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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;The accompanying condensed consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiaries Methes Canada and Methes USA. All significant
inter-company transactions and balances have been eliminated.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting.  The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;Costs directly incurred in connection with
the IPO were recorded as deferred financing fees until the completion of the IPO. These deferred financing fees were charged against
additional paid-in capital upon completion of the IPO. Financing fees relating to other financing arrangements are deferred and
amortized over the term of the loan.&lt;/p&gt;

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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;The Company accounts for shipping and handling
fees in accordance with FASB ASC 705 &amp;#34;Cost of Sales and Services&amp;#34;. Shipping and handling costs for the three and six
months ended May 31, 2013 were $101,561 and $175,255, respectively (three and six months ended May 31, 2012 - $110,540 and $290,277,
respectively). Costs related to raw materials purchased, are included in inventory or cost of goods sold, as appropriate. While
amounts charged to customers for shipping product are included in revenues, the related outbound freight costs are included in
expenses as incurred.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Disclosure of accounting policy for the classification of shipping and handling costs, including whether the costs are included in cost of sales or included in other income statement accounts. If shipping and handling fees are significant and are not included in cost of sales, disclosure includes both the amounts of such costs and the line item on the income statement which includes such costs.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

 -Publisher FASB

 -Name Accounting Standards Codification

 -Glossary Handling Costs

 -URI http://asc.fasb.org/extlink&amp;oid=6514758



Reference 5: http://www.xbrl.org/2003/role/presentationRef

 -Publisher FASB

 -Name Accounting Standards Codification

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 -Publisher FASB

 -Name Accounting Standards Codification

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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;The Company accounts for income taxes under
ASC 740 Accounting for Income Taxes. Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
periods in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC 740-10-05,
Accounting for Uncertainty in Income Taxes, prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a tax return.&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;For those benefits to be recognized, a
tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;The amount recognized is measured as the
largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Potential tax benefits
from net operating losses and foreign tax credit carry forwards are not recognized by the Company until their realization is more
likely than not. We assess the validity of our conclusions regarding uncertain tax positions on a quarterly basis to determine
if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position's sustainability
under audit. The Company has determined that there were no tax exposures as at November 30, 2012 and May 31, 2013.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;Basic earnings per share (&amp;#34;EPS&amp;#34;)
is determined by dividing net earnings available to common stockholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. In computing diluted EPS, the average number of shares of Common Stock outstanding is increased
by Common Stock options and warrants outstanding with exercise prices lower than the average market price of Common Stock using
the treasury stock method. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive.
Potentially dilutive shares include 91,264 warrants and 383,310 Common Stock options issued and outstanding as at May 31, 2012
and 2,163,764 warrants and 483,310 Common Stock options issued and outstanding as at May 31, 2013. All outstanding warrants and
options have an anti-dilutive effect on the loss per share and are therefore excluded from the determination of the diluted loss
per share calculation for the three and six months ended May 31, 2012 and 2013.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Disclosure of accounting policy for computing basic and diluted earnings or loss per share for each class of common stock and participating security. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation and takes into account stock dividends, splits and reverse splits that occur after the balance sheet date of the latest reporting period but before the issuance of the financial statements.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

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&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27pt"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;In September 2011, the FASB issued ASU
2011 - 08,&lt;i&gt; Intangibles - Goodwill and Other&lt;/i&gt;, which amends ASC Topic 350 and the current guidance on testing goodwill for
impairment. Under the revised guidance, entities testing goodwill for impairment have the option to first assess qualitative factors
to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the
fair value of a reporting unit exceeds its carrying amount. If an entity determines it is more likely than not that the fair value
of a reporting unit exceeds its carrying amount, then performing the two-step impairment test is unnecessary. The amendments are
effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December&amp;#160;15, 2011. The
Company adopted this statement effective December&amp;#160;1, 2012. The adoption of this guidance did not have a material effect on
the Company&amp;#146;s condensed consolidated financial statements.&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"&gt;In December 2011, the FASB issued ASU No.&amp;#160;2011-11,&lt;i&gt;
Disclosures about Offsetting Assets and Liabilities&lt;/i&gt; (Topic 210). The new disclosure requirements mandate that entities disclose
both gross and net information about instruments and transactions eligible for offset in the statement of financial position as
well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard
requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The
amendments are effective for annual reporting periods beginning on or after January&amp;#160;1, 2013, and interim periods within those
annual periods. The disclosures required by the amendments are required to be applied retrospectively for all comparative periods
presented. The Company does not believe the adoption of this standard will have a material impact on its condensed consolidated
financial statements.&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 40pt"&gt;All other recent pronouncements issued by the FASB or other
authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the
consolidated financial statements of the Company.&lt;/p&gt;

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