Derivative Liability

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

Note 5 - Derivative Liability

The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instrument should be classified as a liability when the conversion option becomes effective and there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2017:

Balance - May 31, 2017	$	90,986
(Gain) on change in fair value of the derivative		259,330
Settled upon conversion of debt		(169,605	)
Balance - November 30, 2017	$	180,711

The following table summarizes the gain/loss on derivative liability included in the income statement for the periods ended November 30, 2017 and 2016, respectively.

	Six Months Ended
	November 30,
	2017		2016
Day one loss due to derivatives on convertible debt	$	-	$	87,124
(Gain) loss on change in fair value of the derivative		259,330		(1,501,226	)
	$	259,330	$	(1,414,102	)

The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability, as well as the determined value of the option liability at each measurement date:

	November 30,	May 31,
	2017	2017
Expected term	0.02 - 3.08 years	0.12 - 4.08 years
Expected average volatility	239% - 362%	108.24% - 314.75%
Expected dividend yield	-	-
Risk-free interest rate	0.83% - 1.90%	0.34% - 1.62%