </td>
<td align="left" width="80%"> </td>
</tr>
<tr>
<td> </td>
<td width="5%"> </td>
<td width="10%"> </td>
<td width="80%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="5%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="80%">
54,615,642
Common shares (2014:
46,899,285
Common shares)
</td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="5%"> </td>
<td valign="top" width="5%"> </td>
<td> </td>
</tr>
<tr>
<td width="5%"> </td>
<td valign="top" width="5%">c)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">Changes to Issued Share Capital</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 20%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Year ended November 30, 2014</u>
</p>
<p align="justify" style="margin-left: 20%; font-family: times new roman,times,serif; font-size: 10pt;">
On July 17, 2014, the Company issued
50,000
shares on exercise of options at $0.25
per share.
</p>
<p align="justify" style="margin-left: 20%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Nine- months ended August 31, 2015</u>
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="20%"> </td>
<td valign="top" width="5%">a)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">
On June 3, 2015, the Company received $16,775
and $6,995
for the exercise of
105,600
warrants and
35,000
options respectively.
</p>
</td>
</tr>
<tr>
<td width="20%"> </td>
<td width="5%"> </td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> </p>
</td>
</tr>
<tr>
<td width="20%"> </td>
<td valign="top" width="5%">b)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">
On June 19, 2015, the Company issued
7,575,757
common stock at price of $0.33
(CAD $0.40) per share on a non-brokered private placement basis and raised $2,500,000. There were no broker commissions or fees associated with this subscription. The closing of the private placement was approved by the TSX-Venture Exchange, as required under stock exchange rules.
</p>
</td>
</tr>
</table>
100000000
0.001
5000000
0.001
0.001
50000000
100000000
5000000
54615642
46899285
50000
0.25
16775
6995
105600
35000
7575757
0.33
0.40
2500000
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">5.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">STOCK BASED COMPENSATION</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Effective October 30, 2006 the Company adopted the following stock option and stock bonus plans which were replaced by the Incentive Stock Option Plan (the “2013 Plan”) that was issued in May, 2013.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Incentive Stock Option Plan</u>
. The Company’s Incentive Stock Option Plan authorizes the issuance of shares of its Common Stock to persons that exercise options granted pursuant to the Plan. Only employees may be granted options pursuant to the Incentive Stock Option Plan. The option exercise price is determined by its directors but cannot be less than the market price of its common stock on the date the option is granted. The Company has reserved
1,000,000
common shares under this plan. No options have been issued under this plan as at August 31, 2015.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Non-Qualified Stock Option Plan</u>
. SDI’s Non-Qualified Stock Option Plan authorizes the issuance of shares of its Common Stock to persons that exercise options granted pursuant to the Plans. SDI’s employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plans, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. By a resolution of the Board of Directors, the Company amended this plan to increase the number of common shares available under this plan from
2,250,000
to
4,500,000
effective October 10, 2007. The Company further amended its Non-Qualified Stock Option Plan to increase the number of Common Shares available under this plan to
5,000,000
and filed an S-8 registration statement on April 10, 2008.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Stock Bonus Plan</u>
. SDI’s Stock Bonus Plan allows for the issuance of shares of common stock to its employees, directors, officers, consultants and advisors. However bona fide services must be rendered by the consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. The Company has reserved
150,000
common shares under this plan. No options have been issued under this plan as at August 31, 2015.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Effective May 31, 2013, the Company adopted an incentive stock option plan (the “2013 Plan”), which replaces the stock option and stock bonus plans that were in place prior to adoption of the 2013 Plan. All outstanding options to purchase Common Shares granted by the Company under the prior plans are now governed by the 2013 Plan and the prior plans (an Incentive Stock Option Plan, a Non-Qualified Stock Option Plan, and a Stock Bonus Plan) have been terminated.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Year ended November 30, 2014</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On March 19, 2014, the board of directors granted options to five consultants to acquire a total of
400,000
common shares. The
400,000
options were issued at an exercise price of $0.31
(CAD$0.35) per share and vest immediately with an expiry term of three years. The fair value of each option used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:
</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
151.63%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.16
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
47,897
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On May 9, 2014, the board of directors granted options to one director to acquire a total of
600,000
common shares. These options were issued at an exercise price of $0.32
(CAD $0.35) per share and vest immediately with an expiry term of five years. The fair value of each option used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:
</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
205.42%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.24
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
140,573
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On July 25, 2014, the board of directors granted options to two consultants to acquire a total of
150,000
common shares. These options were issued at an exercise price of $0.32
(CAD $0.35) per share and vest immediately with an expiry date of August 5, 2017. The fair value of each option used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:
</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
152.35%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.28
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
33,952
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On September 11, 2014, the board of directors granted options to directors and consultants to acquire a total of
1,875,000
common shares. These options were issued at an exercise price of $0.36
(CAD $0.40) per share and vest immediately with an expiry date of September 10, 2019. The fair value of each option used for the purpose of estimating the stock compensation is calculated using the Black-Scholes option pricing model with the following weighted average assumptions:
</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
170.42%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.30
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
529,188
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
As of November 30, 2014 there was $Nil
of unrecognized expense related to non-vested stock-based compensation arrangements granted. a
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Nine- month period ended August 31, 2015</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company did not issue any options during the nine- month period ended August 31, 2015.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
As of August 31, 2015 there was $Nil
of unrecognized expense related to non-vested stock-based compensation arrangements granted.
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
151.63%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.16
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
47,897
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
0.0200
0.00
0.00
1.5163
0.16
47897
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
205.42%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.24
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
140,573
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
0.0200
0.00
0.00
2.0542
0.24
140573
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
152.35%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.28
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
33,952
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
0.0200
0.00
0.00
1.5235
0.28
33952
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Risk free rate</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="12%">
2.00%
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Expected dividends</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
0%
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Forfeiture rate</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0%
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Volatility</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
170.42%
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Market price of Company’s common stock on date of grant of options</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
0.30
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Stock-based compensation cost</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
529,188
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
0.0200
0.00
0.00
1.7042
0.30
529188
1000000
2250000
4500000
5000000
150000
400000
400000
0.31
0.35
600000
0.32
0.35
150000
0.32
0.35
1875000
0.36
0.40
0
0
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">6.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">STOCK PURCHASE WARRANTS</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Year ended November 30, 2014</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On August 6, 2014, the Company issued $1,398,592
(CAD $1,549,000) face value
12% convertible debentures with a term to August 6, 2017 (the “Maturity Date”). At any time while the debentures are outstanding, the holder has the option to convert the outstanding principal of the debentures into common shares of the Company at a fixed conversion price of CAD $0.50
per share. In connection with the financing, the Company issued warrants to placement agents to purchase
151,900
shares of common stock at an exercise price of US $0.45
(CAD $0.50) per share. These warrants expire on August 5, 2016. The relative fair value allocated to warrants and credited to additional paid in capital was $33,583.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Nine month period ended August 31, 2015</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company did not issue any warrants during the nine month period ended August 31, 2015.</p>
1398592
1549000
0.12
0.50
151900
0.45
0.50
33583
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">7.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">RELATED PARTY TRANSACTIONS</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The following transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Nine months ended August 31, 2015</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Two non-independent directors were compensated as per their consulting agreements with the Company. The Company expensed a total of $158,900
as management fees to these two directors, in their role as officers in accordance with their consulting contracts and expensed a total of $3,900
as automobile allowance.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The Company expensed $19,000
for services provided by the CFO of the Company and $166,500
for services provided by a corporation in which the Chief Operating Officer has an interest, in accordance with the consulting contract.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The Company reimbursed $65,700
to directors and officers for travel and entertainment expenses incurred for the Company.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>Nine months ended August 31, 2014</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The directors were compensated as per their consulting agreements with the Company. The Company expensed a total of $186,597
as management fees to its two directors and expensed a total of $5,400
as automobile allowance.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The Company expensed $20,840
for services provided by the CFO of the Company and $169,968
for services provided by a corporation in which the Chief Operating Officer has an interest.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The Company reimbursed $83,543
to directors and officers for travel and entertainment expenses incurred for the Company.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On May 9, 2014, the board of directors granted options to one director to acquire a total of
600,000
common shares. These options were issued at an exercise price of $0.32
(CAD $0.35) per share and vest immediately with an expiry term of five years. The fair value of each option used for the purpose of estimating the stock compensation is calculated using the Black- Scholes option pricing model. The Company expensed $140,573
as compensation expense.
</p>
158900
3900
19000
166500
65700
186597
5400
20840
169968
83543
600000
0.32
0.35
140573
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">8.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">COMMITMENTS AND CONTINGENCIES</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<u>COMMITMENTS</u>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">a) Consulting agreements:</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The non-independent directors of the Company executed consulting agreements with the company on the following terms:</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective January 1, 2013, SDI executed a two- year agreement with a company in which a director, Allen Ezer, has an interest. The agreement was extended for a period of two years ending December 31, 2016 at a monthly remuneration of CAD $8,925. Either party may terminate the consulting agreement by giving
90
days written notice. In the event of termination without cause due to change in control brought out by sale, lease, merger or transfer, the Company is obligated to pay severance of
12
months fees at current rate at time of change in control. Effective February 1, 2015, the Company and director agreed to reduce the monthly remuneration by
10% to CAD8,032. This reduction continued until the completion of the next round of financing, which was completed in May 2015.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Agreement with the Chief Executive Officer Greg Sullivan to pay compensation of CAD$12,000
per month, with an annual
5% increase and a car allowance of CAD$600
per month. The agreement expires on December 31, 2016. In the event of termination without cause, the Company is obligated to pay two times the then monthly compensation and by continuing the then benefits coverage for a period of
2
years. The monthly remuneration will increase with accomplishment of milestones. The agreement may be terminated with mutual consent or by the Chief Executive Officer giving three weeks’ notice. Effective February 1, 2015, the Company and director agreed to reduce the monthly remuneration by
10% to CAD12,502. This reduction continued until the completion of the next round of financing, which was completed in May 2015.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective October 1, 2014, SDI executed a renewal agreement with a company in which the Chief Operating Officer Dean Thrasher has an interest in, for a period which expires on December 31, 2017 for services rendered. The total consulting fees are estimated at CAD$864,000
for the three-year period. In the event of termination without cause due to change in control brought out by sale, lease, merger or transfer, the Company is obligated to pay severance of
18
months’ fees at current rate at time of change in control. SDI paid cash and expensed $230,892
during the year ended November 30, 2014. The company may also accept common shares in lieu of cash. As of November 30, 2014, the company has not exercised its right to accept this compensation in shares. Effective February 1, 2015, the Company and director agreed to reduce the monthly remuneration by
10% to CAD $21,600. This reduction continued until the completion of the next round of financing, which was completed in May 2015.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective November 1, 2013, SDI executed an agreement with a non-related consultant to pay compensation of $3,800
(CAD $5,000) per month. The consultant has agreed to provide corporate market advisory services. The agreement is for a period of a minimum of three months and will continue unless otherwise terminated by either party by giving
30
days written notice.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective May 1, 2015, SDI executed an agreement with another non-related consultant to pay compensation of $3,800
(CAD $5,000) per month. The consultant is to assist with sales initiatives, demos and participate in trade shows. The agreement unless renewed by mutual consent expires December 31, 2015. The consultant is also entitled to a
5% cash commission for all completed direct sales to end users and a
2% cash commission for all completed indirect sales. In addition, as a sales incentive, the company may grant stock options at market prices, being
25,000
stock options for every
5,000
rounds sold, to a maximum of
200,000
options. Either party may terminate the consulting agreement by giving
60
days written notice.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective April 2014, SDI executed an agreement with a non-related consultant to set up its social media sites and optimization of search engines for the Company, at a start- up fee for CAD$3,000
(Phase 1) and payment of CAD$1,500
per month and issued
100,000
stock options at $0.32
(CAD$0.35) when Phase 2 of the project was implemented (refer to note 6).
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective August 2014, SDI executed an agreement with a non-related consultant to pay compensation of $5,500
per month for the first
5
months and $5,000
from sixth month to end of the term. The consultant is to assist with sales initiatives, demos and participate in trade shows. The agreement unless renewed by mutual consent expires December 31, 2015. On renewal, there will an annual increase of
4.5% effective January 1, 2016. The consultant is also entitled to a
5% cash commission for all completed direct sales to end users and a
2% cash commission for all completed indirect sales. The Company granted
50,000
stock options to the consultant on July 25, 2014 and has agreed to grant
25,000
stock options for every
5,000
rounds sold domestically to a maximum of an additional
150,000
options. Either party may terminate the consulting agreement by giving
30
days written notice.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Effective January 1, 2015, SDI executed an agreement with a non-related public relation consultant to pay compensation of $7,000
per month and an additional compensation of $250
per month for media monitoring services. The agreement shall be for an initial period of one year and thereafter will renew automatically for additional periods of one year each. Either party may cancel this agreement without cause, by giving no less than ninety days’ notice.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
b) The Company has commitments for leasing office premises in Oakville, Ontario, Canada to April 30, 2018 at a monthly rent of $5,145
(CAD $6,399).
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">c) Effective April 17, 2015, the Company signed a five-year, non-exclusive, renewable Technology License and Supply Agreement (“TLSA”) with United Tactical Solutions (“UTS”) of Chicago, IL.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">UTS is a global provider of specialized less-lethal solutions, with an extensive U.S. customer base, and international customers worldwide.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Under the terms of the TLSA, UTS will purchase volume quantities of SDI’s full range of products for private labeling and re-sale under the UTS Conflict Defense Solutions (“CDS”) brand. Sales will be through the global UTS network across military, law enforcement and correctional service agencies. The TLSA includes an initial Standing Offer from UTS for US$500,000
as a contracting vehicle for volume purchases, with related provisions that guarantee minimum annual quantity purchases.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The TLSA also provides SDI with access to the UTS training network for end-user certification on SDI products within these agencies.</p>
8925
90
12
0.10
8032
12000
0.05
600
2
0.10
12502
864000
18
230892
0.10
21600
3800
5000
30
3800
5000
0.05
0.02
25000
5000
200000
60
3000
1500
100000
0.32
0.35
5500
5
5000
0.045
0.05
0.02
50000
25000
5000
150000
30
7000
250
5145
6399
500000
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">9.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">EXCLUSIVE SUPPLY AGREEMENT</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company entered into a Development, Supply and Manufacturing Agreement with the BIP Manufacturer on July 25, 2012. This Agreement provides the Company to order and purchase only from the BIP Manufacturer certain 40MM assemblies and components for use by the Company to produce less-lethal and training projectiles as described in the Agreement. The Agreement is for a term of five years with an automatic extension for an additional year if neither party has given written notice of termination prior to the end of the five year period.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company and a division of Abrams Airborne Manufacturing Inc. (AAMI), namely Milkor USA (MUSA), agreed to partner for a joint cross-selling / marketing initiative.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">This arrangement allows both companies to leverage existing and future sales channels by offering a comprehensive, full-package of Milkor USA’s 40mm Multi-Shot Grenade Launchers in conjunction with SDI’s 40mm Less-Lethal ammunition product-line to end-users globally.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">10.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">CONVERTIBLE DEBENTURES AND DEFERRED FINANCING COSTS</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>
$1,398,592
(CAD $1,549,000) Convertible Debentures
</i>
</b>
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On August 6, 2014, the Company issued $1,398,592
(CAD $1,549,000) face value
12% convertible debentures with a term to August 6, 2017 (the “Maturity Date”). At any time while the debentures are outstanding, the holder has the option to convert the outstanding principal of the debentures into common shares of the Company at a fixed conversion price of CAD $0.50
per share. At any time after February 6, 2015, the Company has the right to force the conversion of the debentures into common shares at a price of at least CAD$0.65
per common share for a period of at least
20
consecutive trading days. If the common shares do not trade on any trading day and the bid price of the common Shares is CAD $0.65
or greater, the common shares shall be deemed to have traded at a price of at least CAD $0.65
on that trading day. Additionally, the Company has the right to redeem the debentures, in whole or in part, (a) during the
12
months ending August 6, 2015, at a premium of
15% to the principal amount being redeemed plus any accrued interest, (b) during the
12
months ending August 6, 2016, at a premium of
5% to the principal amount being redeemed plus any accrued interest, (c) during the
12
months ending August 6, 2017, at a premium of
2% to the principal amount being redeemed plus any accrued interest. In connection with the financing, the Company issued warrants to placement agents to purchase
151,900
shares of common stock at an exercise price of CAD $0.50
per share. Additionally, the Company incurred $157,293
(CAD $174,209) in financing fees.
</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The Company has evaluated the terms and conditions of the convertible debentures and placement agent warrants under the guidance of ASC 815. The conversion feature met the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition of conventional contemplates a fixed number of shares issuable under the arrangement. The instrument was convertible into a</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">fixed number of shares and there were no down round anti-dilution protection features contained in the contracts. The Company was required to consider whether the hybrid contract embodied a beneficial conversion feature (“BCF”). The debentures did not result in a BCF because the conversion price was not in the money on the inception date. There were no terms or features contained in the warrant agreement that would preclude the warrants from achieving equity classification.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">The following table reflects the allocation of the purchase on the financing date:</p>
<div align="right">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Convertible Debentures - Face Value</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,398,342
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Proceeds</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%">$</td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
(1,279,773
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred financing costs</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
(190,876
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Paid in capital (warrants)</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
33,583
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Prepaid expenses</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
16,681
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Accrued expenses</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
21,793
</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Convertible debentures</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,398,592
</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
The warrants were valued at $33,583
and were recorded as a component of deferred financing costs. Interest expense related to the debentures amounted to $173,707
for the nine- month period ended August 31, 2015. Of the $173,707, $125,989
related to accrued interest and the remaining $47,718
related to the amortization of deferred financing costs.
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="95%">
<tr valign="top">
<td align="left" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">Convertible Debentures - Face Value</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,398,342
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom">Proceeds</td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%">$</td>
<td align="right" nowrap="nowrap" valign="bottom" width="12%">
(1,279,773
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred financing costs</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
(190,876
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Paid in capital (warrants)</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
33,583
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Prepaid expenses</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
16,681
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Accrued expenses</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
21,793
</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Convertible debentures</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,398,592
</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="2%"> </td>
</tr>
</table>
1398342
-1279773
-190876
33583
16681
21793
1398592
1398592
1549000
1398592
1549000
0.12
0.50
0.65
20
0.65
0.65
12
0.15
12
0.05
12
0.02
151900
0.50
157293
174209
33583
173707
173707
125989
47718
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">11.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">INVENTORY</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
Inventory as of August 31, 2015 consist of finished goods of Blunt Impact Projectiles 40mm for $54,938
(November 30, 2014: $120,246) and 40mm LMT launchers for $13,990
(November 30, 2014: $nil) which are held at the BIP manufacturer.
</p>
54938
120246
13990
0
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">12.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">RESTRICTED CASH</p>
</td>
</tr>
</table>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">
On May 29, 2015, the Company accepted a $2,500,000
subscription for the sale of
7,575,757
common stock at a price of $0.33
(CAD $0.41) per share on a non-brokered private placement basis. The funds were held in escrow, as the closing of the private placement was subject to approval of the new insider by the TSX- Venture Exchange, as required under stock exchange rules. The funds were thus reflected as restricted cash for the quarter ended May 31, 2015. Subsequent to the quarter, in June 2015, the Company received approval from the TSX-Venture exchange and funds were released from escrow.
</p>
2500000
7575757
0.33
0.41