Shareholder's Equity

6 Months Ended

Nov. 30, 2011

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

15.  Shareholder’s Equity

Stock Issuance for Compensation

On June 1, 2010, the Company hired a consulting company. As compensation, the Company paid $45,000 and issued 115,000 shares of restricted common stock, and another 100,000 shares of restricted common stock will be issued upon certain terms. The shares are valued at market price of a total of $316,250 at $2.75 per share. The cash paid was first recorded as prepaid expenses. The shares issued are recorded as deferred consulting fee. Both the prepaid expenses and deferred consulting fee will amortize to expense over the agreement term of the six-month period. As of November 30, 2011, prepaid expenses for this service have a balance of $0 and deferred consulting fee has a balance of $0. On November 18, 2010, the Company hired an investor relations company. As compensation, the Company agreed to issue 30,000 shares of restricted common stock. The shares are valued at a market price of $77,700 at $2.59 per share. As of November 30, 2011, the shares have not been issued and the payable is included in the liabilities section of the balance sheet. On July 30, 2011, the Company issued to its legal counsel as compensation 250,000 shares of common stock, which shares are valued at $212,500. On October 19, 2011, the Company issued to various employees a total of 740,000 shares for employee reward, which shares are valued at $562,500 at $0.75 per share. On November 21, 2011, the Company issued to its consulting company as compensation 175,000 shares of common stock, which shares are valued at $70,000 at $0.40 per share.

Options

On December 17, 2009, we granted to the previous CFO options to purchase 300,000 shares of common stock, with an exercise price of $3.90 per share, which was the closest stock issuance price of the date of grant. The options will vest over 2 years and expire 3 years after the vesting date or after a termination date whichever is earlier. All the options were forfeited immediately when the CFO resigned the position on October 25, 2010.

On February 12, 2010, we granted to our CEO options to purchase 400,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 2 years and no option can be exercised after 5 years from the vesting date.

The assumptions used in calculating the fair value of the above options granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate	0.86	%
Expected life of the options	2- 3 years
Expected volatility	45	%
Expected dividend yield	0

On February 12, 2010, we granted three independent directors each, options to purchase 10,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and no option can be exercised after 3 years from the grant date.

On March 22, 2010, we granted one independent director options to purchase 10,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and no option can be exercised after 3 years from the grant date.

The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate	0.35	%
Expected life of the options	1-2 years
Expected volatility	45	%
Expected dividend yield	0

On October 25, 2010, we granted to our newly appointed CFO options to purchase 150,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and expire 3 years after the vesting date or after a termination date whichever is earlier.

The assumptions used in calculating the fair value of the above option granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate	0.22	%
Expected life of the options	3 years
Expected volatility	81	%
Expected dividend yield	0

Following is a summary of the stock option activity:

	Options outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding, May 31, 2011		590,000	$	3.90	$	0.00
Granted		-		-		-
Forfeited		-		-		-
Exercised		-		-		-
Outstanding November 30, 2011		590,000	$	3.90	$	0.00

Following is a summary of the status of options outstanding at November 30, 2011:

Outstanding Options					Exercisable Options
Exercise Price	Number		Average Remaining Contractual Life in Years		Average Exercise Price		Number
$3.90		590,000		1.38	$	3.90		240,000

Warrants

On October 16, 2009, in connection with the Share Purchase Agreement in October 2009, the Company issued 153,846 warrants to Hunter Wise Financial Group, LLC, the Placement Agent. The warrants carry an exercise price of $3.90 and a 5-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

On March 22, 2010, in connection with the Share Purchase Agreement in March 2010, the Company issued 69,231 warrants to various parties as part of placement cost. The warrants carry an exercise price of $3.90 and a 5-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

On March 22, 2010, in connection with the Share Purchase Agreement in March 2010, the Company issued 1,281,083 warrants to October 2010 investors. The warrants carry an exercise price of $6.00 and a 3-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

Placement Agent Warrants meet the conditions for equity classification pursuant to FASB ASC 815 “Derivatives and Hedging” and EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock.” Therefore, these warrants were classified as equity and accounted for as common stock issuance cost.

	Warrants Outstanding		Warrants Exercisable		Weighted Average Exercise Price		Average Remaining Contractual Life in Years
Outstanding, May 31, 2011		1,504,160		1,504,160	$	5.69		2.05
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Outstanding, November 30, 2011		1,504,160		1,504,160	$	5.69		1.55